Hooray, I won an iPad2 the other weekend! Alright! Three things resulted from this:
- Celebration: Yay! I am so happy!
- Gloating: Neener, neener, you didn’t win an iPad2.
- Lifestyle Inflation: I could now spend buckets of money if I’m not careful.
It’s really number three that I’m worried about, and that has a point of this blog. Here’s what’s going down: I now have a new toy. Of course, the toy doesn’t do much unless I start putting music, books and apps on it. And it doesn’t do much if I don’t have a home internet connection (and I don’t.) And I don’t want it to get all scuffed up, so I’m going to have to get some protective covering for it. That means, I could end up spending this:
- High speed internet connection and WiFi on a year-long contract: $50 per month
- Protective covers: $70
- Twenty handy apps at $4.99 each: $99.80
- Fifty music downloads at $0.99 each: $49.50
- Ten books at 12.99 each: $120.99
What’s the grand total? $340.29 and $50 per month. For a free iPad2. How does this happen? Lifestyle inflation.
It happens all the time. Envision a person who upgrades to a larger house in a more expensive neighborhood. Well, if they’re moving up from a neighborhood that matches their current lifestyle to a neighborhood that exceeds their current lifestyle. So, to fit in, they’ll have to make some changes. First they move up to a bigger, more expensive house, so then they’ll have to:
- Decorate that house. It looks a little weird to friends and neighbors to have a big, empty house, so we have to furnish that puppy. This is not cheap. But that’s not all, when you buy a bigger, more expensive house, you also have to…
- Insure that house. That means that your homeowners insurance premiums will go up. Additionally, your…
- Property taxes increase. Hope you planned for a property tax hike, since your property tax is figured from the assessed value of your house. Of course, now that you are in a bigger house, you’ll probably want to…
- Get cars that match your peers. You don’t want to look poor do you? Never mind the cars you have were satisfactory in your old neighborhood. Now you need up-to-date luxury vehicles. And if you want to make it in the social scene, you’ll have to…
- Join the Country Club and take the kids to all the “right” lessons. Hey, you have to fit in, and everyone goes to the country club/takes riding lessons/scuba dives/whatever.
- And so on.
In the end, it pays to be mindful of lifestyle inflation and cut it off at the pass.