Houston man feels ‘guilty’ after business-class upgrade — but Ramsey Show tells him splurges are OK if you can pass this 5-question test. Would you?

“I’m kind of feeling a bit guilty about it,” he admitted to co-hosts John Delony and Jade Warshaw. (1)

Nearly three in four respondents to a Clever Real Estate survey acknowledged spending on indulgences — 55% going so far as to admit they “spend recklessly,” with emotional discomfort following soon after.

That means most of us can relate to the caller’s dilemma.

Here’s what The Ramsey Show hosts had to say, and some other ways to differentiate between a reasonable splurge and a wasteful indulgence.

How to determine when it’s OK to splurge

Delony was quick to ease the caller’s guilt, noting that wanting to feel more comfortable on a plane, especially for a business trip, is a good reason for an upgrade.

He noted that wanting to be comfortable in an airline seat is different from a sense of entitlement.

“Feeling better is OK,” Delony said of the caller’s seat upgrade. “For me, I cross the line when I start thinking ‘I deserve this’ — that’s a moral line in my head I don’t ever want to cross.”

Warshaw described a five-question checklist she goes through in her head before splurging on something:

• Am I out of debt?
• Am I budgeting my money responsibly?
• Do I have proper insurance to protect my family?
• Am I saving for the future? (e.g., emergency fund, down payment, nest egg)
• Have I prioritized generosity?

If the answer to every question is yes, she goes ahead and splurges. In fact she encourages spending on F.U.N. — where F stands for food (better groceries), U stands for upgrades (like plane seats, furniture, clothing) and N stands for new experiences (like vacations).

Another way to do a mental check on whether it’s OK to splurge is to use author, blogger and data scientist Nick Maggiulli’s “0.01 % rule” promoted in his book The Wealth Ladder.

Maggiulli says if you’re worried about a discretionary purchase that represents less than 0.01 %of your net worth, you can go ahead and confidently spend that money without unduly upsetting your long-term financial trajectory.

For example, with a net worth of $300,000, 0.01 % translates to $30. That becomes your informal “splurge ceiling” — the occasional splurge under that threshold is virtually harmless; those above warrant more scrutiny.

What’s at stake with impulse buys

If you think through upgrades and indulgences first — before spending — you won’t be impulse buying. You’ll be purchasing based on a means test (Jade Warshaw’s five-question checklist or the 0.01% rule) and a thoughtful approach to spending. That means you’ll be less prone to guilt.

However, the opposite is true. The fallout of instant gratification could be guilt.

Warshaw’s checklist indicates what’s at stake in every purchase, whether you think it through or not.

Debt. When you carry high-interest debt, channelling funds into upgrades diverts cash that could accelerate becoming debt free. Interest can compound faster than the perceived “value” of that better seat, sofa, or gadget.

Budgeting. Without disciplined budgeting, upgrades may become slippery slopes. The cost creep of minor upgrades can accumulate unnoticed until it is shockingly high.