Back in the spring, I wrote about lifestyle creep, the phenomenon that occurs when your spending creeps up in response to having more income. Have you experienced this? I would guess that most people do at some point, and it can be interesting to look back over your working years to spot those moments. Sometimes the creep can be very slow and subtle, and other times, it can come in large bursts.
In the first post of this series, I told the tale of my early married life and how lifestyle creep did not play a major role in our lives, due to our meager financial situation. My aversion to debt and interest in simple living also kept lifestyle creep under control.
Part two of the story told about our move to a larger house before we were financially ready for it. Fortunately, that financial boo-boo all worked out as my income increased after the 2000-2002 recession. We made some good financial decisions, such as continuing to make debt pay-down a priority, but also some questionable decisions (we bought a boat!).
In this installment, our lives took another turn. In 2007, we decided to try to have a baby, despite my, um, advanced maternal age. We had been married for ten years, and it hadn’t ever crossed our minds to have a child. And then suddenly it did.
And baby makes three . . . or nine, depending on your point-of-view
For the first ten years of our marriage, we were parents: parents of four-legged babies, that is. At our peak, we had nine dogs and two ferrets. Insane, right? With all those pets, we seldom traveled. Instead, we spent our money on landscaping, pets, and “toys.” (A boat for our lake weekends, motorcycles for Greg, books for me . . .) By the time our daughter, Rowan, was born, our pet population was down to six aging dogs.
In preparation for having a child, I read dozens and dozens of books. My pregnancy was considered riskier: I gave birth at age 39. For the most part, things went smoothly during the pregnancy. We had to rework our life plan, though, and figure out how to fit a small human into our already over-crowded, cluttered home.
Greg gave up his home office, I moved my office into what was his, and we prepared my former office to be a nursery. Of course, we spent a hunk of money furnishing that room. In fact, the discussion about the baby’s room ranks right up there in my top ten list of moments I am NOT proud of. Up to that point, most every piece of furniture in our house was hand-me-down or second-hand furniture. The obvious solution was to find some gently-used furniture for the baby. We could have furnished the room for a few hundred dollars.
Nope. I got my heart set on a fairly expensive set of MATCHING furniture for Rowan, and I would not budge. I might have thrown a temper tantrum to get my way on this decision. After all, we had the money. Who cares if this went against our philosophy up to this point! This would be our one and only child, and I wasn’t going to settle for less than the best.
And the baby gear. OMG. I am a planner by nature, so I did the research, I made the lists, Greg and I discussed what we would need, and then we started accumulating baby gear. Of course, we barely used some of the things I thought we had to have. But because it was in the budget, we spent the money happily as we anticipated Rowan’s arrival.
Who knew kids took so much time and money!
A mere three months before Rowan arrived, Greg determined that the car we had wasn’t safe enough. Our Subaru Outback lacked side air bags, so he insisted we upgrade to a safer choice. I loved that car and didn’t want to change vehicles. After much arguing, negotiating, and a trip to the bathroom at the dealership during the paperwork signing to cry over losing the car I loved, we drove off in a new Subaru Forrester. (An aside: I left the dealership pissed at Greg, but by the time I had arrived at work, I was totally in love with the new car. Chalk it up to being a hormonal pregnant woman.)
Furniture. Baby gear. A new car, along with a new car payment. Hospital bills. All this, and our income had decreased due to our family decision to have Greg serve as the stay-at-home parent. Our lifestyle creep was out of control. But no matter, we had our new daughter, and all was well.
We did do SOME things right
While we were spending money hand-over-fist during those years, there were good points, too. Before we bought house #2, we had paid off all our debts except our mortgage. Indeed, we racked up some new debt during the years in house #2, with two additional mortgages and a car payment. But we paid our credit cards off monthly. When we decided to have a child, I made a budget, and we started saving money vigorously. When those hospital bills rolled in, we were able to dispatch them fairly quickly.
My business was growing and so was my income. We had bought a building for my business, and we were regularly investing for our future. But Rowan arrived in July of 2008, just in time for the bottom to fall out of the stock market as the Great Recession kicked in. This put a damper in my income for a couple of years, but due to our planning and saving, we made it through. Since we weren’t using it, we sold the boat, too.
We start to build our dream life
All in all, we were making good decisions and not fully succumbing to lifestyle creep. After our hysterical spending in preparation for Rowan, we did curb those tendencies. The recession was certainly a factor in helping us dial back our spending. We settled into new patterns of work and home life, and all was well.
In 2010, when Rowan was two, we started talking about finding a larger home with more property. We had visions about how we wanted to live our lives: we wanted more buffer between us and neighbors, room to roam, and more garden space. Because we were busy with work and a toddler, we weren’t actively looking. We would just poke around from time to time.
The winter of 2011, however, changed our trajectory. It was a whopper of a winter, and one big storm had us and all our neighbors stranded for several days. The roads were impassible, and Greg used his ATV to help those who lived further up the road get from their stranded cars to their homes.
One of these trips up the mountain brought news that a large parcel of land a half-mile further up from our house was going on the market. To make a long, but exciting, story short, the property was being turned over during a bankruptcy proceeding. We could buy those 46 acres for a deep discount. We scrambled to put together a down-payment and arrange for financing because this was a dream come true for us, as well as a deal we could not pass up.
Once again, we relied on our faith that we would be able to make the cashflow work and jumped in without looking back. To say that this was a strain on our finances would be an enormous understatement. While my business continued to grow and prosper, we had been diligently paying off debts and increasing our savings. This would be a huge increase in debt load. (In fact, after the house was built, our debt load was more than quadruple what it was prior to purchasing the property. Ugh.)
Building a house almost killed us financially, and we almost killed each other
The next three years were spent cleaning up the property, designing our dream house with an architect, and enduring the extra-long process of having our house built.
So. Much. Money.
This would be the pinnacle of our lifestyle creep saga. As these things usually do, everything cost far more than we originally anticipated. A whole lot more. I kept my head down at work to grow the business more, and Greg did all he could to help with the home design and construction to save what money we could. We busted our tails to keep afloat, cutting costs as much as possible in other areas in order to have more funds to cover the costs of the project. We settled on a modest 2400 SF home, rather than “going big” to suit the sweeping size of the homesite. We were land poor and house poor, but we managed.
Unlike so many couples that fight over building a house, we didn’t disagree on anything when it came to making decisions about the design or amenities of the house. Our disharmony came from the unrelenting stress of the financial side of things in our lives at that time. After we finally moved into the new house, Greg worked hard to renovate our old house to put it on the market. Everything moved in super slow motion, it seemed. But we managed. We kept our heads down and worked.
Lifestyle creep, in spades
While prior installments of our story illustrated minor or measured lifestyle creep, this era of our lives was like a pole-vault up in spending and debt accumulation. I am careful with money, as a rule. I’m a financial planner, after all. But many of the decisions we made about this home-building project were based on the fact that I assumed my income would continue to rise going forward. Fortunately for us, that turned out to be true. It could have turned out very differently. It was, in my view, a calculated risk.
If you have read this whole story, I appreciate your interest and persistence! In Part 4 of the saga, which will bring us to present day, you’ll see our lifestyle creep go off the charts and then recede.
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**This is a photo of house #3, our current home, during the fall before we moved in.