Over the past few months, Sarah and I have cut several expenses out of our lives. We eliminated our cable bill. We switched auto insurance after doing a bit of shopping around, cutting our premium nearly in half with no change in coverage. We cut out a couple of subscriptions that we weren’t getting any value out of. During the late spring and summer, we did a ton of bulk buying and meal prepping, filling up cupboards with a number of things that have cut our average monthly grocery bill this year by a surprising amount (about 20% a month). I’ve also found a nice balance with my own personal spending, with the total going down drastically. We’ve planned our 2019 and 2020 family summer vacations, both of which are really inexpensive.
Although this year has been expensive in other ways (replacing a vehicle, going on a very nice family vacation with my in-laws, doing some minor home remodeling), the cuts we’ve made have actually helped a lot with the financial impact of our other expenses.
I occasionally have lunch with a good friend where we openly talk about our finances, a tradition started years ago. As I was explaining these things to him, he made an astute observation. “It sounds like you’re kind of doing the opposite of lifestyle inflation.”
I thought about it for a minute and agreed, and then just spontaneously said, “Yep, lifestyle deflation.”
It’s a term I really like.
To summarize the idea, lifestyle deflation refers to the conscious choice to lower one’s standard of living in terms of dollars and cents spent on their cost of living, whether by need or by choice. People are often forced into lifestyle deflation by unexpected life events, like the loss of a job or a loved one. At the same time, lifestyle deflation can be a choice.
Why would one choose lifestyle deflation, then? Why would a person in America today, without financial reason (like a job loss or an overwhelming debt load), choose to cut their lifestyle?
The argument for avoiding lifestyle inflation makes sense – you’re earning more income, but rather than incorporating it into your spending, you’re investing it first or using it to pay off debt.
Lifestyle deflation, however, is a much different beast. It means that you’re actually cutting elements of your current lifestyle and using that money for long-term investment rather than simply moving that money to different lifestyle choices. You’re cutting the cable bill, but you’re not replacing it with different spending. Instead, you’re actually reducing the paid services in your life.
With lifestyle deflation, you’re not only choosing to redirect some of your money to long-term goals, you’re also choosing to eliminate or reduce the amount of spending done on some aspects of your current lifestyle. It represents a reversal of the earlier decision you made when you chose to start spending regularly on that item.
For most people, the initial gut response to lifestyle deflation is a hard negative. It feels like a bad thing. Why on earth would you choose to have less in your day to day living?
Well, there are several reasons. People undergoing lifestyle deflation by choice usually do so because of at least one – and often more – of these reasons.
First of all, you’ve realized that some aspects of your current day to day life are bringing you very little value in terms of your quality of life. You’re spending money regularly on something that just doesn’t add much value at all to your life. Maybe it did when you started spending that money, but now that value has essentially vanished and you’re spending money out of inertia.
Second, you’ve realized that long-term financial goals actually provide more value to your day to day life than you initially realized. Having a big emergency fund is a big stress reliever, as is knowing that your retirement is secure or that you can handle a job loss without instant panic mode. That stress relief can be more valuable than you think.
Third, you’ve realized that there are free and low-cost things out there that elevate your quality of life as much as or more than other things that you’re currently spend more on. Over the years, there are many, many things I’ve discovered that add tremendous value to my life at almost no cost.
Fourth, you’ve realized that some of the things that you previously viewed only as a big positive actually have a negative side, too, and the new balance isn’t worth it. Cost is obviously one big negative factor, but there are routines that we fall into that have other negative factors. Perhaps they’re distracting us from our relationships. Perhaps they’re eating up too much time and you’re almost time-addicted to it. Perhaps they’re affecting your health in an adverse way. If you add that to the cost, it doesn’t balance out well.
Fifth, you’ve realized that the “bang for the buck” that you’re getting out of things in your life isn’t what you want. You get joy out of something, but it is eating up a lot of your money. Many expensive hobbies will often fall into this trap – you love that hobby, but it eats up a lot of money and there are other less expensive hobbies that you enjoy and haven’t really explored yet.
Sixth, and finally, you’ve realized you have an innate yearning for “less.” Some people reach a point where they just want to declutter and simplify their life for many reasons. Perhaps they can’t even identify a reason. There’s just some subconscious voice telling them that their life is too complicated and too materialistic and it’s time to cut back.
All of these realizations point people toward lifestyle deflation without the misery. The key factor is that they’re all centered around some form of self-realization. You figure out something about yourself or your life and that realization nudges you to deflate your lifestyle in some fashion.
Let’s look at each of these six realizations in a bit more detail.
Realization #1: Low-Value Life Elements
People are creatures of habit, and sometimes we fall into a habit or routine that requires a regular expenditure of money even though we’re no longer getting a lot of value from that habit or routine. Usually, this is because we don’t think about the expenditure with a critical eye; we rely on the routine itself and our past positive experience for it.
For us, cable television was a prime example of this. When we moved into our current home, we watched cable TV quite a bit. My morning routine usually involved watching news and SportsCenter, and we have a number of network and cable programs that we watched faithfully.
Over the years, though, our overall television viewing dwindled. I discovered I found more value in reading books and long articles. Sarah and I mutually chose to limit our children’s screen time and that often inherently meant limiting our own screen time as well. As streaming became more popular, watching programs on demand became more in line with how we lived our lives.
Yet we persisted with cable. Why? Out of habit, mostly. We didn’t sit down and really consider whether it added value to our life. We just recalled that it once did and thus never really questioned the cable bill.
Eventually, we realized that the value we were currently getting from cable was actually really low, so we cancelled it. This was undoubtedly a type of lifestyle deflation, but in terms of our day to day life, there’s not much lost value there.
Here are a few things to think about.
What things do you spend money on at least once a month? Dig through your bank statements and credit card bills a bit so that you don’t miss anything.
Which of those things provides very little value currently in your life? Go through each one and consider that thing in the here and now, not in terms of the value it once provided for you. Be honest and serious with this evaluation; don’t hang onto stuff out of nostalgia or out of a sense of “someday” or “maybe.”
How do I eliminate those services and habits? If you find things you’re investing money in that aren’t providing you real value, eliminate them! Deflate your lifestyle a little!
Realization #2: High Value in Long-Term Financial Goals
Although money put aside for big financial goals isn’t actually doing anything to directly impact your daily life, when you do start saving, you’ll often discover that having money in the bank is a persistent positive in your day to day life.
You’re less worried about your long-term future, obviously.
You’re less worried about life problems and emergencies, because you have money in the bank to deal with them easily.
You feel less regret about having to say “no” to unique opportunities and you feel like those unique opportunities are now able to be considered more deeply, like a career change, because your financial state is no longer blocking you from putting those things on the table.
Those changes add up to less stress in your life, and as you’ll discover, living paycheck to paycheck does have a surprisingly high level of background stress that we often sweep under the table. When that goes away, it feels good, even if it’s often accompanied by some lifestyle deflation of our day-to-day lives.
For me, the peace of mind given by strong retirement savings and a healthy retirement fund has been literally life changing. The amount of stress I had in my life due to finances when our firstborn was a baby was tremendous and I didn’t even consciously realize it. I just felt perpetually stressed out, and it was finances that were behind a lot of that stress.
Here are a few things to think about.
What exactly would you do if you suddenly lost your job and were unable to work, or the same were true for your partner? What kind of “panic mode” would that set off? Does the thought of it alone make you feel nervous?
What happens when a big unexpected expense hits your life, like a car failure? Do you handle it easily? Or is it extremely inconvenient and involves a lot of credit card shuffling?
Do you feel nervous about checking the mail or answering the phone? Are they likely to be carrying bad financial news?
Does talk of retirement leave you with a bad feeling in your gut and you walk away from that conversation quickly? What exactly are you going to do when you’re older and can’t work?
Those things slowly vanish as you deflate your lifestyle a little bit and use that saved money to pay off debt and save for emergencies and for your big life goals like retirement.
Realization #3: Inexpensive, High-Value Life Elements
One interesting aspect of lifestyle inflation is that people often throw away inexpensive life routines that they were happy with out of an allure for more expensive life routines that are now available to them thanks to a higher income. Often, those new routines really aren’t any better than the old ones in terms of the quality of day to day life.
It is well worth your time to rediscover – or even newly discover – the joys of inexpensive but still high value elements of your life. The things that don’t cost much at all but bring you a great deal of personal value should be noted and cultivated. Those are things that you should intentionally include in your life and carve out space for, as they’re far better than high cost / high value things and low cost / low value things.
For me, four things really stand out in terms of low cost / high value for me. The big one is reading – curling up with a library book is about as “low cost / high value” as it can be for me. I feel similarly about low and moderate intensity hiking and cooking at home. I also feel the same way about some of my normal lifestyle routines – bodyweight exercises, meditation, journaling, and so on.
Here are a few things to think about.
What things have I ever done in my life that I’ve deeply enjoyed that didn’t cost a lot of money? Just think about things that you’ve enjoyed in the past that you don’t make time for right now, or things that you currently enjoy that you wish you had more time for. What are those things?
What things have I thought abut doing in my life that didn’t cost a lot of money? Maybe you’ve wanted to try hiking or volunteering or reading the great literary works. Make a list of those things.
How can I incorporate some of these things into my life? What can I cut away to make room for them? Start looking through your life for expensive things that you’re currently doing that you could cut out, at least for a while, to make room for these ideas. Maybe you could try not watching cable for a month while engaging in these hobbies, and if that goes well, just cancelling cable.
Realization #4: Discovery of ‘Hidden Negatives’
Many of the things we spend our time and money on come with “hidden negatives” that we don’t consider at a brief glance or even when we’re engaged with that activity but become apparent at other times.
Vices often fall into this category. They make us feel good in the moment, but they often make us feel awful when we’re not using them. Coughing, dry mouth, feeling hung over – those aren’t great feelings, but we often don’t consider them when diving into a vice.
For me, one great example of something with a hidden negative is board games. They take up space, not just on the table but also on the shelf. They also typically require other people to play, as well as uninterrupted blocks of time in which to play them. Those things are all sometimes hard to come by, and considering them is a good encouragement to keep my board game spending in check.
Here are a few things to think about.
Are there moments where you feel negative feelings as a result of things you otherwise spend money on and feel happy about? I feel this when I’m organizing my board game shelves or trying to organize a game night or trying to find a block of time to play a game I’m excited about. I just want to play the game, not do all of this other stuff.
Does the hobby take up a lot of space? Maybe the hobby requires a great deal of space to participate or to store the items related to the hobby. I have a friend who does woodworking and the workspace requires quite a lot of square footage in his garage, which adds to property taxes and homeowners insurance.
Does the hobby take an inordinate amount of prep time to enjoy? For example, I enjoy the hobby of home brewing, but it takes quite a bit of time to go through the long checklist of tasks that are require to make the beer and clean up afterwards. Simply preparing a batch is an afternoon project when considering all of the cleanup, and then there’s bottling and other associated tasks. It always eats far more time than I expect.
Realization #5: Low ‘Bang for the Buck’
There are also lifestyle choices and hobbies that you actually enjoy but are very expensive for the time and enjoyment you do get out of them. A hobby that requires a fistful of cash to properly enjoy is a hobby that isn’t providing a great “bang for the buck” for you.
For me, the perfect example of this phenomenon is golfing. I really enjoy golfing, but when you add up the cost of decent clubs, the green fees, and all of the other expenses that go along with it, regular golfing quickly escalates into a pretty expensive proposition. As much as I enjoy it, golfing inherently gobbles up a lot of money, taking away significantly from other aspects of my life. It’s got a great “bang,” but not a great “bang for the buck.”
Here are a few things to think about.
What are the most expensive elements of your life? Do you have an expensive hobby? Do you live in an expensive home with high property taxes and insurance? Do you drive an expensive car with high car payments and insurance? Do you eat out constantly at nice restaurants? Think about what your most expensive habits and routines and lifestyle choices are.
What do you really lose by cutting back on those things? These might be things you enjoy, but by cutting back on them, because they’re so expensive, you open the door to other opportunities in your life. What do you really lose by golfing less? What do you really lose by driving the car for another year or two? What do you really lose by eating at home more often?
What might you gain if you cut back? If you cut back on an expensive routine, that’s going to quickly free up a lot of money in your life. What could you use that money for? What low cost things that you’re excited about would you now have the time for?
Realization #6: Innate Yearning for Simpler Life
A final factor well worth considering is an inner yearning for a simpler life. This is often expressed through things like decluttering and minimalist living.
I’ve seen people go through and get rid of most of their possessions. I’ve seen people move from a big home in the suburbs to a small apartment in the city or a smaller home in the country. I’ve seen people reboot their whole life routine. I know one person who went from living in a 4,000 square foot home to basically vagabonding for three years and living out of a duffel bag.
Sometimes, people simply want the simpler life, and that’s a valid thing, too.
For me, I feel this most when I’m spending time on tasks like reorganizing possessions or cleaning up messes. I don’t want to invest my time and energy into those things and I yearn to simplify.
Here are a few things to think about.
Consider your unused and barely used stuff. How many items in your home have you not used at all in the past year? How much stuff is stowed away in the garage and in closets that you simply haven’t touched or considered? Why can’t that stuff just go away? Eliminating everything that you don’t use might open the door to living in a much smaller place, and it will definitely free up regular time once you’ve done it.
Carefully consider any decisions in which you’re buying yet another addition to a collection in which you don’t actively use most items in that collection already. If you have 100 DVDs you don’t watch, why are you buying #101? It’s just cluttering up your space. Rent that movie instead, or borrow it from the library.
When shopping for a home, ask yourself how much of this home you’ll actually live in and how much is just storage space for stuff. Where will you actually spend significant time? Do you need eight closets and four bathrooms? Consider the same thing about your current home as well.
Lifestyle deflation, when done by choice after careful consideration, isn’t a negative. In fact, it’s often a positive. It’s a great way to free up time, alleviate stress, and put your financial resources to work in a more personally meaningful fashion.
However, coming to such a conclusion is often tricky. The modern world nudges everyone toward lifestyle inflation, and thus choosing lifestyle deflation can feel as though you’re walking strongly against the tide.
It’s worth it, though. What can you deflate in your life?
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