2897: Some Lifestyle Creep is Inevitable. It May Even Be Desirable by U-Ming Lee on Intentional Spending

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[00:01:06] [SPEAKER_00]: This is Optimal Finance Daily. Some lifestyle creep is inevitable. It may even be desirable.

[00:01:12] [SPEAKER_00]: By Yu Ming Lee of yuming.medium.com

[00:01:17] [SPEAKER_00]: And I'm your host and personal finance enthusiast, Diana Merriam.

[00:01:21] [SPEAKER_00]: Now let's get right to it and continue optimizing your life.

[00:01:29] [SPEAKER_00]: Some lifestyle creep is inevitable. It may even be desirable.

[00:01:34] [SPEAKER_00]: By Yu Ming Lee of yuming.medium.com

[00:01:39] [SPEAKER_00]: Almost everyone who claims to be a personal finance guru warns about the dangers of lifestyle creep.

[00:01:46] [SPEAKER_00]: Personal finance influencers like Kevin O'Leary and Graham Stephan scream loudly about the perils of store-bought coffee,

[00:01:55] [SPEAKER_00]: as if making your own coffee would solve everyone's financial problems.

[00:02:00] [SPEAKER_00]: Other writers hem and haw about one expense or another.

[00:02:03] [SPEAKER_00]: Own more than one pair of shoes in your life? You're a victim of rampant consumerism.

[00:02:10] [SPEAKER_00]: Your reckless spending will bring about the apocalypse.

[00:02:13] [SPEAKER_00]: I'm only mildly exaggerating.

[00:02:16] [SPEAKER_00]: These declarations may be intended to highlight how out-of-control spending can devastate your financial health and the planet.

[00:02:24] [SPEAKER_00]: But they may also lead people to believe that they don't have their personal financial house in order

[00:02:29] [SPEAKER_00]: unless they save 90% of their monthly income, eat only steamed cabbage, and drink only plain water.

[00:02:37] [SPEAKER_00]: Needless to say, neither extreme position, reckless spending, or unyielding self-imposed austerity

[00:02:44] [SPEAKER_00]: serves you well in the long run.

[00:02:46] [SPEAKER_00]: I've been reflecting on the lifestyle creep concept.

[00:02:50] [SPEAKER_00]: Let me show you why I think some lifestyle creep is acceptable and even desirable.

[00:02:55] [SPEAKER_00]: There's no shame in starting life flat broke.

[00:02:59] [SPEAKER_00]: My first rental after college was a flop house in a seedy neighborhood in London.

[00:03:05] [SPEAKER_00]: For months, I slept on a worn sofa in a room with a big window overlooking a heavily fortified school.

[00:03:13] [SPEAKER_00]: I'd be risen in the morning by the sounds of the school's janitor clearing away stuff left behind by junkies the night before.

[00:03:20] [SPEAKER_00]: And in the evenings, I'd make sure I got home before the sun went down because the streetwalkers would appear soon after.

[00:03:28] [SPEAKER_00]: Needless to say, these were not ideal living conditions.

[00:03:32] [SPEAKER_00]: But I did it because I didn't have much money at the time.

[00:03:35] [SPEAKER_00]: It was the only place I could afford in an expensive city.

[00:03:39] [SPEAKER_00]: Austerity is tolerable only when it serves a purpose.

[00:03:43] [SPEAKER_00]: I moved out of my unwholesome apartment as soon as my financial situation improved.

[00:03:49] [SPEAKER_00]: I reasoned that my safety was more important than saving a few hundred dollars on rent each month.

[00:03:55] [SPEAKER_00]: I got a nice new mattress when I moved into my next apartment.

[00:03:59] [SPEAKER_00]: I even bought myself a sofa bed to break my sofa sleeping habit after I realized I'd grown too accustomed to sleeping on a sofa.

[00:04:07] [SPEAKER_00]: You could say that my newfound financial status inflated my lifestyle.

[00:04:13] [SPEAKER_00]: However, I contend that I had outgrown the need to force myself into harsh living conditions.

[00:04:19] [SPEAKER_00]: See, forced austerity has a corrosive impact on your mental well-being.

[00:04:24] [SPEAKER_00]: Being forced to live in an environment far below your comfort level means you're constantly exposed to minor irritations.

[00:04:33] [SPEAKER_00]: I'm not naturally inclined to be offered weed of dubious providence on the street.

[00:04:38] [SPEAKER_00]: Neither did I find it enjoyable to be propositioned by a junkie with mottled skin while her malnourished child sobbed and wailed nearby.

[00:04:48] [SPEAKER_00]: These events weren't deal-by-dry.

[00:04:51] [SPEAKER_00]: These events weren't deal-breakers in and of themselves.

[00:04:52] [SPEAKER_00]: But as I forced myself to ensure these minor indignities due to my difficult financial circumstances,

[00:05:00] [SPEAKER_00]: each event sapped my limited willpower.

[00:05:02] [SPEAKER_00]: Like me, you don't have an infinite supply of mental fortitude.

[00:05:07] [SPEAKER_00]: Living far below your means due to forced austerity means that the constant drip, drip, drip of the little indignities you're forced to endure will eventually wear you down.

[00:05:20] [SPEAKER_00]: Your standards will change whether you like it or not.

[00:05:24] [SPEAKER_00]: As you progress in life, you may find yourself unable or unwilling to make the same trade-offs you once did.

[00:05:31] [SPEAKER_00]: In my 20s, sleeping on a dingy sofa didn't feel like much of a sacrifice.

[00:05:36] [SPEAKER_00]: Given the affordable rent, it was a no-brainer.

[00:05:39] [SPEAKER_00]: In my 40s, however, if I slept on a sofa with questionable spinal support,

[00:05:45] [SPEAKER_00]: my aching back would be a nagging reminder to accept my physical limitations.

[00:05:51] [SPEAKER_00]: When faced with the possibility of making costly trips to the chiropractor and developing a painkiller habit,

[00:05:57] [SPEAKER_00]: that cheap rent is no longer an affordable choice.

[00:06:01] [SPEAKER_00]: Ignoring our changing circumstances and what we decide is acceptable or not risks financial ruin.

[00:06:09] [SPEAKER_00]: For example, my aunt was forced to live far below her means for decades by my overly frugal uncle.

[00:06:16] [SPEAKER_00]: She seemed fine for decades.

[00:06:18] [SPEAKER_00]: But at some point, the family is unsure when.

[00:06:21] [SPEAKER_00]: The constant indignities of being forced to endure conditions she barely tolerated made her snap.

[00:06:29] [SPEAKER_00]: One thing led to another, and she ended up blowing the family's $3 million savings within three years.

[00:06:37] [SPEAKER_00]: Spend mindfully instead of avoiding lifestyle creep altogether.

[00:06:41] [SPEAKER_00]: You may have guessed by now that I've been deconstructing the entire lifestyle creep concept.

[00:06:47] [SPEAKER_00]: I made a point of discussing forced austerity,

[00:06:50] [SPEAKER_00]: which I consider to be the kind of frugal spending you engage in

[00:06:54] [SPEAKER_00]: because you're forced to do so by external circumstances.

[00:06:58] [SPEAKER_00]: Eating no-brand tinned spaghetti for every meal because that's all you can afford,

[00:07:03] [SPEAKER_00]: instead of eating a well-balanced diet of fresh foods, is a form of forced austerity.

[00:07:09] [SPEAKER_00]: Likewise, living in a slum flop house because it's the only place with rent you can afford,

[00:07:14] [SPEAKER_00]: is very much forced austerity.

[00:07:17] [SPEAKER_00]: As a result, getting out of these conditions as soon as possible after one's finances improve

[00:07:23] [SPEAKER_00]: is a necessity, and not lifestyle creep, the way Kevin O'Leary and Graham Stephan portray it.

[00:07:30] [SPEAKER_00]: Living in forced austerity conditions exacts a toll over the long run.

[00:07:35] [SPEAKER_00]: This toll may take the form of a higher risk of diabetes or malnutrition,

[00:07:40] [SPEAKER_00]: or the likelihood that a drug-adled junkie will stick a knife into you.

[00:07:45] [SPEAKER_00]: Having said this, I'm not suggesting that you go entirely the other way

[00:07:50] [SPEAKER_00]: and live a life of over-the-top, conspicuous consumption.

[00:07:54] [SPEAKER_00]: The happy middle ground I propose is one of mindful consumption.

[00:07:59] [SPEAKER_00]: This entails making informed purchasing decisions.

[00:08:03] [SPEAKER_00]: To be more mindful of one's consumption,

[00:08:06] [SPEAKER_00]: focus on getting the most value out of a purchase,

[00:08:08] [SPEAKER_00]: rather than focusing solely on price.

[00:08:11] [SPEAKER_00]: Value is highly subjective.

[00:08:14] [SPEAKER_00]: The perception of what is valuable varies greatly from person to person.

[00:08:19] [SPEAKER_00]: A high-end digital SLR camera can be an extremely useful tool for a professional photographer.

[00:08:26] [SPEAKER_00]: For someone like me, who makes a living by writing words rather than taking pictures,

[00:08:30] [SPEAKER_00]: that camera is more difficult to justify as a tool.

[00:08:34] [SPEAKER_00]: At this point, I'd like to note that an object's value doesn't have to be defined solely by its utility.

[00:08:39] [SPEAKER_00]: It's perfectly fine to consider a purchase that brings you joy to be valuable as well.

[00:08:45] [SPEAKER_00]: If that $5 Starbucks coffee helps you through a tough day, go for it.

[00:08:50] [SPEAKER_00]: But if it's become a habit, and you're drinking Starbucks coffee daily without thinking about it,

[00:08:56] [SPEAKER_00]: that $5 a day quickly adds up to $150 a month.

[00:09:00] [SPEAKER_00]: You'd have to ask yourself if the pleasure you get from your daily Starbucks habit is really worth $150 per month.

[00:09:07] [SPEAKER_00]: Final thoughts.

[00:09:09] [SPEAKER_00]: Lifestyle creep isn't always a bad thing.

[00:09:12] [SPEAKER_00]: Nobody wants to spend the rest of their life sleeping on a filthy sofa and subsisting on tinned spaghetti.

[00:09:18] [SPEAKER_00]: Even the most non-materialistic among us want to improve our living conditions.

[00:09:23] [SPEAKER_00]: If nothing else, rising living conditions signal that we're improving our lot in life.

[00:09:29] [SPEAKER_00]: Personal finance gurus do their followers a disservice by preaching forcefully against lifestyle creep.

[00:09:36] [SPEAKER_00]: They create the impression that any lifestyle creep must be avoided at all costs

[00:09:41] [SPEAKER_00]: if one can dream of ever achieving financial freedom.

[00:09:44] [SPEAKER_00]: The pursuit of mindful consumption, in my opinion,

[00:09:48] [SPEAKER_00]: strikes a happy balance between rigidly self-enforced austerity and excessive consumption.

[00:09:53] [SPEAKER_00]: Being mindful of your purchases entails determining the value of each purchase to you.

[00:10:00] [SPEAKER_00]: It means breaking free from mindless routines that slowly but steadily deplete your resources.

[00:10:06] [SPEAKER_00]: It also means avoiding imitating others unthinkingly,

[00:10:10] [SPEAKER_00]: buying things only because they're popular rather than because they fit your lifestyle or needs.

[00:10:16] [SPEAKER_00]: Finally, mindful consumption implies acknowledging that your possessions are there to serve you

[00:10:22] [SPEAKER_00]: rather than you becoming trapped in an endless cycle of working yourself to the bone

[00:10:26] [SPEAKER_00]: and scrimping and saving to buy things you don't really want.

[00:10:34] [SPEAKER_00]: You just listened to the post titled,

[00:10:37] [SPEAKER_00]: Some Lifestyle Creep is Inevitable.

[00:10:39] [SPEAKER_00]: It May Even Be Desirable.

[00:10:41] [SPEAKER_00]: By Yu Ming Li of yuming.medium.com

[00:10:45] [SPEAKER_00]: And I'll be right back with my commentary.

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[00:11:50] [SPEAKER_00]: I truly believe that if you could learn only one thing about money, it should be to live below your means.

[00:11:58] [SPEAKER_00]: It seems like such a simple concept, but there's so much packed into that statement.

[00:12:04] [SPEAKER_00]: It's relevant if you're low-income or high-income, and it demonstrates the dispassionate nature of money.

[00:12:11] [SPEAKER_00]: I feel that the author today has misinterpreted the concept of lifestyle creep.

[00:12:17] [SPEAKER_00]: I think of it as the kind of lifestyle inflation driven by an insatiable need for more

[00:12:23] [SPEAKER_00]: that causes you to eventually live beyond your means.

[00:12:28] [SPEAKER_00]: This is very different from improving impoverished living conditions.

[00:12:33] [SPEAKER_00]: The way you spend money is a very personal choice,

[00:12:37] [SPEAKER_00]: and many of us who talk about money will share what works for us.

[00:12:42] [SPEAKER_00]: I personally don't expect anyone to make the same spending choices as me,

[00:12:47] [SPEAKER_00]: but I share to demonstrate how I've come to spend below my means.

[00:12:52] [SPEAKER_00]: Some people simply have more means,

[00:12:55] [SPEAKER_00]: and so they could buy Starbucks every day and it wouldn't matter.

[00:12:59] [SPEAKER_00]: But other people have more modest means,

[00:13:02] [SPEAKER_00]: and spending $5 or $10 at Starbucks every day

[00:13:06] [SPEAKER_00]: actually does consume a disproportionate amount of their monthly income.

[00:13:11] [SPEAKER_00]: That's why the concept of spending below your means is so universal.

[00:13:16] [SPEAKER_00]: It's going to look different for everyone,

[00:13:19] [SPEAKER_00]: because we all have different levels of income,

[00:13:21] [SPEAKER_00]: different preferences, and different circumstances.

[00:13:25] [SPEAKER_00]: But that should do it for today.

[00:13:26] [SPEAKER_00]: Have a great rest of your day,

[00:13:28] [SPEAKER_00]: and I'll see you tomorrow, where your optimal life awaits.