By: Financial Mechanic Back in elementary school they did a lot to scare us out of smoking. A huge poster of a woman dominated the nurse’s office, where you could see through half of her body as if with cartoon x-ray vision. You could see her rotting lungs, cavity-filled mouth, and other gross consequences from habitual smoking. Definitely a decent fear tactic as that image is burned in my brain to this day. Another poster showed what you could buy with the money spent smoking over time.
Nice dinner out
Dinner at the top of the Eiffel Tower
Home theatre set up
Trip to Paris
5-day Heliskiing trip
Summiting Mt. Everest
Used 2015 Subaru Forester
The math is simple. Over time, the average rate of growth if you invest in a total index fund or the S&P 500 is around 7% annually, accounting for inflation. This growth is assuming you invested the money once and left it there to grow. If you are interested in playing with some numbers, here is a decent calculator to use. The days of retirement come from assumed spending of ~$40,000 a year after 40 years. Of course, this will vary person-to-person, but you could take the amount in the 40 Year column and divide it by your daily spending to get the number of days.
The biggest takeaways:
- If I invested the money from selling my car and biked to work instead, I could shave off at least 5 years of work.
- I don’t smoke, but if I instead gave up something I do a lot — eat out for lunch– I could make huge returns. Just one day of lunch will eventually be 2 days of freedom down the line. But if I brought my lunch from home for 10 years and invest $10 five days each week instead, I would have ~$33,000 in 10 years. Almost a full year of retirement for me!
- If I put off having one puppy now, eventually I can build a doggo empire and take over the world!
What is worth the trade?
Some things aren’t worth the trade-off of freedom down the line. We only have one life to live, and it’s not worth being an unhappy scrooge just so you can live big later. But what things would be easier to give up now to be worth free time later? Are there things in your life that don’t increase your quality of life that you could cash in for freedom? Republished with the permission of FinancialMechanic.com.