Lifestyle Inflation: How to Earn More, Spend More, and Get Nowhere

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Multi-ethnic bachelorette party toasting with champagne
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After the graduation caps are tossed in the air and the realities of impending student-loan bills sink in, millennials (we hope) scurry off to the rat race. Many fresh-faced college grads are receiving their first paychecks above minimum wage and -- at the same time -- their introduction to lifestyle inflation.

In the simplest terms, lifestyle inflation is the practice of increasing your spending in correlation with a higher income -- and frequently, spending all of that new income, or more.

Lifestyle inflation in high school meant using every cent of your pitiful paychecks from Applebee's to buy spaghetti-strap tops, go to the movies, and fill up the tank in the old clunker you shared with your three siblings.

In post-collegiate life, a starting salary of -- let's say $30,000 -- can offer a drastic increase in spending power from those days of filling orders for boneless buffalo wings.

Unfortunately, for those who funded college with student loans or took advantage of easy, pre-approved credit card applications (pre-credit card reform) -- that $30,000 seems to disappear all too easily.

The Voice of Reason

When Nick Rovisa was in school, he relied on credit cards for necessities like groceries and textbooks. "I also used it for things I just had to have at the time," he says, "like an Xbox 360."

Now 28, Rovisa, a digital professional working in New York City, says the seemingly unlimited cash he had on hand was exciting. "But thankfully," he adds, "I did always have a voice of reason in the back of my mind, which kept me from spending like crazy."

Rovisa graduated from college in 2008 and worked for a few startup companies before landing a salaried job that provided him with what he considered a "real paycheck." In those early years out of college, he took some time before acknowledging his debt.

"I always knew I had racked up debt," he says, "but didn't realize I was actually in debt until then. That's when I wised up and began taking control of my finances."

Other millennials are stunned when their lifestyle expectations don't match up with their first jobs out of college -- even if they picked a major with a low ROI.

Spend and Regret

"I always imagined that my first paycheck would be so much more," says Michelle, a 26-year-old Chicago-based university academic. "I was looking for that magic-bullet job that would pay me for the lifestyle I thought I had deserved -- even though I knew all too well what a teacher's salary would be like when I got my degree."

Even though her first paycheck was lower than she'd anticipated, Michelle warmly embraced lifestyle inflation.

"That paycheck was like candy to me," she says. "I basically bought out The Limited for a whole new wardrobe. I went out for a big celebration dinner. I bought bottles of champagne. I treated my friends. And then I instantly regretted everything."

Even with the taste of regret in her mouth, Michelle continued to inflate her lifestyle with a more expensive apartment, new clothes and a pricey gym membership.

"I told myself I deserved it after a year of living with such limited pay," she says. "Living in Chicago, I see girls my age who live such a free and stylish life. I wanted to pretend that I could be like that -- debt and all. I just figured everyone carried a card with a $3,000 balance."

On the eve of her wedding, Michelle calculated the combined debt she would share with her soon-to-be husband. The next day, the two made a pact to begin the process of climbing out of their financial hole by setting a budget and adjusting their lifestyle downward to live within their means.

Michelle now keeps herself accountable and chronicles the journey on her blog, Fit Is the New Poor.

Adjusting to Her Not-So-Dreamy Income

Like Rovisa and Michelle, my first job out of college (in entertainment) paid much less than I'd dreamed of as a doe-eyed undergrad.

To subsidize my salary, I picked up a second job (which required me to don a green apron every day and ask my customers if they wanted their drinks in a tall, grande or venti cup). I reverted to living like a college student and subsisting off expired bistro boxes, breakfast sandwiches, paninis and pastries.

It's a miracle my heart didn't burst from all the sodium.

By the following summer, I'd found full-time, salaried employment -- with benefits.

That year of financial struggle taught me the importance of "paying myself first" by committing a percentage of each paycheck to my savings account. I took advantage of my employer's 401(k) offering, as well as the pre-tax mass-transit card.

But even though I had dodged the obvious overspending traps, I experienced a lifestyle inflation problem a year later, when increases in Social Security taxes, public transit costs and rent took an extra $118 a month out of my pocket. In other words, I was suddenly living beyond my means as a result of actual inflation in my fundamental living expenses. Fortunately, I could adjust my budget to avoid debt and continue to save after inflation.

To prepare for potential budgeting troubles that are beyond our control, it's critical to live below our means and pay off our debts. Most lifestyle inflation is a matter of choice, and by choosing wisely, we can set ourselves up for financial success even when our expenses increase or an emergency arises.

And trust me: Living in the black feels a lot better than buying one more cute spaghetti-strap top.

Erin Lowry writes for DailyFinance on issues relating to millennials, money and personal finance. She's also the blogger behind Broke Millennial, where her sarcastic sense of humor entertains and educates her peers. Visit her there or follow her on Twitter, @BrokeMillennial.

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88 Comments

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richikid

You asked for IT ....YOU VOTED FOR IT ! enjoy IT

November 18 2013 at 2:25 AM Report abuse -1 rate up rate down Reply
betty_brock

Mac posted that Socialist/Communist countries are doing very well. That means that mac/Evan is a commie.

November 17 2013 at 10:07 PM Report abuse -2 rate up rate down Reply
betty_brock

Find Jesus, Evan. He can take away your hate.

November 17 2013 at 9:57 PM Report abuse rate up rate down Reply
Mr. ROC

Inflation has made the average American's life a struggle to keep-up the basics of life, utilities, food and clothing. Inflated prices, that we suffer from now, are the result of government policies teamed-up with the military/industrial complex and the bankers of this country. Housing was over-priced, because our government put a gun to the head of the banks and said" you will loan money". So a house was financed by our banks, that went into foreclosure, and was bailed out by the taxpayers of America. Until affordability return's to the market place, our quality of life will continue to slide toward that of a 3rd world country.

November 17 2013 at 6:26 PM Report abuse -1 rate up rate down Reply
2 replies to Mr. ROC's comment
setanta54s_back

no your inflated prices are a DIRECT RESULT of libtard diM policies and the envirOs controlling and REGULATING OUR NATURAL RESOURCES.
your food is delivered HOW ?solar powered or their WIND emanating from their posteriors producing GAS and BS.
why is OIL and the refined PRODUCTS IMPORTED and GASOLINE IS ALSO IMPORTED due to NOT ENOUGH REFINERIES-----WHO'S IN CHARGE ?

SEEN THE COST for a gallon of DIESEL ????? OUTRAGEOUS.
same for everything ELSE.


diMs were warned on hell care AND CONTINUED ANYWAY.


should WE NOW ADDRESS SHAMNESTY and the CONTINUATION OF OPEN BORDERS and welfafre medicaid WIC SNAP etc FREELY STOLEN from AMERICANS IN NEED ?


o'buMMa and mooo'shell have been in the white HUT SINCE WHEN ?
and WHAT ARE THEIR EXPENSES ?
diM POLICIES and pelosi SINCE WHEN ?


thank the diMs and the morons that KEEP ELECTING THEM.

43% pay NO federal taxes.DUE TO WHAT ?
certain states the PARASITES OUTNUMBER THE TAXPAYERS THE SAME.
WHY ?

government industrial military complex ? no.


as for the housing and mortgage collapse ? thank the diMs from cuomO to fwanks,doDD etc.
THEY WERE WARNED and intentionally DID THIS.


NOW there will be no HEALTH CARE due to THEM AGAIN DESTROYING THINGS that ONCE WERE EASILY AVAILABLE the same as GAS and a BIG BLOCK V8 and CARS made outta steel and not POS souped up GOLF CARTS WITH PLASTIC BUMPERS.

November 17 2013 at 7:44 PM Report abuse -2 rate up rate down Reply
3 replies to setanta54s_back's comment
have a super day

Wah ! American are struggling? To get inside the storesTo spend and spend more. An X box is not something you cannot live without. What a nation of whiners. Learn to live within your means and start saving.

November 29 2013 at 11:55 AM Report abuse rate up rate down Reply
jrb359

We've had 5 long, non-productive years with a president whose only concern is himself and obamacare. I can only hope we make it until 2016!

November 17 2013 at 5:37 PM Report abuse -2 rate up rate down Reply
teapartyisdying.uall

The Republican brand is broken.

They have lost the popular vote in 5 out of the last 6 Presidential elections. Boehner's 112th and 113th Congress have been the least productive of any House of Representatives in history.

After the 2012 elections, their RNC director said they were going to reach out to minorities more. That hasn't happened. They refuse to pass the immigration bill in the House.

Their RNC director said that they were going to reach out to women more. That hasn't happened. Instead, the rights of women are disappearing in Republican led states.

Their RNC director said they were going to get their message out better. Having people disrupt conversation to repeat false talking points isn't getting out their message.

8% of Americans identify with the T Party. The T Party Reps in Congress represent 18% of Americans. Yet, Boehner continues to cater to them, rather than to pass legislation that would re-open this Republican Government Shutdown.

Republicans were once a viable political party in this country. But to be viable, you have to elect sane Americans and have sane Americans get out your message.

This isn't "conservatism". This is the end of the Republican Party as we know it if something doesn't change. That's sad. We need 2 parties in this country but we need 2 parties that are willing to work together for the good of the country.

November 17 2013 at 4:56 PM Report abuse +5 rate up rate down Reply
1 reply to teapartyisdying.uall's comment
willypfistergash

Fuggoff spongebob...the house is working on it's own immigration reform.

Funny, you dopes keep saying the tea party is dying, even choosing a dopey screen names saying it. But then you turn around and whine, snivel and cry that they guiding the legislation coming from the house. For a party you say is dying, it sure is powerful..as you say.

November 17 2013 at 6:04 PM Report abuse -1 rate up rate down Reply
1 reply to willypfistergash's comment
setanta54s_back

that's ALL THEY GET VIA their SCRIPTS-

they can't defend their mess_i_yuuh ANYMORE and cannot defend the diMprOgressiveslibturds the SAME
so they have been REDUCED to beating around DAAAAAAABUUUUUUUUUUSH
like it's 2000 !!!!!!!!!!!!!!


definite PROOF of SCRIPTED GARBAGE HERE.
they NEED THEIR SCRIPTS.

November 17 2013 at 7:47 PM Report abuse -2 rate up rate down
teapartyisdying.uall

Republican Party's Rating Plummets To 'Record Low'

=======================================================

There may be plenty of blame to go around for the nine-day government shutdown, but the Republican brand is taking the harder hit in public opinion.

Just 28 percent of Americans have a favorable impression of the Republican Party, down 10 percentage points from last month, according to a Gallup poll. The polling firm called it a "record low," noting that "this is the lowest favorable rating measured for either party since Gallup began asking this question in 1992."

While the Democratic Party isn’t popular either, it fared better, with 43 percent of Americans approving of the party -- down a comparatively small 4 points from September.

2013-10-09-GallupGOPFavorability.png

The percentage of Americans rating the Republicans unfavorably also reached a record high of 60 percent, while 49 percent gave the Democrats a negative rating. Remarkably, more than one-quarter of Republicans (27 percent) viewed their own party unfavorably.

In Gallup's tracking, the only previous loss of approval that came anywhere close for the Republicans was a drop from 43 to 31 percent immediately following the House of Representatives vote to impeach President Bill Clinton in December 1998. As The New Republic's Nate Cohn notes, the only good news for the Republicans is that the last time, their rating snapped back to 40 percent a few weeks later.

Nonetheless, the negative perceptions of Republicans during the impeachment debate helped Democrats to gain five House seats in the November 1998 election. That was the first time since 1934 that the president's party gained seats in a midterm election.

The Gallup poll surveyed 1,028 adults between Oct. 3 and Oct. 6

November 17 2013 at 4:54 PM Report abuse +3 rate up rate down Reply
2 replies to teapartyisdying.uall's comment
teapartyisdying.uall

How low can you go?

November 17 2013 at 4:55 PM Report abuse rate up rate down Reply
willypfistergash

What a diiference a month can make.

November 17 2013 at 6:05 PM Report abuse rate up rate down Reply
teapartyisdying.uall

Tea Party Receives Its Highest Negatives Ratings To Date In New Poll

============================================================

New Survey Shows Opinion Of The Tea Party At New Low.

A new survey conducted by Pew Research shows a steep decline in support for the Tea Party. In the poll, the right-wing movement receives its lowest ratings to date.

The survey took place Oct. 9-13, during the heart of the government shutdown. According to the poll, 49 percent of Americans have a negative opinion of the movement, compared to 30 percent with a positive view. In 2010, only 25 percent of Americans had a negative opinion.
Unfavorable Views of Tea Party Have Nearly Doubled Since 2010

The survey revealed that the Tea Party’s low ratings are not a partisan issue. Democrats, Independents and Republicans expressed a growing negative opinion of the movement. In Aug. 2011, 64 percent of Republicans held a positive view of the Tea Party. That number now stands at 53 percent, while 27 percent of GOP members view the movement negatively. This is the lowest rating GOP members have ever given the Tea Party.

November 17 2013 at 4:48 PM Report abuse +4 rate up rate down Reply
1 reply to teapartyisdying.uall's comment
willypfistergash

That's right spongebob...keep milking that obama reid shutdown. 4-5 weeks later, most Americans don't trust you people or obama.

November 17 2013 at 6:08 PM Report abuse -2 rate up rate down Reply
teapartyisdying.uall

Tea Party Approval Rating Nears All-Time Low

================================================================

A new poll shows the tea party is nearing an all-time low as conservative activists fight against the implementation of the Affordable Care Act, the Huffington Post reported.

The poll, conducted by Gallup, says 22 percent of participants identify as tea party supporters while 27 percent say they oppose the group, and the leftover 51 percent didn't express an opinion.

Share This Story

Additionally, participants who said they "strongly oppose" the party outnumber those who "strongly support" it, 17 percent to 11 percent.

During the 2010 midterm election, a poll said 32 percent supported the fiercely anti-Obamacare group, demonstrating a 10 percent loss in the pass three years.

On the other hand, only 55 percent of tea partyers approve of the Republican party while 43 percent disapprove.

Gallup surveyed a group of 1,510 adults between Sept. 5 and Sept. 8.

Although the party is generally considered a movement within the Republican party, 7 percent of GOP lawmakers view them unfavorably and 55 percent of them remain ambivalent on the group.

Lydia Saad, senior editor of Gallup, commented on the poll numbers.

"U.S. support for the Tea Party is at a low ebb at a time when key issues of concern for the movement -- funding for the Affordable Care Act and raising the U.S. debt ceiling -- are focal points in Washington, with Tea Party-backed Sen. Ted Cruz prominently fighting both policies," Saad wrote. "The discomfort he has created in the Republican caucus is merely emblematic of the ambivalence national Republicans feel toward the movement. Although few Republicans outright oppose the Tea Party, far more are neutral toward it than support it."

In July, a poll done by Pew Research showed that Republicans believe the GOP needs to "address major problems" before the 2016 presidential election and 59 percent agreed to reconsider some of it's positions, with differing opinions on which way they should shift.

November 17 2013 at 4:43 PM Report abuse +3 rate up rate down Reply
teapartyisdying.uall

THE TEA PARTY IS MADE UP FROM STRAW HATS AND TEA BAGS.

November 17 2013 at 4:07 PM Report abuse +1 rate up rate down Reply