Tuesday, October 16, 2007

Wasted Money

I just wanted to write a quick post about this article.

I'm really glad to see the stats on these things posted. I had computed the average cost of alcohol for a moderate drinker at one point based off of averages from a friend of mine. It was something like $6,000 a year. This, by the way, is after tax money. Now try throwing in coffee each day, which some people will get 2 or 3 cups. And then after all that, you add the health costs for the illnesses that you will get from dehydration. That's a large amount of money thrown away each day. If you smoke, it's even worse.

Let's take a low estimate of $8,000 a year. Say you do this for 5 years. There is a BMW you could have bought. Say you invested the money instead of spending it on a BMW. Even if you get a 5% ROI per year, that's still a potential gain of $6,415.30 (before tax) that you've thrown away. And what do you have to show for it? Most of the time people go out drinking to have fun they end up not remembering what they did. So in order to compensate for that they convince themselves they had a good time. That leads to the pattern of reliance on drinking to have a good time, which is a bad cycle. In the end you've spent your money, don't remember what you did, but at least you've convinced yourself that you enjoyed it... that is until you wake up and realize that you're 35 with a beer gut, potentially a few more kids than you expected to have, and stuck in a job you hate.

I'm not saying that you shouldn't ever spend money. The question is the value gained vs the potential value lost. Sometimes it's worth sitting down and thinking about what you're spending your money on and if it's worth it to you or not. What you're really losing in the end, is your time. When you put your money to work for you, you buy back your future.

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