Hey everyone! If you haven’t heard, the New York Federal Reserve concluded that U.S. consumers and businesses are paying 90% of Trump’s tariffs in 2025. Thanks Trump, for making everything more expensive. Fortunately, relief might be on the way. The Supreme Court struck down Trump’s “emergency” tariffs. Or maybe not… Trump hit back with a 10%, no 15% Global Tariffs. Who knows what it’ll be up to by the time you read this blog post? One thing we know for sure is that U.S. consumers will pay more and more to enrich Billionaires.
We can’t control trade policy, but we can control lifestyle inflation. Lifestyle inflation is a key factor to FIRE. Most U.S. workers (64%) live paycheck to paycheck. The more they make, the more they spend. If you can keep lifestyle inflation under control, you’ll be able to save more and achieve financial independence sooner. That doesn’t mean freezing your lifestyle forever. Some upgrades are natural, even healthy. The key is intentional spending, not mindless upgrades to “keep up with the Joneses.”
I retired early in 2012. I can’t believe it’s been 14 years! Let’s see how the RB40 household has handled lifestyle inflation since then.
Lifestyle Inflation
Housing: A+
In 2012, we lived in a 2-bedroom condo with an awesome view. It was great, but we outgrew the condo. We wanted a yard and a nicer neighborhood for RB40Jr. In 2019, we moved to our duplex. (We lived in one unit and rented the other one out.) It’s been a big win.
- RB40Jr can walk to school and hang out with friends in the neighborhood.
- We share some expenses with our tenant.
- Rental income covers the mortgage.
Our monthly housing expense is actually lower now than in 2012. We have done really well here and kept our housing expenses under control. Most of my friends have nicer homes and they spend much more on housing.
That said, change is coming. RB40Jr is a teenager, and we need more space. Next year, I’ll ask the tenant to move out, which will double our housing cost. After high school graduation, we’ll probably sell and downsize again. For now: A+.
Transportation: A+
We bought a new Mazda5 right before our son was born. Fifteen years later, we are still driving it. The odometer is almost 100,000 miles, and it’s still going strong. The minivan is full of dents and dings because we park on a busy public street. But I don’t really care about cosmetics as long as it runs reliably. I would like a nicer vehicle, but I’m not in a hurry. Why buy a nicer car when it’ll get banged up on the street? We did really well in this category: A+.
Groceries: B
In 2012, I went grocery shopping at WinCo regularly. They are cheaper than Safeway and other local grocery stores, but it takes 20 minutes to get there. These days, I’m lazier and shop at the neighborhood Trader Joe’s and Safeway. It’s easier, and it gives us a reason to go out for a walk. I still try to buy groceries on sale, but price isn’t a big consideration if I need something specific. We loosen up a bit here: B.
Eating out: C
Today, we eat out or order takeout about once per week. This is way more often than 14 years ago. Back then, we rarely ate out because our son was a baby. Now that our son is a teenager, we go out more often.
I’ve also loosened up on restaurant choices. We still support small mom-and-pop places, but we occasionally splurge on fancy restaurants. Portland has an incredible food scene, and we want to enjoy it while we’re here.
Yes, we’re spending more. But we’re also making memories.
Grade: C (and I’m okay with it).
Clothes: A
Personally, I did a great job keeping my closet frugal. I wore t-shirts and jeans in 2012. I still wear the same stuff, but with more holes. These days, most of my clothes are “clay clothes.” I can wear them to ceramic class and get clay on them without having to worry. Also, Mrs. RB40 is retired now, and she doesn’t need to buy work clothes. That’s great. I think we’re doing quite well in this category: A.
Hobbies: D
I’m spending way more on my hobbies. Back in 2012, I was busy with a baby. My only hobby was blogging – and it generated income. Today, I spend about $150/month on ceramics, and blogging is trending toward negative cash flow. Recently, I spent $1,000 on a nice ukulele. My lifestyle inflation in the hobby category is high, but it really isn’t too bad in the grand scheme of things. I bet most 52-year-old guys spend a lot more on their hobbies. How much do you spend on your hobbies? What do you do for fun? Let me know in the comments. Technically a D here, but I’m okay with it.
Subscriptions and services: B
The only subscription we have is Spotify for RB40Jr. I made a deal with him. He can have 1 subscription. If he wants something else, he’ll have to give up Spotify. Personally, I avoid subscriptions because I dislike recurring charges.
Services are where I’ve softened
- Taking Uber instead of public transit to the airport.
- Paid a plumber to unclog the sink at the rental for the first time.
- Contractors for kitchen remodel and flooring.
- Paying for haircuts instead of buzzing it myself.
I still DIY yard work and minor repairs, but I’m more willing to pay for convenience now. Grade: B.
Travel: B
Our travel style hasn’t changed much. These days, I try to book a midrange hotel instead of the cheaper places. That’s about the only change we made. We still travel independently and don’t buy a lot of stuff to bring home. I haven’t upgraded to flying business class. That’s too much money for a few hours in a bigger chair. I’d rather splurge on a nicer hotel and activities.
Travel spending has edged up, but not dramatically. B feels fair.
Lifestyle Inflation GPA: Solid B
Alright, my lifestyle inflation GPA is a solid B. That’s pretty good, right? More importantly, we’ve kept the Big 3 (housing, transportation, food) largely under control. That’s what matters most for FIRE.
We live almost the same lifestyle as we did in 2012—just slightly more relaxed. Everything will ramp up over the next few years, though. We need more space at home, and we’ll need a new car at some point. I’m glad we held back this long.
What about you? Have you kept lifestyle inflation under control? Or have you loosened up a bit over the last few years?
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