Lifestyle Deflation

Wanna date yourself? Start talking about landlines, corded phones and beepers. I had all three and spent a disproportionate amount of income on them back in the day. Every self-respecting busboy needs a beeper! Owners of the German restaurant paid me $2 per hour plus a share of waiter’s tips for a total of $5 per hour on average. A beeper cost $50 so I had to bus tables for 10 hours just to buy it . The service was $10 per month so add another 2 hours of work. Of course what teenager would ever look at this rationally?

Teenagers may get a pass but what about adults? Observing my own socio-economic circle it appears that most continue down the same path well into adulthood. There is one difference. The scale and the impact of these financial choices increase dramatically.

You probably know someone who financed or leased a $35,000 car on an entry-level job salary. How about someone who bought a house worth 5+ times their yearly income? Furniture on credit? A boat?

Lifestyle inflation is real. Keeping up with the Joneses is not just a catchy phrase. We all partake in one way or the other. It feels good – it feels right – to keep up with your neighbors, friends, Facebook “friends”. They have it, what about me?!

To reach financial independence is to climb a tall mountain. Do we really need to make the path slippery as well?

Today I have a lot more opportunity to have, literally, whatever I want. Great income, low expenses and tens of thousands in easy credit on tap. I can stop by the BMW dealership on my way home tonight and drive out in a brand new X5. I can sell our (already huge) house and buy an even bigger one – perhaps one with a pool? Maybe a boat too?

I’ve tried to live it up! I splurged on a hot tub. “Flirting with luxury” is the right post title as the hot tub was returned after just 7 months.

The more money I have the less stuff I want.   

  • I sold the BMW and bought a used 2009 MINI Cooper
  • I sold the motorcycle and bought a cheap scooter  
  • I have a long list of stuff for sale on eBay and Craigslist
  • I haven’t felt a need to “treat” myself to a lunch out at work in years
  • We will be downsizing to a house half the size of our current one

There are other examples but you get the picture. Each action above is exactly the opposite of what’s expected. You are supposed to move up – not down! My own mother thinks I got it all backwards.

Here is a fun visual. My scooter on the left. My coworker’s new toy is on the right. My son is in the middle – because that’s just the way it is.

What’s more in line with The Norm? An established IT Professional who rides a 15-horsepower-900-dollar-Taiwanese-scooter to work or a successful IT Developer who rides a 150-horsepower-Italian-made-Ducati-masterpiece?

I’m not implying that what I’m doing is better than The Norm. But I do increasingly find myself choosing the alternative path.

The money does change people. I lost the desire to pursue “bigger and better” things as defined by The Norm.  That certainly includes climbing the corporate ladder. 

A lot has been said about FU money. This entry is a classic. Now that I have FU money I can attest the sense of freedom it provides. I will add that it’s equally liberating in social setting as well. Most people writing about FU money highlight the freedom it brings to work life. I noticed the perceived social pressures receding quickly as well.    

The more money I have the less I care what others think about me. I don’t mean that in a mean way. I didn’t start saying “FU” to people after crossing some arbitrary net worth threshold.

But I do feel a lot less pressure to conform. Everyone wants to split the check even though I had water and apps while the rest feasted on fancy entrés and $12 drinks? No thanks, I’ll take my own check. Seriously, who thinks this is fair to begin with?

A group of friends wants to go on a 4-day “vacation” that costs $6k per couple? Count me out as I’d much rather spend the money doing a month or two of slow travel abroad. 

I don’t need to impress anyone with my car. I ask for a PBR when others order the latest Artisanal-Locally-Sourced-Limited-Batch-Farm-To-Table-Ginger-Flavored-Spruce-Infused-Persimmon-Fortified-$9-Craft IPA.

It all just happens to tie in neatly with the whole Savings-Rate-To-FIRE (financially independent retire early). A 70% savings rate can get you there in 10 years or less. If that sounds nice you may want to target spending roughly 30% of what others would to have the same fun. No more FOMO – enjoy the same experiences but on your own terms.

We go out, we travel, we buy things. We just try to target spending 30% of what everyone else is spending. To close the beer loop – a PBR costs roughly a third of your average craft brew. I also happen to like the taste so there is zero downside.

It’s actually not that difficult to hit that 30%-of-what-others-spend target. Practice enough and it becomes automatic. Not only that – it becomes fun! I get more satisfaction out of Optimizing than from Making It Rain every day. You should feel excited, not deprived. Otherwise you’re doing it wrong.

Lifestyle Deflation as the source of happiness.

I’d call you crazy if I heard you say that back in my beeper days.

Money changes people. Which path will you take as your net worth increases?

 

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