Lifestyle Inflation Talks

Not everyday does something happen in my personal or professional life where I can talk about personal finance and the related topics which we so freely discuss online in this community. So obviously when the opportunity presented itself when I was riding in my boss’s car, I hopped all over it.

I know that my boss makes multiple hundreds of thousands of dollars a year. It’s no secret in my profession. He owns a large home within commuting distance to Manhattan, and also a summer home which I visited during this trip which I’m discussing. I being nosey, Zillowed the address afterwards and was pretty shocked at how much he paid. Let’s just be honest and say you don’t get much bang for your buck when buying a beach home within driving distance to NYC.

After our trip, he gave me a ride back to the train station so I could get back to Manhattan. During the car rise we started talking about money, relationships, and how they intertwine. First thing we discussed is buying a home. My boss made a statement that millennials don’t want to purchase homes. My response was my normal rant about how a primary residence is NOT an investment. He actually agreed! And then noted that he has made money on both of his home sales in the past, but his current primary residence he has lost his shirt on and may never recuperate the costs. Basically he bought a dumpy house in a really nice neighborhood and basically had to scrap it and build again. I was pretty impressed as most people aren’t willing to share their money mistakes and admit that their primary residence is not an investment.

Next topic of conversation was relationships. He had just purchased his wife a new SUV (she stays at home) of the $40 thousand American made variety. Well they were riding with another couple one weekend, and they were in that couples’ $70 thousand foreign made SUV. My boss went on to discuss that after that night, he could sense that his wife was disappointed about her cheaper SUV after riding in luxury. I think it stung him a little because he had just shelled out 40 G’s on his wife’s car, which she now seemed to not like as much.

After the car conversation, he transitioned into explaining that he doesn’t actually live in the real world and it’s actually a little bubble. He must for his wife not to like a $40 thousand SUV and actually expect to have something more expensive. He lives in an upscale neighborhood, and he knows everyone has to make lots of money to afford homes in the area. On top of the homes that hover around low seven figures, $70 thousand cars aren’t even really a big deal. He kind of questioned how he found himself in his current situation. He was not born into this life, not by a long shot. From my observations, it’s pretty simple to figure out how he got there. He grew up lower class, wished and hoped to make it rich, busted his ass, and now he’s found himself upper class. Sad thing is… I don’t think it is as sweet as he first imagined.

I could definitely relate (to an extent). From the time I was a kid through probably 25 years old, I aspired to live a life just like this guy. Make the big bucks, have two houses, and nice cars. My first “big boy” car purchase when I was 22 was a Cadillac for Pete’s sake. But then here I am in a car with the person I wanted to be for so long, and he was basically admitting it wasn’t all it’s cracked up to be.

So as you can imagine, I really enjoyed this car ride. My boss could easily retire in the next few years if he didn’t let the lifestyle inflation effect him in his bubble which he and his family lives. But I bet he’ll continue to grind, work long hours, and stress to keep up the lifestyle. He’s now got a wife and kids who are used to the life, and I bet would not be easily convinced otherwise. Honestly I don’t think he could even convince himself to “turn it off” even though he notices how crazy it all is. To each his own, but as I bet you can guess – I don’t think it’s worth it. At least not for me.

Have you ever found yourself in a riveting personal finance question with a boss or coworker? How did you handle it?

44 thoughts on “Lifestyle Inflation Talks

  1. Jim Wang

    It’s awesome you could have such a candid conversation about this, it’s really eye opening. I think the adage of how you’re the average of the five people you spend the most time with is very true – if those folks live in low-7 figure homes, drive 70k cars – you’ll be compelled to do the same.

    This reminds me of something my wife and I do when we go out. We never get the dish we consider our favorite somewhere else. It will only end in disappointment, either it’s done better this time and now our favorite won’t match up OR it’s not as good… in which case we’re disappointed now. Lose-lose.

    Now, you can’t exactly avoid entering homes or riding in other cars as easily but you can try. 🙂
    Jim Wang recently posted…How Costco Pays Me to Be a Member — and other Costco Money HacksMy Profile

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  2. Dominic @ Gen Y Finance Guy

    Hey FF,

    This reminds me of a conversation that I was having with my old boss who was the CFO. We are talking about a guy that is making 2X what I make just so we are clear. His mom was in pour health and he was in the process of getting a reverse mortgage on her house to help pay for in house care for his mother.

    He made a comment to me that was absolutely shocking. While the bank approved and processed the reverse mortgage he volunteered to pitch in a couple thousand dollars a month to help pay for the care his mother was receiving.

    My first thought was “that’s cool that you can help your mom out like that.”

    However there was a hold up on the reverse mortgage and he explained that he was worried because he had been doing this for a few months and was almost out of money.

    My second thought was “WTF do you do with all the money you make?” This is a guy in his 50’s that earns $350K a year, is single, rents a house, and has little to nothing to show for it outside of his 401K.

    Luckily everything worked out and he got paid back the $10,000 he had pitched in to help his mom out.

    But I could not imagine being in his shoes. He is obviously spending way to much money on wine, expensive dinners, and living the real OC lifestyle.

    Cheers,

    Dom
    Dominic @ Gen Y Finance Guy recently posted…Monthly Goal Check-in #2 – @ 3/1/2016My Profile

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    1. Fervent Finance Post author

      Yikes! That’s pretty terrible money management considering he’s a CFO and single to boot! Maybe he had a gambling problem or something… I’m just glad I learned about personal finance before I was making the big loot 😉 Take care Dom.

      Reply
  3. Mr. SSC

    This is almost an exact example of how we got to deciding that we wanted something different. I’d grown up lower middle class – pretty poor though due to bad financial sense of my parents, and busted my butt to get a good paying job where I don’t have to worry about money. Yet, now that I have it, I just ask myself, “Is this all there is? This is the carrot at the end of the stick I’ve been chasing?” In the words of Talking Heads from Once in a Lifetime, “And you may ask yourself, My God, what have I done?” hahahaha

    Seriously though, we live below our means and save a lot because we realized that there is more to life than chasing the always nicer cars. You know what’s better than a $70k SUV, a $100k Tesla, if that’s the newest trendiest car to have. Especially after having kids this was even more cemented in our brains that we wanted more time with them, rather than a “better title” at work, even higher salary, even bigger house, even fancier cars…

    With all the layoff talks around here everyone ahs been talking finances, and like Dominic’s comment, my old boss was remarking how he could “never afford to retire” even if he’d saved from when he was young. Of course, he just bought a $5k road bike and about $3k of electronics to go with it, and he spends just as freely on other items as well. I just think, man, lifestyle creep is a retirement killer. It’s also not as enjoyable as I would have thought either. Rather, I have other things I’d much rather be doing than knowing I could afford to spend $600 on a “nice” dinner.
    Mr. SSC recently posted…Feb 2016: Our money went where?My Profile

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    1. Fervent Finance Post author

      Great points Mr. SSC. I guess my boss is lucky in a sense that if he keeps doing this until 60’s, he’ll easily be able to retire. A big pension and big SEP 401k will allow him everything he wants/needs. But just sad he would have to wait until close to then to step away. He’s by no means living outside of his means, but he could definitely be doing himself a favor by slowing down the spending!

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  4. amber tree

    A few months back I had a conversation with a co worker on the topic of investing. We drifted away and I mentioned some FIRE blogs. At one moment in time the question came: how much is enough? I had the feeling he was struggling with this. I explained to him the 4pct SWR vs dividends and rental income. I think a light went on in his head. He owns some rental places and – I suspect – a decent amount of cash. He lives, from what I see – quite frugal.
    He no longer works with our company, so I can not see if he now is on the road to FIRE as well.

    There are also the colleagues who say they have no money to invest, but do go on ski and summer trip and the occasional city trip. And a new iphone when apple releases one… It is all into the priorities I think.
    amber tree recently posted…Portfolio vs Risk ToleranceMy Profile

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    1. Fervent Finance Post author

      I bet he’s thankful you gave him that quick lesson! Probably researching FIRE as we speak 🙂

      Reply
  5. Kyle

    Even if he realizes how insane it is, he also probably realizes he’ll have a mega war on his hands from his wife and kids if he tries to make any drastic changes. Kids are probably taught they’ll get whatever they want at this point and his wife seems the same way. To them, it’s free, the wife knows it’s her husbands work, but its very hard for people to put themselves in someone else’s shoes or she just doesn’t care. That’s a tough call, unless he’s really unhappy. I’d probably say no to the upgraded SUV for now since it’s brand new and see how she reacts, It sounded like she didn’t ask for it directly though.
    I’ve been in a situation with a stay at home fiance and while I kept encouraging her to get a job and start a career, we had no kids, she just didn’t want to. I feel like if that’s your situation it’s you’re job to control the finances because nobody really understands earning a living but the person doing it (*but holey shit that’s financially legally dangerous if you’re married – can be considered a form of abuse!) I felt like I was spoiling her because I’d always spend more on her than myself out of love, but the idea that I could be “abusing her *financially” once we married because she didn’t want to work and I wanted most financial control just sounds so ridiculous.
    Pretty much all of my bosses have been hard working frugal entrepreneurs. I talk a lot about finances to coworkers, I don’t believe anyone has changed any habits from the conversations. One complains regularly that he probably wont be able to retire is the kind of guy who puts others before himself. He gives a lot to the poor, he adopted 2 toddlers who are in their twenties now and has a pretty much stay at home wife and he built a in-law sweet addition on his home for his mother to live. So many people I meet I’m positive could help them put away a sizable amount of money towards retirement and not “sacrifice” much at all, but managing money and learning about investing just isn’t a sexy topic, even if it’s probably the most important and relevant topic in our daily lives. Plus, as you mentioned, pretty much everyone is so guarded when it comes to talking about money. I guess I’m even guilty about that, I assume people will be jealous or think I’m paid a lot more if they know I put $20k away in investments last year while they only put $4k in.

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    1. Fervent Finance Post author

      Wow those are some pretty interesting real world experiences. I think you hit the nail on the head. Cars and homes are sexy. Saving for retirement and compound interest aren’t (well they are for me!).

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    1. Fervent Finance Post author

      Yeah I was pretty shocked how conscious he was about it. But I think it’s because he grew up in a low income family. Keeps him grounded somewhat.

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  6. The Bearded Dragon

    I really like the fact that you had a candid conversation about money and relationships with your boss. For some reason that just makes me smile 🙂

    Also, when you are having a face to face conversation and someone tells you that the “good life” isn’t all it’s cracked up to be, that means more and feels different than someone writing about it online. You can sense their emotions, the sincerity in their voice. Sounds like it was an interesting car ride to say the least. Thanks for sharing.
    The Bearded Dragon recently posted…Expenses: February 2016My Profile

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    1. Fervent Finance Post author

      It was definitely an entertaining car ride indeed! He’s a pretty candid guy. I was surprised since I let it slip every so often that I’m a flight risk so that he doesn’t work me too hard 😉

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  7. InsiderAccountant

    What you have found with your boss is pretty standard for people in that position in professional life. Instead of the additional money making life easier it has just gone on to inflate lifestyles and ended up making life harder. The wife has usually bought into the dream (she’s not out there working the extreme hours to make the money!) and the husband is happily handing over the cash to pay for all of this stuff.

    This is essentially how most of my peers at our firm operate. I feel like I am a very odd fish in comparison to them, but don’t actually feel any guilt/pressure to be like them because I don’t actually care what they think.

    In a team meeting yesterday another Partner asked the team how much they thought they needed to retire. I said 25x my expenses (which he didn’t understand) and he said $5m. Others said $1m. Using the 4% rule, this would say that he needs $200k per year to live. Lifestyle inflation has obviously done it’s work on him, a bit like your boss!
    InsiderAccountant recently posted…Negative gearing – a bizarre Australian tax break that’s under attackMy Profile

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    1. Fervent Finance Post author

      My fellow accountant IA! You would understand this better than anyone. Luckily those guys will have huge pensions waiting for them at 62 and a huge 401k to boot.

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  8. Claudia @ Two Cup House

    Yes! I’ve had one of these moments, but just one. A few of my co-workers discussed how they wanted to become rich, and I mean really rich; they proceeded to describe the Scrooge McDuck ways in which they would be able to demonstrate wealth. Anyway, I asked what their plans were to get there and I was surprised to learn that they didn’t have any, as if though wealth just falls out of the sky. When I suggested frugal ways to make cuts to free up cash for investing as the means for trying to get started, they scoffed. :/
    Claudia @ Two Cup House recently posted…Where is the Journey Taking You?My Profile

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    1. Fervent Finance Post author

      Hi Claudia! Everyone has wild dreams, but only some are bold enough to make changes to get them there.

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  9. Emma Lincoln

    Isn’t it the best when you can speak candidly with someone who is in such a different financial situation? And it’s sad too – when you realize that all that money and they still feel like they can’t keep up.

    Reply
    1. Fervent Finance Post author

      Hi Emma. It definitely makes a corporate career less of a priority for me. That’s for sure!

      Reply
  10. TheMoneyMine

    I think you’re lucky to have such a boss.
    Being able to openly talk about money with him and the fact that he shares some of his mistakes is a great sign of trust. I guess you could have a similar open discussion on career opportunities next time 😉

    I have a friend a little like your boss. He’s now CFO and obviously making good money, and one day told me that he realized he could never go to a lower paying job because his wife would never accept a lower standard of living. He has accepted this as a fact and compromise in their relationship. I thought this was crazy, but their relationship seems to work this way and I think they’ve actually found a good balance. But in meantime, they have to fly business class, drive Mercedes and live in a house with a private pool. Their life is pretty darn good, but maintaining this lifestyle will probably be incompatible with any kind of early retirement, even if they make twice what I make.

    If you can’t control your lifestyle inflation, enough is never enough.
    TheMoneyMine recently posted…5 Articles that made me smarter this monthMy Profile

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    1. Fervent Finance Post author

      I’m happy that I’ve learned enough is enough in my 20’s. Definitely makes things easier on my 30’s and 40’s 🙂

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  11. Our Next Life

    I love that you went there with your boss! I recently had an opening with a slightly more senior colleague, and was delighted that she knew all about index funds and expense ratios. She even asked me my favorite index fund, and knew what I meant when I said VFIAX. Ha! It was a good reminder that we shouldn’t assume that everyone we encounter is mindless about finances. 🙂
    Our Next Life recently posted…How My Audit Fears Dictate Our TaxesMy Profile

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  12. Norm

    I have to laugh imagining his wife being suddenly dissatisfied with their “cheap” SUV. I know people think like that, but I can’t even force myself into that mindset anymore. Luckily, my wife and I can enjoy riding in a nice car or staying in a really nice place every once in a while without it having an effect. There is definitely a difference between them and us. We are fully aware the whole time: “This isn’t us.”
    Norm recently posted…How We Churn Credit Cards for Frequent Flyer Miles & PointsMy Profile

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    1. Fervent Finance Post author

      I tried to think of it from the wife’s point of view. She’s probably thinking, here are two husbands who probably make similar money. My husband bought me a $40k car, while the other bough his wife a $70k car. What did I do wrong? Why is my husband being cheap? I’m not condoning this behavior but always interesting trying to understand the other point of view. Take care Norm!

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  13. Harmony @ CreatingMyKaleidoscope

    Lifestyle inflation can be very sneaky – you start by eating at a restaurant instead of Burger King and all of a sudden you’re buying a $40K SUV. I see it in a lot of my co-workers as they rise in the ranks. I swear they actually believe that a higher paycheck means you have to spend more on clothes and cars. Crazy. So thankful I’m not falling for that scam.
    Harmony @ CreatingMyKaleidoscope recently posted…The One Thing I Want My Children To Know About MoneyMy Profile

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  14. Mrs. FrugalEnginerds

    I have been on both sides of this situation, the entitled wife as well as the frugal/FI wife. Not that I was married twice, but I changed over time. I felt insulted when my husband wanted to get me a cheaper SUV than what I originally wanted, even though we both work and I never was a housewife. The mentality at that time was I deserved a nice car, I worked hard for it, and I wanted it. My husband for a long time has a different agenda, that is to retire early. So it’s naturally for him to wanting to save as much as possible. We eventually settled for something in the middle, of course not $40K SUV, but something dependable and will last me at least 10 years. The thing is, not too many women understand the importance of FIRE and not will be on board with their spouse. I know, I was one of them. It took me a few years to see the importance of FIRE, and even if we don’t get there as planned, at least we’ll have a nice savings for rainy days. Thoroughly enjoyed this post!

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  15. Vanessa @ Cash Cow Couple

    Hi FF,

    This is a really incredible conversation you had with your boss. It sounds like he was honest a little vulnerable. That is so rare for humans in general, and even more for a boss to employee conversation. You must be easy to talk to! What is even crazier is that he actually agreed with your different perspectives on money. What is not surprising is that he will most likely do as you’ve said and continue down the destructive path he and his family are on. I think there is a lot to be said for not letting your lifestyle inflate so dramatically.
    Vanessa @ Cash Cow Couple recently posted…PolicyGenius Review – Affordable Life Insurance With Fewer HasslesMy Profile

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    1. Fervent Finance Post author

      The crazy thing is – at his income level it’s not really destructive. He’s just slowing down how long it will take him to call it quits. But I agree on lifestyle inflation can definitely have the final say in how long you have to work.

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  16. Andrew@LivingRichCheaply

    Very interesting conversation. It seems like he wouldn’t mind a simpler life, but maybe the wife is not on board. Reminds me of a relative who makes a very good income. When he was single, he wasted a lot of money on conveniences because he spent much of his time at work, but he was never a big spender on material things. He drove an old Corolla! But after he got married and had a kid, his wife wanted a nice house in the best neighborhood in the best school district, as well as a name brand car. The Corolla had to go…they got matching Lexuses.

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    1. Fervent Finance Post author

      I would find it hard (read as – impossible) to have a significant other that had total opposite views on money as me. But I guess that makes me weird and a minority 🙂

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  17. DC @ Young Adult Money

    When I told my boss about my book that was coming out (had to explain why I was abruptly delaying my MBA that I had talked about and applied for tuition reimbursement for) she told me about her and her husband’s plans for early retirement. What was awesome about the convo was she told me about IRA conversion ladders, something I had never read about or heard about – which is pretty rare as I’ve read a ridiculous number of personal finance articles. It was a great convo and provided some fresh content for the blog.

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    1. Fervent Finance Post author

      That’s awesome that you had that talk with your boss AND learned something. Can’t ask for better work interaction than that!

      Reply
  18. Financial Samurai

    Thanks for sharing your story! It’s an example of where money doesn’t buy happiness. It’s very trueand based on my experiences, I think the perfect number to make is around 200,000 to 250,000 a year. Making it have 1 million a year is nice but it takes a lot of work.

    The bosses life is somewhere where you might end up. Ask if it’s worth it or not. I love the workforce after I decided it wasn’t worth trying to get to managing director over the next 2 to 3 years. Life has been great, even if I didn’t earn as much.

    Sam
    Financial Samurai recently posted…Net Worth Targets By Age, Income, And Work Experience For Financial Freedom SeekersMy Profile

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    1. Fervent Finance Post author

      I have no interest in having his life. I’ll be out of the rat race well before that time. But it is nice confirmation that the big paycheck isn’t all it’s cracked up to be.

      Reply
  19. Millennial Boss

    My last boss would show me the $1500 shoes he bought online and told me one time I was car shopping that I could have the day off if I would go test drive audis! 🙂
    I totally get it.
    I love having those real conversations with other people but I’ve found that it’s best to keep some of my financial goals to myself because they are so not mainstream. It’s amazing the amount of people who will talk you into debt versus talk you out of it.
    Millennial Boss recently posted…How I Paid Off $53,000 of Debt in 18 MonthsMy Profile

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    1. Fervent Finance Post author

      I agree on keeping some of the goals to ourselves. I bet I’m more inclined to get a bigger raise if the boss thinks I’m struggling – not socking away half my income.

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