3 Questions To Ask Before Increasing Your Lifestyle

Summary

Podcast Summary: The Ramsey Show Highlights Episode: 3 Questions To Ask Before Increasing Your Lifestyle
Release Date: December 7, 2024
Host/Author: Ramsey Network

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Introduction

In the latest episode of The Ramsey Show Highlights, the hosts delve into the delicate balance between enjoying the fruits of financial labor and maintaining fiscal responsibility. Titled "3 Questions To Ask Before Increasing Your Lifestyle," this episode offers listeners practical strategies to navigate the challenges of rising expenses due to family growth, inflation, and the ever-looming threat of lifestyle creep. Through expert advice and real-life examples, the show provides actionable insights for those looking to enhance their quality of life without compromising their financial stability.

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Listener's Financial Situation and Concern

The episode kicks off with a listener, identified as B, reaching out with a multifaceted financial concern. At 00:06, B shares,

"My husband and I are 40. We've been married 15 years. Paid off about $150,000 in student loans when we first got married. Now we've got three kids, and I'm just sort of looking at how our expenses keep growing every year. A combination of kids, inflation, and lifestyle creep."

B is grappling with managing escalating expenses that stem from expanding family needs, inflationary pressures, and lifestyle enhancements. The core of B's inquiry revolves around maintaining a balance between honoring past financial sacrifices and being intentional about future financial decisions.

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Expert’s Analysis on Lifestyle Creep

At 00:48, co-host C addresses B's concerns by probing into the listener's current financial standing within the Ramsey Network's Baby Steps framework:

"So would you consider yourself on baby step five? Baby step six? What's the plan?"

B responds by indicating that they are still managing their mortgage and saving for their children's college education. C then elaborates on the concept of transitioning from "intensity to intentionality," emphasizing that intentional lifestyle upgrades are acceptable as long as they are financially responsible.

At [01:51], C explains:

"The reason that we do the baby steps is so that... So that I can live in a nicer house. So that I can travel more, so that I can go to more of my kids' sports games. Whatever the so that is, chances are it does cost more because this is a whole money thing."

C reassures listeners that increasing one's lifestyle is not inherently negative if it aligns with financial prudence and long-term goals.

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Five Pillars of Personal Finance

C further breaks down the principles of financial responsibility through what she refers to as the "five pillars of personal finance." At [02:10], she outlines:

1. Budgeting:

   "Am I a person who keeps and sticks to a budget monthly? Yes. Okay. Great. Check that box."

2. Debt-Free Living:

   "Am I a person who is out of debt and values never going into Debt again. And I'm putting that... Yes."

3. Proper Insurance Coverage:

   "Am I a person who carries the proper insurances?... Okay, I do that. Check."

4. Savings and Investing for the Future:

   "Am I a person who has valued savings and investing for the future...? Right. Check that box."

5. Generosity:

   "Am I a person who prioritizes generosity?... If I'm doing those five things, I'm also working on my baby step."

By adhering to these pillars, C asserts that individuals can responsibly enhance their lifestyles without falling into financial pitfalls.

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The Three Questions Framework

Adding depth to the discussion, host A introduces a practical tool for decision-making centered around three questions: "Could I do it? Should I do it? Must I do it?"

At [03:17], A states:

"Here's three questions. I could do it. I should do it. I must do it."

This framework encourages listeners to evaluate potential expenditures by categorizing them based on feasibility, desirability, and necessity. A shares a personal anecdote about contemplating a significant purchase—a dry sauna—illustrating how these questions guide deliberate financial choices.

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Practical Application Example

A provides a detailed walkthrough of applying the three-question strategy when considering an expensive purchase. At [04:33], A explains:

"It's an expensive purchase. I mean, it's not a 500 purchase. That's an expensive purchase. So I'm looking at it going, should we. Stacy and I, should we do this?... It's got a lot of health benefits... We've got space for it... I've got the cash for it. It's not going to hurt me."

This example underscores the importance of assessing whether a purchase aligns with one's values and financial capabilities. By methodically addressing each question, A and his spouse ensure that their spending decisions support their overall financial health without derailing their progress.

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Conclusion: Aligning Values and Financial Decisions

Wrapping up the episode, C emphasizes the evolving nature of personal values and their impact on financial decisions:

"Your values change and get to change throughout this process."

A reinforces this by acknowledging that not all opportunities or temptations should be pursued:

"The answer is no. So... I think you're worried about you're doing something dumb. And I just don't see that if you've got values aligned with how you spend your money."

The hosts collectively advocate for a balanced approach where lifestyle enhancements are pursued thoughtfully, ensuring they contribute positively to one's life without sacrificing financial security.

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Key Takeaways

• Balance is Essential: Transitioning from paying off debt to enjoying financial freedom requires intentionality to avoid lifestyle creep.

• Adhere to Financial Pillars: Budgeting, debt elimination, proper insurance, savings/investing, and generosity form the foundation of sound personal finance.

• Use the Three Questions Framework: Before making significant purchases, ask if you could, should, and must do it to ensure alignment with your values and financial goals.

• Values Evolve: Regularly reassess your priorities and financial decisions to reflect your current values and life circumstances.

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Notable Quotes with Timestamps

• C on Lifestyle Creep:
  [01:06] "Lifestyle creep kind of has this negative connotation that if I'm increasing my lifestyle too much, I'm putting myself kind of in a place where I'm not being financially smart."

• C on Five Pillars:
  [02:10] "Am I a person who keeps and sticks to a budget monthly?... Am I a person who prioritizes generosity?... If I'm doing those five things, I'm also working on my baby step."

• A on the Three Questions:
  [03:17] "Here's three questions. I could do it. I should do it. I must do it."

• A on Practical Decision-Making:
  [04:33] "It's an expensive purchase. So I'm looking at it going, should we... It's got a lot of health benefits... I've got the cash for it. It's not going to hurt me."

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Final Thoughts

This episode of The Ramsey Show Highlights serves as a valuable guide for individuals and families seeking to enhance their lifestyles thoughtfully. By integrating structured financial principles with practical decision-making frameworks, listeners are empowered to make choices that enrich their lives while safeguarding their financial futures.

Transcript

[A]

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[B]

So I am curious on your thoughts on once you've paid off your consumer debt. My husband and I are 40. We've been married 15 years. Paid off about $150,000 in student loans when we first got married. Wow. Now we've got three kids, and I'm just sort of looking at how our expenses keep growing every year. A combination of kids inflation and lifestyle creep. And just sort of curious on that balance of, you know, the intensity from where we started our marriage to the intentionality and how you balance that in a way that's honoring the hard work and being mindful of the future, if that makes sense.

[C]

Yeah, I think that's a great question. So would you consider yourself on baby step five? Baby step six? What's the plan?

[B]

Where are you four, five, and six? We still have a balance on our mortgage.

[C]

Okay. And you're still putting aside for kids college?

[B]

Yes, I'm putting aside for kids college.

[C]

Yeah. I think there's. You said all the right buzzwords, which is at this point, you're moving from intensity to intentionality. What? You're right. And the way that intentionality balances with the idea of I still want to enjoy my life, at what point does it become, quote, unquote, lifestyle creep? Because lifestyle creep kind of has this negative connotation that if I'm increasing my lifestyle too much, I'm putting myself kind of in a. In a. In a red zone or in a. In a place where I'm not being financially smart. Right. And so the way I like to think of it is, first off, the reason that we do the baby steps is so that. And you get to fill in the blank on what the so that is so that I can live in a nicer house.

[A]

House.

[C]

So that I can travel more, so that I can go to more of my kids sports games. Whatever the so that is, chances are it does cost more because this is a whole money thing. Right. And so for me, where the barrier lies is as long as I'm doing all of the things that would. Would cause me to be a financially responsible adult, it's okay for me to increase my income and therefore increase my lifestyle. Right. So for you, you're a baby steps walker. I kind of like to filter this through just a general kind of five pillars of personal finance. Am I a person who keeps and sticks to a budget monthly? Yes. Okay, great. Check that box. Am I a person who is out of debt and values never going into Debt again. And I'm putting that. And have put that into practice. Yes. Am I a person who carries the proper insurances? I've checked all the boxes. I've done all the stuff. I check my coverage yearly. I carry what I need to. Okay, I do that. Check. Am I a person who has valued savings and investing for the future, whether that's emergency funds, whether I'm. I'm contributing the right amounts to my investing for the future? Right. Check that box. And am I a person who prioritizes generosity? If I'm doing those five things, I'm also working on my baby step. Yeah. Increase your lifestyle, Knock yourself out, Have a good time. That's what it's about. It's not about I have to limit myself like this all the time. All the time. Otherwise, what was the purpose? What was the point?

[A]

Yeah, I agree. The only thing I would add to this, Sarah, is I think there's three questions that even now, I'm constantly asking myself. Because we've got three teens, one's in college. I got two drivers. I got a third one on the way. I mean, I feel like I'm running a garage service. I got so many cars at my house. And I think there's three simple little questions. And this is about intentionality, so maybe this will help. Here's three questions. I could do it. I should do it. I must do it. So it's like, could I do it, question mark? Yes. Should I do it? Oh, I got. I got them on the other end of the phone. And then. And then, must I do it? So when I think about things, if it's in the must category, well, then we've got some values that are driving that decision. Right. This is the important stuff. If I'm in the. Should I do this? Well, we still got values driving that question, but it's not apparent that it is fundamental. It's just, okay, do I do this? Like, I'll. You know, I'll tell you. I got one of those right now. It's a dry sauna. Outdoor dry sauna.

[C]

Okay, that's good.

[A]

Should I. I'm in the. Should I. Should I do this? And I'm doing my research, and I don't want to go down the rabbit trail and waste everybody's time through it.

[C]

Walk us through it. I like this.

[A]

Well, it's. It's an expensive purchase. I mean, it's not a 500 purchase. That's an expensive purchase. So I'm looking at it going, should we. Stacy and I, should we do this? I've got. I gotta get a car for Josie, who turned 16 in a couple weeks. So we're doing the homework on that. And, you know, she's not gonna be ready to drive right away, but she's gonna be close. You start looking through other things. I got a college kid. Okay. We're. We're cash flowing, a lot of that. So I start walking through. Okay, that's a. That's a sizable purchase. So I'm going, should I do this? So I start to wait. It's got a lot of health benefits, and I've already gone down that. It's really good for Stacy and I and our health. You know, it has all of those positive benefits. We've got space for it. I got a space for an outdoor space, as you know, you've been over the house. And I go, okay, it's not going to cramp anything. It's so check. I've got the cash for it. It's not going to hurt me.

[C]

And you're still doing all the other things.

[A]

And I'm still doing all the things. So I'm in that place of going. I'm walking through that. Even at this stage where I've got the money, I'm not going to feel it, but I do feel it. I still go, that's a sizable purchase.

[C]

Yes.

[A]

And do we do it now? So then did Stacy and I change our Christmas plans for each other and go, this is what we're going to do? I mean, all I'm saying is I'm using a super simple thing that I like to walk through. Could I do it? Yes. Should I do it? Well, we got to wrestle with that. And then the must I do it? And I think maybe that'll help, Sarah, with staying in view of your values so that, you know, if your values are right, your money's going to be right.

[C]

Yeah. And the truth is, your values change and get to change throughout this process. Something that.

[A]

That's right.

[C]

Would not have been important to you maybe three baby steps ago could become important to you now. And that's also. Okay. So just a little permission.

[A]

Let's say you and Sam call us up and go, hey, let's go on this trip. I'm going right to. Should I?

[C]

Oh, okay. Yeah.

[A]

Because we have margin in our life.

[C]

That's right. That's right.

[A]

The could is there, so. But there are times in life where it's going, hey, I.

[C]

No.

[A]

Could.

[C]

Yeah.

[A]

Nope.

[C]

Private jet.

[A]

Can't do it. No. No. Yeah. Could I? No. The answer is no. So. You know, Sarah, I hope that helps you. I think you need to give yourself permission. I thought Jay did a wonderful job of setting it up, but I hope those little questions. That just keeps you. I think you're worried about you're doing something dumb. And I just don't see that if you've got values aligned with how you spend your money.

[B]

Thank you. I appreciate it.

[A]

Yeah. Create your free every dollar budget today. The simplest way to budget for your life.