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Understanding lifestyle creep and debt

| Feb 21, 2020 | Bankruptcy |

Say you make $30,000 a year and you are living from one paycheck to the next. Your debt keeps getting worse. All you can think is that you need more income. If you made $100,000 a year, you’d never have to think about money.

Unfortunately, this is not always how it works. The reason is lifestyle creep.

This is a term that refers to the way that people spend more money as their income increases. As they slowly make more and more money, they begin spending more of it, as well. While they technically know that it’s happening, they often don’t understand the impact. All they know is that they’re still living from one paycheck to the next — even with twice the salary.

For instance, maybe you drive a 10-year-old car that you have paid off. When your salary doubles, you buy a new car. Or maybe it’s not even that dramatic. Maybe you have always worn the same clothes, and some you’ve had since college. With more money coming in, you feel free to go out and revamp your wardrobe. Now you’re wearing designer clothes and trying to keep up with the latest styles.

Lifestyle creep is risky because you feel like it’s why you’re working. You’re trying to earn more to get the nice things you’ve always dreamed of. What that means, though, is that you can face debt and financial problems with almost any income level. If you find yourself moving toward bankruptcy, you must know what legal steps to take. An experienced attorney can help you.

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