How Our Financial Attitude Is Changing With Increasing Income

by golbguru on September 1, 2008

Since a little more than seven months ago, I made some adjustments to the path in which my career was taking me and took up a job instead of pursuing PhD. One of the main reasons for going that route was that I was so narrowly focused for so long that I forgot why I was doing PhD in the first place (of course, there is more to that story that just that, but I won’t go into that with this post).

Anyways, our household income increased by about four times after I took up the job. Initially, things were taking a deflating turn for the first couple of months - I guess this was in part because I was a relatively “newly employed” and was undergoing training without any major responsibilities (plus,  I apparently hadn’t discovered new ways of spending the increased income). However, our spending took a turn for the worse right after I published this post in early February.

Additionally, I have now started paying a lot less attention to our financial details (”details” is the key word here). There are only two fundamental concepts that I have been keeping in front of me: 1. to not spend more than what we earn (look at #7 in the linked post), and 2. to not time the market. Everything else is just falling in its place automatically.

The rest of our life is now governed primarily by convenience. Here are just a few changes in our spending habits and financial attitudes that occurred over the last few months.

1. Paradigm shift in the way I manage credit cards: I no longer have the time or the patience to follow those balance transfer offers and research/keep track of how our income would be increased by juggling such offers. I don’t care about optimizing the rewards anymore, and just use credit cards for the simple reason that I get an itemized list of where we spend our money at the end of the month.

As such, I am not using all my credit cards anymore. The fact that I have so many of them seems a bit ridiculous to me at present (this is an interesting development). Plus, I have discovered other practical problems in having too many credit cards (more on this later), so I am down to using just two credit cards at present.

2. Preferences for schedules rather than prices. We have flown thrice since February and every time, we went for flights that were more “convenient” instead of flights that were cheaper. On one of those three occasions, we had the option to drive (which would have been a whole lot cheaper), but again, the time spent in driving didn’t seem worth money saved. Interestingly, in the past, we have driven to that very location twice and at that time, the money saved seemed a lot more worth than amount the time spent in driving.

3. Buying what we “like” rather than buying what is “cheap”. Affordability is still in our minds but we don’t kill ourselves trying to save a few cents (or even a few dollars at times). For example, earlier, for cereals, it was usually “Great Value” from Walmart - now, it’s Kellogg’s or whatever brand that seems better - from a store that is closest to home. :)

4. Outsourcing clothes for ironing. Ironing is one activity I hate - it may be because I never ironed my clothes (over several years) when I was a student. It either took 10 minutes of my time every morning, or about an hour every weekend. Now that’s replaced by 5 minutes of detour every other week and $25.

5. Eating out more. This is again a product of optimizing convenience rather than costs. If we are too tired or not in a mood to cook, we just eat out without worrying too much about it. And, when we eat out, the choice of restaurant is usually dictated by time (and sometimes by what we feel like eating) rather than by how cheap or expensive it is.

6. Using toll roads instead of regular roads. I tried using regular roads (read as traffic-light-infested-roads) for the first couple of months. However, as the stress at work started growing, I started using toll roads more frequently. The toll costs me a lot more than I would like, but using toll roads has reduced a lot of stress in my life. I am now happy when I reach my workplace in the morning, and I am happy when I reach home in the evening, and I don’t have to bitch about how horrible my luck is to catch all the red lights on the way.

Also, the drive that used to take me 30 minutes via regular road now takes about 10 minutes via toll road. That much time saved everyday is just priceless.

7. If the market bothers me, I just don’t look at it. Out of sight, out of mind is what probably works with me in this case. I have some set investing goals this year (in terms of how much I should invest and where) and I just stick with that without really worrying too much about what the market is doing at any given time.

Come to think of it, the increased income is working towards making our lives a bit easier. Call it lifestyle inflation or improvement in the quality of life, or call it just sheer laziness (I am sure there will be different perspectives), or whatever. All we care about is that there is a lot less stress in our lives by spending a little more  money.

As long as we avoid these problems with lifestyle inflation, I think we are okay. :)

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1 stidmama 09.01.08 at 8:04 am

This is a perfect example of how life is… personally I don’t see any problem at all with paying more for convenience or to reduce stress - or to have fun. If you can afford it. And you can! If it helps, remember that stress contributes to health problems, and health problems can lead to decreased (or nonexistent) income. Investing in minimizing stress is really a way to maximize income!

Glad you are keeping the important financial concepts in mind though — staying within what you can actually afford and not worrying overmuch about what the market is doing “right now.”

2 Finance Junkie 09.01.08 at 11:47 am

Like your site. We’ve got similiar finance interests. Interested in doing a link exchange?

All the best,
Finance Junkie of PluggedinFinance

3 Early Retirement Extreme 09.01.08 at 12:08 pm

“I’m rich! I suddenly have an opinion on the capital gains tax.” :-)

I preferred to stay out of life style inflation. It was either that or having to work for the next 20-30 years. Maybe the one of the few practical things about grad school is that with the low salary one never develops an appreciation for convenience and shiny objects?

4 Patrick 09.01.08 at 3:35 pm

Less stress, more enjoyment. Sometimes it’s worth paying a little extra to do those things that make your life easier or more enjoyable. Paying extra to save time is one thing I’ve also found myself doing more of since I began earning more money. If I can pay a little extra to save a few minutes, or in the case of travel, a day or more, I will do it. The extra time is worth it to me.

5 moom 09.01.08 at 4:34 pm

Seems you have a balanced attitude. If you are a poor grad student or have huge debts then being ultrafrugal makes sense. Otherwise, growing your expenditure slower than your income but taking advantage of your increased income makes sense.

I wish we could subscribe to comments threads on your blog…

6 golbguru 09.01.08 at 6:02 pm

Thanks for reminding me about the comment thread subscription. I have to yet look into my options as to which plugin allows me to do that - but feature will be up and running soon.

7 neimanmarxist 09.03.08 at 6:20 am

i am perfectly happy to outsource ironing as well. it is one chore i truly can’t stand .as for buying what you like…. why would anyone buy something they didn’t ? :) buy it once, buy it right, never buy it again.

8 troy 09.03.08 at 7:53 am

let me see if I get this straight.

You now make more money, and because of that you now spend more of that money of lifes little luxuries.

how original - like almost every other person alive.

I am not saying anything about your choices for I agree. That is what money is for. It is just that this post is boring and unimpressive.

I understand this is your blog and perrogative, but the premise of the blog is money matters, frugality, and general financial attention yet your post describes indulgence and inattentiveness.

Spending LESS while making more is impressive. parallel spending - that is average.

I was directed here by another much more excellent PF site. Lots of work to do here.

Good luck with it.

9 anna 09.03.08 at 9:17 am

I never iron and I never buy clothes that require it. Same goes for dry cleaning. Simple.

10 Golbguru 09.03.08 at 11:36 am

Troy: Thanks for your time in commenting.

The premise of the blog is “Musings on…” … doesn’t say impressive or extraordinary or anything like that anywhere in the title.

For future reference, life (and stuff in general) is boring sometimes.

Or perhaps, I could pretend to be a demigod and claim something outrageous in every single post, but then I would negate the point of my last post on BS.

Apart from that, it’s really simple: don’t like it - don’t read it - if you already did - forget about it and move on. :)

11 Stock Trading To Go 09.03.08 at 2:31 pm

“7. If the market bothers me, I just don’t look at it.” This makes perfect sense, why let something bother you and get under your skin? Recently I moved nearly 70% of my once portfolio into a high yield savings account, less worry for me!

12 Stock Trading To Go 09.03.08 at 2:32 pm

Oh a question to go along with that, I am getting 3.3% interest with Etrade, if anyone’s knows of a better deal please let me know. I also have an ING that yields 3% but haven’t been able to find anything better.

13 Shevy 09.03.08 at 3:56 pm

I outsource ironing to my Hubby, who doesn’t mind doing it! Much cheaper than sending it out.

14 TFB 09.03.08 at 10:23 pm

Welcome to the working class! It may be a small surprise to you what used to matter doesn’t matter as much any more, but pretty soon you will start worrying about other things. I like the way you tell it like it is - life is boring sometimes. You don’t have to try to impress anybody.

15 HMB 09.05.08 at 7:05 am

I know the feeling man! As income goes up, you don’t worry so much about the “little things.” I’m in the same boat and the spending is not the same as before.

16 PT 09.06.08 at 9:23 am

Great to see you’re able to enjoy a few more things. Things I probably take for granted. Like you mention, I think it’s key to strike a good balance between convenience and cost.

17 Lillian R. 09.11.08 at 1:37 pm

The price of convenience….

My boyfriend and I always have this debate, I tell him to take a few more minutes to do something another way that will allow him to get more out of what he is doing and he tells me his time is worth more than what he would get out of it. Go figure!

Anyways, I use my rewards card to pay for everything not only because i feel safer using it compared to my debit card, but also i like to see what i spend each month. Oh yeah, and the rewards.

Right now i have a Discover card, which i love, and i am able to track my spending very easily. Also, i got it from the CardOffers website and they send me a check for applying for it through them.

18 Super Saver 09.11.08 at 7:11 pm

I must respectfully disagree :-) I think it’s your sets of choices that have changed but probably not your attitude. After all, you are still spending less that you earn. When you start spending more than you earn, then I would agree your attitude has changed.

19 golbguru 09.12.08 at 12:30 pm

Super Saver - good point (cough*technicality*cough). ;)
Or may be that line between “set of choices” and “attitude” is thin and fortunately I am on the right side of it (at least at present).

20 Steve Austin 09.17.08 at 12:15 pm

Golbguru, you sound like an entirely different person. I guess a major life event can do that. Another possibility is that the old Golbguru just sold the blog to an imposter Golbguru!? ;-\

21 Super Saver 09.23.08 at 9:13 am

@ Steve,

I agree. The tone and format of posts is now different. Golbguru has probably sold his blog and is living off the proceeds :-)

22 golbguru 09.25.08 at 8:28 am

Steve, Super: I smell conspiracy. :)

Someone offered to buy the blog … but I am not selling it .. not yet.

23 table saw 09.30.08 at 1:00 pm

I’ve heard many great things about using toll roads to save time and avoid stress. Wish we had them in my area because by the time I get to work I feel frustrated and tensed.

24 Katie 10.16.08 at 3:11 pm

I downsized my spending to save more and am much happier but it is a matter of choosing where to spend- rather than skimping on everything. And sometimes spending less is a false economy.
Now I have downsized I have more time and after 8 years of work am about to splurge on my first proper vacation - yippee!

25 BloggingBanks 10.30.08 at 8:04 am

Wow congrats on your new job. But please do not spend more than you earn!

26 Andy 11.07.08 at 12:20 pm

As I was reading the list, I found myself nodding my head to all your points. Well put. The only one I would add is that I have started looking at some more risky investments (like options), both as a learning opp and because I have more free cash flow.

27 Finance 11.10.08 at 7:21 pm

Many of us tend to spend more once our income increase, some even spend their future money through using credit card.

28 Vincent Scordo 11.21.08 at 12:04 pm

It’s not just a full time job that increases the lack of personal financial oversight, rather I think it’s “stress level” that is key. If you’re working a high stress job, then you are more prone to want to have someone else deal with your clothes, food, house, yard, car, etc.

Stress, in the US, is actually a big culprit in terms of folks mismanaging their money. Give people time to think, along with a few personal finance golden rules, and I think they will do just fine…

Vince - a practical living blog

29 Online savings 11.22.08 at 2:53 pm

Totally agree with Vin, the stress level can contribute to one’s personal financial circumstance.@ Gol, it’s great to see you’re able to enjoy a few more things. Things I probably take for granted. Like you mention, I think it’s key to strike a good balance between convenience and cost in most situations.

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