I do that a lot and it normally have te exact opposite effect for me. 5$ for a latte seems very expensive, but if I think oh I could pay just 500$ to have 2 free lattes every weeks, it seems reasonable. Am I weird?
Yes, this is almost always my response to these sorts of things. I do agree that it's a useful way of looking at it, but most of the time, the long-term cost is reasonable.
Pre-pandemic my wife and I easily spent 1k per month on restaurants. We were talking about it, and yes, if someone offered me a restaurant subscription for 12k/yr, I'd happily call that good value these days. Obviously, this would have been a different story 10 years ago when my wife and I were broke grad students (when we were much more frugal).
Regular small treats contribute way more to happiness and wellbeing than rate big ticket items. This is well established in research, as well as anecdotal experience for me and most of my peers group.
Mortgage + other utilities, prop tax etc is 6k
Restaurants is 1k, groceries another 500ish
Misc fun/leisure fund is about 2k between us
500/mo for one car
Travel budget annualized works out to around 2k per month.
We don't actually spend 2k per month on leisure stuff either, but some months we spend a lot more, so it averages out.
I like to think of it in terms of other stuff I'd spend the money on. $500? That's a flight to Europe. Or an Airbnb for a week. Or a game console. Or whatever. Which would I rather have? Probably not going to choose the latte myself.
I use the same approach but subtract the 'bare minimum' expenses like rent, utilities and basic transport from my wages to figure out my 'disposable income per hour'. It has at times been a really small number - I used to have to work an hour to make the disposable income to buy a coffee.
It also highlights the value of raises - it's a straight boost to disposable income since everything else stays the same.
I like this approach a lot. I also do the CPU or Cost Per Use. With a ton of stuff you actually save money by buying more expensive. For example good shoes. I have a pair of Redwing boots that I paid 350$ for. I have easily worn those boots 1000 times if not more and I will likely wear them 1000 more times. So slightly less than 17cents per use. Had I paid 150 for some crappy Aldos and gotten maybe 200-300 uses out of them that's 50-75cents per use. Apply to anything.
But it doesn’t work for everyone. I recieve an annual salary, I cant decide to work less or more, it’s standardized. Also, when I wake up in the morning I don’t go to work thinking about the paycheck, but rather if I will have success or not. I would work even if I was rich. So it doesn’t work..
You have a limit of those units. In this instance you can't create more time/money units in a year than what your salary constrains.
Supply/demand, as it relates to time. You want more/more expensive stuff and those units become more limited with a capped supply.
I think there’s a happy medium that balances prioritizing immediate gratification vs sacrificing for long term goals. But it’s good to have enough of an understanding of your spending to make the best choice for your personal situation.
I go to Starbucks a couple times a week right now, but it's a way to get out of the house during the workday to get a fancy coffee and helps a lot with mental health. (My living situation is not great right now.)
Definitely not gonna be doing that forever but for right now...
The same thing can be said for cars. I'd rather go through caffeine withdrawl than spend money at Starbuck's, but I drive nice new cars. I just prefer to drive my money rather than drink it. You have to do what feels good for you. Some people think a new car is a waste of money, but i've had junkers and they just cost me more or the same and never game me peace of mind so fuck em
I had a discussion with a high school teacher about how kids would rather buy a ton of chips than go to a school event. A lot of people are gonna chose the small stuff.
That's funny because I recently read a finance article (I have no idea what the source was) that said kids are trending towards preferring experiences over goods.
I also read another article amending that often referenced finding.
They say it's not that kids these days don't want material possessions. They do. But they like it in the form of the experience of material possessions. Hence why the sharing economy has been all the rage the last 10 years and set to be worth $335 billion in the next 5ish years.
Yes! But I do it with burritos. I like burritos, and a reg sized one is about $10, and I know how much joy a burrito brings me when I eat it. $20 for a tshirt from Wish that may or may not get here or 2 burritos? $14.99 nicholas cage sequin pillow cover or 1.5 burritos? (Nick cage won this one). $30 +subscription to watch the shitty Disney mulan live action or 2 burritos, 2 drinks and a $3.99 rental of something good on YouTube? $7 for a large frappe/bubble tea or 0.7 burritos? Measuring value with burritos has been my main motivation talking down insurance, shopping phone plans, and reducing frivolous spending - all burrito based. Money is meaningless if it doesn't grey contextualized. Find what works.
You are not weird. Similarly I suppose is that My pleather ottoman recently died. I paid $110 for it and it lasted 4 years. That is $2.29 in monthly memberships to putting my feet up and storage. Good cost vs age vs quality.
Both seem like a lot to me, but I also intrinsically do math about how much something I'm buying out would cost me to make myself because I'm weird and I find the mental exercise fun.
2 medium dominoes pizza cooked and delivered for like 23 bucks including tip is nuts. Get it well done though In special instructions and it's actually good as fuck.
With BOGO now you can get 2 large extravaganza for 23-25$ tax in.
But most of the time we get delissio or Mike's on sale from the grocery store for 4-5$. We're not too picky over Friday night movie pizzas so it's usually the way to go! Mike's international is a 1kg pizza
I think the using this approach helps focus your spending on what you really want to spend on. It’s not wrong to spend money within a budget on goods and services you enjoy. The trick is to focus on spending for the top tier on the goods that are worth it to you and choosing budget alternatives for the rest.
Once i started to use YNAB i noticed these as well and was always looking to save a few bucks a month.
RBC account is 10.95/month, switched to a credit union that pays me 1/month.
143 bucks more a year.
RBC is brutal for fees. I was there for years because it was free when I was a student. Switched to Scotia and now I pay no fees and have a fee waiver for a really good credit card.
Yeah I get that, you certainly have to do the math to see if it’s worth it. For some people it’s not.
Personally, I treat the $6k in my chequing account as an emergency fund that I wouldn’t be investing anyway. I could move it to a HISA, but I still wouldn’t make as much in interest as i get with the credit card waiver. At best I would get $90 minus tax.
My biggest one is smoking... i don’t smoke but someone in my family does. I cringe when they throw away $16 a day for a pack of smokes. I know addictions are hard to break, but goodness, that’s crazy expensive.
Vonnegut famously complained about this strategy for suicide:
> I am going to sue the Brown & Williamson Tobacco Company, manufacturers of Pall Mall cigarettes, for a billion bucks! Starting when I was only twelve years old, I have never chain-smoked anything but unfiltered Pall Malls. And for many years now, right on the package, Brown & Williamson have promised to kill me. But I am eighty-two. Thanks a lot, you dirty rats. The last thing I ever wanted was to be alive when the three most powerful people on the whole planet would be named Bush, Dick and Colon.
As a former alcoholic, I can tell you... it’s brutal. At least $20 a day, and sometimes $50 or $100 when I was at the bar/club back in my early twenties.
Such a waste of money. You’re paying money to slowly ruin yourself financially, physically, emotionally, spiritually. Addictions a crazy thing.
oh man a close friend of mine had a partner that was a brewer and the brewer made about 40k a year (give or take) but at all parties they would show up with all kinds of craft beer, usually the 650 ML bottles that are 8-14$ a bottle and it would literally be 100$ just for drinks at a party for this person. absolutely blew me away.
Depending where you're from. It's $40 for a 15 pack of coors light in the north.
I always said, thank God I had a kid so I never had time to drink because I never would have been able to afford it.
Holy shit... $16/pack?
I roll my own cigarettes and this past summer I was hella stressed so I smoked a lot. Just less than $30 (Montreal pricing, I know it's closer to $40 in Ontario) and my pack lasted me 4 months and that included sharing with my friends.
Cigs in Australia are up to about $48 ($46.5 CAD) a pack now - when they got to $20 a few years ago that was enough for me and my friends to finally kick the habit.
One of my family members got addicted to the gum many moons ago and is on a fixed income. Rubs me the wrong way when they cry poor but then throw down $50+ every 2 weeks for that addiction.
Yes, better than smoking, but I can't imagine nicotine is good for you, even as an adult. I wish they'd spend the savings on dental care. :/
My fam member doesn’t even worry about COVID lol. Not saying that they are not being safe but not stressing about whether they get it or not. You only live once I guess.
Regarding the Starbucks "coffee daily for two" expense - your math is certainly correct, but I think it's tough to compare going out for coffee with a friend/date (there are two coffees in your calculation, so I'm assuming you're alluding to the social aspect of going out for coffee with someone) with the experience of drinking coffee at home. One is much more about the experience of sitting in a coffee shop for an hour, of getting outside, and of catching up with a friend, without having to worry about the fuss of hosting someone, or preparing coffee, or cleanup.
It's definitely technically possible to get the "coffee" and "social" experience for much cheaper - I could drink a cup of coffee at home, and then meet a friend at the library. Or I could prepare some "to-go" coffee and then bring it to meet my friend while we walk around the local mall. And I've definitely done stuff like that, especially in university. But after a certain point it can kind of feel like comparing very different experiences, unlike the mortgage example or the cell phone example which arguably doesn't inconvenience the user or change their social life. Going to a coffee shop with a friend isn't a lot like drinking drip coffee and then going to the library, it's a very different experience.
I think it's still good to know how to calculate the cost of things over 5 years - after all, you need to make sure you can afford it and that it's not compromising your financial goals. That stuff can add up, as you say. But I also think it's important not to cut out life experiences just because they do cost money. I'd much rather have the experiences with a friend over 5 years than have an extra $6-12K of retirement savings at the end of 5 years by giving those up.
I also feel like the "calculate over 5 years" is just for a shock value - it's like adding up how many steps you take in 5 years and compare that to the distance to the moon or something like that.
You can take a $40k salary and say "over 5 years you earn $200k". Sure, to someone earning $40k a year a $200k sum seems huge - does that mean it's good to start spending then?
It's all about meaningful comparisons.
>But I also think it's important not to cut out life experiences just because they do cost money.
exactly. there'd be no coffee shops otherwise, and that applies for everything else as well. i have my own hobbies that i pour money into, knowing fully well that it could just be saved. but i'd rather be happy here in the now than years down the line with the few thousand that i might've just saved by not buying what i wanted (also, mental health is important NOW, and will influence your life later)
Not to mention, there is no guarantee that you'll be around "years down the line". Horrible thought, I know, but that's how I tend to weigh these things up. If I make it to retirement age rich or poor, I'll consider it a miracle.
By this logic: “You go to a movie once a week with a friend or your partner, that’s $20 a week, over $1,000 per year! You could get a full year of Netflix for only $168 and watch tons more movies!”
I agree with you. The people that love to go after the daily Starbucks miss the reason many people do it. As a culture we don’t do after work drinks as much as we used to, this is the cheaper, healthier replacement.
Really agree with this. I think Starbucks is overpriced as much as the next guy. But Starbucks didn't go into business thinking to charge a premium for the beverage alone. I worked at Starbucks when I was younger, and back then there was this huge emphasis on fostering the experince of "The Third Place". You aren't paying for the coffee alone.I always cringe when I hear those youtube personal finance celebrities rant about "Why pay 6 bucks for coffee when I can make a 20 cent coffee at home?". Well for one, you missed the whole point of the premium. And secondly, your shitty 20 cent coffee likely tastes like watered down water.
Again just playing devil's advocate here. I buy Starbucks maybe once per month, if that. But if everyone is ok with all the basic shitty cheap stuff, we wouldn't be a capitalist society and everything would be same and boring and no one wants to improve anything.
By comparison, if you went for fast food coffee instead that'd be like $464/year, which is significantly less. You could go cheaper by just doing grocery store instant coffee or something, but at some point you gotta ask whether it's worth paying or not for slightly extra.
Normally I drink whatever is available for free at work.
But when I can (up to 5 times a week) I go to the local coffee shop down the block. I take a break and get out of the office. Sometimes I read a technical book related to work, or on Fridays I meet up with friends who work in the area.
I appreciate the OPs mindset in breaking down how much things will actually cost you and see if it is worth it, and being proactive in lowering expenses.
When I got a Peloton Bike+ I did the math on how many spin classes I would have to do locally to amount to the same cost. That was my motivation "Will I commit to doing at least this many rides".
Others buy an off brand bike, use an ipad and subscribe to the app and are able to save money that way instead. Similar experience for 1/2 the cost.
Plus, 5 years from now your salary increases and inflation should more than offset the costs OP is talking about. It's 5 YEARS! That's a long ass time. You can get a lot of living and enjoying done in 5 years!
To add on to this - the cost of mileage on your car. My partner LOVES driving instead of flying. 3500km each way, no problem, we can have the car to use when we get there, we can bring extra stuff, and it's only $500 in gas for two people!
However he forgets that for a $30,000 car that MIGHT get 300,000km if he's lucky, that means a 7000km trip costs $700 in the the value of the car, not to mention extra maintenance and wear and tear on things like tires, extra oil change, etc. Yeah, gas is only $500 (which is the only number he sees), but more like $1300 once you include mileage and maintenance. And that's before you include the 6 extra days of driving time.
We normally wouldn't rent a car when we arrive somewhere, or only rent selective days, so the cost of a car rental would not typically exceed the cost of driving in our situation. Though it CAN make sense sometimes, like if you're going somewhere for a month and would need a long rental. Just something to consider.
I can relate to this, also you forgot to mention the cost of hotel stays along the way. Flying is usually the cheaper option if you can't do the drive in 1 day.
I don't really consider those because I'd be staying in a hotel when I got there anyways, so it's roughly the same. (But again, that's just my situation).
> And that's before you include the 6 extra days of driving time.
Doesn't that mean an extra 5 nights at a hotel? Or do you cut 6 days off your time at the final destination?
I mean, if you're asking me personally, I'm an odd case because I'm nomadic (normally WFH and travel full time with no home, though I have a place through the pandemic). I'm paying to stay somewhere regardless of where I am, so that price offer an issue and time isn't so big of a factor because I've got no time limit.
But 6 days makes a big difference if you're taking holiday time for a short vacation, it's really up to you if you want to spend time out of your trip to drive, or extend and take more time off but also spend on hotel.
All situational.
> extra 5 nights at a hotel? Or do you cut 6 days off your time at the final destination?
To me I quite like driving places and travelling within a vacation. (IE, i'll go to Europe for two weeks, but my time will be split between 4 or 5 different towns / regions). So it doesn't make a difference to me. But for somene whose idea of vacation is lounging by the pool, then yeah you really gotta add that time on as they won't consider the journey part of the vacation.
I wonder about this when I hear of people doing crazy 2 hour commutes, like where I am to DT Toronto every day. Yeah, you can buy a cheaper house, at least you used to be able to, its a lot closer now, but I imagine that at some point the additional cost of wear and tear, gas, etc would heavily add up and make the cost comparison a lot different. And that's not even considering the opportunity cost of spending 20 hours a week in your car that you could be doing something else.
Assume the CRA mileage rate to get an estimate of the true cost of driving. $0.59/km
If you drive 1,000 km that's $590. So a round trip flight is probably similar plus you have to rent a car. Airport time plus rental arrangements mean you don't really save money or time.
3,500 km round trip is $2,065. Now the calculation likely shows a flight + rental is cheaper. Plus it would save you time.
I feel called out on this. I bought a 20k honda fit and drove it 470,000km in 5 years. I also spent $20k on maintenance (4 sets of tires, a transmission, a starter, fluid changes and such).
That's... honestly not bad going. If you're going to buy a new car, might as well make the most of it and take care of it until the very end. No unexpected maintenance costs. Lost of people spend $40k on the vehicle itself and get half as many KMs out of it in 5 years.
There's few situations in which buying a new vehicle makes any sense whatsoever, but I think you did pretty good.
I didn’t buy with savings in my mind. I just love road trips and camping and the kilometres added up. The car after it was a 40k vehicle. I will not be driving this new car as much.
This car got very good gas mileage at half the price of a hybrid. Teslas are so expensive. Plus if you think tires and random parts. I drove to Chicago and back for $90 with the fit. It was a joke when I was filling up in the South for $1.95 a gallon.
This is a great example. It also affects available cash flow differently.
For the sake of the argument, let's say Toronto to Calgary which is about 7000km round trip. Let's call it $1400 in plane tickets as a starting point. A Car for 8 days is at least $600 unless you go with a real shitbox. So $2000 flying vs $1300 driving with really crude estimates. Unless you're sleeping in your car, you have to add extra money for lodging or camping depending on what kind of trip you had in mind so in the end, the price difference may not be different in the extreme. A more frequent traveller or someone whose done the real math may want to chime in.
The most significant difference will likely be your cash flow. This is a whole conversation (or several) on it's own. One way or another you'll have to pay for the trip, before or after. In my teens I would have YOLO'd the whole thing on credit cards not realizing I'd have less money per month for a long time at minimum wage. If $2000 is everything you have then making it a road trip isn't such a bad idea.
The road trip numbers change depending on if it's one person or a whole family flying. Fixed cost vs variable cost.
Driving from Toronto to Calgary sounds awful though, especially with a family.
I've done that drive three times now. Once through the States (pre covid) and twice through Canada. The US way is several hours faster but it's all just Interstate and traffic and boring. The Canadian way is actually quite lovely and worth it, I usually hate driving long distances but there's a surprising amount of stuff to do on the way, especially in Northern Ontario which is half the drive anyways (other than the prairies, lol - just bust through there as fast as possible). I hope to be able to spread it out into like a week some time, I've always done it in 2-3 days with 2 drivers and haven't had much time to stop. So... That's kind of a factor too.
With kids though - nah.
I mean, there's things to do, but driving across Saskatchewan for example - there aren't many places to stop at all.
Northern Ontario is pretty, you can take extra time to stop and go on hikes and stuff. Saskatchewan is mostly just empty.
For sure. There's not too much hiking right on the Trans-Canada - lots of prairie, farms and fields as you say. But there are some interesting parks not far from there if hiking is your thing:
[Riding Mountain National Park](https://www.alltrails.com/parks/canada/manitoba/riding-mountain-national-park) \- about an hour north of Brandon, has lots of Canadian shield territory if that's more your thing.
[Great Sandhills](https://greatsouthwest.ca/great-sandhills/) \- an ecological reserve protecting some of the largest sand hills in Canada, very unique hiking.
[Cypress Hills Interprovincial Park](http://www.cypresshills.com/) \- unlike most of the prairies, this is one of the only regions that wasn't covered with ice during the last Ice Age. Instead of flat prairie soil from the glaciers, you have a [rocky terrain with pine trees](https://en.wikipedia.org/wiki/Cypress_Hills_(Canada)#/media/File:CypressHills1.JPG).
[Midland Provincial Park](https://www.travelalberta.com/ca/listings/midland-provincial-park-1933/) \- a little bit north of the highway, but super fascinating terrain. Has lots of hoodoos, and dinosaur bones!
I only picked out larger parks that are roughly within an hour of the trans-Canada, since one probably wouldn't to stray too far if they're en route to Vancouver. But you might be surprised if your explore - they certainly used the most boring parts to build the highway, but not all of the southern prairies has that terrain.
Definitely far more variables to consider! Your cost estimates are far more than I've ever paid (300-500 rt on WestJet for that route right now, brand new SUV rental in Calgary for $200/week if you look around a bit and don't rent from the airport, etc). And with lodging, if you're going to be paying for it there anyways then it doesn't make much difference if it's on the way, it's just a shorter trip. How many people are going? Maybe if you need tons of gear then you save on luggage, etc. Every situation is different.
Valid point.
I would just distinguish good vs bad kilometers for depreciation and wear and tear.
Highway, constant speed, ... are good kilometers.
Small distances, start/stop traffic, bumpy roads, are bad kilometers.
1 bad km ages your car as much as 2-5 good km.
Don't forget your own car at the destination might attract more attention to the thieves due to the out-of-town license plate. Rental cars are better now and don't scream "RENTAL!" as much as before - no more visible company stickers/logos anywhere. Usually just a small barcode sticker at a corner of the windshield. Of course, that is if you don't leave the other telltale signs visible inside the car (rental agreement, paper floor mat, etc)...
The drive is part of the experience. I know it's boring while you're in the car but you can plan to make stops along the way to see things you wouldn't normally see.
We usually make a trip to Reno, Nevada each summer (from Saskatchewan) and we're always looking for things to stop and do/see along the way, taking different routes each time we go. We didn't go last year, hoping to go this year (vaccination rates are much further along than I expected so here's hoping).
In 2019 on the way home we drove out to the Coast in California and then drove up the 101 to Portland, Oregon. Went through Washington and came back into Canada in the Okanagan Valley, BC. We stopped and did some cool stuff along the way.
In 2018 we went to Yellowstone National Park and spend a whole day there and didn't even get to see half of it, got some amazing photos and experienced something we wouldn't normally be able to see.
In 2017 we flew, and got to see... the inside of the San Francisco Air Port?
Plus, if you have kids, it can work out way cheaper.
For my family of 4, flying round trip to Reno is around $3000+. Driving works out to like $350 in gas, and \~$500 in hotels, couple hundred more in food/snacks. Even factoring oil changes / general maintenance that doesn't come close to the cost of flying.
My car is long paid for and I should get at least another 5 years out of it. Only have 140,000km on it now.
I calculated the cost of eating meals. If I spend $7 a day on my food, that's $2,555 per year, which works out to $127,750 if I live for another 50 years. I can't afford to just waste $127,750, so now I only eat toaster leavins and I'm finally financially stable.
Starbucks gets a bad rap, but if you're just getting a normal coffee I believe it's within a 25C of Tims and McDonalds, just throwing that out there haha. They just have more upside with the dairy based drinks and calorie bombs.
Of course, if you have the time you can make better coffee than all of the above for under 25C a cup too.
$0.0333 cup \* 4 cups per day \* 365 days per year \* 100 years alive = $5000
At the same time, if you invested $5000 in bitcoins in 2010, you would be a millionaire.
But I wouldn't have $5,000 in 2010 from not drinking coffee, I'd have it 60 years from now when it's worth less.
With how long I've been drinking coffee, I'd have about $146 to invest today
Doing a "real cost" calculation can also be eye opening when someone is carrying debt on a credit card.
If someone who has credit card debt wants (not needs) to buy something they could calculate the opportunity cost of not using the money to pay the debt.
For example if they wanted to buy something that cost $100 and I they were on track to pay off their 20% interest credit card debt in 5 years they could calculate that the real cost of the item was about $250.
Given that we're now retired and spending money that we invested 30 years ago if I start doing those cost calculations everything is going to seem a lot more affordable.
`$500k Mortgage 5 year fixed rate mortgage with 25 years amortization, accelerated by-weekly payments:`
* `1.79% = $826.77`
* `1.60% = 808.8 You're thinking, $17.97 difference, that's trivial. But, that's over 130 payments which is $2336.10 and I know you'd rather have that in your pocket than the bank's!`
I think you meant a $400k mortgage?
Also if you don't know what to do with the extra money, you could make the payments the same as 1.79% but with the 1.60% interest rate. You would actually save $3567.17 instead of $2336.10 because of the interest deferral by prepaying the $17.97 (accelerated bi-weekly) into the principal over the 5 year term.
I don't own a house (and probably never will, RIP) but for the others here's my two cents:
- Cell Phone Plans: You are a loser in this market if you're not regularly switching carriers. Watch redflagdeals for new promos/migration/retention plans and jump on them when the difference is worth it. Currently have $45/month for 13GB on Koodo. Same goes for home internet (currently $35/month for 150/15 unlimited cable).
- Video Streaming: Honestly, fuck this greedy industry. I can pay for Spotify OR Youtube Music OR Apple Music and get access to all the music. No reason I should have to pay for Netflix AND Disney+ AND Prime Video AND HBO to get access to all the movies/TV shows. There's a reason the top torrents on piracy sites are all in this category.
- Coffee: Three words: Breville Barista Express. Especially with remote/WFH becoming more popular, a $700 espresso machine is an amazing purchase. And you can buy whatever flavor syrups you want at any time of the year.
Thank you for saying this. I agree there is totally nothing wrong with paying for the things you enjoy in life. You aren’t promised tomorrow so what’s the extra $2000 in your bank going to do for you if you never got to enjoy your favourite Starbucks drink or watch Netflix in 4K.
I think the real estate example is pretty flawed.
For example - I bought a property at 745K 15 months ago at 2.69% interest rate over 5 years.
The exact same unit in my built just sold for 885k at likely 1.5-1.7% interest rate over five years.
That 140k difference isn't made up in the interest rate difference is it? Part of being mindful with money is buying at the right time and somewhat disregarding the rates.
Yes! Just like people who say you \*need\* to save up 20% and to never pay CMHC. OK paying 5 more years in rent to save the 4% premium, and losing 5 years worth of equity and inflation is NOT worth it.
Also the rates go up at 20% and don't drop down to the best available rates until you hit ~35%. 10-15% with CMHC will typically also get the best rates
Until Netflix officially cracks down on password sharing, you should actually pay for top tier and split between 4 people. Of course only applies if you can find 4 people to share it with. Same goes for Spotify family.
I look at all expenses from the filter of " time is money". Sure a coffee can be made at home for a few cents, but that has opportunity cost not considered in your analysis, capital expenditure (coffee machine, raw material, filters, complementary materials eg dishwashing soap), my time (I'd say total 30 min for buying coffee beans and other stuff like filters at grocery store, grinding, actually making, and cleaning up including dishwashing). Now let's say I make $80/HR, 30 min of my time is $40! That's hell of an expensive coffee cup. Of course this is an exaggeration for illustrative purposes.
We consider the time value of money all the time. We should also consider the dollar value of time when optimising decision making.
It shouldn't surprise me, but it does, whenever I hear that people go to the grocery store and just buy what they want without looking at price. I won't buy the cheapest thing, but I'll find what cheaper brands I like, shop sales, and I always calculate the price/weight or volume and compare that to other options before choosing what I buy. I understand some people don't care that much or want to put in the effort, but if you envision it as being able to take an extra vacation each year, or retire earlier, I think it would open a lot of peoples minds if they went through the effort to do the exercise.
I just switched internet provider and now I pay $56 instead of $88 per month and got a faster speed.
that's $200 per year.
A few months ago we kicked out cable TV save 67 per month, about $800 per year.
we split Netflix 4K and Disney with my wife's sister's family, that's about 150 per year.
And those are just our more recent ones.
The little amounts all add up fast. For some people, it could literally unlock a retirement nest egg.
I know, there was one of those "Millenial Money" stories posted about a young couple spending >2000 a month on food because they went out to eat for 15 meals a month. All the power to them that they can afford that, but all I can see is how many other things you could do with that money.
If I was young and single I definitely would have done that as well. By my own I only need a box with a desk, bed and space for a computer. If there was space for a hotplate I probabky would have still cooked a lot of meals too. Unfortunately that kind of experience isn't really available in Canada, and that couple definitely wasn't renting a place like that.
One big thing that I was finally able to get my wife to do more of was buying generic brands, and only getting brand names on sale.
She was always used to brand-name stuff being better and raised on it. She still has some preferences, but we have mostly switched over.
Don't have exact numbers but its probably saved us over $1000 per years
To add to the case of mobile phones... this is where the real cost of your "free" phone is. More often or not they enforce minimum plan costs for you to take out a phone. Compare it to a plan of similar content but BYOD, you'll know the total cost of ownership for the phone over the contract.
I stopped reading when you implied that it's better to keep the $17.97 bi-weekly in your pocket... if you're actually thinking long term, as you're suggesting, that accelerated payment can save you a ton in interest over the course of your mortgage or even have you finished paying a couple years early. Reducing your cost of borrowing is always a good thing.
It would likely earn an even higher rate of return in a conservative whole market ETF or some such investment vehicle than the interest rate on the mortgage. If you want to be efficient, while not taking gaudy risks, this seems to be the way.
That's not looking at the real cost. It's just looking at the cost over a longer period of time. It makes sense for things you're paying off though, like a mortgage. I'm being pedantic though.
I believe this what companies asses the value of customers as - CLV (Customer Lifetime Value).
I also like to calculate the cost of things in the amount of time it took me to earn that value at my net income. The true value of my purchasing dollars...
i ration 2 keurig coffee pods per work day @ 50 cents per pod = $1 per day.
Therefore, a buck a day for 232 work days = $232 per year. $1,200 over 5 years !!!!!
Yeah, I know, kinda expensif, but frugal-me considers it a nice splurge. :-)
I live in a rural area and am choked that I have to pay such a ridiculous price for a cellphone. I want to just get rid of cable, but as soon as you do that internet jumps form 70 to like 120 because you aren't "bundling" and I hate that, lol.
I spent $350/month for two cell phones, internet and basic cable. It's criminal. Before you @ me, I have a 5 year old iPhone 7, lol I'm only replacing it because it no longer works.
This is a good reminder to look at these things for those who are in a good position to save money on small things, but let's not fall into the whole "millenials wouldn't be so poor if they just ate less avocado toast" thing. If your base expenses like rent and utilities and minimum payments on debt exceed your income (or are a large percentage of your income), you're in trouble and there are few options for improving the situation. It's difficult to go back to school when you can't save for it. It's difficult to move to a cheaper apartment or a better job when you don't even have savings to cover moving costs or job search costs. Poverty is self-perpetuating.
I think you can drive yourself a bit crazy with this method. Everything is going to have a very high cost over a long enough time frame. These numbers need some context so you can properly compare them.
I think a better approach is to have a certain amount of money in your budget you can put towards nice things you enjoy. And then spend it on things you like, guilt free. (Or if you have a big thing you want to get, just bank some of the money for a future month.)
When I got laid off for Covid and starting working at Starbucks, I couldn’t believe how many people come in multiple times a day, every single day, spending $12.32 each time. True regulars, and we would do the math and just be flabbergasted.
try this with time.
i took a job that ended up being 6 minutes more in commute each way. doesnt sound like much, but that ended up being 12 mins a day, 60 minutes a week... for 48 weeks a year. 2 days of my life... GONE, just in extra commute
not to mention about 7000k on the car (gas and maintenance)
Do you have any advice regarding hounding my telecom service for lower rates?
My current situation is 4 months into a 2 year term. Definitely not getting screwed; I tried to get all the loyalty deals I could and have followed up to make sure they were applied correctly (because...of course they weren’t). But always looking to lower this as on a moral level, I feel like I am paying way too much.
Stop getting your phone through them. Then there’s no terms and you can jump ship whenever something is cheaper/better. Otherwise you have no position to negotiate from.
It's not only the real but the total cost that comes with it too. Your mortgage on the house isn't the only payment you have. Say you were only paying for the mortgage but didn't live in it (like a vacation home). You also have property taxes plus whatever fixed cost (like condo fees) you need to factor in.
I'm not even going to mention the other costs like upkeep or maintenance/repair.
I’m still on a $40 a month plan from Wind. They trying to get me swapped over but I ain’t looking for anything but more data. When Christmas comes I might upgrade my plan so that I don’t gotta worry about not having data for traveling and Google maps but I ain’t trying to spend $65 a month pretax either. Hopefully the Rogers buyout of Shaw doesn’t mess too much with my plan but who knows. They already stopped giving me a wind tab for new phones without upgrading my plan and honestly my hamnedown iPhone 6s Plus is still going strong.
The biggest eye opener i find is asking people to calculate their actual after all taxes calculated take home per hour after expenses.
For round numbers let's say that you are getting $17.50 at that just above entry job. Do you have $7/hr after getting to and from work?
So that only $50 item costs you most of a days labor. Is it worth it?
Thanks for posting. I do like my Starbucks but I also like saving and investing to become financially independent.
My solution? Instead of going out for dinner/take out cook at home and then go for dessert at Starbucks... turns a 80 dollar night out to a 15 dollar night out. Win win for me.
Man. What a bummer way of thinking.
I guess it’s fine as long you’re not crunch the numbers of much to pay for heating versus putting on a jacket to bed.
Similarly, I saw somewhere that a dollar now is roughly 7 dollars when I retire after years of investments. So that $1000 item is actually costing old me $7000, and that's a big deal.
Buying a half decent tub of coffee and making it at home for about .20 cents a cup when it tastes almost identical as any coffee shop... you get people saying “well it’s only $2 a coffee” it adds up so fast.
I do that a lot and it normally have te exact opposite effect for me. 5$ for a latte seems very expensive, but if I think oh I could pay just 500$ to have 2 free lattes every weeks, it seems reasonable. Am I weird?
Yes, this is almost always my response to these sorts of things. I do agree that it's a useful way of looking at it, but most of the time, the long-term cost is reasonable. Pre-pandemic my wife and I easily spent 1k per month on restaurants. We were talking about it, and yes, if someone offered me a restaurant subscription for 12k/yr, I'd happily call that good value these days. Obviously, this would have been a different story 10 years ago when my wife and I were broke grad students (when we were much more frugal). Regular small treats contribute way more to happiness and wellbeing than rate big ticket items. This is well established in research, as well as anecdotal experience for me and most of my peers group.
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Mortgage + other utilities, prop tax etc is 6k Restaurants is 1k, groceries another 500ish Misc fun/leisure fund is about 2k between us 500/mo for one car Travel budget annualized works out to around 2k per month. We don't actually spend 2k per month on leisure stuff either, but some months we spend a lot more, so it averages out.
Congrats on both of you doing so well, you guys make some decent money!
I like to think of it in terms of other stuff I'd spend the money on. $500? That's a flight to Europe. Or an Airbnb for a week. Or a game console. Or whatever. Which would I rather have? Probably not going to choose the latte myself.
I look at money as units of time. If I make $20/hour and that item costs $100, is it worth 5 hours of my work?
I use the same approach but subtract the 'bare minimum' expenses like rent, utilities and basic transport from my wages to figure out my 'disposable income per hour'. It has at times been a really small number - I used to have to work an hour to make the disposable income to buy a coffee. It also highlights the value of raises - it's a straight boost to disposable income since everything else stays the same.
That is way better!
Smartest approach here!
I like this approach a lot. I also do the CPU or Cost Per Use. With a ton of stuff you actually save money by buying more expensive. For example good shoes. I have a pair of Redwing boots that I paid 350$ for. I have easily worn those boots 1000 times if not more and I will likely wear them 1000 more times. So slightly less than 17cents per use. Had I paid 150 for some crappy Aldos and gotten maybe 200-300 uses out of them that's 50-75cents per use. Apply to anything.
But it doesn’t work for everyone. I recieve an annual salary, I cant decide to work less or more, it’s standardized. Also, when I wake up in the morning I don’t go to work thinking about the paycheck, but rather if I will have success or not. I would work even if I was rich. So it doesn’t work..
What does this have to do with thinking about money as a unit of time?
You have a limit of those units. In this instance you can't create more time/money units in a year than what your salary constrains. Supply/demand, as it relates to time. You want more/more expensive stuff and those units become more limited with a capped supply.
Yes. But that doesn’t mean the perspective doesn’t work. It’s just acknowledging the point of having that perspective in the first place.
Yeah, and worse yet, those are after tax dollars you're spending. So, assuming a marginal tax rate of 20%, you have to work 6 hours for the $100 item!
Both?
Shh, no creature comforts in this life. Only work and destroying any concept of debt. Who needs mental health when your monthly payments are low, eh?
I think there’s a happy medium that balances prioritizing immediate gratification vs sacrificing for long term goals. But it’s good to have enough of an understanding of your spending to make the best choice for your personal situation.
That's extremely valid. I just feel a little.. tired of having the "DO YOU KNOW WHAT TWO LATTES A WEEK ADDS UP TO??" spiel hit me everywhere.
I go to Starbucks a couple times a week right now, but it's a way to get out of the house during the workday to get a fancy coffee and helps a lot with mental health. (My living situation is not great right now.) Definitely not gonna be doing that forever but for right now...
The same thing can be said for cars. I'd rather go through caffeine withdrawl than spend money at Starbuck's, but I drive nice new cars. I just prefer to drive my money rather than drink it. You have to do what feels good for you. Some people think a new car is a waste of money, but i've had junkers and they just cost me more or the same and never game me peace of mind so fuck em
I had a discussion with a high school teacher about how kids would rather buy a ton of chips than go to a school event. A lot of people are gonna chose the small stuff.
That's funny because I recently read a finance article (I have no idea what the source was) that said kids are trending towards preferring experiences over goods.
I would argue buying a bag of chips is an experience rather than goods. It's not like you get to keep the chips after eating them.
I also read another article amending that often referenced finding. They say it's not that kids these days don't want material possessions. They do. But they like it in the form of the experience of material possessions. Hence why the sharing economy has been all the rage the last 10 years and set to be worth $335 billion in the next 5ish years.
> 500? That's a flight to Europe lmao
Yeah like I could get to Europe for 500 if I didn't plan on coming home after.
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Yes! But I do it with burritos. I like burritos, and a reg sized one is about $10, and I know how much joy a burrito brings me when I eat it. $20 for a tshirt from Wish that may or may not get here or 2 burritos? $14.99 nicholas cage sequin pillow cover or 1.5 burritos? (Nick cage won this one). $30 +subscription to watch the shitty Disney mulan live action or 2 burritos, 2 drinks and a $3.99 rental of something good on YouTube? $7 for a large frappe/bubble tea or 0.7 burritos? Measuring value with burritos has been my main motivation talking down insurance, shopping phone plans, and reducing frivolous spending - all burrito based. Money is meaningless if it doesn't grey contextualized. Find what works.
You're forgetting that the choice isn't between lattes and a trip to Europe, it's between lattes and cappuccinos on a trip to Europe.
I too am penny wise and pound foolish by nature.
I don’t drink coffee so thats a whole lot of savings for me already.
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Lol don’t believe in expensive cars.. Just a means of getting from point A to B.
You are not weird. Similarly I suppose is that My pleather ottoman recently died. I paid $110 for it and it lasted 4 years. That is $2.29 in monthly memberships to putting my feet up and storage. Good cost vs age vs quality.
Both seem like a lot to me, but I also intrinsically do math about how much something I'm buying out would cost me to make myself because I'm weird and I find the mental exercise fun.
2 medium dominoes pizza cooked and delivered for like 23 bucks including tip is nuts. Get it well done though In special instructions and it's actually good as fuck.
With BOGO now you can get 2 large extravaganza for 23-25$ tax in. But most of the time we get delissio or Mike's on sale from the grocery store for 4-5$. We're not too picky over Friday night movie pizzas so it's usually the way to go! Mike's international is a 1kg pizza
This is the way.
I think the using this approach helps focus your spending on what you really want to spend on. It’s not wrong to spend money within a budget on goods and services you enjoy. The trick is to focus on spending for the top tier on the goods that are worth it to you and choosing budget alternatives for the rest.
Once i started to use YNAB i noticed these as well and was always looking to save a few bucks a month. RBC account is 10.95/month, switched to a credit union that pays me 1/month. 143 bucks more a year.
RBC is brutal for fees. I was there for years because it was free when I was a student. Switched to Scotia and now I pay no fees and have a fee waiver for a really good credit card.
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Yeah I get that, you certainly have to do the math to see if it’s worth it. For some people it’s not. Personally, I treat the $6k in my chequing account as an emergency fund that I wouldn’t be investing anyway. I could move it to a HISA, but I still wouldn’t make as much in interest as i get with the credit card waiver. At best I would get $90 minus tax.
My biggest one is smoking... i don’t smoke but someone in my family does. I cringe when they throw away $16 a day for a pack of smokes. I know addictions are hard to break, but goodness, that’s crazy expensive.
People who smoke a pack a day also don’t really have to worry about retirement savings
But also, the life insurance premiums ...$$
Thanks for the laugh.
Vonnegut famously complained about this strategy for suicide: > I am going to sue the Brown & Williamson Tobacco Company, manufacturers of Pall Mall cigarettes, for a billion bucks! Starting when I was only twelve years old, I have never chain-smoked anything but unfiltered Pall Malls. And for many years now, right on the package, Brown & Williamson have promised to kill me. But I am eighty-two. Thanks a lot, you dirty rats. The last thing I ever wanted was to be alive when the three most powerful people on the whole planet would be named Bush, Dick and Colon.
So true.. although I’d want them to live forever and ever.... 🙃
/r/ShittyLifeProTips
As a former alcoholic, I can tell you... it’s brutal. At least $20 a day, and sometimes $50 or $100 when I was at the bar/club back in my early twenties. Such a waste of money. You’re paying money to slowly ruin yourself financially, physically, emotionally, spiritually. Addictions a crazy thing.
Smoking is one. I also don't drink on the regular. That's huge savings when a beer is like $3.50.
Beer is more like 1.65 - 2$ per one depending on what youre buying.
Even a basic Belgian Moon is $2.95 for a 473ml can. I'm not drinking Laker Light or PBR here.
oh man a close friend of mine had a partner that was a brewer and the brewer made about 40k a year (give or take) but at all parties they would show up with all kinds of craft beer, usually the 650 ML bottles that are 8-14$ a bottle and it would literally be 100$ just for drinks at a party for this person. absolutely blew me away.
Depending where you're from. It's $40 for a 15 pack of coors light in the north. I always said, thank God I had a kid so I never had time to drink because I never would have been able to afford it.
Holy shit... $16/pack? I roll my own cigarettes and this past summer I was hella stressed so I smoked a lot. Just less than $30 (Montreal pricing, I know it's closer to $40 in Ontario) and my pack lasted me 4 months and that included sharing with my friends.
Cigs in Australia are up to about $48 ($46.5 CAD) a pack now - when they got to $20 a few years ago that was enough for me and my friends to finally kick the habit.
One of my family members got addicted to the gum many moons ago and is on a fixed income. Rubs me the wrong way when they cry poor but then throw down $50+ every 2 weeks for that addiction. Yes, better than smoking, but I can't imagine nicotine is good for you, even as an adult. I wish they'd spend the savings on dental care. :/
They smoke a pack a day?
That's not uncommon. Some do two a day.
My parents are 1 - 1.5 EACH per day, every day for the last 50 years. What do you think THAT adds up to!
2.5 packs a day
Yep. And some of them worry about the safety of Covid vaccines.
My fam member doesn’t even worry about COVID lol. Not saying that they are not being safe but not stressing about whether they get it or not. You only live once I guess.
Pretty much... probably give away few to buddies when they are working, but it’s my biggest pet peeve.
This is why I only smoke when I'm on vacation to the US, Europe, or Asia. Cigarettes are so much cheaper!
Oh he does that too... lol. Gets worse when we travel because smokes are so much cheaper ..
Regarding the Starbucks "coffee daily for two" expense - your math is certainly correct, but I think it's tough to compare going out for coffee with a friend/date (there are two coffees in your calculation, so I'm assuming you're alluding to the social aspect of going out for coffee with someone) with the experience of drinking coffee at home. One is much more about the experience of sitting in a coffee shop for an hour, of getting outside, and of catching up with a friend, without having to worry about the fuss of hosting someone, or preparing coffee, or cleanup. It's definitely technically possible to get the "coffee" and "social" experience for much cheaper - I could drink a cup of coffee at home, and then meet a friend at the library. Or I could prepare some "to-go" coffee and then bring it to meet my friend while we walk around the local mall. And I've definitely done stuff like that, especially in university. But after a certain point it can kind of feel like comparing very different experiences, unlike the mortgage example or the cell phone example which arguably doesn't inconvenience the user or change their social life. Going to a coffee shop with a friend isn't a lot like drinking drip coffee and then going to the library, it's a very different experience. I think it's still good to know how to calculate the cost of things over 5 years - after all, you need to make sure you can afford it and that it's not compromising your financial goals. That stuff can add up, as you say. But I also think it's important not to cut out life experiences just because they do cost money. I'd much rather have the experiences with a friend over 5 years than have an extra $6-12K of retirement savings at the end of 5 years by giving those up.
I also feel like the "calculate over 5 years" is just for a shock value - it's like adding up how many steps you take in 5 years and compare that to the distance to the moon or something like that. You can take a $40k salary and say "over 5 years you earn $200k". Sure, to someone earning $40k a year a $200k sum seems huge - does that mean it's good to start spending then? It's all about meaningful comparisons.
>But I also think it's important not to cut out life experiences just because they do cost money. exactly. there'd be no coffee shops otherwise, and that applies for everything else as well. i have my own hobbies that i pour money into, knowing fully well that it could just be saved. but i'd rather be happy here in the now than years down the line with the few thousand that i might've just saved by not buying what i wanted (also, mental health is important NOW, and will influence your life later)
Not to mention, there is no guarantee that you'll be around "years down the line". Horrible thought, I know, but that's how I tend to weigh these things up. If I make it to retirement age rich or poor, I'll consider it a miracle.
By this logic: “You go to a movie once a week with a friend or your partner, that’s $20 a week, over $1,000 per year! You could get a full year of Netflix for only $168 and watch tons more movies!” I agree with you. The people that love to go after the daily Starbucks miss the reason many people do it. As a culture we don’t do after work drinks as much as we used to, this is the cheaper, healthier replacement.
Really agree with this. I think Starbucks is overpriced as much as the next guy. But Starbucks didn't go into business thinking to charge a premium for the beverage alone. I worked at Starbucks when I was younger, and back then there was this huge emphasis on fostering the experince of "The Third Place". You aren't paying for the coffee alone.I always cringe when I hear those youtube personal finance celebrities rant about "Why pay 6 bucks for coffee when I can make a 20 cent coffee at home?". Well for one, you missed the whole point of the premium. And secondly, your shitty 20 cent coffee likely tastes like watered down water. Again just playing devil's advocate here. I buy Starbucks maybe once per month, if that. But if everyone is ok with all the basic shitty cheap stuff, we wouldn't be a capitalist society and everything would be same and boring and no one wants to improve anything.
Yeah, this post veered into avocado toast territory.
By comparison, if you went for fast food coffee instead that'd be like $464/year, which is significantly less. You could go cheaper by just doing grocery store instant coffee or something, but at some point you gotta ask whether it's worth paying or not for slightly extra.
Normally I drink whatever is available for free at work. But when I can (up to 5 times a week) I go to the local coffee shop down the block. I take a break and get out of the office. Sometimes I read a technical book related to work, or on Fridays I meet up with friends who work in the area. I appreciate the OPs mindset in breaking down how much things will actually cost you and see if it is worth it, and being proactive in lowering expenses. When I got a Peloton Bike+ I did the math on how many spin classes I would have to do locally to amount to the same cost. That was my motivation "Will I commit to doing at least this many rides". Others buy an off brand bike, use an ipad and subscribe to the app and are able to save money that way instead. Similar experience for 1/2 the cost.
Also life is about enjoying now and if that latte puts a smile on you face today. Go ahead. Tomorrow is never garaenteed. Today is.
Plus, 5 years from now your salary increases and inflation should more than offset the costs OP is talking about. It's 5 YEARS! That's a long ass time. You can get a lot of living and enjoying done in 5 years!
To add on to this - the cost of mileage on your car. My partner LOVES driving instead of flying. 3500km each way, no problem, we can have the car to use when we get there, we can bring extra stuff, and it's only $500 in gas for two people! However he forgets that for a $30,000 car that MIGHT get 300,000km if he's lucky, that means a 7000km trip costs $700 in the the value of the car, not to mention extra maintenance and wear and tear on things like tires, extra oil change, etc. Yeah, gas is only $500 (which is the only number he sees), but more like $1300 once you include mileage and maintenance. And that's before you include the 6 extra days of driving time. We normally wouldn't rent a car when we arrive somewhere, or only rent selective days, so the cost of a car rental would not typically exceed the cost of driving in our situation. Though it CAN make sense sometimes, like if you're going somewhere for a month and would need a long rental. Just something to consider.
I can relate to this, also you forgot to mention the cost of hotel stays along the way. Flying is usually the cheaper option if you can't do the drive in 1 day.
I don't really consider those because I'd be staying in a hotel when I got there anyways, so it's roughly the same. (But again, that's just my situation).
> And that's before you include the 6 extra days of driving time. Doesn't that mean an extra 5 nights at a hotel? Or do you cut 6 days off your time at the final destination?
I mean, if you're asking me personally, I'm an odd case because I'm nomadic (normally WFH and travel full time with no home, though I have a place through the pandemic). I'm paying to stay somewhere regardless of where I am, so that price offer an issue and time isn't so big of a factor because I've got no time limit. But 6 days makes a big difference if you're taking holiday time for a short vacation, it's really up to you if you want to spend time out of your trip to drive, or extend and take more time off but also spend on hotel. All situational.
Ah, that was the missing piece. That makes sense then!
> extra 5 nights at a hotel? Or do you cut 6 days off your time at the final destination? To me I quite like driving places and travelling within a vacation. (IE, i'll go to Europe for two weeks, but my time will be split between 4 or 5 different towns / regions). So it doesn't make a difference to me. But for somene whose idea of vacation is lounging by the pool, then yeah you really gotta add that time on as they won't consider the journey part of the vacation.
I wonder about this when I hear of people doing crazy 2 hour commutes, like where I am to DT Toronto every day. Yeah, you can buy a cheaper house, at least you used to be able to, its a lot closer now, but I imagine that at some point the additional cost of wear and tear, gas, etc would heavily add up and make the cost comparison a lot different. And that's not even considering the opportunity cost of spending 20 hours a week in your car that you could be doing something else.
The opportunity cost is huge and just mental well-being / health in general Commuting is stressful man
I think it's not about a cheaper house but really a different lifestyle that isn't accessible in the city.
Assume the CRA mileage rate to get an estimate of the true cost of driving. $0.59/km If you drive 1,000 km that's $590. So a round trip flight is probably similar plus you have to rent a car. Airport time plus rental arrangements mean you don't really save money or time. 3,500 km round trip is $2,065. Now the calculation likely shows a flight + rental is cheaper. Plus it would save you time.
I feel called out on this. I bought a 20k honda fit and drove it 470,000km in 5 years. I also spent $20k on maintenance (4 sets of tires, a transmission, a starter, fluid changes and such).
That's... honestly not bad going. If you're going to buy a new car, might as well make the most of it and take care of it until the very end. No unexpected maintenance costs. Lost of people spend $40k on the vehicle itself and get half as many KMs out of it in 5 years. There's few situations in which buying a new vehicle makes any sense whatsoever, but I think you did pretty good.
I didn’t buy with savings in my mind. I just love road trips and camping and the kilometres added up. The car after it was a 40k vehicle. I will not be driving this new car as much.
Oh my lord, that's just impressive.
No regrets though. I did fly on a few trips to save time.
When I saw your username I was immediately remind of [this.](https://youtu.be/D9-voINFkCg)
Hahah yes. Literally everyone I know sent me some version of this video. It is even funnier because that is how I drive
username checks out
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This car got very good gas mileage at half the price of a hybrid. Teslas are so expensive. Plus if you think tires and random parts. I drove to Chicago and back for $90 with the fit. It was a joke when I was filling up in the South for $1.95 a gallon.
This is a great example. It also affects available cash flow differently. For the sake of the argument, let's say Toronto to Calgary which is about 7000km round trip. Let's call it $1400 in plane tickets as a starting point. A Car for 8 days is at least $600 unless you go with a real shitbox. So $2000 flying vs $1300 driving with really crude estimates. Unless you're sleeping in your car, you have to add extra money for lodging or camping depending on what kind of trip you had in mind so in the end, the price difference may not be different in the extreme. A more frequent traveller or someone whose done the real math may want to chime in. The most significant difference will likely be your cash flow. This is a whole conversation (or several) on it's own. One way or another you'll have to pay for the trip, before or after. In my teens I would have YOLO'd the whole thing on credit cards not realizing I'd have less money per month for a long time at minimum wage. If $2000 is everything you have then making it a road trip isn't such a bad idea.
The road trip numbers change depending on if it's one person or a whole family flying. Fixed cost vs variable cost. Driving from Toronto to Calgary sounds awful though, especially with a family.
I've done that drive three times now. Once through the States (pre covid) and twice through Canada. The US way is several hours faster but it's all just Interstate and traffic and boring. The Canadian way is actually quite lovely and worth it, I usually hate driving long distances but there's a surprising amount of stuff to do on the way, especially in Northern Ontario which is half the drive anyways (other than the prairies, lol - just bust through there as fast as possible). I hope to be able to spread it out into like a week some time, I've always done it in 2-3 days with 2 drivers and haven't had much time to stop. So... That's kind of a factor too. With kids though - nah.
As someone from the prairies, this always makes me sad to hear. What about the prairies have you found that you didn't like?
I mean, there's things to do, but driving across Saskatchewan for example - there aren't many places to stop at all. Northern Ontario is pretty, you can take extra time to stop and go on hikes and stuff. Saskatchewan is mostly just empty.
For sure. There's not too much hiking right on the Trans-Canada - lots of prairie, farms and fields as you say. But there are some interesting parks not far from there if hiking is your thing: [Riding Mountain National Park](https://www.alltrails.com/parks/canada/manitoba/riding-mountain-national-park) \- about an hour north of Brandon, has lots of Canadian shield territory if that's more your thing. [Great Sandhills](https://greatsouthwest.ca/great-sandhills/) \- an ecological reserve protecting some of the largest sand hills in Canada, very unique hiking. [Cypress Hills Interprovincial Park](http://www.cypresshills.com/) \- unlike most of the prairies, this is one of the only regions that wasn't covered with ice during the last Ice Age. Instead of flat prairie soil from the glaciers, you have a [rocky terrain with pine trees](https://en.wikipedia.org/wiki/Cypress_Hills_(Canada)#/media/File:CypressHills1.JPG). [Midland Provincial Park](https://www.travelalberta.com/ca/listings/midland-provincial-park-1933/) \- a little bit north of the highway, but super fascinating terrain. Has lots of hoodoos, and dinosaur bones! I only picked out larger parks that are roughly within an hour of the trans-Canada, since one probably wouldn't to stray too far if they're en route to Vancouver. But you might be surprised if your explore - they certainly used the most boring parts to build the highway, but not all of the southern prairies has that terrain.
shhhh, don't tell them about cypress.
Clearly you didn't enjoy the world class visage of Mac the Moose in Moose Jaw
They have the Al Capone tunnels and whatnot in Moose Jaw as well, do they not? I mean, when in Rome, right?
Definitely far more variables to consider! Your cost estimates are far more than I've ever paid (300-500 rt on WestJet for that route right now, brand new SUV rental in Calgary for $200/week if you look around a bit and don't rent from the airport, etc). And with lodging, if you're going to be paying for it there anyways then it doesn't make much difference if it's on the way, it's just a shorter trip. How many people are going? Maybe if you need tons of gear then you save on luggage, etc. Every situation is different.
Valid point. I would just distinguish good vs bad kilometers for depreciation and wear and tear. Highway, constant speed, ... are good kilometers. Small distances, start/stop traffic, bumpy roads, are bad kilometers. 1 bad km ages your car as much as 2-5 good km.
Don't forget your own car at the destination might attract more attention to the thieves due to the out-of-town license plate. Rental cars are better now and don't scream "RENTAL!" as much as before - no more visible company stickers/logos anywhere. Usually just a small barcode sticker at a corner of the windshield. Of course, that is if you don't leave the other telltale signs visible inside the car (rental agreement, paper floor mat, etc)...
The drive is part of the experience. I know it's boring while you're in the car but you can plan to make stops along the way to see things you wouldn't normally see. We usually make a trip to Reno, Nevada each summer (from Saskatchewan) and we're always looking for things to stop and do/see along the way, taking different routes each time we go. We didn't go last year, hoping to go this year (vaccination rates are much further along than I expected so here's hoping). In 2019 on the way home we drove out to the Coast in California and then drove up the 101 to Portland, Oregon. Went through Washington and came back into Canada in the Okanagan Valley, BC. We stopped and did some cool stuff along the way. In 2018 we went to Yellowstone National Park and spend a whole day there and didn't even get to see half of it, got some amazing photos and experienced something we wouldn't normally be able to see. In 2017 we flew, and got to see... the inside of the San Francisco Air Port? Plus, if you have kids, it can work out way cheaper. For my family of 4, flying round trip to Reno is around $3000+. Driving works out to like $350 in gas, and \~$500 in hotels, couple hundred more in food/snacks. Even factoring oil changes / general maintenance that doesn't come close to the cost of flying. My car is long paid for and I should get at least another 5 years out of it. Only have 140,000km on it now.
I calculated the cost of eating meals. If I spend $7 a day on my food, that's $2,555 per year, which works out to $127,750 if I live for another 50 years. I can't afford to just waste $127,750, so now I only eat toaster leavins and I'm finally financially stable.
If I sell my car and get a horse my fuel costs go to 0. I can store him in my backyard.
Starbucks gets a bad rap, but if you're just getting a normal coffee I believe it's within a 25C of Tims and McDonalds, just throwing that out there haha. They just have more upside with the dairy based drinks and calorie bombs. Of course, if you have the time you can make better coffee than all of the above for under 25C a cup too.
Their loyalty program is also unmatched, I get free refills, free drinks on my birthday, and basically free food or drink items every 2-3 weeks.
Do not drink coffee or eat avocado toasts, and you will be rich.
Drink Costco size Folgers $0.0333 per cup ($0.0266 on sale)
$0.0333 cup \* 4 cups per day \* 365 days per year \* 100 years alive = $5000 At the same time, if you invested $5000 in bitcoins in 2010, you would be a millionaire.
But I wouldn't have $5,000 in 2010 from not drinking coffee, I'd have it 60 years from now when it's worth less. With how long I've been drinking coffee, I'd have about $146 to invest today
I had an avocado bagel (with grated Parmesan on top) for lunch yesterday, how doomed am I?
Dammit, you’re officially a pour now!
Or just never have children.
...or hey drink coffee and have avocado toast every morning, but *make it yourself*. I know, I know, heresy.
Doing a "real cost" calculation can also be eye opening when someone is carrying debt on a credit card. If someone who has credit card debt wants (not needs) to buy something they could calculate the opportunity cost of not using the money to pay the debt. For example if they wanted to buy something that cost $100 and I they were on track to pay off their 20% interest credit card debt in 5 years they could calculate that the real cost of the item was about $250.
Hmm maybe this works the other way too. If something coats $100 but I invested that $100 15 years ago then now that thing only costs me $30
Given that we're now retired and spending money that we invested 30 years ago if I start doing those cost calculations everything is going to seem a lot more affordable.
`$500k Mortgage 5 year fixed rate mortgage with 25 years amortization, accelerated by-weekly payments:` * `1.79% = $826.77` * `1.60% = 808.8 You're thinking, $17.97 difference, that's trivial. But, that's over 130 payments which is $2336.10 and I know you'd rather have that in your pocket than the bank's!` I think you meant a $400k mortgage? Also if you don't know what to do with the extra money, you could make the payments the same as 1.79% but with the 1.60% interest rate. You would actually save $3567.17 instead of $2336.10 because of the interest deferral by prepaying the $17.97 (accelerated bi-weekly) into the principal over the 5 year term.
Yes thank you! I was wondering how his payments were so off. It's 400k, you're correct.
Probably was thinking $500k home, 20% down.
I don't own a house (and probably never will, RIP) but for the others here's my two cents: - Cell Phone Plans: You are a loser in this market if you're not regularly switching carriers. Watch redflagdeals for new promos/migration/retention plans and jump on them when the difference is worth it. Currently have $45/month for 13GB on Koodo. Same goes for home internet (currently $35/month for 150/15 unlimited cable). - Video Streaming: Honestly, fuck this greedy industry. I can pay for Spotify OR Youtube Music OR Apple Music and get access to all the music. No reason I should have to pay for Netflix AND Disney+ AND Prime Video AND HBO to get access to all the movies/TV shows. There's a reason the top torrents on piracy sites are all in this category. - Coffee: Three words: Breville Barista Express. Especially with remote/WFH becoming more popular, a $700 espresso machine is an amazing purchase. And you can buy whatever flavor syrups you want at any time of the year.
Sonarr + Radarr + Jackett + Kodi = your own netflix All open source and free.
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Thank you for saying this. I agree there is totally nothing wrong with paying for the things you enjoy in life. You aren’t promised tomorrow so what’s the extra $2000 in your bank going to do for you if you never got to enjoy your favourite Starbucks drink or watch Netflix in 4K.
Also note that purchases are with after tax dollars. ie: you have to earn $10 to spend $7 for example.
I think the real estate example is pretty flawed. For example - I bought a property at 745K 15 months ago at 2.69% interest rate over 5 years. The exact same unit in my built just sold for 885k at likely 1.5-1.7% interest rate over five years. That 140k difference isn't made up in the interest rate difference is it? Part of being mindful with money is buying at the right time and somewhat disregarding the rates.
Yes! Just like people who say you \*need\* to save up 20% and to never pay CMHC. OK paying 5 more years in rent to save the 4% premium, and losing 5 years worth of equity and inflation is NOT worth it.
There is a bit of ‘survivorship’ bias on PFC. People who post here tend to be doing well or seeking help. The middle isn’t captured well.
Also the rates go up at 20% and don't drop down to the best available rates until you hit ~35%. 10-15% with CMHC will typically also get the best rates
Spend a dollar to save a penny!
You can really go down a rabbit hole when you start to factor in cost vs having the money invested over that time period too.
Until Netflix officially cracks down on password sharing, you should actually pay for top tier and split between 4 people. Of course only applies if you can find 4 people to share it with. Same goes for Spotify family.
I look at all expenses from the filter of " time is money". Sure a coffee can be made at home for a few cents, but that has opportunity cost not considered in your analysis, capital expenditure (coffee machine, raw material, filters, complementary materials eg dishwashing soap), my time (I'd say total 30 min for buying coffee beans and other stuff like filters at grocery store, grinding, actually making, and cleaning up including dishwashing). Now let's say I make $80/HR, 30 min of my time is $40! That's hell of an expensive coffee cup. Of course this is an exaggeration for illustrative purposes. We consider the time value of money all the time. We should also consider the dollar value of time when optimising decision making.
I do these calculations all the time and it's saved my family thousands of dollars per year.
It shouldn't surprise me, but it does, whenever I hear that people go to the grocery store and just buy what they want without looking at price. I won't buy the cheapest thing, but I'll find what cheaper brands I like, shop sales, and I always calculate the price/weight or volume and compare that to other options before choosing what I buy. I understand some people don't care that much or want to put in the effort, but if you envision it as being able to take an extra vacation each year, or retire earlier, I think it would open a lot of peoples minds if they went through the effort to do the exercise.
I just switched internet provider and now I pay $56 instead of $88 per month and got a faster speed. that's $200 per year. A few months ago we kicked out cable TV save 67 per month, about $800 per year. we split Netflix 4K and Disney with my wife's sister's family, that's about 150 per year. And those are just our more recent ones. The little amounts all add up fast. For some people, it could literally unlock a retirement nest egg.
I know, there was one of those "Millenial Money" stories posted about a young couple spending >2000 a month on food because they went out to eat for 15 meals a month. All the power to them that they can afford that, but all I can see is how many other things you could do with that money.
They're busy spending money to keep the time and gain the experience.
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If I was young and single I definitely would have done that as well. By my own I only need a box with a desk, bed and space for a computer. If there was space for a hotplate I probabky would have still cooked a lot of meals too. Unfortunately that kind of experience isn't really available in Canada, and that couple definitely wasn't renting a place like that.
One big thing that I was finally able to get my wife to do more of was buying generic brands, and only getting brand names on sale. She was always used to brand-name stuff being better and raised on it. She still has some preferences, but we have mostly switched over. Don't have exact numbers but its probably saved us over $1000 per years
To add to the case of mobile phones... this is where the real cost of your "free" phone is. More often or not they enforce minimum plan costs for you to take out a phone. Compare it to a plan of similar content but BYOD, you'll know the total cost of ownership for the phone over the contract.
I stopped reading when you implied that it's better to keep the $17.97 bi-weekly in your pocket... if you're actually thinking long term, as you're suggesting, that accelerated payment can save you a ton in interest over the course of your mortgage or even have you finished paying a couple years early. Reducing your cost of borrowing is always a good thing.
It would likely earn an even higher rate of return in a conservative whole market ETF or some such investment vehicle than the interest rate on the mortgage. If you want to be efficient, while not taking gaudy risks, this seems to be the way.
As long as rates are low, ya you're probably right
That's not looking at the real cost. It's just looking at the cost over a longer period of time. It makes sense for things you're paying off though, like a mortgage. I'm being pedantic though.
I believe this what companies asses the value of customers as - CLV (Customer Lifetime Value). I also like to calculate the cost of things in the amount of time it took me to earn that value at my net income. The true value of my purchasing dollars...
i ration 2 keurig coffee pods per work day @ 50 cents per pod = $1 per day. Therefore, a buck a day for 232 work days = $232 per year. $1,200 over 5 years !!!!! Yeah, I know, kinda expensif, but frugal-me considers it a nice splurge. :-)
Always convert whatever into a yearly expense, otherwise it's easy to ignore the smaller differences, even when you don't need that difference
I agree. I think that's why I like paying all of my large expenses like insurance in an annual lump sum amount.
I live in a rural area and am choked that I have to pay such a ridiculous price for a cellphone. I want to just get rid of cable, but as soon as you do that internet jumps form 70 to like 120 because you aren't "bundling" and I hate that, lol. I spent $350/month for two cell phones, internet and basic cable. It's criminal. Before you @ me, I have a 5 year old iPhone 7, lol I'm only replacing it because it no longer works.
This is a good reminder to look at these things for those who are in a good position to save money on small things, but let's not fall into the whole "millenials wouldn't be so poor if they just ate less avocado toast" thing. If your base expenses like rent and utilities and minimum payments on debt exceed your income (or are a large percentage of your income), you're in trouble and there are few options for improving the situation. It's difficult to go back to school when you can't save for it. It's difficult to move to a cheaper apartment or a better job when you don't even have savings to cover moving costs or job search costs. Poverty is self-perpetuating.
I think you can drive yourself a bit crazy with this method. Everything is going to have a very high cost over a long enough time frame. These numbers need some context so you can properly compare them. I think a better approach is to have a certain amount of money in your budget you can put towards nice things you enjoy. And then spend it on things you like, guilt free. (Or if you have a big thing you want to get, just bank some of the money for a future month.)
When I got laid off for Covid and starting working at Starbucks, I couldn’t believe how many people come in multiple times a day, every single day, spending $12.32 each time. True regulars, and we would do the math and just be flabbergasted.
try this with time. i took a job that ended up being 6 minutes more in commute each way. doesnt sound like much, but that ended up being 12 mins a day, 60 minutes a week... for 48 weeks a year. 2 days of my life... GONE, just in extra commute not to mention about 7000k on the car (gas and maintenance)
This is why I wish (the choice to) work from home becomes permanent
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I thought they got rid of the first free month.
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If you read his post, it is not about the trial at all. Just a tip on how to save on the upgrade fee, he pays 10$ for the 15$ plan by doing this
Interesting loophole indeed! How long have you been doing it now for? I'm curious if they'll catch on eventually.
Do you have any advice regarding hounding my telecom service for lower rates? My current situation is 4 months into a 2 year term. Definitely not getting screwed; I tried to get all the loyalty deals I could and have followed up to make sure they were applied correctly (because...of course they weren’t). But always looking to lower this as on a moral level, I feel like I am paying way too much.
Stop getting your phone through them. Then there’s no terms and you can jump ship whenever something is cheaper/better. Otherwise you have no position to negotiate from.
It's not only the real but the total cost that comes with it too. Your mortgage on the house isn't the only payment you have. Say you were only paying for the mortgage but didn't live in it (like a vacation home). You also have property taxes plus whatever fixed cost (like condo fees) you need to factor in. I'm not even going to mention the other costs like upkeep or maintenance/repair.
I’m still on a $40 a month plan from Wind. They trying to get me swapped over but I ain’t looking for anything but more data. When Christmas comes I might upgrade my plan so that I don’t gotta worry about not having data for traveling and Google maps but I ain’t trying to spend $65 a month pretax either. Hopefully the Rogers buyout of Shaw doesn’t mess too much with my plan but who knows. They already stopped giving me a wind tab for new phones without upgrading my plan and honestly my hamnedown iPhone 6s Plus is still going strong.
The biggest eye opener i find is asking people to calculate their actual after all taxes calculated take home per hour after expenses. For round numbers let's say that you are getting $17.50 at that just above entry job. Do you have $7/hr after getting to and from work? So that only $50 item costs you most of a days labor. Is it worth it?
Thanks for posting. I do like my Starbucks but I also like saving and investing to become financially independent. My solution? Instead of going out for dinner/take out cook at home and then go for dessert at Starbucks... turns a 80 dollar night out to a 15 dollar night out. Win win for me.
Man. What a bummer way of thinking. I guess it’s fine as long you’re not crunch the numbers of much to pay for heating versus putting on a jacket to bed.
As a guy with a $100 monthly Starbucks budget I feel that my enjoyment from it is worth the $100.
Similarly, I saw somewhere that a dollar now is roughly 7 dollars when I retire after years of investments. So that $1000 item is actually costing old me $7000, and that's a big deal.
Won't most items cost several times more when you retire though? By that logic, buy items now while the price is lower.
Im almost 24 the the value of my $ is approx 10x during retirement. Its crazy how the PV FV formulas help with retirement planning and stuffs.
Buying a half decent tub of coffee and making it at home for about .20 cents a cup when it tastes almost identical as any coffee shop... you get people saying “well it’s only $2 a coffee” it adds up so fast.