Lifestyle Deflation: Strive For Financial Discomfort

Lifestyle DeflationHuh?

Aren’t we trying to achieve the exact opposite? Aren’t we trying to be good with our money so that it isn’t the cause of stress in our life? So that we we can thrive NYC and experience the best it has to offer? So that we can enjoy time with our friends and family?

Of course! Day to day, that is what I strive for in my life and I like to think I have done a pretty good job achieving it. I know that I have enough money in an emergency. That if I lost my job tomorrow, I could live for months (or years if I needed to). I don’t have to stress about student loans or credit card debt, because I don’t have any. However, when I look at my bank account – specifically at my checking and savings accounts, I never want to be too comfortable.

Over the years, my salary has been a bit of a roller coaster. Due to the recession, at one point I had to take a job that paid less than my previous job. However, my current salary is higher than it ever has been in the past (don’t worry, it’s still less than the $80k level I talk about in my about me video). As my salary increases, what happens if I don’t have a plan in place?

  1. My checking and savings accounts slowly grow as the money going in starts to outpace the money going out.
  2. I see the increased balances and worry less about being conscious about my spending, thinking that I can now afford “nicer” things.
  3. I buy the new computer I don’t really NEED, but now how the funds to afford.
  4. In the long term, maybe I figure that I don’t NEED roommates any more and rent out an apartment all to myself – hey, I can afford it.

This is normal. This is how most people live their lives. Personal Finance bloggers and experts call this “lifestyle inflation”. Following this path won’t kill you. It won’t necessarily put you in debt (although if you move too quickly and outpace your salary increase, it can). But it will also slow you down. If you have thought about what is important to you, and have figured out your priorities in life, then you’ll see that by purchasing that new computer and by upgrading your apartment, you are making a sacrifice. You AREN’T spending on your long term goals and priorities.

So what’s my trick for avoiding lifestyle inflation? Never get too comfortable. As soon as I see my bank account growing month over month, I make a change. I invest the surplus and I make sure my bank account is down to a level that I am not quite comfortable with. Then, I go into my Vanguard account and increase my monthly contribution, so that surplus doesn’t just come back. Of course, I still have enough to get by and honestly more than most people who live paycheck to paycheck, but it is just enough to make me a little uneasy. Now, instead of succumbing to lifestyle inflation, I am keeping my lifestyle constant and perhaps even looking for ways to cut costs and optimize.

Lifestyle Deflation! What a wonderful concept. Why am I excited about lifestyle deflation?

Well, because of these actions, my investments grow at a crazy rate and I am SPEEDING down the path to financial independence. I am working towards buying the things that truly make me happy, like time and freedom.


Side Note: You may have noticed (or not) that I went back to my old theme. This is temporary. The short version of the story is that my new theme that I had just purchased was no longer being supported/kept up, so when I updated my WordPress plugins, the site broke. Normally, a theme update would have been issued to fix this, but now, I am just out the $45 I spent on the theme. I put in a request to the ThemeForest customer support team, so hopefully I will be comped a new theme, since the one I just bought recently is pretty suddenly useless to me. I’ll keep you updated!

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8 thoughts on “Lifestyle Deflation: Strive For Financial Discomfort

  1. Stefanie @ The Broke and Beautiful Life July 21, 2014 at 8:34 am

    I was exploring a similar idea in a post last week for US News & World report and got some serious backlash. I didn’t suggest anything crazy or gross like dumpster diving, just the usual- get a roommate, bike if it’s feasible, get free haircuts from beauty schools, etc- people just find every excuse in the world for those options (and I’m sure any other suggestion) not to work.
    Stefanie @ The Broke and Beautiful Life recently posted: Google Is The New ResumeMy Profile

    • Mr NYBudget July 22, 2014 at 8:01 am

      Interesting. Yeah, I don’t currently expand my writing to other outlets and it seems as though as a result, I am protected by a bubble of like-minded people who read this. I honestly feel badly for people who get angry at frugality. If they choose not to pursue it, or pursue it in a different way, that’s their choice – but to get angry about it reveals something missing from their life, I feel.

  2. Aldo@MDN July 21, 2014 at 11:29 am

    This is a good point. I’m still not comfortable with where I am financially so I try not to fall in the lifestyle inflation, but I hadn’t thought about it before reading this. Now I’ll be aware of it.
    Aldo@MDN recently posted: How I Saved $450+ On Getting My Car PaintedMy Profile

    • Mr NYBudget July 22, 2014 at 8:02 am

      Right – some day you will be comfortable (or at least more comfortable) with where you are.

  3. Even Steven July 23, 2014 at 3:44 pm

    Little off track from the article, but I wanted to let you know I nominated you for a Liebster award, click this guy to check it out.
    Even Steven recently posted: Liebster Award, MVP, and VacationMy Profile

    • Mr NYBudget July 23, 2014 at 7:03 pm

      Thanks Even Steven!

  4. Louise @ Good Financial Choices August 10, 2014 at 11:01 am

    A good point, I’m currently suffering from a bit of lifestyle inflation …….deflation sounds like just what I need. I’m allowing myself one massive treat of an amazing holiday, then I need to get back to frugal habits….
    Louise @ Good Financial Choices recently posted: Net Worth 0 – August 2014My Profile

    • Mr NYBudget August 10, 2014 at 5:04 pm

      Nice – it’s all about always reevaluating!

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