lifestyle inflation http://www.wisebread.com/taxonomy/term/12720/all en-US 8 Factors That Could Keep You Broke Forever http://www.wisebread.com/8-factors-that-could-keep-you-broke-forever <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-factors-that-could-keep-you-broke-forever" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/sad_woman_showing_her_wallet_with_money.jpg" alt="Sad woman showing her wallet with money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you are perpetually penniless, you may feel that's just the hand you've been dealt when it comes to money.</p> <p>The truth is, no one has to live their life permanently broke. And many people don't simply end up in the red due to poor luck. If you want to reach true financial security, you'll need to take a good, hard look at your money habits and identify the culprits of your struggling finances.</p> <p>Here are some reasons you could stay broke forever.</p> <h2>1. You would rather look rich than be rich</h2> <p>One thing that keeps many people broke is spending money &mdash; and even taking on debt &mdash; to look like they are doing well. You want to drive a nice car and live in a nice house so that everyone will think you're successful, even though maintaining appearances is keeping you broke. It's an easy trap to fall into, and it's a vicious cycle to try and break free from.</p> <p>Instead of spending your time worrying what your neighbors and friends on Facebook think, focus your energy on getting back on your feet. If you stop spending money to look rich, you can actually be rich someday. (See also: <a href="http://www.wisebread.com/4-money-lessons-you-can-learn-from-the-joneses?ref=seealso" target="_blank">4 Money Lessons You Can Learn From the Joneses</a>)</p> <h2>2. You are not keeping track</h2> <p>You may feel that since you don't have any money, there's no point in keeping track of it. The reality is, no matter how much money you make, you need a budget. Operating without one can keep you in the red. If you don't have a way to oversee and manage your spending so that you have more money coming in than going out, you will be broke forever.</p> <p>Start a budget today so you can understand how much money you have to work with and what you're spending it on. Use your findings to make more mindful choices about your expenses and spending habits. While you're at it, be sure to add a column for &quot;savings,&quot; too. (See also: <a href="http://www.wisebread.com/stop-using-these-5-excuses-not-to-budget?ref=seealso" target="_blank">Stop Using These 5 Excuses Not to Budget</a>)</p> <h2>3. You wait to start investing</h2> <p>When you are broke, you don't feel you have any &quot;extra&quot; money to send to nonessential things like investing. But investing <em>is</em> an essential. Instead of waiting until your finances get better to take a dip into the markets, you should really be making an effort ASAP. The longer you wait to invest, the longer it will take you to build wealth and reach financial independence.</p> <p>You don't need to be wealthy to start. Invest now with whatever money you can come up with. Even a few dollars per day can make a huge difference. (See also: <a href="http://www.wisebread.com/how-just-5-a-day-can-improve-your-financial-future?ref=seealso" target="_blank">How Just $5 a Day Can Improve Your Financial Future</a>)</p> <h2>4. You don't have a plan for getting ahead</h2> <p>If you are broke, something needs to change to make you un-broke. Making a real change requires more than simply <em>hoping</em> that things will change. You need to form a plan, followed by action to execute your plan and meet your goals. If you don't have a plan to improve your financial situation, you will never get ahead.</p> <p>There's no reason to overwhelm yourself. Start small; plan on paying off your smallest credit card using the <a href="http://www.wisebread.com/6-secrets-to-mastering-the-debt-snowball?ref=internal" target="_blank">debt snowball</a> method, and take steps to make it happen. You'd be surprised how great it will feel to achieve even a small financial goal, and you'll be inspired to tackle the next one.</p> <h2>5. You have given up</h2> <p>When your financial outlook is bleak, it's easy to get discouraged. But if you accept the state of being broke as your permanent reality and stop working to change things, you will probably stay broke.</p> <p>Find inspiration from people who have managed to pull themselves out of bad financial situations. Read blogs, subscribe to newsletters, and listen to podcasts about debt repayment. Hearing about other people's success will inspire you to achieve your own financial freedom. (See also: <a href="http://www.wisebread.com/how-one-inspiring-couple-paid-off-48000-in-25-years?ref=seealso" target="_blank">How One Inspiring Couple Paid Off $48,000 in 2.5 Years</a>)</p> <h2>6. You are addicted to debt</h2> <p>No money? No problem! You can still get almost anything you want just by swiping your card and signing your name on the dotted line. Does this sound familiar? If so, those credit card payments may be keeping you broke. If you continue using credit instead of money you actually have to buy things, interest payments will bury you. You will never get ahead financially.</p> <p>Change your focus from accumulating things to accumulating wealth. Start by paying down your credit card accounts and resolving to make new purchases with cash. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a>)</p> <h2>7. Lifestyle inflation is eating up your raises</h2> <p>Your annual raise can easily evaporate due to lifestyle inflation. Those extra dollars in your paycheck disappear from your account only to go toward more TV channels, a bigger house or apartment, a nicer car, a lavish vacation, and better food. The problem here is that once you upgrade your lifestyle, you don't want to go back. Your newer, &quot;nicer&quot; things become your new normal. But if your expenses keep ratcheting up as fast (or faster) than your income, you'll stay broke forever.</p> <p>The key to battling lifestyle inflation is to recognize what is happening and prevent those little upgrades from sneaking in. If you get a pay raise, don't automatically set off on an online shopping spree; instead, send the extra dollars into an emergency fund, retirement account, or toward debt repayment. You'll be glad you did. (See also: <a href="http://www.wisebread.com/how-one-nice-thing-can-ruin-your-whole-budget?ref=seealso" target="_blank">How One Nice Thing Can Ruin Your Whole Budget</a>)</p> <h2>8. You are piling up deferred expenses</h2> <p>I once lived in an old farmhouse that I was fixing up. I had a long list of upgrades and repairs that I needed to do as soon as I got some money. Eventually, I realized that those deferred expenses were keeping me broke &mdash; so I sold the farm. Your list of deferred expenses may look different from mine &mdash; maybe it's never-ending home improvement projects, or things you are waiting to buy for your hobby &mdash; but they are keeping your money tied up nonetheless.</p> <p>Take a hard look at the deferred expenses that are standing in line waiting to take your money. Can you eliminate the root cause of these expenses and free up future dollars? Doing so just may be your ticket to financial freedom. (See also: <a href="http://www.wisebread.com/the-10-commandments-of-reaching-financial-freedom?ref=seealso" target="_blank">The 10 Commandments of Reaching Financial Freedom</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-factors-that-could-keep-you-broke-forever&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Factors%2520That%2520Could%2520Keep%2520You%2520Broke%2520Forever.jpg&amp;description=8%20Factors%20That%20Could%20Keep%20You%20Broke%20Forever"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Factors%20That%20Could%20Keep%20You%20Broke%20Forever.jpg" alt="8 Factors That Could Keep You Broke Forever" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/8-factors-that-could-keep-you-broke-forever">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-smart-things-you-can-do-with-your-finances-even-if-youre-broke">15 Smart Things You Can Do With Your Finances, Even if You&#039;re Broke</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-putting-off-these-9-adult-money-moves">Are You Putting Off These 9 Adult Money Moves?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-types-of-overspenders-which-one-are-you">5 Types of Overspenders — Which One Are You?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-online-forums-thatll-help-you-reach-your-financial-goals">9 Online Forums That&#039;ll Help You Reach Your Financial Goals</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-minute-finance-create-financial-goals">5-Minute Finance: Create Financial Goals</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bad habits broke budgeting circles debt investing keeping up with the joneses lifestyle inflation paycheck to paycheck Tue, 06 Mar 2018 09:00:07 +0000 Dr Penny Pincher 2111220 at http://www.wisebread.com How One Nice Thing Can Ruin Your Whole Budget http://www.wisebread.com/how-one-nice-thing-can-ruin-your-whole-budget <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-one-nice-thing-can-ruin-your-whole-budget" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-613134306.jpg" alt="Woman shopping and ruining her whole budget" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As your income rises, you tend to experience &quot;lifestyle inflation,&quot; defined as the tendency to increase spending over time to upgrade your lifestyle. You get a nicer place to live, buy better food, eat at restaurants more, buy a nicer car, spend more on vacations, spend more on pets, hobbies, and other nonessential expenses. (See also: <a href="http://www.wisebread.com/9-signs-youre-suffering-from-lifestyle-inflation?ref=seealso" target="_blank">9 Signs You&rsquo;re Suffering From Lifestyle Inflation</a>)</p> <p>Even if your income is not rising, there is still pressure to spend more and upgrade your lifestyle as you grow older. You see your friends and neighbors &quot;moving on up&quot; and feel like you are working hard and deserve to move up as well. Once you start spending more, you reset your baseline expectations, and your increased level of spending becomes the new normal. (See also: <a href="http://www.wisebread.com/5-mental-biases-that-are-keeping-you-poor?ref=seealso" target="_blank">5 Mental Biases That Are Keeping You Poor</a>)</p> <h2>The problem with lifestyle inflation</h2> <p>This habit can keep you stuck in the mud forever, financially speaking. Lifestyle inflation is typically a repeated behavior rather than a one-time splurge, so you keep paying more month-after-month and year-after-year for things like a bigger house or nicer car. This extra spending saps money that could be funding investment accounts and paying off debt. Even worse, lifestyle inflation spending is sometimes funded with borrowed money &mdash; such as charging a vacation to a credit card. It can keep you living paycheck-to-paycheck and delay reaching financial independence by decades. (See also: <a href="http://www.wisebread.com/how-to-escape-the-paycheck-to-paycheck-cycle?ref=seealso" target="_blank">How to Escape the Paycheck-to-Paycheck cycle</a>)</p> <h2>How the Diderot Effect makes it worse</h2> <p>What benefit do you get from all of the extra spending to inflate your lifestyle? The simple answer is that you get nicer stuff. But is buying the nicer stuff making you <em>happier </em>than you would be without it?</p> <p>According to a phenomenon called the Diderot Effect, buying nicer stuff can actually make you less satisfied and lead to spiraling consumption. The Diderot Effect is named after the French philosopher Denis Diderot who described the following scenario in the 1700s: He received some very high quality clothing as a gift. The new clothes made his old clothes and even his furniture and artwork seem shabby in comparison. Diderot was no longer satisfied with his possessions and went about upgrading most of his belongings to try to find satisfaction again.</p> <p>The Diderot Effect is a driver of lifestyle inflation today. Let's say one of your kitchen appliances breaks down and you decide to replace it. You find a good deal on a fancy new appliance and buy it. Now all of your other appliances seem outdated and you can't wait to upgrade the rest of your appliances as well. And after you upgrade the appliances, you might decide that upgrading your countertops would make sense to go with the new appliances. (See also: <a href="http://www.wisebread.com/the-10-biggest-lies-we-tell-ourselves-about-money?ref=seealso" target="_blank">The 10 Biggest Lies We Tell Ourselves About Money</a>)</p> <p>Another aspect of the Diderot Effect is that people tend to buy possessions that form a culturally complementary set. In other words, you see yourself as belonging to a particular cultural group and tend to buy possessions that reflect this status and that are consistent with your other possessions. However, if you get some higher status possessions, this can drive you to see yourself in a higher cultural status. You will then strive to upgrade all of your possessions to match your perceived status and be complementary with your other possessions. So getting a fancy refrigerator can make you feel like the kind of person who has fancy things and lead you to upgrade accordingly.</p> <p>Lifestyle inflation is a vicious cycle. You spend more money to buy nicer things that ultimately make you less satisfied. You then spend more money trying to find satisfaction and the cycle continues. Unfortunately, no matter how much money you spend, there will always be something newer, nicer, or better that you want to buy.</p> <h2>Break the cycle with &quot;lifestyle leveling&quot;</h2> <p>The way to break the cycle of spending more and more money in pursuit of happiness is to realize what is happening and short circuit the Diderot Effect. When you do spend money, buy things that are consistent with your other possessions. In the kitchen appliance example, you could buy a midrange appliance instead of the high-end model, or even find a used appliance the same age as your other appliances. This way you will spend less, and keep your lifestyle level and consistent instead of buying something much nicer than your current possessions that could spark dissatisfaction and send you into a spending spiral.</p> <p>The concept of <em>lifestyle leveling</em> will help you to maintain a consistent lifestyle &mdash; and spending level. Gain control over lifestyle inflation by upgrading your lifestyle by choice, not as an unintended consequence of the Diderot Effect. When it comes down to it, you don't need the nicest things money can buy &mdash; especially if you don't have the money to spend. All you need are things that work well and make your life easier. And there are plenty of ways to find items that fit those requirements without letting the Diderot Effect destroy your perception of needs vs. wants.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/how-one-nice-thing-can-ruin-your-whole-budget">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-resist-the-expensive-once-in-a-lifetime-mentality">How to Resist the Expensive &quot;Once in a Lifetime&quot; Mentality</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-too-many-decisions-costs-you-money">Here&#039;s How Too Many Decisions Costs You Money</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-how-americans-spent-their-money-in-the-1950s">This Is How Americans Spent Their Money in the 1950s</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/39-mindless-ways-youre-wasting-money-in-every-part-of-your-life">39 Mindless Ways You&#039;re Wasting Money in Every Part of Your Life</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/people-are-still-spending-too-much-on-their-weddings">People Are Still Spending Too Much on Their Weddings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Shopping diderot effect lifestyle inflation mental biases saving money shopping Shopping Tricks Spending Money Thu, 06 Apr 2017 08:30:10 +0000 Dr Penny Pincher 1922315 at http://www.wisebread.com 9 Signs You're Suffering From Lifestyle Inflation http://www.wisebread.com/9-signs-youre-suffering-from-lifestyle-inflation <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-signs-youre-suffering-from-lifestyle-inflation" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman-bills-stressed-76662978-small_0.jpg" alt="woman bill stressed" title="woman bill stressed" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Our tendency is, for the most part, to live right up to the ceiling of what our income will allow. This <em>lifestyle inflation</em> becomes a problem when our expenditures begin to exceed the amount of money we bring in, thereby causing us problems managing our personal finances.</p> <p>What's worse &mdash; many people who are engaging in lifestyle inflation don't even realize it, because they've spent so much time getting accustomed to living that way. (See also: <a href="http://www.wisebread.com/how-to-not-be-a-debt-slave?ref=seealso">How to Not Be a Debt Slave</a>)</p> <p>So how can you recognize and identify this potentially disastrous habit? Here are nine practical signs to look out for.</p> <h2>1. Excessive Credit Card Debt</h2> <p>Though it's a common practice for many of us to use our credit card and pay it off on time (there's value in reaping those rewards points if you're a disciplined user), excessive credit card debt that you can't pay off will begin to accrue interest. Over time it'll cost you far more than the initial bill in interest and late charges. When a rolling credit card payment becomes a normal part of your budget, it's a sure sign that you need to scale back and spend less in order to pay off your debt. Start setting aside chunks of cash specifically allotted to chip away at this debt as quickly as possible.</p> <h2>2. Avoiding Basic Money Management Tasks</h2> <p>There is, of course, common procrastination when it comes to doing your budget or checking account balances. I'm not talking about that. Instead, I'm referring to the act of intentionally avoiding any tasks related to managing your own money. Generally this happens when you know that the picture you see is going to be bleak, and it's much easier to just avoid it instead and hope for the best. Get back on track by scheduling a certain time of week or month &mdash; I find that Sunday afternoons work best for me &mdash; to check in on your finances and determine what you need to reel in for the week ahead.</p> <h2>3. A Lack of Discretionary Income</h2> <p>&quot;Mo' money, mo problems&quot; as they say, and this one is typical of those who suddenly start earning more than they were previously, followed closely by spending more. It's also a telltale sign that the budget needs to be tightened up to provide some breathing room and more mileage out of your paycheck.</p> <h2>4. Your Income Is Spent Before It's Earned</h2> <p>Another term for this is &quot;living paycheck to paycheck.&quot; In this scenario, your expenses are so crippling that you have to wait for your paycheck to show up before you actually pay for them. Once that happens, it's a revolving door where you're always behind and constantly trying to play catch up. The obvious solution here is to cut back where you can, but also to take a serious look at your cash in and cash out and decide whether serious changes need to be made &mdash; like downsizing to a smaller apartment, buying a less expensive car, etc.</p> <h2>5. People With Similar Incomes Don't Spend as Much as You</h2> <p>There are a lot of extenuating circumstances that can cause two people in the same economic tier to live lives that look really different &mdash; like if one is single and the other is a parent of two. Outside of those circumstances, however, you should generally see similarities between your lifestyle and that of your peers who make what you make. If there's a disconnect, it might indicate that you're living beyond your means.</p> <p>If you and your colleagues earn about the same salaries and one of you is taking lavish vacations and indulging in other expenses that don't seem feasible across the board, there's likely a problem &mdash; and if it's your problem, it's time to settle down.</p> <h2>6. Impulse Buying and the &quot;Shopping Rush&quot;</h2> <p>Everybody loves to get new stuff. The allure and mystique of new things (regardless of our age) is always strong, even if it wears off after a short time. But if you feel yourself craving that feeling and the rush that comes along with making a new purchase, it's an indication that shopping has become a habit that has become detrimental to your finances &mdash; and perhaps other areas of your life. Usually this is an issue that can be quelled by self-discipline, but if you feel it's out of your control you can seek professional help.</p> <h2>7. You're Bored at Home</h2> <p>Increased buying can be a vicious cycle, leading to boredom, which leads to even more dangerous spending habits. Do you find yourself restless at home? Do you often go online or out to a shopping center to buy something that you don't need just to have something to do? I'm guilty of this myself at times, which is why I try to plan activities and adventures with friends for times when I know that I'll otherwise be at home without much else productive on my plate. Staying busy curbs my desire to blindly shop for things I don't need, and I get to fill my weekends doing things that feel like I spent money even if I didn't.</p> <h2>8. You Don't Look for Deals</h2> <p>Sometimes an inflated lifestyle is just a matter of failing to be thrifty (or, in my opinion, just being plain lazy). I know plenty of people who are spending way more money than they need to spend simply because they pay full price for everything when there are savings literally at their fingertips. I can guarantee you that I save thousands and thousands of dollars every year because I won't purchase a single thing without a coupon or a discount (if I can help it).</p> <h2>9. You Don't Feel the Need to Save Money</h2> <p>Perhaps the most telling sign that you're overspending and living above your means is that you've completely written off the idea of saving money. You assume that it's unnecessary or perhaps impossible to do. The truth is, neither of those things are accurate.</p> <p>If you make even a modest amount of money, you can contribute something to your savings account. This is a good place to start if you've come to the realization that you're living an inflated lifestyle. Once you cut back expenses, set up an automatic bank draft from checking into savings and start with a small, weekly amount. Even just $20 is a great start. Rome wasn't built in a day, and neither is your bright financial future.</p> <p><em>Do you have other signs of lifestyle inflation that you'd like to add? Please share in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/9-signs-youre-suffering-from-lifestyle-inflation">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-only-6-rules-of-frugal-living-you-need-to-know">The Only 6 Rules of Frugal Living You Need to Know</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-warning-signs-that-you-need-to-stop-using-your-credit-cards">6 Warning Signs That You Need to Stop Using Your Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-champion-of-savings-over-spending">A champion of savings over spending</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-all-of-the-benefits-of-your-credit-cards-and-none-of-the-costs">How to Get All of the Benefits of Your Credit Cards — and None of the Costs</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/pets-old-cars-and-3-other-common-money-pits">Pets, Old Cars, and 3 Other Common Money Pits</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living credit debt lifestyle inflation spending Wed, 12 Nov 2014 18:00:09 +0000 Mikey Rox 1253727 at http://www.wisebread.com Lifestyle Inflation: The Ultimate Financial Trap http://www.wisebread.com/lifestyle-inflation-the-ultimate-financial-trap <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/lifestyle-inflation-the-ultimate-financial-trap" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/car-4594948-small.jpg" alt="lifestyle" title="lifestyle" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Do you remember the first real paycheck you ever got? Not a pouring coffee part-time kind of paycheck, but one from a real, full-time-with-benefits, honest-to-goodness job? I know I remember mine. And while that salary would not have impressed most people, it sure impressed me. Suddenly, I was making more in two weeks than I'd scraped by on over the course of two months while in university. In other words, I was rich! (See also: <a target="_blank" href="http://www.wisebread.com/is-peer-pressure-keeping-you-poor">Is Peer Pressure Keeping You Poor?</a>)</p> <p>So, I did what any highly educated, smarty-pants college grad would do&nbsp;&mdash; I spent every cent on new clothes. And shoes. And probably some other stuff I can't remember now. After all, in two weeks, my job would just give me more!</p> <p>It wasn't long before I'd accumulated a lot of nice clothes and other things I hadn't even really thought of buying before. But here's the thing. Although I was making a lot more money, I still rarely had two quarters to rub together at the end of the month, just like in college. Only this time it wasn't so much my lack of income that was the problem, it was me.</p> <h2><strong>Lifestyle Inflation</strong></h2> <p>It's called <em>lifestyle inflation</em>, and it's what happens when you get a raise or some other financial boost that should put you ahead, but instead often leaves you in exactly the same financial position.</p> <p>Once I could afford something better, all the trappings of my former lifestyle suddenly looked like a dingy, old version of me. Soon, I was shedding versions like a snake and its skin, trying to slither away from the discards as quickly as possible.</p> <h2><strong>Caught on the Hedonic Treadmill</strong></h2> <p>What I didn't realize is that while you may be able to buy a better lifestyle, it never really feels like a better life. Some people call the act of pursuing that lifestyle the &quot;hedonic treadmill;&quot; you can run as fast and as hard as you like, but you won't actually get anywhere. And if you really push it, chances are you'll fly right off and land face first in your own little slice of financial hell.</p> <p>Fortunately, my job gave me the opportunity to learn about personal finance &mdash; and the skills to assess what I was doing with my money. I have, of course, enjoyed some lifestyle inflation since my college days; I have a car, I eat much less canned food, and my apartment is far from crummy (look mom, no ants!). But it hasn't inflated so much that I'm not benefiting from my bigger income. As a result, I'm able to save money for retirement every month, make extra payments on my mortgage, and stay out of debt.</p> <p>Want to avoid falling prey to lifestyle inflation? Well, you're in luck, because it's actually as easy as shifting your perspective.</p> <h2>Remember What Makes You Happy</h2> <p>Sometimes a boost in income is almost like a switch in the brain. Suddenly, the car you drove so proudly looks like an old tin rattle bucket, and the $1 burritos you shared with friends are thrown aside for fancier fare. The thing is, when you think back to the days in your life when you were happiest or had the most fun, those memories are probably completely unrelated to what you were wearing, driving, or how much money you were spending. Chances are, they probably had more to do with where you were in life and who you were with.</p> <h2>Tight Budgets and High Adventure Go Hand in Hand</h2> <p>I once stayed in a filthy motel that was only sort of close to the beach. It was supposed to look like a cute Mexican inn, but the doors were only sheets of plywood with peeling red paint (seriously), and hospitality was definitely less than quaint &mdash; the inn keeper banged on the door at 9 a.m. to ensure we'd be out by checkout time. Oh, and did I mention that the front desk also served as a bar, and that both were manned by a one-armed, tie-dye clad man with a glass eye? You can't make that kind of stuff up. If my friends and I had been able to afford a hotel on the beach, one with real doorknobs and soft, soap-scented sheets, well, I wouldn't have this story to tell.</p> <p>Financial constraints have their advantages. Not only do they force you to be more resourceful, but when you run out of options, you're likely to find yourself in <a target="_blank" href="http://www.wisebread.com/for-amazing-affordable-vacations-travel-slowly">some pretty crazy adventures</a>. I can't say I'd go back to that motel, but I have to admit that most of the nice hotels I've stayed in haven't been nearly as memorable.</p> <h2>Take It Away Before You Can Spend It</h2> <p>It always amazes me when people can live happily enough on their salaries and then still find themselves unable to save more money when they get a raise. If they didn't have that money to spend before, why do they seem to need it so badly as soon as it hits their bottom line? The answer is, they don't, just like I didn't really need all that money from my first job &mdash; at least not for spending.</p> <p>Fortunately, I got into the habit of <a target="_blank" href="http://www.wisebread.com/managing-your-short-term-money">taking some of it out of my checking account</a> on payday and moving it to my savings account, or my retirement plan or, later, my mortgage. You can do the same. You just have to decide to do it. And if you want to indulge in a little of your newfound wealth money, go ahead and do it. Just be sure to split the difference to save for some bigger, more important financial goals.</p> <h2>Build Some Balance Into Your Budget</h2> <p>Avoiding lifestyle creep doesn't mean living your life as a crusty, closed-fisted money hoarder. After all, you probably work pretty hard for every pay raise you get, and you deserve to enjoy that extra money. So please, <a target="_blank" href="http://www.wisebread.com/8-little-luxuries-that-go-a-long-way">spend some of it on something awesome</a>. Just not all of it. After all, if making more money just means continuing to live paycheck to paycheck, running up debt, and accumulating more stuff, you're really just working harder and harder without actually <em>living better</em> &mdash; or getting ahead financially. And that's just sad.</p> <h2>Feel Richer, Be Richer</h2> <p>Lifestyle inflation is so sneaky that it can creep up on you almost without you noticing. Suddenly, you're driving a nicer car, or even just moving up to brand-name cereal. There's nothing wrong with wanting to enjoy money, but I think the key is to <em>actually enjoy</em> it. Otherwise you can make all kinds of money without feeling the least bit richer for it.</p> <p><em>Have you ever succumbed to lifestyle inflation? How did you walk yourself back to more sensible income and spending habits?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tara-struyk">Tara Struyk</a> of <a href="http://www.wisebread.com/lifestyle-inflation-the-ultimate-financial-trap">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-keep-anxiety-from-ruining-your-budget">5 Ways to Keep Anxiety From Ruining Your Budget</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-signs-youre-suffering-from-lifestyle-inflation">9 Signs You&#039;re Suffering From Lifestyle Inflation</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-americans-spend-too-much-on">5 Things Americans Spend Too Much On</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/frugal-red-herrings-money-savers-that-cost-you-in-other-ways">Frugal Red Herrings: Money-Savers That Cost You in Other Ways</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/one-simple-thing-you-can-do-today-to-start-living-frugally">One Simple Thing You Can Do Today to Start Living Frugally</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living lifestyle inflation overspending peer pressure Thu, 20 Jun 2013 10:36:30 +0000 Tara Struyk 978395 at http://www.wisebread.com 7 Money Moves to Make When You Get a New Job http://www.wisebread.com/7-money-moves-to-make-when-you-get-a-new-job <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-money-moves-to-make-when-you-get-a-new-job" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6759453761_d034daa225_z.jpg" alt="woman in office" title="woman in office" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Whether you are trying to change positions, find work again after a layoff, or simply start your career, it's easy to jump for joy when you get a job offer and forget all about your wealth for awhile. Yet, this is a great time to think about your finances, because taking the right steps now can really accelerate your asset accumulation. Here are seven items you should think about if you want to take your wealth to a whole new level. (See also: <a href="http://www.wisebread.com/starting-a-new-job-3-rules-to-live-by">Starting a New Job: 3&nbsp;Rules to Live By</a>)</p> <h3>1. Negotiate Your Salary</h3> <p>This can be easier said than done, I know, but consider that any amount you can get is going to compound into every future raise, and anything you get now will affect your lifetime earnings significantly. At least negotiate until the employer says something along the lines of &quot;we can't give you what you want, and we won't budge on our previous offer.&quot; Any other response likely means that there is some more room to push, and I've yet to see anyone retract their original offer if you respectfully asked for a bit more.</p> <h3>2. Get the Details on Company Benefits</h3> <p>Did you know that some companies will help you pay your mortgage? That's rare, but most companies have adopted&nbsp;government-encouraged plans like 401(k) matches, cafeteria plans, Flexible Spending Plans, and dental and medical coverage, which can save you thousands a year. Yet, most people seldom ask about these benefits when they are comparing potential job prospects. The inclusion of these plans can make a gigantic difference between the effective pay of a job offer, so take these benefits seriously.</p> <h3>3. Remember Your Former 401(k)</h3> <p>If you are moving from another job, remember to roll your 401k into an IRA or at the very least, move your former 401(k) into the 401(k) of your current employer. Don't be tempted to take it out, or else you end up forgoing all the benefits of a tax-deferred account.</p> <h3>4. Avoid Lifestyle Inflation</h3> <p>If you happen to get a raise by accepting a new job, you definitely won't be alone if you increase your spending. But most people haven't saved enough for retirement either, so don't try to keep up with the Jones in that department. By delaying lifestyle inflation even just one year, you can save much more.</p> <h3>5. Pay Yourself First</h3> <p><a href="http://www.wisebread.com/pay-yourself-first-what-it-means-and-how-to-do-it">Schedule transfers to savings</a> to occur when your paycheck hits your account. This way you won't be able to access the extra cash, and you likely won't miss it.</p> <h3>6. Shift Your Paycheck Into a Savings Account</h3> <p>When HR asks you which account you'd like your paycheck deposited into, provide the information for your online savings account and start collecting interest on day one. This used to work better when interest rates were much higher, but it's still better than nothing.</p> <h3>7. Make Sure You Are Withholding Enough</h3> <p>I used to say that you should never <a href="http://www.wisebread.com/5-reasons-why-its-ok-to-get-a-tax-refund">give Uncle Sam an interest-free loan</a> by prepaying too much of your taxes, but I have come around. For one thing, you are losing just a tiny bit of interest. But more importantly, most people will take a psychological hit when they discover they have to pay additional income tax when filing their taxes, not to mention that a surprise like this could throw financial plans into disarray. That's why you should look at your W4 and make sure you are withholding enough to cover your taxes, as opposed to filling it out to get the least amount of taxes withheld.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/david-ning">David Ning</a> of <a href="http://www.wisebread.com/7-money-moves-to-make-when-you-get-a-new-job">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/left-a-job-do-a-rollover">Left a job? Do a rollover.</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/saving-goals-for-every-age">Saving Goals for Every Age</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/pay-yourself-first-what-it-means-and-how-to-do-it">Pay Yourself First: What It Means, and How to Do It</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-you-really-need-to-pay-yourself-first-seriously">7 Reasons You Really Need to Pay Yourself First (Seriously)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-easy-ways-to-get-richer-in-2018">4 Easy Ways to Get Richer In 2018</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 401(k) lifestyle inflation new job pay yourself first Tue, 10 Apr 2012 10:00:11 +0000 David Ning 917174 at http://www.wisebread.com In Two-Income Households, Can Making More Put Us Further Behind? http://www.wisebread.com/in-two-income-households-can-making-more-put-us-further-behind <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/in-two-income-households-can-making-more-put-us-further-behind" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6808494489_0b1f56ee23_b.jpg" alt="young family" title="young family" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It wasn&rsquo;t so long ago that men dominated the workforce, and the vast majority of married women worked as homemakers. Back in 1975, only one-third of mothers headed out to the office in the morning. But according to Bureau of Labor Statistics data from 2010, in families with children, 58% of households had two working parents. Thank goodness we have more choices nowadays...or do we?</p> <p>According to a Public Agenda report published in 1999, while many families like the idea of having one parent at home with young children, the vast majority don&rsquo;t see it as a realistic option. In other words, while the option to either work or stay at home should mean more choices for families &mdash; especially as the stay-at-home dad becomes increasingly common &mdash; statistics show that in many cases, parents don&rsquo;t feel free to make that choice because they need the money. (See also: <a href="http://www.wisebread.com/12-side-jobs-for-stay-at-home-moms-and-dads">12 Side Jobs for Stay-at-Home Moms and Dads</a>)</p> <h3>From Big Savers to Big Spenders?</h3> <p>To be clear, a lot of things have changed since the days when women ruled the home; housing has become more expensive, taxes and health insurance consume a larger portion of U.S. incomes, and the cost of university education has steadily increased. Those are things that can put a major dent in the family budget. But something else has changed, too. Because while two-income families earn more, they also spend more and have considerably more debt than one-income households, according to the Bureau of Labor Statistics. &nbsp;</p> <p>In a nutshell, today&rsquo;s two-income families have budgeted to the limit of their two-paycheck status. The question is, where is all that extra money going?</p> <h3>Breaking It Down</h3> <p>I&rsquo;m not an economist, but I don&rsquo;t think the cost of living is the only thing that&rsquo;s changed over the years. Even just anecdotally, things are considerably different. My grandmother started married life with two wooden milk crates for kitchen chairs, and my parents had hand-me-downs and other misfit furniture from their respective single lives. But I&rsquo;m hard-pressed to find a newly married friend without a brand-new furniture suite &mdash; and often a brand new house and car, too.</p> <p>And, while housing is said to consuming a bigger portion of the family income, comparing those figures may not be comparing apples to apples when the average size of a new home continues to expand. As of 2010, the new &ldquo;normal&rdquo; for a new home is 2,392 square feet, according to the U.S. Census Bureau; in 1950, the average was 938 square feet, a figure that&rsquo;s crept upward with each decade. If there&rsquo;s anything we&rsquo;ve learned from the ongoing foreclosure crisis, it&rsquo;s that landing a dream home does not always lead to happy ever after. Even if it does, living that vaulted-ceiling dream is an expensive proposition. So why do we appear to be obsessed with raising our children in <a href="http://www.wisebread.com/mcmansion-to-mccottage-why-smaller-houses-are-smarter">larger homes</a> than the ones we grew up in?</p> <p>Another thing that&rsquo;s changed &mdash; debt. Credit cards were just getting their footing as part of mainstream consumer culture in the 1970s. Today, they are so ubiquitous that over 70% of the population has more than three of them. And, according to the Federal Reserve, the average consumer had more than $15,000 in credit card debt in 2010. The problem with carrying ongoing debt is that it makes everything more expensive and drags down disposable income. Maybe that&rsquo;s why savings rates have also dropped so precipitously over the years. In 1970, the average savings rate was 11%. In recent years, economists count it as a good sign if the savings rate is even<i> positive</i>.</p> <h3>What&rsquo;s Changed?</h3> <p>Critics are going to say that things have gotten harder, and that two incomes are now essential. I can&rsquo;t say that isn&rsquo;t true &mdash; at least not for everyone. But I&rsquo;m unconvinced by arguments that suggest that getting by on one income just isn&rsquo;t possible. Women have always played a central role in the household budget, even when they weren&rsquo;t earning the money. But I&rsquo;m not sure the move away from household budgeting and coupon clipping to bringing in a salary has always moved families farther ahead in an economic sense.&nbsp; And, while the world may have changed, so has our notion of what our standard of living should look like. If anything&rsquo;s holding two parents in the workforce where one would rather be at home, I&rsquo;d put my money on the <a href="http://www.wisebread.com/avoiding-aspirational-spending">inflation of our lifestyles</a>.</p> <h3>The Bottom Line</h3> <p>I would venture to say that women&rsquo;s move into the workforce was less about career aspirations than it was about options &mdash; which is why I find the fact that many parents now feel stuck at work so disappointing. So, it seems that the question isn&rsquo;t so much whether it&rsquo;s possible to live on one income so much as whether we&rsquo;re willing to live on less. It&rsquo;s a different kind of life, for sure &mdash; one with fewer possessions, but also fewer bills to pay. But then, sometimes different is good, especially when it means having a choice. Am I right, ladies?</p> <p><em>This post is a part of Women's Money Week 2012. For more posts about budgeting, see <a href="http://womensmoneyweek.com">womensmoneyweek.com</a>.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tara-struyk">Tara Struyk</a> of <a href="http://www.wisebread.com/in-two-income-households-can-making-more-put-us-further-behind">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-prep-your-finances-for-an-emergency-vet-visit">How to Prep Your Finances for an Emergency Vet Visit</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/21-things-you-should-make-your-kids-pay-for">21 Things You Should Make Your Kids Pay For</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-money-lessons-you-can-learn-from-your-pets">6 Money Lessons You Can Learn From Your Pets</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-parenting-mistakes-to-avoid-when-teaching-kids-about-money">4 Parenting Mistakes to Avoid When Teaching Kids About Money</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-fun-books-that-will-get-your-kids-excited-about-money">10 Fun Books That Will Get Your Kids Excited About Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Family cost of having children lifestyle inflation two income family Thu, 08 Mar 2012 10:48:20 +0000 Tara Struyk 909731 at http://www.wisebread.com Lifestyle Upgrades: Beware the Diderot Effect http://www.wisebread.com/lifestyle-upgrades-beware-the-diderot-effect <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/lifestyle-upgrades-beware-the-diderot-effect" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/diderot_effect_2.jpg" alt="Women on a luxury train" title="Women on a luxury train" class="imagecache imagecache-250w" width="250" height="145" /></a> </div> </div> </div> <p>Ever noticed how upgrading one thing means you have to upgrade another? There's a name for that &mdash; the Diderot Effect. (See also: <a href="http://www.wisebread.com/have-style-not-a-lifestyle">Have Style, Not a Lifestyle</a>)</p> <p>We've just lived through an example of the phenomenon, because our apartment manager has just installed a bunch of upgrades in our apartment. It happened like this:</p> <p>The very old kitchen faucet started leaking, requiring a new fixture. But the new fixture wouldn't fit into the hole in the old sink, so we needed a new sink. The new sink wouldn't fit into the hole in the old countertop, so we needed a new countertop.</p> <p>Now, up to this point, the issue was just basic physics &mdash; things need to fit, or you've got problems. But then the issue shifted just a bit.</p> <p>A new countertop on one side meant that we needed a new countertop on the other side as well, or they wouldn't match. (And the half-walls at the entrance to the kitchen were topped with islands that matched the old counters, so they needed to be upgraded as well.) And, with the new countertops, the kitchen cabinets started looking pretty shabby, so they needed to be refinished. And the kitchen walls needed a fresh coat of paint.</p> <p>This is the dreaded Diderot Effect.</p> <p>The Diderot Effect is named after the French writer Denis Diderot, who wrote a famous essay on how the gift of one very nice item had made his other things look shabby. In an amusing fashion, the essay traces out the series of steps by which he ended up having to upgrade everything he owned.</p> <p>A whole lot of marketing is aimed at getting you to buy one nice thing &mdash; because the marketers know that having one nice thing will put you on the path to replacing many other items as well &mdash; things that are perfectly good, but that aren't as nice as your new thing.</p> <p>It's an easy trap to fall into, and a terrible one.</p> <p>Fortunately, the Diderot Effect is its own cure. While one nice thing makes your other stuff look shabby, when your stuff is all about the same, it produces a pleasant inertia that makes it easy to resist upgrades.</p> <p>Add to this the concept of <a href="http://www.wisebread.com/book-review-wabi-sabi-simple">wabi sabi</a> &mdash; which emphasizes such values as simplicity, functionality, authenticity, and modesty &mdash; and it becomes easy to resist the Diderot Effect.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/lifestyle-upgrades-beware-the-diderot-effect">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-ways-to-add-luxury-to-your-life-without-paying-luxury-prices">10 Ways to Add Luxury to Your Life Without Paying Luxury Prices</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/replace-these-8-luxury-buys-with-their-cheaper-better-alternatives">Replace These 8 Luxury Buys With Their Cheaper, Better Alternatives</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-a-luxury-eccentricity">Choosing a Luxury Eccentricity</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-little-luxuries-that-go-a-long-way">8 Little Luxuries That Go a Long Way</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-would-it-cost-to-actually-live-like-a-queen-for-a-day">How Much Would It Cost to Actually Live Like a Queen for a Day?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Lifestyle improvement lifestyle inflation luxury Mon, 27 Feb 2012 11:24:14 +0000 Philip Brewer 905623 at http://www.wisebread.com