Skip to main content

$200k for a coffee and sandwich?

I'm reading "Playing with FIRE" by Scott Rieckens. He realised he could save a 6-figure amount just by not having a sandwich and coffee on his way to work each day.


Traditionally Scott would buy an coffee and a sandwich on his way to work. It was "only" eight dollars so it seemed like an easy purchase.

Even with free coffee at work, eight dollars seemed a small price to pay with a sandwich included.

Doing the Math

Then Scott crunched the numbers. Eight dollars each workday came to $160 a month. $1,920 per year.

Continuing this habit for 30 years of work would cost him $57,600.

If he invested that $160/month instead, he would accumulate $133,161 (invested at 5%).

Translating that into Australian dollars it's $194,765.27 (to be precise).

How the little things add up

It is amazing how even little things add up if we do them a lot. $8 doesn't sound much - until he realises he's buying 7,200 coffees and 7,200 sandwiches.

Are we getting value?

This is not to say don't ever buy anything. It's about working out whether we're really getting value from our purchases.

Repeat purchases are particularly in question - for two reasons. Because we do them often, the cost really adds up (like the coffees). We also know that the longer we have something the less we enjoy it.

So how much does stuff really cost?

Good question. I developed my own little calculator for this (grab a copy).

I tried an example of a $14 lunch each workday. It came out to cost nearly quarter of a million dollars.


Download your own copy and you can try it out for different expenses, whether they occur each workday, every day, week, month or year.

I'm not picking on coffee drinkers. It might be buying clothes you don't wear, having a gym membership you never use, or cable TV that you don't need.

By finding out the true cost you can decide whether it's providing good value, or whether you'd be better off with the cash.

Further reading

See my review of Scott's book Playing with FIRE, or his movie of the same name.

For future articles why not subscribe to my monthly-ish email. It's quick way to catch up on my new articles. Get it automatically when you get the calculator, or subscribe here.

Comments

Popular posts from this blog

Monopoly, money and you

One of the most well-known board games can also be a great way to learn about money and investing - according to this book. Perhaps one way to teach kids (and maybe ourselves) about finance is to play a board game. In so many ways, the game parallels our own financial life - and we can practice financial decision-making without losing any real money. Is monopoly like life? Yes and no. We manage our cash, negotiate, make deals, make choices, go through tough times, make investments, pay tax and reap rewards. To do well we have to make investments. It's very hard to win just by collecting $200 each time you pass go. There are rules, and wise moves. The better we know them, the better we do. However, in real life, you can win without forcing others into bankruptcy. Principles that work in the game and life Diversify. You might have hotels on the two most expensive properties on the board, but if no-one lands on them, you still might lose. Investments have a price and a value. They are...

The 'keys' to happiness

At the moment my wife is practising a song. She'll be performing it on piano at the upcoming wedding of a friend. She wants to do lots of practice so it can be just great for the day. But we don't own a piano. At this point the material world says "Well, go out and buy one". But these days there are many more options. After a couple of practices on a friend's piano we put out the call on Streetbank - a community site for people to share things with their neighbours. Within a day we had a couple of offers of a keyboard to borrow. It's a great solution as it was free for us, and made use of keyboards that were just sitting around unused. One was so unused that the owner said he would test if it still worked before he lent it to us. I'm told that Aristotle once said that joy was in use not in ownership. I think this is a good example of that philosophy in action. Although sometimes I question if it's "joy" to hear the same song pract...

Are cooktops a waste of space?

Who has ever had four saucepans cooking at once? So why do we have four hotplates on cooktops? Back in the day of all-in-one units, four hotplates were a nice fit on the top of the oven. These days the cooktop and ovens are usually separate but we've stuck with four hotplates. In many homes and apartments it's worth re-thinking. Is this is a wise use of bench space? Two-saucepan cooktops are making an appearance and freeing up some bench space in smaller kitchens. Aldi are taking it a step further with the Induction Cooking Plate . It's a stand-alone single-hotplate device that can be packed away when not in use. Aldi says it has 8 temperature settings, 5 preset cooking functions, a timer, touch controls and overheat protection. Could this be the future of smaller kitchens? Cost-savings in building. More bench space. Less energy consumption with the efficiency of induction cooking. Another great example of less is more. I don't mean this to be an ad, but...