Dunkin Donuts killed my children’s education
Since I’m now writing about my experiences and opinions of being young and employed, I figured that it would make sense to share some knowledge on how to work with your PAYCHECK!
No one makes enough, that is a human fact, but what you do with your money is even more important than what you make. Its not about living with in your limits, but living without suppressing the same.
I’m in a mathematical mood (geek alert), so I want to share some calculations on the stupid ways most people throw away their money:
The Dunking Donuts frenzy that has hit this country more than any other in the world. I have a friend that drinks 2 Dunkin Iced Coffees every day, including weekends; so I decided to do the math.
2 coffees
x $4 bucks each
x 7 days a week
x 52 weeks
=s $1,456.
WOW, that’s enough money to travel for a few weeks, or a Big ass LCD TV, or new winter tires for your car, I don’t know, whatever makes you happy.
So ok, whats $1,500 bucks; nothing? Since The Average American salary is $42,000, $1,500 is about 2% of the American salary; next time you complain that they don’t want to give you a 2% raise, you could think of where you have a 2% that you could be enjoying.
I know what you are thinking: “Frank, I don’t drink that much coffee…” But I bet you like beer. I’m not calling you a drunk or anything, but lets say you like to go out on the weekends with your friends and have a few beers watching the game or over dinner (don’t get me started with dinner); you know you do. What? Yes, I’m doing some math for that one too:
3 beers (right)
x $5 each
x 2 days a weekend (right)
x 52 weeks
= $1560
Alright, another 2% of your salary, I hope you don’t like wine or any other mixed drinks because that would be $2,496 or more.
You got the point; most people waste their money in things that end up in their intestines (and out of their body; not to be too graphical), but I want to show you how that math grows in time, and how you could use that growth for your benefit.
Doing some quick math if you go out to eat once a week and have a couple of beers like I illustrated above you would have spent an average of $31,200 over the last 10 years. Suddenly not that irrelevant anymore. Those are the bad news.
Now lets go over the good news. If for the next 10 years you put that money in Bonds with a 5% interest rate for example, at the end of your 10 years you would have a total of $51,44 which means an extra $20,000 you never worked for, only because you ate out less and went to the liquor store and not the bar.
That is the most basic calculation in the world (for better finance advice go to www.Moneyand Investing.net), but that money could probably pay for an MBA, or part of your kids College education, or a down payment for a house, or a long trip through Europe, or a car… you get the idea.
Im obviously not here to tell you to stop drinking coffee or beer, or stop doing whatever you do to enjoy life, it’s just to get you thinking about all the money you may be throwing away that someday you will need for more important things. DVD’s (that we never watch more than once), Fancy Clothes, makeup, SHOES, fancy technology stuff you dont need, online services… A lot of things that we don’t really need that often. So the next time you are struggling to pay the rent or complaining about how fast your check disappears, think about all this stuff…
The examples I gave you add to an average of $10,000 a year out of commodities that you may not need (you are good at math and already figure out that is $100,000 dollars over the years), and I can’t help myself and have to invest it at the same bonds, it’s more than a $164,872 dollars. Your kids are going to Harvard!!!!!!!!!!
Do whatever you want with your money,; this is just something to think about.
July 21st, 2009 at 11:25 AM
Commonly reffered as the latte factor — Registered to David Bach.
This is one of the reasons I believe everyone should keep a tally of their expenses on a financial software like Quicken (there is a free one on the web).
When you categorize expenses, you start to understand where your money is going away. You can review them and say: Yes, every drop of that Muga (Rioja) 2001 was worth it! Or you can say: I do not really enjoy that category that much, and I may want to start reducing expenses there.
It also helps keep things in perspective. We all want more money. But life is full of tradeoffs, and we should strive for balance while living it.
As your article suggests, someone that is spending more money on lattes/beer/wine/eating-out than on savings, or education for children has an interesting set of priorities.
July 22nd, 2009 at 9:10 AM
I don’t want to question what makes other people happy, but I too am tired of hearing people complain about not having enough money as I watch them buy expensive meals, cloths they don’t need and other frivolous items. There is nothing wrong with going out to eat or buying more cloths than you closet can handle, but if you want to, say buy a house, and you can’t seem to save up the down payment this might be the reason. People need to take into account thier long term goals when making even small purchases, and then stop complaining about thier the consequences of thier actions.