I haven’t read many shocking blog posts. Interesting, yes. But not shocking.
Enter May 2018. This post about the cascading effect of small purchases shocked me. Mr Money Mustache claims that even tiny spending choices can make or break your financial health. This seemed ridiculous, so I did the math myself.
I’ve thought about this a lot since them. Looking at the math, he’s absolutely right — my response to spending impulses (hobbies, clothing, electronics…) determines whether I spend my life doggy paddling and gasping for air or become an olympic swimmer.
The mundane choices we make every day reverberate years into the future.
Looking at my own life, here’s a rundown of 4 spending changes I decided to make:
My Audible.com Subscription Since 2014, I’ve paid Audible $15 every month to download one of their audiobooks.
That was fun until I fell months behind on finishing books. It was time to pull the trigger on the ‘Cancel Subscription’ page.
This bummed me out for a couple days. Even when I don’t have time to listen, I love the idea that I’m the type of person who would be an audible listener. I guess I’m the ideal audible customer: I keep paying but don’t use the service. #marketingwin 😞
Two things cheered me up:
- When I have extra money these days, I invest it in index funds, which return an average of 7% interest over time. By investing that $15 every month, I’ll have 2500 bucks to blow in 10 years. I could do some damage with 2500 bucks… *rubs hands together* Looking longer term, I could even let that $15 per month marinate for 30 years instead of 10 — for a sweet, sweet $17k. That’s about 8 months of living expenses for me assuming I spend a generous $30k per year. Would I trade my audible subscription for 8 months off work? DEFINITELY.
- I recently found out I can download audiobooks from my library for free. Problem solved.
Bread This might sound like a teeny weeny one. But. I have to buy a specific bread due to a food allergy. At the grocery store, this bread costs $5 / loaf. At 2.5 loaves per month, that’s costing me ~$12.50 per month. It’s essentially a bread subscription. A sub-scription, if you will. 😉 I realized this summer that I could just bake my own bread in about 20 minutes per week. The bread I make is really delicious. (Check out this no-knead bread recipe.) It costs me $.65 per loaf including energy cost, so $1.63 / month. That’s $10.87 saved per month. In 30 years, that’s a healthy $12k.
Just those two changes — trading my audible subscription for library audiobooks and giving up store-bought bread for homemade — will give me $29k in retirement, handily covering my living expenses for a YEAR. Take a year sabbatical from work? Retire a year earlier? Yes please! *Cha-ching!*
Ok, now for a couple bigger, more embarrassing ones:
Massages (don’t judge me…)
Last year, I spent ummm… hundreds… on massages to get through a tough winter.
After a while, I realized that they only make me feel better for about 6 hours. The thing that made me feel best was doing back exercises and practicing self-care. In the end, I decided to stop getting massages.
Looking at the math, let’s say I have $80 per month to spend. I could pay for 1 massage or put the $80 into an index fund.
If I do the massages, I’ll feel better for a few hours each month. In the index fund at a conservative 7% interest, in 10 years I could have $13,200.
So assuming a generous living budget of $30k / year, I could take SIX MONTHS off work in 10 years. Having a massage vs. having six months of my life back? I choose the six months.
If I’m looking longer-term, the numbers get even crazier. In 30 years, my $80 / month would turn into $90,600. By skipping massages, I could retire 3 years early and do whatever I want all day every day. YES!
Cell Phone Plan A year ago, my cousin Sam recommended a cell phone plan that I never bothered to look into: Mint Mobile. According to him, it would cost me $15 / month for basically unlimited everything. It sounded too good to be true. My current plan with AT&T was costing me a whopping $65 / month.
But I didn’t switch, because my short-termitis kicked in. Research, schmesearch… I already had a phone plan. Plus, I reasoned, no one I knew had Mint Mobile, so it must suck.
I came to realize that potentially saving $50 month might be worth a little effort. In essence, I’d be getting PAID to do that research.*
Doing the maths: putting that $50 / month into index funds for 10 years would give me $8,200: a healthy 3 months off.
In 30 years, that’s $56k, enough for me to reclaim 2 YEARS of my life. Because of AT&T’s limited coverage out here in the mountains, switching plans made sense anyway. I’d actually get BETTER coverage on the Mint Mobile plan which uses T-Mobile’s network.
I made the switch this month. So far I haven’t noticed any difference between my $15 Mint Mobile service and my $65 AT&T service. I’ll update if that changes.
Altogether, I’ll have $176k in 30 years, covering 6 YEARS of living expenses.
This will make a big impact on my future. In 2013 when I was saving almost nothing, my projected retirement age was 90-something. Maybe that six years earlier will allow me to retire in my late 80s.
*Some of the sites I used to research Mint Mobile:
– The Mint Mobile website
– Tom’s Guide 2018 review with detailed coverage and customer feedback
– This guy wrote a fascinating techical review including data speeds, etc. He has 2 phones, so compared them using the SpeedTest app
– Forbes.com 2018 article comparing plans
Note: Before 2018, Mint Mobile was called “MintSIM.”
John says
It’s great to be aware of the long-term effects of one’s choices… nice job on doing the math on that.
I hadn’t heard of Mint Mobile. They sound really good… but I see they don’t support wifi-calling on iPhones. I have lousy cell signal at home and need wifi-calling. (But maybe I wouldn’t need it if I switched carriers… hmm.) Anyway, my point is not to speak poorly of Mint Mobile, but to point out other options. I pay $35/month for Cricket, which uses AT&T. That’s much more that Mint Mobile, but much less than what a lot of people pay. And they support wifi-calling and visual voicemail.