Due to my insane dream of retiring young, I save roughly 40% of my pre-tax income. Sometime it can be hard justifying denying myself things I could clearly afford, especially when my friends and co-workers have them.
It is also tough with the peer pressure from family members. Everytime my mother (who hasn't earned an income in 35 years) comes to my house, she tries to convince my wife that she should get 1) a new couch, 2) all new furniture 3) a china cabinet, 4) dining room table and innumerable other things.
It can be really tough to avoid lifestyle inflation. Here's my thoughts on some tips.
- Keep your Poorer Friends- The instinct to splurge money on all sorts of conspicuous consumption would definitely be higher if I hung around my co-workers more. The same effect would kick in if I lived in a really expensive house.
- Get Everyone on the Same Page- My wife and I are on roughly the same page, we have the same goals though I think we have different priorities, we both want a family and to retire early.
- Buy ourselves some nice things- It doesn't feel like we are denying ourselves too much when we both have a few expensive things to appease us. She has a house and an expensive engagement ring, and I have a Tivo. She apparently needs more expensive appeasement than I. :)
- Don't feel the Need to Keep Up With the Jones-I don't need to waste my money in order to show how cool I am.
I know other people allocate a certain amount of their paycheck automatically to Vanguard or something, and that could definitely work, though its not for me. My investments are being spread around a number of places.
2 comments:
Sometimes keeping richer friends could be smarter. I know a number of lawyers who can help me out of a pile of jams.
I've also found that money can be contagious. Being around money can open up opportunities to make more money.
This is true. My NYC Friend is the best of both worlds, he is a brilliant investor, and at the same time doesn't really spend money lavishly.
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