Lifestyle Creep
It is a very subtle occurrence that is closely related to the “Keeping Up With the Joneses” phenomenon. It happens so quickly that you don’t notice until it’s too late.
First, there’s an initial event…
You earn a promotion or raise at work, receive a windfall, or free up a little cash flow by paying off a lingering debt.
Then, of course, you have to congratulate yourself. Except, the one time celebration continues.
Feeling the wiggle room, you begin dining out more often and attending more social activities that don’t seem too expensive.
Next thing you know, you’re shopping in more upscale stores because you think you can afford better quality. Yes, you’ve adopted the mantra that more expensive equals better. Besides, you loved _____’s new shoes/handbag/sweater/etc. and you must have one.
Next up is a new car. You’ve changed your style, so you have to keep up with all other outside appearances. Actually, you tell yourself you want one because you can “afford” it now. The truth is, you really can’t, but you think your college car looks raggedy compared to your friends’ luxury cars.
Now, as you park your brand new car in front of your old apartment, you think your place is a dump, so you decide to redecorate for a new and refreshed look.
After you finish redecorating, you throw a dinner party to show off. By the end of the night, your apartment feels way too small and you hate your neighbors for blasting their strange music all night. So you make a mental note to begin searching for a bigger place on the better side of town.
Instead of looking for a bigger/better apartment, you find yourself in the car with a Realtor looking at houses because your friends have convinced you that paying rent is a waste of money. Everyone else owns a home, so you should too.
And the cycle continues…
Are you guilty of lifestyle creep?
I have been and it was a constant internal battle. Want to know how I fixed my problem? I found some poor(er than me) friends! LOL! No, I’m just kidding. Next post, I’ll explain what I did (and continue to do) to avoid lifestyle creep and maintain self control.
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Good post, Ma! I miss your posts! You keep bringing in topics noone else wanna touch with a 10 foot pole. I am eagerly looking forward to reading how you avoided the Lifestyle Creep.
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Love this post! The social activities are the only area where I’m guilty of the lifestyle creep. I’ve actually down-sized a little with the homes I’ve had and the last two moves were because I changed cities. The next move will be due to getting married and my family increasing 200%. But none of the moves were due to promotions or keeping up with the joneses.
Now travel? That’s a different story – I’ve cut back a bit in the past two years but I still like to go.
My one friend that kept me on the travel/social creep – she finally broke down and developed a financial plan for her future, so we’ve cut back together.
All my other friends make less than me, so I don’t have that influence. If anything – I’m the bad influence by suggesting trips and concerts. But again, my pending lifestyle change has caused me to think twice about a lot of my ‘creeping’.
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Going back to grad school put any sort of lifestyle creep in reverse! I’m living like I did in college (which is not that great).
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I’ve noticed a minor lifestyle creep, but I am conscious about being more smart as my income increases. I actually find that, overall, I restrict myself more now that I make an amount of money I’m satisfied with. Some of that probably comes from wanting to save more and more. When I was barely paying bills, I spent every dime, because I had to…now, I try to save most of what I don’t “have” to spend.
I see how this happens to folks, though. Can’t wait to hear your strategy.
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I’m definitely guilty although I tend to think that some of the more major decisions are for the better. For example, I am currently paying more rent to live in an area where my son can attend better schools. The plus is that I’m closer to work, and thus get home at a more reasonable hour to spend time with him and take him to his activities. When I moved to California three years ago, I purchased a new car. Looking back I could have purchased a used car, but didn’t want to worry about repairs. I also like to travel, which definitely has crept upward as my professional life flourished. With my pending transition, I’m definitely cutting back.
I look forward to your next post on ways to avoid the lifestyle creep.
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my bf and i were just discussing this over breakfast this morning! i have doubled my salary since 2005 and i feel like i had more money then than i do now. now, i realize some things cost more now (gas & food), but i feel like i’ve just made adjustments in my life to spend all that extra money on-ha! i wish i could live on only half my salary…i had such good times with my old salary, too! i didn’t feel deprived one bit.
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I think we have been guilty of lifestyle creep in the area of services, travel and food…housing has been the same for 15 years and the cars are on average 7 years old.
But, I will say that along the way we have keep the ratio of savings-to-spending in check, so the percentages have stayed the about same over the years, (saving 30+ per cent of income). So, as the income pie has gotten bigger, the absolute amounts of both savings and spending has gone up. I think, for us, it has been a healthy balance. We have more savings than ever before, but we also take vacations to nicer places now and allow ourselves the luxury of certain services.
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Ooooh, hurry and post how you overcame it ’cause I have lifestyle creep for real. It is so getting out of hand.
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hmmm let’s see….new lr2 in july, quarterly microdermabrasions since march, iphone last month (and data plan), so…sort of…..although in january we are going to pay lr2 off and start maxing our iras (right now we do max on 401k and 50% towards ira limits).
Lifestyle creep? a little….
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Oh lord, this is (starting to be) me. It’s subtle… I’ll buy clothes from my favorite boutiques at full price, even though those boutiques are too pricey for me when they’re on sale! I’ll buy dinner for a friend. Impulse buy. Because I have money saved. I have no debt. It’s not even that much. AAAAUUGHHHH!! Thanks for the reality check.
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Honda Accord 04 under 80k miles but want a 2008 Altima or Tahoe Lifestyle creep …semi but my Honda is kinda of small for me and my son and our 50 million things :)
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I want to indulge in the lifestyle creep cause of my “good job” but then buyers remorse always wins out. Great post and awesome blog.
I’ve watched my friends and have learned that all the new and shiny “stuff” comes with worry when jobs are lost or illness happens. So I’ll stay put in my little rowhouse, paid off car, and ok wardrobe…thanks for the friendly reminder…
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I don’t know how much of my blog you’ve read if any but if so you may already know that I decided to give up everything and start over in a new state. But yes I’ve been a victim to this before. Looking around me and keeping up BARELY! But my main thing would be my own expectations I haven’t met. I “thought” I had it all planned out. I should do this..by this age and that by that age” When it wasn’t happening I was crushed. Now I’m ready to start over and keep my eyes on the road in front of me and not on the side at what other folks are doing! Like my friend always says…you don’t know what people go through to get the things they have ! Good Post!!! I’ll be back!
Sincerely,
Go
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I dont understand posts like this. Have some independance of mind and do your own thing. Dont follow the herd and dont keep up with the jones’ – financial independance is far better than buying crap.
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Spending can get out of control so easily. I’m constantly having to reign myself in. I try to really think about whether I need something or not in the store and afterwards as I look over my receipts. But what I really do is focus on not trying to go back where I first started out after college. It was cool to be on my own in my first apartment in my early 20’s, but I don’t really want to go back to sleeping on an air mattress. I’d rather try to save some more.
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I am DEFINITELY guilty of lifestyle creep. I did this for about 8 or 9 years before I realized that this was not what God had for me. It started right out of college, I had to buy my 1st home to prove that I could have my own. Then, after a few years, the home was not large enough (even though it was just me and my daughter). So, I bought a bigger house after a promotion and a bigger car (a truck to be exact). Now, I live in a house that I feel is too big (to clean anyways (LOL)), and I’m upside down in equity. Not to mention, it is way outside of my comfort zone of debt to income ratio. I am glad though that I have definitely grown through this experience, and God is teaching me so many new things in spite of my selfishness. Thank God that He promised to never leave nor forsake me cause I would be in a world of trouble otherwise. I am learning to truly be content in all circumstances, whether in plenty or in need, and to be a much better stewart of what God has blessed me with.
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Can you tell me OR refer me to a previous post where you would explain the best method of financial gain. I typically listen to Dave Ramsey where he explains the method of living below your means while the author or Rich Dad Poor dad says that’s not the key! What do you think?
Sincerely, Go
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I love your blog topics! I’m waiting for the follow up post to this!
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I’m ashamed to admit that I do all of these things. Maybe not to the extent to moving into more expensive digs and buying new cars, but when hubby or I start making more money, I find myself spending more on groceries, clothes, going out to eat. I always smack myself at the end of the month when I add everything up and see how much more I spent on those things than I normally do.
I’m really trying not to do that anymore. When we make more money, the only thing that we spend it on is.. nothing. It goes right into our savings. We may go out and have a fancy dinner or something one night, but that’s it. The rest is to be put away. :)
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Great post on “life style creep.” I would like to say since I havve been a student so far I haven’t been tempted by life style creep because everyone around me tend to be broke students but this isn’t so. I am in law school and I have to say several students are already living like lawyers earning six figures. I look forward to your next post.
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Hi Single Ma,
You are so right! My husband and I have done really well (we are mid-20s) but live WELL below our means. We budget every paycheck within a few dollars, and off it goes before it arrives. When we were house hunting, you better believe I crunched the numbers on every house we liked – researched the property tax, value over time, utilities (we live in the desert), even the alarm system cost! When we finally found a home we loved, we not only were able to pay cash for it (thus making for an excellent deal!) but we now know we have enough put away for a rainy day (or an unusually large bill.) We did end up buying a much larger house than we originally planned on, but because it was a foreclosure and cash (or pre-approval) talks, we got an excellent deal in a great neighborhood, and the value will only increase. (As in, we looked at many 1700 sq ft homes, and ending up buying a 2800 sq ft home for the SAME PRICE, only 10 years old with no issues other than a couple broken roof tiles, a missing fridge, and a broken window!) We are thinking of renting out the separate guest quarters for a little extra income to stash away.
I started reading you long ago when you were Single Ma and Money – maybe 3-4 years? Not sure. But you definitely set me on the right track (my husband’s also good with money, thankfully) and we have you to thank for getting us where we are today. Granted, I was raised a dave Ramseyite too… :)
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I am in the same situation as SavingDiva – avoiding Lifestyle Creep by going back to school. It certainly leads to a stark realization that it’s a lot easier to get by as a worker bee! I often miss the days of a paycheck and health insurance benefits, seriously.
Jerry
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I have a question though. What if you suddenly got a HUGE raise i.e. double or triple your salary next year . Is it possible to avoid lifestyle creep at all?
I think it would be very difficult. Early on in people’s careers, they accelerate quickly and generally hit a wall.
I hit an income wall at 30, and believe I’ll be hovering in my range for the next 10 years. I hope I can still increase, but as they say, trees don’t grow to the sky!
Would love to hear the communities thoughts.
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Some very timely advice here. Despite earning high salaries many folks can’t keep pace with the cost of lifestyle creep and it takes discpline to rein in spending!
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Good post on how people can begin to spiral out – easily done. But almost as easily fixed. All about a lifestyle change in my opinion.
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