Avoiding the Lifestyle Creep

Avoiding the lifestyle creep – the single largest reason behind my ability to save enough money to take a year off from work.  You know what the lifestyle creep is – it’s when your lifestyle improves as (and sometimes more than) your income improves.  It was also (and still is) the most tempting for failure.  I often find myself having discussions with the little devil on my shoulder.

After I got out of debt, I found myself with some extra funds each month.    I remember the moment specifically – sitting down at the computer getting ready to do my budget for the next month and realizing I had money to play with.  One of my top five life moments.

My budget bucket “Debt Free  - Yipee” no longer had a purpose.  And I had a choice to make.

1. Put the extra funds into savings
2. Passive income investment
3. Buy something
4. Pay down our mortgage

Ultimately, I chose a combination of #1 and #4.

To get to that decision, there was a lot of time spent researching #2.  I was not, nor do I ever expect to be, interested in investing in the stock market.  I realize there is a lot of money to be made there, but it’s just not for me.  I can’t control it – which means I don’t like it.  Type A.

We were interested in purchasing some real estate.  Britt and I both had experience as landlords.  I rented out my condo after Britt and I got married.  Then when we moved to North Carolina, we rented out our condo in Anchorage.

With the exception of our current house, I’ve always had great experience with real estate.  I believe in the power of owning rental property.   But after researching the rental market in the area we live in and the condition of the property we could afford, we decided it wasn’t the right time.

And of course, if you know me – I had lots of fun entertaining choice #3.  I wanted a Cadillac.  (Still do!)   But I had worked hard to get out of debt.  And I fought the instinct to buy something I knew I would grow tired of in a couple of years.

Finally, Britt and I hate-detest-despise having a mortgage.  In fact, one of my forty before 40 is to have my mortgage paid in half.  We are well on our way and I fully expect to be able to meet that goal within the next three years.  Even further, I’d like to have it paid in full within the next seven years.  It is a lofty goal, I admit, but certainly achievable – even with my year off.  I’ve got motivation – once we have the house paid off, I have some dreams to meet.

So – I split the amount previously budgeted to pay down debt in half.  Actually it was split in thirds – sort of.  20% went to increase the amount we gave at church.   10% was applied to increase the Fun Money bucket as a long-term reward for paying off debt.  And the rest was split down the middle.  One half went to the Freedom Fund and one-half towards the principal on our mortgage.

This is the general rule I followed for every extra dime we got.  Whether it was a bonus, a raise, a promotion, birthday gifts, Christmas gifts, proceeds from Craig’s List, proceeds from selling books on Amazon.  You catch my drift.  Whatever the source – I first gave to the Lord, then a little to myself and  the bulk went to the mortgage and the Freedom Fund.

By taking that extra money after we were debt free, along with subsequent increases in income and side cash, and applying it to savings, Britt & I have successfully avoided the lifestyle creep.  We are not extreme tightwads (although Britt pushes the envelope sometimes) (and I coupon).  We always have a new car.  We vacation at least annually.  We have fun!  But we consciously stay away from buying what we don’t have and don’t need.

We made one BIG exception to this rule, but it was a very calculated decision.  I  wanted a pool when we moved here.  After growing up in Alaska, the idea of owning a house with a pool meant I had achieved success in life (silly girl I know).  But we couldn’t find a house with a pool that was on the island  - at least within our price range.  After we bought our little Beach House (emphasis on the little) I thought about a pool for four years.  I was obsessed as my friends on Facebook are well aware.

Once we realized we were going to stay in this house as a result of the market, I needed to find a way to make this house our Happy House.  What was originally intended to be a 3-year home was looking like it would be a forever home, or at least a 10-year home.  So Britt sold his Harley, we borrowed a small amount of money from family, we took some money from our savings and WE. PUT. IN. A. POOL.  Do you see me doing cartwheels?

I’m not sure if it was the wait, the insatiable desire or the fact we were able to pay cash (we paid off the family loan within a few months) – but it was the best decision EVER!  Not the most financially savvy decision, from an investment perspective, for sure.  But emotionally – super smart.   It renewed a love for my home and as a result, helped me stay put instead of tossing some money down on a house we didn’t need.

The pool is another example of knowing myself, embracing my flaws and finding smart ways to curb bad financial decisions. The pool, although expensive, was paid for with cash.  No long-term commitment. No increase in debt.  Had my love for this house not been renewed, I guarantee we would have bought a bigger house with a bigger mortgage payment.  I would not be sitting here in my pajamas, with Landon on my lap, typing this post.  Instead, I would be doing my hair getting ready for work.  Well, maybe not doing my hair.  But definitely getting ready or work!

And that’s all folks – that is how I did it.  I saved enough to take the year off.  Can you believe it?  I don’t sometimes.  I pinch myself often.   Living the dream with my man and my minis.

What are your dreams – are you walking towards them?  Or are you walking away by doing the creep?

I hope you’re enjoying the Skinny Wallet Phat Life series.  If you haven’t read the other posts in this series – you can catch up here:

Introduction
Getting out of Debt
Budgeting for Success
Budget to Actual
Tips to a Sticky Beginning

Coming up next is Fun Ways to Earn Cash.

Have a blessed day and see you next post.

p.s. but when I win the lottery, the lifestyle creep is on!