Lifestyle inflation: The ultimate race to bankruptcy

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By: Phil Bradford
on 17th Oct,2016

Thinking that we can have it all is the road that leads to lifestyle inflation, and the nagging feeling of a lack of control that comes with it.
Lifestyle inflation: The ultimate race to bankruptcy

The Final Remedy: Knowing you mustn't have it all!

The media always bombards us with exclamatory messages that we should have it all. Big condominiums, multiple luxury cars, a second home, exotic vacations, a $50,000 designer kitchen (whether or not we even cook at home is irrelevant), it doesn't matter. You want it, you need it, you have to have all of it.

But you can't juggle it all, you can't afford it all and more important, you don't need it all! Just accepting that realization is liberating. Thinking that we can have it all is the road that leads to lifestyle inflation, and the nagging feeling of a lack of control that comes with it.

How do we get control of lifestyle inflation? By taking control of our spending, one expense at a time.

  • 1 Drop some entertainment: Do you have cable TV and a Netflix subscription and a Wii and Playstation and X-Box? Do you really need all of these? Do you really have time for all of them? Select two you like best and get rid of the rest. Not only will this save money, but 24/7 entertainment has a way of making time disappear, which can cost even more money; can you afford that?
  • 2 Avoid trading up on your home: A promotion or major raise shouldn't cause an automatic need to move to a bigger home or a more expensive neighborhood. How many people would have avoided the foreclosure mess simply by avoiding their last trade-up? Bigger houses mean higher mortgage payments, property taxes, utilities and repair bills; it's a cycle that never ends.
  • 3 Avoid flipping your car every 3-5 years: It's bad enough that this pattern means a perpetual car payment, but it's magnified by the fact that the new car is usually more expensive than the last one. The cost of this pattern over a lifetime is staggering.
  • 4 Curb recreational shopping: People debate whether baseball or football is America's favorite sport; they're both wrong. It's shopping. If you doubt it, check out mall parking lots on Saturday's and minor holidays. When money is tight, we might avoid going shopping so we don't spend money we don't have. That restriction disappears as income rises, and a slow financial bleed takes its place.
  • 5 Become more active in leisure times that don't cost money: Spending money is often an attempt to avoid boredom, fill the hours or to compensate for a lack of human connection. The more money we have, the easier this is to do. But spending time with family or friends or doing a charitable work usually costs nothing, and can build the kind of connections that spending money can't. Life is more about what we do than about what we have.
  • 6 Stop watching TV: Television is all about advertising. The more time you spend watching it, the more you'll think you need, and the more you'll buy. It's the plan behind TV programs and it's not an accident.
  • 7 Bank the higher income from a promotion or raise: This is a sure fire way of building wealth without radically altering your finances. This is also the best way to gradually learn to live beneath your means and to ultimately create the financial security that will relieve many of life's stresses in a way that the next new car, vacation or toy gadget never will.

Lifestyle inflation has become a process of gradually adopting a never ending series of high-cost complications that drain our time and attention, and ultimately, our wealth. But more stuff should never be the end game of higher income. Instead, a rising income should be transformed into a stronger financial position, with more free time and a heightened sense of purpose. Those are the qualities that really make the financial journey worth being on.

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