This article is by staff writer Kristin Wong.

Despite that I don’t own it, I like my apartment. It’s got a mountainous view, it’s comfortable, and my neighbors are few but friendly. Sure, I’d like to own a home someday. But, unless I move to another city, that probably isn’t going to happen in the next few years. I’m fine with that. Like my neighbor said, I’d rather live here than anywhere else, at least for now.

If you sense a wee bit of defensiveness in my tone, you’re not imagining it. Part of me is trying to justify something.

After my upstairs neighbor moved out a few months ago, our management company began gutting their apartment. We found out they were completely updating it and tearing down walls to put in central air, a dishwasher and an entirely different floor plan.

It didn’t take long for me to notice all the stuff I hate about our apartment: doing the dishes by hand — what are we, cavemen? — and no central air. Life shouldn’t be this hard.

In case there’s any doubt, I’m joking. My point is: I never really noticed these things until I learned about the amenities that will be enjoyed by the Future Joneses in Apartment 9.

“We should move into that apartment,” my boyfriend and I have been joking over the past few months. “Wouldn’t that be funny? To move up one flight of stairs?”

But at some point, we got kind of serious about it. “Well, the rent will only be $240 more per month,” he pointed out. In our area, that’s not a huge jump. Plus, we split rent, so we’d each only pay an extra $120 a month. “If we moved, we’d still be living below our means,” I conceded. “But I don’t know.”

It’s pure lifestyle inflation. And in recent weeks, I admit that I’ve started to mull over the question of whether lifestyle inflation is ever okay and, if so, how do you decide when it is okay? Here’s how I’m sorting out my thoughts on the matter.

(Warning: This is another one of those “First World problem” posts. I’m really grateful to be debating over something like this.)

How will this affect my budget?

It’s the first, and most important, question. Our spending will automatically change, monthly, with this expense. It’s not something we buy once and get to enjoy it. It will truly inflate our lifestyle and our budget. To be honest, I don’t really use a strict budget. I make savings goals each year, and simply aim to reach those goals.

I crunched the numbers to see what our spending looks like, using the 50/30/20 paradigm (50 percent bills/30 percent spending/20 percent savings goals) as reference. If we were still trying to get out of debt, it would change my perspective quite a bit, but here’s how my spending stacks up in any event, generally speaking.

  • 27 percent: Bills and rent (14 percent rent, 13 percent bills)

  • 35 percent: Savings

  • 38 percent: Spending

I was surprised that spending was my highest percentage, because I consider myself a frugal person. But I guess it makes sense — my fixed expenses are pretty low, compared to the 50/30/20 method, and that’s because I am so frugal with those expenses. I cut back on the things I don’t care about so I can spend more money on the things I love, like travel and dining out.

If we moved to the new apartment, the bills and rent percentage would jump to almost 30 percent.

“That’s still great compared to most people’s budgets,” my boyfriend argued. Which is true, but I’d rather compare my spending to my own goals, not other people’s expenses.

So back to the question: How will this affect our budget? I’m not going to budge on my savings goals.

I guess I could always take on extra work to make up the difference. That would keep my spending and income gap in tact. But dammit, I don’t want to work more.

In that case, the extra money would have to come out of our spending. That means less dining out or less travel. I have to ask myself, Is the apartment worth giving up a bit on those things? And, in that case, is it truly lifestyle inflation, or just a trade-off?

(Note: My boyfriend and I haven’t fully merged our finances yet, so I’m only calculating my own budgetary changes.)

What is the opportunity cost?

The extra amount I’d pay each month, $120, equates to $1,440 a year. And I could be losing even more than that, if you consider the opportunity cost. What additional opportunities are we giving up by spending that money?

For example, let’s say we choose to invest that money instead. If I invest $140 a month, in a year, that’s almost $1,500 (assuming a return of 7 percent). And in three years, that would be $4,800. If we combined our savings, that amount will jump to about $9,500.

Suddenly, I wonder if I really hate doing the dishes that much. Is a more comfortable lifestyle worth the opportunity cost?

And what is that cost in terms of my goals?

Let’s say my goal is to save up for a down payment for a home in L.A. If I save that money instead, I could buy a home sooner. But how much sooner? Homes here are expensive, and, unfortunately, $9,500 would be about a tenth of what our down payment might cost. I might rather live it up in this apartment for the next three to five years at the risk of pushing back my homeownership goal a bit. In that time, maybe I’ll pick a cheaper place to live, anyhow.

What am I getting in return?

I showed my boyfriend that figure.

“But it’s not like we’re not getting anything in return for our money,” he said. “Plus, we’ll cut back on spending, not our savings.”

Even though I defended renting a while back, I couldn’t help but argue:

“But we’re spending more money on a place we don’t even own. It’s like throwing money away.”

“With that logic,” he said, “Why don’t we just move into the cheapest apartment we can find?”

He has a point. Renting is just our reality. I’d love to buy a home someday; but if I stay where I’m at, it’ll be a while before that happens. Isn’t it okay to enjoy my income a little in the meantime?

Still, there’s a part of me that feels we’re spending more money on something, and, when it’s all said and done, we have nothing to show for it, because we don’t own it.

“When we travel, we don’t own anything, either,” he said. “Except the memories. It’s more of an experience purchase. In this case, we’re paying for comfort.”

And here’s the comfort we’d be getting in return:

  • A bit more free time: We’d save time doing the dishes. Also, when both of us have a busy week, we sometimes order out too much and avoid cooking. Cooking equals dishes, and I know neither of us will have time to do those dishes the next day, so it’s just easier to order out. I’m not arguing that this dishwasher will save us money, but it might make it easier to avoid stress spending.

  • Brand new stuff: This is a rarity when you rent. It’d be really nice to use a tub and toilet that a hundred other people haven’t used on a regular basis.

  • More space: The apartment is slightly bigger, which is nice, though it’s not that big of a deal to me. I don’t mind small spaces. But it would be nice to have more room for my home office.

  • Better aesthetics: The layout, lighting and amenities are better, making our day-to-day environment more comfortable and pleasant.

How frequently will I enjoy this?

Another important consideration in mulling over my lifestyle upgrade: Is this upgrade something I will enjoy often? It makes sense to spend your money where you spend your time.

A couple of years ago, we splurged on an expensive mattress, part of the justification being that we spend 8 hours a day on the thing. My back and I have zero regrets about that decision.

On the other hand, I once bought an expensive pair of heels. I work from home and rarely go to fancy places, so these shoes mostly just collect dust in my closet. Every now and then, I look at them and wonder if I should just try to sell them.

The apartment splurge is something I would enjoy on a daily basis, especially since I work from home. Also, I’d have more room for my home office, which would be nice.

I like being frugal. But, as we’ve discussed before, frugality isn’t just about saving money. It mostly seems to be about optimizing value. I’m not saying that this move would be a frugal choice; I just wonder if it’s inherently un-frugal. I’ll admit, I’m leaning on the side of moving, because I have no real concrete goals, I’m just saving to save, and, hell, I want to live a little. I’m into personal finance for the financial freedom, flexibility and options. What’s the point of managing my money so well if, when I finally get to the third stage of finance, I hesitate to spend it on day-to-day comfort and convenience?

It all sounds very rational, but the cautious side of me worries that I’m only justifying things. After all, I didn’t get to the third stage by giving into lifestyle inflation.

Still, it sure would be nice to move into what now seems like the perfect apartment.

What do you think? Is moving into a better apartment a bad personal finance decision? How do you decide on lifestyle upgrades? Is there something else to consider?

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