It’s Saturday morning and I’m finding myself sitting in my home office relaxing. It has been so long since we’ve just taken a weekend at home to relax that I have to admit, it’s kind of nice. Normally, I’d already be out working on the lake house, but we are getting so close on that, I decided to just take it easy this weekend. The other nice part about not going out there is that we aren’t spending gobs of money on building supplies this weekend. My wallet and bank account appreciate it.
I keep finding myself thinking about the future value of the money I have today. Nickel has a post about quick and dirty financial equations. While I knew about the Rule of 72, I hadn’t seen the easy way of figuring out what current money is worth at retirement age. Basically, you just have to add a zero to the sum that you are spending and that’s about what you are giving up in retirement. So, as an example, if I buy the Nintendo WII that I really want, I’d have to spend $250. Add a zero to that and I’m looking at a reduction of $2500 to my retirement. This rule assumes you have 30 years left before you retire and you earn a conservative 8%. If you do better than 8% in the next 30 years, you are losing even more. YIKES.
I absolutely love stumbling on to a new and simple tool like that because it truly sticks with me. I’m finding myself questioning all kinds of purchases by simply putting a zero on the end of it. The new laptop I just recently bought? Yeah, I robbed myself of $7000 in retirement. Uggghhh. Heck, even that nice cut of meat that we bought last night took a $200 bite out of retirement…… You get the drift. Of course, I don’t want to be the person that robs myself of today’s opportunities and enjoyment either, which is why I’m not collecting cans all day long and living on Top Ramen. It’s all about moderation, but I have to admit, this simple little tool is already altering my behavior slightly.
Now, if you’ll excuse me, I’m off to the store to spend money.
Wow! I think this really going to come in handy for stupid purchases….like the burrito for $6 I had to have at lunch today…that’s over $60 I took away from my retirement….
Of course on the flip side…you don’t want to deprive yourself of all current material happiness. It’s good to live it up sometimes.
Ugh, I do the same thing with spending as you do with the Wii scenario. Whenever I think of that, it really makes me not want to buy anything. The only way I can overcome it is by telling myself that I want to live a little when Im young and active, not when I’m old and stuck to a chair.