So let me start off by saying, I don't think of buying a house or having kids as really increasing our standard of living. With that, here are my prerequisites for increasing our standard of living:

1) Always increase budget with inflation as of January
2) All savings goals will be met (we are saving enough to all of our life-long savings goals to make them)
3) Retirement savings goals are met (we are saving enough into retirement to meet our current standard of living as of 60 years old)
4) Pre-retirement savings goals are met (we are saving enough for DH's teaching retirement at 54 years old)

At this point I would raise my standard of living according to how much I am still able to save in retirement. If I up my retirement savings such that I can retire with another $200 a month, then if there is more money I can spend $200 more a month now.

Watching my parents, I've seen how hard it is to deflate their lifestyle and how quickly it reflates. After 2 years of unemployment, my parents are getting ahead of themselves with his current employment. Thankfully they sat down and made a budget and a wishlist, but their wishlist is huge and still growing. I figure if we can limit our lifestyle for as long as possible, we can avoid getting ahead of ourselves.

Here's hoping.