As the title says, “Our daily habits can cost us years”. Don’t believe me? Have you ever read about the coffee story? If you’ve never heard of it, the basic premise is that if you buy coffee every day for 30 years you end up losing out on over $100k! No, that’s not a typo. Take a look at the numbers:
- A cup of coffee costs $3.50 a day
- $3.50 x 7 days a week = $24.50 per week
- $24.50 x 52 weeks a year = $1274 per year
- $1274 x 6% compound interest per year x 30 years = $114,080
Would you give up that much for just a coffee!?
So what if you just decided to give up coffee on the weekends because you still really would like that morning coffee at work!
- Coffee still $3.50 a day
- $3.50 x 5 work days a week = $17.50 per week
- $17.50 x 52 weeks a year = $910 per year
- $910 x 6% compound interest per year x 30 years = $81,486
That’s still a lot of money! BUT, how much did you save? Well…$32,594. Not bad for just deciding to not buy coffee on the weekends! Making coffee at home would save even more.
What about the story where you let money work for you and you can drive free cars for the rest of your life?! Dave Ramsey, a financial blogger, devised a strategy to let your money work for you. Check out his article on driving for free!
The moral of the story is if you look at your money in a little more strategic way you can save a ton! Of course you don’t have to give up your coffee every day if it adds value to your life. It’s more the evaluation of “Is it worth it?“. What if you drank coffee every other day instead? Or maybe waited a little longer between each haircut? Over time it all adds up!
The decisions we make can dramatically impact our future. It doesn’t have to be a horrible sacrifice where we constantly analyze and penny pinch. It’s more on the thought of making slight adjustments.
Life is like a box of chocolates, or in this case, a chess game…
Think about it like a game of chess. You make tons of moves in the game, but a lot of the time it takes just a few strategic moves to win the game. If you just thought ahead a little you’d be able to win much sooner.
That’s the point of achieving financial independence isn’t it? It’s thinking ahead, planning, and strategizing to “win” much sooner than what a normal game would take. The biggest enemy is time.
Maybe you love chess and you never want to give up the game! I admire that and it’s great. But you don’t have to give it up. You can now play other games without worrying about if the chess game will still be there. Obviously I’m not talking about chess, but hopefully you get the point!
Sometimes you make fantastic financial moves without realizing it.
- Decided to take pre-requisites at a local community college you may have saved thousands. Those thousands will have added up over your lifetime whether or not you realize it.
- Maybe you decided you didn’t want to live alone and got a roommate. Now you’re saving hundreds every month!
Do the decisions have sacrifice? Yes, but it depends on how you look at it because one persons junk is another persons treasure!
I made a decision to buy a condo instead of continuing to rent and over my life that is going to save me a ton and help me achieve retirement years earlier than I would have if I had continued to rent.
Imagine if instead the decision was to buy an over-sized house with “nice to have” space. Sure, extra space is nice but what are you doing with it? It’s nice to dream, but being realistic can be a blessing in disguise.
Now you have to fill it with more things. Do you need those things if you didn’t have the extra space? Now the property tax is double. Just deciding to buy a house in my area instead would have cost me at a minimum double on the property tax. In a lot of cases the house property taxes are quadruple! Years of lost freedom just to have a small yard and a few extra square feet.
Is it worth it!?
I’m not saying don’t buy a house, I’m just saying strategize! It should be fun like a game. Now you can retire years earlier!? How amazing!