Re:Lifestyle Inflation. It's a wealth killer
by soared on Wednesday December 30, 2020 @03:31PM
(#25585719)
Is increasing expenses as a YoY percent a realistic way to look at this though? My investments grow in that way, but my expenses do not. I don't think lifestyle inflation compounds in this way.
For example, if I start buying slightly nicer coffee this year.. I don't continuously keep buying nicer and nicer coffee. I buy $7/lb coffee now and that will definitely not compound into $22/lb in 30 years from a 4% yearly increase.
A much better way to look at it is net new purchases. For example, my 2002 corolla is paid off so its nearly free to drive. If I get a raise I might justify buying a new car. Now this is a significant expense that the author should look at.
For example, if I start buying slightly nicer coffee this year.. I don't continuously keep buying nicer and nicer coffee. I buy $7/lb coffee now and that will definitely not compound into $22/lb in 30 years from a 4% yearly increase.
A much better way to look at it is net new purchases. For example, my 2002 corolla is paid off so its nearly free to drive. If I get a raise I might justify buying a new car. Now this is a significant expense that the author should look at.