Lifestyle Deflation

by FI Fighter on December 15, 2012

in Ways to Save Money

lunch

It’s only natural for a person to want to upgrade their lifestyle upon receiving their first paycheck from their first “real” job. This usually happens for a person when they are still young, often times in their early twenties. After living the poor life for so long, it’s completely understandable why someone might want: a nicer car, more stylish clothes, the latest smartphone, a fancy apartment, and a countless array of other new toys.

But let’s be real here for a second. Most people just starting off in their careers are also the same people who: have accrued massive amounts of debt, have little to nothing in savings, and have no real proven work experience.

Need For Speed

It’s one thing for someone in their 40’s to be buying an expensive new automobile. Chances are, at least they have some form of savings built up, and enough job skills to land another position, should the need arise.

But for a young person just starting out? It doesn’t make any financial sense whatsoever! Even if you are fortunate enough to start off your career with no debt, it doesn’t make any logical sense to start making big purchases so early in the game. What if you get laid off? You don’t even have any real work experience yet, so how can you know for certain that you have what it takes to succeed in the corporate workplace?

Those who want to emulate their peers will quickly fall victim to this trap. Anyone who wants a quick fix, and instant gratification, will also fall prey. It’s almost too easy not give in to lifestyle inflation! If all of your friends are doing it, and all the commercials are telling you to consume, well, unless you know any better, you’ll most likely give in and join the rest of the masses.

For myself, I was a victim of over-spending and over-indulging during the first few years out of college. Like most, I was anxious to make up for lost time. This meant: a new car, nicer things, and much more frequent dining at expensive restaurants. The mainstream money magazines were all telling me to “save 10% of your net paycheck”, so since I was stashing 20% or so, I figured I was doing an awesome job of saving.

Re-Program for Wealth Building

The good news is, it doesn’t usually take a person long to realize that the path to “getting rich” doesn’t lie through consumption and spending. In fact, as soon as the lightbulb goes on, one of the first things you’ll want to alter are your spending habits. As they say in sports, “offense wins games, but defense wins championships.” It won’t matter how much money you earn if you can’t hold on to any of it.

With that said, I now like to practice what I call lifestyle deflation. Now, instead of trying to keep up with the Joneses, I’m focused on trying to run circles around my old college self. The reason why? Well, what better person to emulate than my old college self, who was one of the cheapest, most frugal person I’ve ever known. Now that I’m a total addict to building wealth, I want to challenge myself and defeat a formidable opponent! If at first I don’t succeed, you can bet I will keep trying until I do!

Spending: College vs. Now

To get a better feel on how I am doing in the present day, I will compare my current spending habits to what I was doing when I was in college. Let’s break it down by category:

Rent

rent

College Self: I moved around a lot in college. Basically, every semester or year. The contrast between apartments was rather large as well. So, this meant in some semesters I was paying close to $1000/month, while others I was spending just under $500/month. I don’t recall the exact numbers, but I would average it out to around $800/month, with everything included.

Today’s Self: I live close to work. This is something that is non-negotiable for me, as I hate to commute. So, I’ll gladly pay more for convenience if I have to. Rent today is also around $800/month with everything included.

Verdict: As of this past August, I’m also now a landlord, renting out a place for $2090/month. After accounting for all the rental expenses, I usually net around ~$400/month. So, this will cover about half my current rent. As a result, my effective rent is now $400/month. Disregarding the rental income, I would say the rental expenses are about the same from college to now. Advantage, TIE!

Transportation

ride

Not my exact ride, but the price tag is close enough

College Self: I didn’t have a car. I relied on the subway, bus, and my rollerblades. If I really needed to get somewhere far, I would hitch a ride with my old roommate, who had a car. Bus access was free for all students, so I didn’t have to pay for any passes. The rollerblades were durable, and the original wheels/bearings are still holding strong to this day. I would estimate that I spent about $100/year in subway charges.

Today’s Self: I have a car. An expensive one too. This was one of the first really dumb decisions I made immediately after getting that first paycheck. Live and learn. Since the vehicle has depreciated way too much in value to allow me to recapture fair value, I am just going to hold on to it and drive it to the ground. I spend the following each year:

Registration: $300
Insurance: $900
Gas: $1800
Repairs/Maintenance: $500

Total: $3500
Net Result: -$3400/year

Verdict: I’m getting annihilated here by my much smarter college self. I could probably save on costs by biking more frequently to work. However, the office is a bit further away from home, so it’ll be a challenge for me to keep this up regularly. I need to work on my willpower! In early FI, I know for certain I will be driving a lot less. Until then, I will need to bike more to reduce costs. Advantage, College Self.

Clothing

angry birds
College Self: I didn’t wear fancy designer wear in college, but I sure did care about my attire! I was at the age when I was trying to look sharp, trying very hard to impress: professors, visiting professionals, and most importantly, girls! I probably spent close to $1000/year in clothing. In college, it wasn’t unusual for me to purchase: new jeans, dress shirts, and shoes every few months.

Today’s Self: I haven’t bought new clothes in over a year. Because of my many years spent accumulating nice clothes, I have enough dress shirts and slacks to last me a lifetime. These days, my job also doesn’t require me to interface with customers, or other high level executives. So, I get to finally dress down to the regular engineering dress code. What does this entail?

Well, for starters, the same rotation of seven pairs of jeans that I plan on wearing until I retire. If one pair fails, I will replace it with another pair of Levi’s, or Banana Republic (only if they are on sale!) jeans. A new pair should only cost $40, at most. I happen to really like BR jeans, so would be willing to pay $10 more than for a pair of Levi’s.

I wear a lot of sweatpants and shorts on the weekend. These items are usually pretty durable, but the shorts can fail sooner since I wear these when I exercise. I haven’t needed to purchase a new pair in quite some time, but would still venture to guess that $30/year is needed for upgrades.

When it comes to shoes, I’ve definitely stopped caring. I used to collect shoes in high school, but now I try to minimize as much as possible. I have a nice pair of hiking boots that I am hoping will last me at least 15 years. My dress shoes should last me another five years. My formal dress shoes, I’ve only worn twice, so these should last me a lifetime. Same with my bowling shoes. Running shoes are the ones I will have to upgrade most frequently. A good pair will probably last three years. I would say $30/year would do it.

For t-shirts, I wear the generic Champion brand that is found at Target. These are black t-shirts that try to imitate the fabric that is used in the more expensive Under Armour brand. I do notice a difference, and the Champion shirts do wear out a lot sooner. However, they are also about 1/4 the price, so I stick to them. Each t-shirt runs around $12, but again, I’ve accumulated enough to get me through at least the next 20 years. I wouldn’t anticipate needing to upgrade more than one shirt per year.

Next, I have enough sweaters and jackets to last me a lifetime. In fact, I still have some really nice Ralph Lauren and Express Men jackets that I bought while I was in high school. These jackets were purchased for more than $100/each, so they are high quality. I also don’t wear them much, so they look almost brand new. I don’t anticipate ever needing to buy another jacket.

Lastly, I have a lot of socks and underwear. But these tend to fail at a faster rate, so I would budget around $30/year for upgrades.

Net Result: +$858/year

Verdict: When it comes to expenses on clothing, my present day self definitely comes out of this one ahead! Advantage, Present-Day Self.

Technology

3dx_spacenavigator

College Self: I didn’t have a smartphone in college. Well, they didn’t exist at the time. 😉 I had a basic dumbphone, which was pretty dang smart at that time. Though, I did like to indulge in technology. I was into videogames, and bought a new console basically every other year. I was also into PC games, and would pick up two or three new titles a year. I was also a fan of upgrading my PC/laptop. I usually did a new PC build every 3-4 years. I would guesstimate that I spent around $1000/year on technology (not including dumbphone).

Today’s Self: These days, I have very little time to play videogames. If I do, I usually just play my old Playstation 1 or 2 games. After 10 years or so, the experience almost feels brand new again. So, I don’t anticipate buying a new console anytime soon. In fact, I don’t own a single XBOX 360, or PS3 videogame. The last PC game I bought was Oblivion, which was in 2007 for around $20.

The PC I am using to type this entry is the same PC I built in college in 2007. I haven’t made a single upgrade since, and am still using Windows XP. My old laptop from college is still functional as well. The only computer upgrade I’ve made in the past 5 years is buying a new iPad 3. This little device is just too useful, but now that I have one, I’m anticipating it will last me at least 5 years.

And my dumbphone today is probably just slightly more capable than the one I used in college. I would call the expenses here a wash, since the phone was free, and the basic service plan is all that I am paying for. Once my contract expires, I’ll look for an even cheaper plan. Maybe, a pay as you go type of deal.

Since the iPad cost me $500, and I expect it to last 5 years (if the battery will cooperate), total expenses are $100/year (not including dumbphone).

Net Result: +$900/year

Verdict: Alright, another win for the present-day self! These days, I’m more focused on physical activities, and playing guitar for entertainment. I’m not perfect, but a lot of money can be saved when technology consumption is minimized. Advantage, Present-Day Self.

Food

pizza

oh, the college life…

College Self: Food was definitely an expense I struggled with while in school. Let’s face it, with so much homework, studying, and, well, having fun involved with college, there was barely any free time left over for cooking. I rarely cooked, and usually just ate out. I would guess that I spent about $15/day in meals. So, let’s round this number off to $450/month, or $5400/year.

Today’s Self: This is an area where I’ve definitely improved. My breakfasts are really simple, usually just a banana, toast, or egg omelette will do.I also brown bag it for lunch. This usually consists of a simple sandwich, or some rice with a few side items. I’ll also drink some protein shakes for snacks, or between meals. Dinner is also simple, usually just rice and some sides. A 20 lb bag of rice, which costs $20, will usually last me ~80 meals or so. I tend to buy meat in bulk, so if I go to Costco, I can get a week’s worth for about $10. This will be good for about 10 meals. So, for me, a cheap dinner of chicken and rice can be had for about $1.25/meal. My monthly average for food is $315/month.

Net Result: +$1620/year

Verdict: That’s 3 victories in a row for today! It sure does “pay” to cook for yourself. The problem is, I’m not always consistent. Sometimes I’m just far too lazy, and choose to eat out instead. Overall, I’m still doing a lot better than I was just a few years ago. Advantage, Present-Day Self.

Summary

The results have been tallied up, and here is where I stand:

Rent: TIE!
Transportation: College Self is VICTORIOUS!
Clothing: Present-Day Self is VICTORIOUS!
Technology: Present-Day Self is VICTORIOUS!
Food: Present-Day Self is VICTORIOUS!

Net Result: -$22/year (excluding rental income); $378/year (including rental income)

I am spending $1.83 more each month today, than I was when I was in college. Excluding the transportation costs, I’m actually doing better today in each of the other categories. Moving forward, I can see the costs of upkeeping an automobile will really make it difficult for me to deflate my lifestyle enough to where I can clearly pull away in the race to outperform my old college self. Hmm, on second thought, maybe I will eventually need to ditch the ride. I didn’t realize it was STILL costing me an arm and a leg. Alright… let’s just put this out there right now:

New Year’s Resolution: Bike to work in the Spring and Summer… let’s aim small for now 😉

 

How does your spending today measure up against your younger self? What have you learned along the way to help keep expenses low?

 

{ 22 comments… read them below or add one }

1 HighyieldsoldierNo Gravatar December 15, 2012 at 11:41 pm

I have to have a car since I live 20 miles from work. Even if I lived close to work I would still want a car. You are doing great at saving and investing, I think ditching the car will be overkill…you need reliable transportation, especially if you lose your present job for some reason…my current employer will not consider anyone for employment if they dont have a dependable vehicle. Im sure they arent the only ones.

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2 FI FighterNo Gravatar December 17, 2012 at 8:17 pm

David,

At the moment, I don’t plan on ditching the car, though it might make sense to downgrade later on. I would just have to be able to find a good deal. I guess what I’ve learned is that I don’t need so much flash, but would rather have a dependable, long lasting (and cheap) vehicle instead.

Take care!

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3 PaulineNo Gravatar December 16, 2012 at 6:25 am

I think I spend about the same than 10 years ago in college, and my income has increased, fortunately. I have learned how to be frugal and not cheap, like buying one item of sturdy clothing that is expensive and will last years instead of 10 cheap items that I will wear once and throw away.

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4 FI FighterNo Gravatar December 17, 2012 at 8:21 pm

Pauline,

You are doing an awesome job of saving! That’s also my plan to keep saving aggressively and not spend more just b/c my paychecks are increasing.

Good point on buying quality. I try to minimize costs, but will gladly pay fair price for quality, especially if it means the item will last much longer. For example, I have an ipad 3 and a few $1000 guitars. So, there’s definitely a time and place for spending. Just gotta make sure to really put those items to use to maximize return.

Best wishes!

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5 Financial SamuraiNo Gravatar December 16, 2012 at 11:11 am

Love the deflation man!

What about. #YOLO?!

Sam

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6 FI FighterNo Gravatar December 17, 2012 at 8:23 pm

Sam,

In my eyes,

YOLO = do what you want, when you want = early FI

Simple as that! I’m just trying to figure out how to get there, so that’s why I’m following experts like yourself! 😉

Take care!

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7 Financial SamuraiNo Gravatar December 16, 2012 at 11:12 am

Btw, program your twitter handle in the retweet button so you know!

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8 Lisa @ Cents To SaveNo Gravatar December 16, 2012 at 4:51 pm

I am definitely doing better now than when I was younger! But, due to job layoffs for both me and my husband over the last two years, we are getting back on our feet again. We have learned a lot over the years, so I do believe our future is definitely brighter. 🙂

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9 FI FighterNo Gravatar December 17, 2012 at 8:27 pm

Lisa,

Glad to see you and your husband are both doing well! Job layoffs are unfortunate (my company has had two in the last quarter), and are really out of our control. This is another reason why it’s a good idea to save aggressively, b/c you just never know. Just seeing others go through it has made me want to save even more. Plan for the best, but prepare for the worst.

Best wishes!

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10 John S @ Frugal RulesNo Gravatar December 17, 2012 at 10:22 am

Good idea for a post! Thankfully I’ve changed my spending ways to not be so foolish and frivolous. Having three kids the spending is different, but is much more frugal.

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11 FI FighterNo Gravatar December 17, 2012 at 8:29 pm

John,

Having kids must make it a bit more difficult to save, which is another reason why I’m using my time now to build up the nest egg. I don’t know what the future holds, but I do know that in the present moment, I only have to account for myself. So, I’m trying to be as smart about savings as I can.

Take care!

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12 Brick By Brick Investing | MarvinNo Gravatar December 17, 2012 at 11:42 am

Great idea and concept my favorite was “As they say in sports, offense wins games, but defense wins championships. It won’t matter how much money you earn if you can’t hold on to any of it.”

It’s soooo true and gave me a great analogy to give friends and family when I am explaining personal finance. Everyone wants to “upgrade” and nobody wants to save.

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13 FI FighterNo Gravatar December 17, 2012 at 8:34 pm

Marvin,

Yeah, I would tend to use the same analogy with my friends as well. Most of them think that “it’s all about the income.”

They see someone living so simply and just automatically assume that they’re doing poorly in their career. Whereas another person will drop by in a brand new BMW, and it’s assumed they are making the big bucks. But who will come out ahead in the long run?

Unless you are born into wealth, there’s no free lunch. Every action has a consequence. If you burn all your cash, well, good luck trying to outsave the person next to you who is putting 70-80% away into savings.

Take care!

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14 MartinNo Gravatar December 17, 2012 at 6:36 pm

hehe, looks like I am the exception in my 40s not buying a fancy expensive automobile. Well my priorities are elsewhere so like Buffet I am still driving my 15 year old truck. The only thing I am thinking on switching is gas mileage and buying some more efficient…

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15 FI FighterNo Gravatar December 17, 2012 at 8:36 pm

Martin,

You are a wise man! I was not so bright, and gave in to temptation. Luckily, I learned my lesson and have done my best to do a 180 reversal. I hope I can get 20+ years out of this ride. That, or downgrade to something that will.

Good luck to you and your time-tested, quality truck!

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16 Holly@ClubThriftyNo Gravatar December 18, 2012 at 7:27 am

We have definitely experienced some lifestyle deflation. Our expenses are quite lower than they were 5 years ago even though we make a lot more money now. Cutting all of the extras out of our budget really helped.

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17 FI FighterNo Gravatar December 26, 2012 at 4:20 pm

Holly,

That’s wonderful! You guys are doing a great job of savings. It’s such an awesome feeling to be bringing in more money and spending less. I’m sure you guys are reaping the rewards of that many times over.

Take care!

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18 JC @ PassiveIncomePursuitNo Gravatar December 22, 2012 at 1:55 pm

My lifestyle has inflated since college but that comes with the territory of my college life. I have relatives that own a house in the town I went to college in so I got to stay there rent free, that’s a big chunk of expenses right there that had to all of a sudden be accounted for. After landing my first job I remember the first purchase I made, it was Playstation 2 and that was about all the splurging that I did. Unfortunately I didn’t really have any goals to focus on so I spent without care but never came close to spending more than my income, but that money just got stashed in my savings account. And I’m glad it did because that helped me get through being unemployed for over a year. Now I’m making up for lost time.

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19 FI FighterNo Gravatar December 26, 2012 at 4:23 pm

JC,

That’s great that you had free rent in college. I’m sure you graduated with a lot less debt than most folks.

I started out much in the same manner as you. I made sure to save more than I spent, but didn’t really have the direction on what to do with my money. As such, there was really no incentive to save more. It’s like running around aimlessly without a goal. Once I discovered dividend investing, I just re-wired my mind to actually really enjoy saving. I’m sure you feel the same way. It’s great that we discovered the “true path” to happiness sooner than later.

Best wishes!

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20 JC @ PassiveIncomePursuitNo Gravatar December 22, 2012 at 1:57 pm

Although I’m looking at a 10%+ decrease in my minimum monthly expenses for 2012 compared to 2011. So my lifestyle deflation is kicking in.

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21 FI FighterNo Gravatar December 26, 2012 at 4:24 pm

JC,

That’s awesome! I hope to join the 80%+ savings camp next year 🙂

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22 Millennial BossNo Gravatar February 2, 2016 at 12:06 pm

Sad thing is I don’t even know how much my college self spent on food & housing because it was provided as a package deal from my college which really means – I paid for it in Student Loans and didn’t worry about it!
I feel the same way about clothes. I have years of consumerism that will last me a lifetime.

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