Ok, let me be more specific - Personally, I'm not talking about buying a new BMW, really. Or anything like that. For me, its the little things:
1) oh, we need new cell phones, we have had the same ones for 3 years, and the phones are breaking. Let's get iphones! ($200 for 2, plus a net increase of $30 per month to our existing cell plan)
You know the answer here - don't buy the iPhone. I want one, but I'm not willing to pay for one. So I've decided it's time for a cell phone upgrade (we have a "new every 2" plan with Verizon, so it's free). We'll get the free phones, and wait for the iPhone to be unlocked in another year or two.
2) oh, we need new clothes. We make x amount of dollars, we can afford new clothes. We need them for work.
Fine, but set a budget. I spend ~ $500 a year on work clothes. As long as I'm within that budget, it's OK to spend. Once I've hit that max, it's gotta be something undeniable (like a bleach accident with my black work pants!)
3) vacation. It wouldn't be summer without a vacation: this year - $5500. I remember being right out of college and spending about 1k on a vacation.
Again, you know what to do - find a cheaper vacation, if spending 5.5X your college amount bugs you. For me, the two things we spend on are cars and an annual vacation. We spend more on a vacation than most, but it sustains us the rest of the year. So, I spend less on clothes, shoes, furniture, computers, cell phones, etc. to afford the vacation.
The trick is to inflate your lifestyle in the areas that are personally meaningful for YOU, not across ever category.
4) food - both eating out and grocery shopping. We make more, so why not buy higher quality (more expensive) food. Why not go out for a nice meal once or twice a week.
This is our big hole these days. Going out to dinner used to mean the Wendy's Value Meal. Now, it means pasta at a middle-of-the-road restaurant, and we like a glass of wine with it. When I look at our monthly CCd summary, we're spending waaayyy too much on this. My answer would be - buy better food for at home - because even expensive stuff cooked at home is MUCH LESS expensive than food prepared by someone else.
If you find another solution or trick, please post it.
Now, don't get me wrong - we save. We save alot - but we could basically save - 100% of one salary (of the two) plus an additional 15% on top of the other if we wanted. And each year the things we "want" seem to turn into things we "need" or rather - we don't feel like we need to say no.
For me, it's all about budgeting. Long before I get my annual salary increase, I've already decided how it will be spent. Last year, I finally made the jump to socking away $1K/month in my 403(b). That felt GREAT. I also increased the $$ I give to my elderly widowed mom each month - from $150 to $200 a month. I'm helping her save up cash for a "nused" car in the next year or so (she drives a 12 year old Buick).
For this year, I intend to take the raise and MAX OUT my 403(b) - which will be another $292 per month. That will probably take care of most of my raise, in addition to taxes.
Much like the poster who expressed guilt for a big purchase (where i told him not to beat himself up too much) I am struggling in a similar fashion with reigning myself in.
Its fairly easy (at least for those with somewhat of a frugal mindset) to do the big things right - ie, buying a car (which we did recently, and got something very practical and understated). Its the little things.
So get a GRIP on the little things, and decide where the personal VALUE comes from. I think it's perfectly OK to spend a little more on eating out if you're maxing out your IRAs and retirement savings, if you have no debt, etc. But if your lifestyle inflation means you're not meeting your savings, retirement and other goals, then you need to adapt.
If you ARE meeting all those goals, you should learn to relax. Maybe go spend some of the excess cash on a massage.