If you’re struggling with debt, or considering filing for bankruptcy, you’ve probably become aware of the ways you spend and save money. As it turns out, one of the best ways to make sure you stay afloat financially may be to pretend like you’re living in the past.

A post from GetRichSlowly.org tells the story that’s fairly common: a woman got a new job and a raise, thought she’d finally end her debt and… didn’t.

The reason? She succumbed to “lifestyle inflation.” Luckily, she fought back and offers some tips for other people looking to hang on to their hard-earned cash.

Ignore Your Raises

While it may be tempting to automatically adapt to the new, more luxurious lifestyle a raise allows you, bumping up your living standards right away can be a bad move financially. This doesn’t mean you should eat Ramen noodles your whole life, but consider living one pay raise behind:

• Use extra income to pay down debt
• Sock new money into a savings account (or a retirement plan)
• Put the money toward a specific future purchase (like a new car)

However you save your money, this strategy will keep you from spending your money as soon as you make it.

Focus on the Right Goals

In the post mentioned above, the writer notes that she accepted a higher-paying job but found herself missing her old one, which allowed her more creativity. Make sure you don’t get trapped into a higher-paying gig or a more expensive lifestyle simply because you can.

• Write down what you want. Having a concrete goal in mind for saving money (like paying off your credit cards, buying a house, etc.) will make the process easier and let you know whether you’re staying on track.
• Use money as a tool. Money alone isn’t much good to you—it’s what you can do with money that matters. So try to treat it like you would a hammer: only take it out when you really need it.
• Take time to reevaluate. If you feel out of control or too restricted financially, sit down and reevaluate your goals. Being willing to change the way you do things is key for adapting your finances.

Remember, raising your debt along with your income can make it more difficult to file Chapter 7 bankruptcy, as you have to qualify under the Chapter 7 means test, which compares your income to the median in your state.

 Email This Post