What is "Lifestyle Inflation" and why do I want to beat it?
LIfestyle inflation is simply increasing your spending every time you earn more money.
Investopedia describes it really well, and has some great advice:
Lifestyle inflation refers to increasing one's spending when income goes up. Lifestyle inflation tends to continue each time someone gets a raise, making it perpetually difficult to get out of debt, save for retirement or meet other big-picture financial goals. Lifestyle inflation is what causes people to get stuck in the rat race of working just to pay the bills.
Screw that. I'm going to avoid this typical scenario. That shit's for the normies.
I just received a 18% increase in pay at work, and have a few goals centered around making it work for me, rather than letting it disappear into the mist....
Few things, just to be certain, I'm not going to live like a miser, or be a annoyingly cheap stiff.
I'm going to invest MOST of my pay increase, not all of it. Life is to be enjoyed, and I'm doing this with purpose and intention.
I have no idea how much higher my paychecks will be, so I'll be checking it out over a few pay cycles before making any changes.
First steps:
1) Calculate the real, net changes to my paycheck over two to three pay cycles.
2) Increase automated savings to my various accounts at each pay period. This includes a general fund for vacations, trips, dinners.
I call it the "FUNd". Get it?
3) Review my other financial goals. They include paying down my mortgage faster, saving to buy a rental house for monthly cash flow. Adjust and allocate automated savings to match those goals and get there faster.
Why do I want to beat "Lifestyle Inflation"? Why not just enjoy the extra money?
Several reasons:
First, I hate squandering money, and am a huge fan and student of investing, finances, and love increasing my net worth. I've been in relationships where so much money was wasted on stupid, materialistic nonsense. I'm a bit sensitive to that, triggered perhaps.
Second, I have gotten myself into significant credit card debt twice in my life, and the second time around was a very difficult, 13 month process to clear it up.
NEVER AGAIN.
Third, I refuse to live paycheck to paycheck. A person living paycheck to paycheck has amassed so many expenses, and no savings, they are fully dependent on each paycheck to pay their bills. If they become unemployed, they cannot pay their bills.
Fourth, I WILL ENJOY the extra money. As mentioned above, my goals with this pay increase is to make use of it INTENTIONALLY. Not wonder what the hell happened to it.
My motto is: "Earn Interest. Don't Pay Interest."
More to come.....
Investopedia describes it really well, and has some great advice:
Lifestyle inflation refers to increasing one's spending when income goes up. Lifestyle inflation tends to continue each time someone gets a raise, making it perpetually difficult to get out of debt, save for retirement or meet other big-picture financial goals. Lifestyle inflation is what causes people to get stuck in the rat race of working just to pay the bills.
Screw that. I'm going to avoid this typical scenario. That shit's for the normies.
I just received a 18% increase in pay at work, and have a few goals centered around making it work for me, rather than letting it disappear into the mist....
Few things, just to be certain, I'm not going to live like a miser, or be a annoyingly cheap stiff.
I'm going to invest MOST of my pay increase, not all of it. Life is to be enjoyed, and I'm doing this with purpose and intention.
I have no idea how much higher my paychecks will be, so I'll be checking it out over a few pay cycles before making any changes.
First steps:
1) Calculate the real, net changes to my paycheck over two to three pay cycles.
2) Increase automated savings to my various accounts at each pay period. This includes a general fund for vacations, trips, dinners.
I call it the "FUNd". Get it?
3) Review my other financial goals. They include paying down my mortgage faster, saving to buy a rental house for monthly cash flow. Adjust and allocate automated savings to match those goals and get there faster.
Why do I want to beat "Lifestyle Inflation"? Why not just enjoy the extra money?
Several reasons:
First, I hate squandering money, and am a huge fan and student of investing, finances, and love increasing my net worth. I've been in relationships where so much money was wasted on stupid, materialistic nonsense. I'm a bit sensitive to that, triggered perhaps.
Second, I have gotten myself into significant credit card debt twice in my life, and the second time around was a very difficult, 13 month process to clear it up.
NEVER AGAIN.
Third, I refuse to live paycheck to paycheck. A person living paycheck to paycheck has amassed so many expenses, and no savings, they are fully dependent on each paycheck to pay their bills. If they become unemployed, they cannot pay their bills.
Fourth, I WILL ENJOY the extra money. As mentioned above, my goals with this pay increase is to make use of it INTENTIONALLY. Not wonder what the hell happened to it.
My motto is: "Earn Interest. Don't Pay Interest."
More to come.....
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