There are two extremes when it comes to saving and spending. People who pinch every penny, and people who spend every dollar they earn. In between are people who save responsibly and spend aggressively on things that make them happy. I want to live in this green zone.
Lifestyle creep has a negative connotation, but it’s a great way to live if done responsibly. Before I get to the benefits of lifestyle creep, I need to point out the obvious. You need to keep your fixed expenses in check. Stretching to buy a house you can’t afford is one of the quickest ways to blow up your financial plan. A car can do the same. Just looking at the sticker prices of these items while not accounting for the variable costs can bury you.
I was thinking about this because of a question that came through our inbox:
32 years old, married with no kids currently have accumulated a portfolio worth a little over $200,000, mostly index funds no crypto or meme stocks. Originally I was interested in pursuing FIRE but I don’t know if that’s what I really want…My question is, how do I start to spend more? What kind of things should I consider spending more on, I know that is highly subjective. How to avoid lifestyle creep so I don’t blow my entire portfolio on something highly unneccessary.
My wife and I recently made a decision that might sound crazy on paper. We pay somebody to come to our house and do our laundry.
Let me explain.
Robyn is a guidance counselor at a Brooklyn high school. She wakes up at 5:45 and leaves the house around 6:15. Her commute is an hour each way without traffic. She gets home at 4:30, plays with the kids, gives them dinner, and puts them down at 7:45.**
The last thing she wants to do at night when she finally gets some time for herself is laundry. So for the last few months, we would do the laundry, let the clean clothes pile up, and take time on the weekends to fold and put them away. I finally said, “This is stupid. Why don’t we pay somebody to do this for us?” So we asked around and found somebody who would do this for ~$60 a week. We’ve been doing this for a month or two now, and I gotta say it’s the best money we spend. I don’t spend a ton of money on material items** so I’m thrilled to pay for things that save my time, which is the thing I value most.
I’m home four days a week. Could I do the laundry? Yeah, of course I could. But I don’t want to, and I’m fortunate to have the resources to pay somebody to do it for me. You might do the math on this and slap on a 5% return and tell me this will end up costing me tens of thousands of dollars. Good. To me, it’s worth it.***
I encourage people to spend their money as long as they’re saving first. Nobody has unlimited money, so you have to choose where you want to spend it. There’s nothing wrong with spending more money as long as you’re doing it responsibly. My goal at this point in my life is not to avoid lifestyle creep; It’s to spend aggressively on things that make me happy and cut back on things that don’t.
As I recently wrote, tomorrow isn’t promised for anyone, so while it’s important to save for the future, it’s also important to live for today.
*This makes it sound like I check out when she comes home. I don’t.
**Not that there’s anything wrong with people liking nice things
***A few people emailed me saying that I should have told the emailer to give money to charity. Fair enough, that was an oversight. I give to charities around the holiday time, but I’m going to automate my giving every month.