Quote:
Originally Posted by DoubleF
Even if we assume that someone "only" wastes $500 per month (grab gum, grab snack, random purchase that was used once and collects dust, extra eat out, cigs/alcohol, spoiled groceries, heat>sweater, make up etc.), that's $6K per year or $60K a decade.
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People should look at this not in terms of what it costs now, but what it costs later.
Spending a sustained $6,000 a year requires, at a minimum, $150,000 in principal. Which is to say, if you believe in the 4% safe withdrawal rate (I don't, by the way), you need $150,000 to support $6,000 in annual spending.
It might not take that much work to earn $6,000, but sure takes a lot more work to save $150,000. With income taxes and the like, saving $150,000 probably requires earning at least $187,500. Or, alternatively, earning and saving something less than that amount, but not touching it and let compounding work its magic.
Either way, that $6K in spending is going to cost you a lot in terms of time and effort in the future in order to keep the $6K expenditure going. That hedonistic treadmill is an unforgiving and demanding bear.
Only you can determine if, as they say, the juice is worth the squeeze, but most people will admit that most expenditures aren't really worth it. Not worth the initial outlay of money, not worth the ongoing expense to keep it in terms of storage and housing cost, not worth the work and effort to earn the money that was used to buy it in the first place or that is needed to keep it.
There is some truth to the comment that "people spend money that they don't have to buy things that they don't need to impress people they don't like."*
But at the same time, it is becoming exceeding difficult for middle class (or lower) people to get started on a secure financial footing when employers demand pieces of paper that cost thousands of dollars for jobs that do not need them, when housing supply is being restricted to favor those who already have a house, and there is a tendency amongst those in government to privatize profits but socialize losses.
* This comment, or a variation of it, is often attributed to Dave Ramsey, but he wasn't the first to come up with it.