It’s the Little Things that Count

Much as my wife has taught me over our relationship, it's the little things that count. It's taking her out to her favorite restaurant even though it's not a special date. It's making coffee in the morning before she's out of bed so she doesn't have to. It's doing ALL our laundry and not just mine leaving hers in a dirty pile in the middle of the room (what can I say… I'm thoughtful).

But it's also the little things in personal finance that make the difference too. In fact, it seems like we are getting "little thing-ed" to death anymore. We live in an incremental age in which every extra item we want seems to cost just a little bit of money. $4.99/week here, $9.99/month there, $0.99/day here and there. It all adds up, and it adds up very, very quickly. Believe me, I can attest to this personally.

It's been more than two years now that I have had a cigarette. My lungs are healthier, my clothes are cleaner, my taste buds are tastier, and my wallet is definitely heavier. When I started smoking it cost $2 for a pack of Marlboro Lights (… mmmmmm…. I still have cravings, leave me alone) and by the time I quit it was not obscene to see $6 per pack in the city. In the end I was smoking a pack and a half of cigarettes a day (that's 30 cigarettes for the lucky few who don't know the ratio personally). My mother always taught me, "If you're going to do something, do it well… and often." Done and done… Thanks Mom.

Well, the haze around me has dissipated and using a little math we see that in two years of not smoking I would have smoked 1095 packs. Seems like a lot, but it's ONLY 1-1/2 packs a day. Broken down it turns out to be:

1. $9 per day
   
2. $63 per week
   
3. $252 per month
   
4. $3285 per year
   

While the $9 disappearing from my wallet every day didn't seem disastrous, when I started to add it up I got a little short of breath (pun totally intended). $63 a week could be a visit to a nice restaurant for my wife and I. $252 a month is a car payment to most people. That $3285 per year could easily become an IRA contribution instead of a pile of ashes. But instead, for 10 years I tossed dollar after dollar into an ash tray and that is the least of the damage done because of that stupid habit. I don't even want to find out how much I actually spent over those 10 years. I might actually have the heart attack I'm now trying to avoid.

Anyhow… I'm not here to preach about the dangers of nicotine abuse. There are other abuses out there much less dangerous to your health, but just as
dangerous to your financial future. Each of these are incremental just like the cigarette expenses were (and depending on which expert you talk to, possibly bad for your health as well).

Let's start with another addiction most people have but isn't demonized like my little stinky habit: coffee. I am (un)fortunate enough to have a Starbucks coffee kiosk in the middle of my company's cafeteria. Feeling a little sluggish when you arrive? How about an extra hot grande caffe latte with breve and whipped cream? A little run-down after your morning emails? Let's pick up a 140 degree venti java chip frappucino with caramel sauce and Splenda! Need a boost before the pre-meeting meeting, and WHO DOESN'T!?!! Well, order me up a triple-caff iced espresso macchiato with low-fat organic goat milk, a sprinkle of cinnamon, and extra ice! Yeah… that hit's the spot.

Every day, all day, that kiosk's cups runneth over and there is procession of people in front of it like an alter call on Judgment Day. And even though my coffee-abulary is on par with the greatest baristas in Columbia, I only allow myself a cup a day and it's usually from home. The reason? I've seen those prices!

Imagine one $5 cup every day (yeah I know, I said IMAGINE). Well, you've seen the math above to know this'll get messy. Luckily, you're not at work every day so we'll only count on a 240 day year.

1. $5 a day
   
2. $25 a week
   
3. $100 a month
   
4. $1200 a year
   

FOR COFFEE!!!

Just think of our coffee bill for a couple: $2,400 a year.

Now, I know some people are as much in love with their caffeine as I was with my oral fixations, but there are alternatives to this. If you are one of those that buys the Super Size coffees, scaling back a size (or two) might actually save you up to $120 a year (and might help a latter problem with high blood pressure). For those more adventurous, try to knock out those specialty drinks and stick to the house blend coffee. These could save literally $1 or even $2 per cup which translates to $400 - $900 a year. Finally, you can always make coffee at home and take it to work in a mug. One pound of Starbucks coffee costs $10 and a pound will usually yield about 70 to 80 cups. Cost savings? Given two people getting 2 cups each morning (and let's include the weekend on this too), and each pound lasts 20 days, a year's worth of coffee would cost $190. You could end up saving $2210 a year.

How about these other cash killers:

A bag of chips ($0.85) and a 20 oz. Diet soda ($1.25) at work from vending machines: $504 per year… ($1008 per year for a couple)

Going out to lunch 3 days a week ($15 each): $2160 per year… ($4320 per year for a couple)

Getting breakfast at McDonalds 3 days a week ($5.50 each): $792 per year… ($1584 per year for a couple)

The list goes on…

The problem doesn't lie with any one of these things by themselves but in the fact that many people have a combination of the above. Personally, I had almost all of the above at the same time. My daily spending would easily get upwards of $25 a day on stuff that I could easily mitigate with a little forethought, willpower and frugality (the deadly "f" word).

Today, I don't smoke (-$3285/year). I take my coffee with me to work from home as does Mrs. Cents. Dunkin' Donut Hazulnut freshly ground each morning… OMG, we're not peasants (-$2210/year). I take a container of cereal, yogurt and banana for breakfast (buy my milk at work for $0.60 a day) (-$648/year), and pack a sandwich for lunch (although I allow myself to go out once a week for lunch) (-$1440/year). I take a bag of chips and a case of soda (stashed under my desk) with me to work to avoid the vending machines too (-$504/year). So instead of spending more than $25/day, I'm spending roughly $20 a week now and my yearly cost savings from the above is about $8000 a year. This doesn't include Mrs. Cents' savings either. I do realize though that I have to buy the cereal, bananas, yogurt, sandwich fixings, soda and chips still, but even after these purchases, the cost savings is still over $6500 a year.

But again, we're not saying that everyone should stop buying everything all the time. But instead, recognize the incremental cost for each routine purchase you make and know that giving a big boost to your budget is little more than a cup of coffee (or lack thereof) away. Remember, it's the little things that count… and count… and count… and count… and count…

We hope this makes cents…