Finance

5 Ways to Control Your Lifestyle Inflation

The solution to most of our money problems is pretty simple: more money. But a larger income doesn’t guarantee a lifetime of financial solvency. For many folks who can’t break free from a paycheck-to-paycheck cycle, lifestyle inflation is to blame.

Lifestyle inflation happens when your spending increases as your income increases. You get a raise at work, so you move to a bigger apartment. You start earning extra cash on the side, and you spend it on small expenses (a new manicure habit, or a subscription to HBO) that add up over time. That’s the thing with lifestyle inflation—it often goes unnoticed.

The problem, of course, is that you gradually lose control of your finances. “Lifestyle inflation is different than a one-time splurge,” says Jackie Lam of the website Cheapsters.org. “It increases your living expenses over the long run. The problem with lifestyle inflation is that even though you have more money, you won’t be saving any more of it. Sometimes you may find yourself in even more debt.”

If your lifestyle spending has gotten out of control, here are a few ways to break the cycle.

1. TRACK YOUR SPENDING.

When you’re ready to deflate your lifestyle, the first step is to look at the numbers. Pull your monthly statements and carefully review your transactions so you can identify any spending problem areas. You might be surprised to find just how much those small lunches or Amazon purchases add up. Once you know where your weak spots are, you can prioritize and rethink how you allocate your money.

“I’m a fan of the Marie Kondo method of decluttering, and you can do the same with your expenses,” Lam says. “Is what you’re spending on bringing you joy? Do you have space for it in your budget?”

Love your daily latte but know you’re spending way too much money on coffee? Lam recommends you find a more affordable alternative. “I’m a huge fan of the ‘swap it, don’t stop it’ method,” she says. “Figure out what the value of something is and see if you can find alternatives. For instance, if you go to CrossFit class partly for the camaraderie, are there other ways you can get fit and hang out with people and spend less?”

2. THINK OF BUDGETING AS A HABIT, NOT A TASK.

Most people have the wrong idea about budgeting. We think of it as a one-time task: crunch the numbers, come up with a spending plan and boom, we’re done budgeting.

But budgeting is more of a habit: It’s most effective…

Best Money Tips: 10 Products You Need for Financial Security

Welcome to Wise Bread’s Best Money Tips Roundup! Today we found articles on products need to be financially secure, energy conservation myths you should ignore, and things you can do in the day to sleep better at night.

Top 5 Articles

You Can’t Be Financially Secure Without These 10 Products — Having homeowners insurance means you won’t be left on the street if your home burns down. Considering how inexpensive policies can be for the coverage they provide, there’s no reason not to have one. [Money Talks News]

13 Energy Conservation Myths You Can Start Ignoring Now — Leaving your computer in sleep mode doesn’t save energy — in fact, keeping it on for long periods of time can ruin its power supply and other components. [Cheapism]

7 Things You Can Do During the Day to Help You Sleep Better at Night — If a small snack before bed is your kind of thing, munch on foods that produce melatonin, like oats, dairy products, and cherries. [PopSugar…

You Don’t Need More Money Advice, You Just Need Advice You Can Relate To

If you’re reading this, you’re probably at least a little interested in getting your finances in order. Maybe you’ve even tried! Maybe you’ve read a bunch of advice, but nothing seems to work for you. If that sounds familiar, the solution might not be to find more advice. Instead, focus on finding advice that speaks to you.

Personal finance is, you know, personal. It’s right there in the name, but people seem to forget just how much money management has to do with your own unique situation, habits, and behaviors. Some money writers focus on their personal debt stories. Others, like me, usually focus on practical tips. And some financial experts focus on the mindset of money in our society. At its core, though, all of this personal finance advice is more or less the same. It’s the approach that’s different. The best money advice, then, is the advice you can actually relate to.

Find a Story That Motivates You

When I first started reading and writing about money, so many people recommended Ramit Sethi’s I Will Teach You to Be Rich, saying it completely changed their life. Sethi offers the same advice that’s worked for ages, but he packages it in a way that speaks to a lot of people. For example, he’s not into cutting back on lattes. Instead of being frugal and saving $3 at a time, he argues, you should focus on saving money where it matters—housing, food, and other large expenses.

Many people find this attitude refreshing. The idea that they can still enjoy small pleasures, like a daily latte, makes them totally want to do this money thing. The advice seems to contradict traditional personal finance advice, which makes it appealing, but when you really dig into it, the advice is standard: cut back on stuff you don’t care about so you have more money to spend on things you do care about. What sets Sethi’s advice apart, though, is his mindset toward money. And that’s everything.

In other words, he has a relatable story: the guy bucking frugality to take control and do what works for him. People…

6 Infuriating Ways You’re Ruining Someone Else’s Credit

Your credit score is one of the biggest deciding factors in your financial health. It influences whether you qualify for the best interest rates on mortgages or auto loans, it can impact your insurance rates, and it can even determine whether you land that dream job or not.

Establishing good credit requires managing your credit accounts responsibly. But your own credit score isn’t the only one that can suffer the consequences of poor credit management. In the same way money can ruin a friendship, your financial carelessness could ruin someone else’s credit. Here’s how.

1. Charging up someone else’s credit card

Becoming an authorized user on someone else’s credit card helps build your own credit history. You’ll receive a credit card in your name, and you’re allowed to make charges on the account. But even though your name is on the card and the account shows up on your credit report, only the primary account holder receives the statements. This person is ultimately responsible for any purchases you make with the card.

If you’re an authorized user, the mature thing to do is pay whatever you charge each month. If you don’t or can’t pay, this sets in motion a chain of events that could ruin the other person’s credit.

Any purchases you charge to the account can raise the primary account holder’s balance and increase their credit utilization ratio beyond a healthy range (utilization ratio is the credit card balance compared to the credit limit). Ideally, credit utilization should never exceed 30 percent of a credit limit — the lower, the better. A high utilization ratio can lower credit scores.

In addition, ringing up charges on someone’s credit card and not paying what you owe could trigger payment problems. This can happen if the primary user doesn’t have enough money for higher minimum payments. If they can’t pay the credit card bill within 30 days, the credit card company could report the late payment to the credit bureaus. While a 30-day delinquency won’t tank a credit…