It's really about aligning your spending with your values. And it's very personal.
I bought a new 2007 Honda Fit in December of 2006. I'm still driving it, because it's still functional and it's been paid off for over a decade. I get teased about it and have been told more times than I could count that I deserve a nicer new car. I just don't care.
I mostly furnished my first house for ~$5k. Lived there 9 years. For the new house I bought 3 really nice pieces of furniture that add a tremendous amount of aesthetic and functional joy to the way we live. I could have kept the old furniture, but I'm glad we spent that $$$. I care about this.
I love to cook, and cook most days from scratch. I shop at Walmart for stuff like my favorite breakfast sausage, yogurt, teas, soda for my husband, etc. where the price is lower for the exact same items. Produce is cheap too, but it's low quality and rots quickly, so I buy it elsewhere and pay more. I also buy Rancho Gordo beans and coffee from local roasters and am a sucker for really nice cheese. This all improves my quality of life.
I enjoy fashion and beautiful jewelry and shoes. So I buy beautiful things to wear out a predetermined budget %. And I care for them appropriately, dry cleaning where necessary - everything else is washed delicate and line dried, and it's wearable for decades. I get flak for my shoe collection, but it's a thing that makes me feel happy. This brings me joy.
We travel. We love Hawaii, so we play the CC game for airline miles and book cheap flights. We generally don't stay in resorts, preferring little condos or even cheap efficiency hotel rooms with kitchenettes so we can cook breakfast and pack lunches and explore. Because of that we don't skimp on cool excursions or $18 drinks at the Mai Tai bar watching the sunset. Most years our biggest vacation expense is paying for our siblings to come with us, because we love them being there with us. This brings us joy.
And some things you compromise on, and that's a value thing as well. Husband really wanted a bigger, nicer house. Ours was paid off and I was content, with an enormous sense of security. I'm typing this sitting next to the pool of the newer bigger house, wondering, as I have frequently since we bought it, if it's worth 6x more than the old one to me. I don't hate it (I mean, I hate having a mortgage again), but it's disconcerting to start to see the pressures to spend that come from a big-ish house in a prominent, nice neighborhood. The lawn services and landscaping, the money to maintain the pool, the cleaning services and cosmetic re-models all around us. The creeping feeling that, since we can live here we've somehow "made it" and can just spend whatever without thinking about it. I've gotten asked many times when we're going to re-do the kitchen. That's a $50k question and people just assume it's inevitable. Even though I think I'm still on track for FIRE, I am uneasy. I felt more balanced in the smaller, paid off house, because I felt like ultra- minimizing housing and transportation expenses allowed me to spend a little more on food and shoes and tropical vacations and not compromise my goals. Here, I fight lifestyle creep, and it's a lot harder to do when we suddenly look wealthy.
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