Wednesday, May 28, 2008

Every Little Counts

Money_Coins Leave it to Yahoo News...which lately, has been my primary news source because I encounter it as I go to log into my email...which means I read a lot of garbage. But, this one was actually quite good. It's about how not spending $10 a day can save you a lot in the long run. It's nothing revolutionary, but is a good reminder of how every little thing you do can become a bigger thing. In general, we focus too much on the BIG picture and not enough on the little things that make up that picture--the pixels, if you will. This is true with things like diet and other habits...and money.


"It's important to understand that it takes very little to start sinking into debt. For most people, spending $10 a day would not be considered extravagant spending by any means, but $10 can result in tens of thousands of dollar of debt...If a person were to save $300 a month (approx. $10 a day) and invest it to get a 5% yearly return, that person would have $20,402 in the bank after five years. On the other hand, if a person ends up spending $300 a month more than he has and puts it onto a credit card that he doesn't pay off over the same 5 year period, that person will owe $36,259, assuming a 26% credit card interest rate." Full article here.


This is a concept I've been thinking a lot about lately. I am by no means in bad shape financially. I have a decent paying job, only carry a little revolving credit that I typically pay off every month, sock savings monthly into my 401K and short term savings accounts, and generally live within my means. (We'll ignore the elephant in the room: my student loans...I like to pretend they don't exist, but they're substantial. Kind of like buying a new Mercedes except without the horsepower).


But, I want to save more. Especially in these "challenging economic times." But not just because of that. I want to save to reach my other goals--such as having the ability to pursue alternate career paths (once I realize what that is), buying property, and having the feeling of a security blanket.


I reviewed my average monthly expenditures in various categories this weekend, and was somewhat shocked to find that they added up to more than my take home salary. Now, this doesn't mean I actually spent more than I made--a portion goes to my savings each month--but it does mean that I'm spending without realizing it. It's all the little things that add up: the coffee, the snacks at work, the dinners out where you end up spending $60, the dinners out where you spend $20, buying the more expensive mascara, choosing expensive food at the grocery--it all adds up.


So, I'm on a new mission to attempt to do as much free and cheap stuff as possible with friends--i.e. not eating out. It's just as enjoyable to have a potluck as it is to go to a restaurant, in my opinion...sometimes more fun. I don't expect this to be easy. I have tried it before and failed. We're so conditioned to do things a certain way. It's almost reflexive to say "let's go get dinner." Plus, the other party has to be a willing participant. But, if I can manage to eliminate as many small expenditures as possible, I think I can make that goal. I've already avoided buying coffee on the way to work yesterday...so that's a start!


p.s. I'm still figuring out typepad's new compose page...hence the different fonts. sorry!


 

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