The Costs are Staggering!

Small Choices - Big Results

The quality of our choices are magnified over time, and this calculator definitely bears witness to that fact.

Many people are surprised at the size of the nest egg built up just from the cost of a few beers or cups of coffee per week. I assumed a 10% real rate of return and a retirement age of 65.   So the final number is about what you would get if you were to stop wasting so much money at the bars (I have been there too) and start plugging a little money into an online brokerage account like Etrade or Ameritrade.  Even if you are a beginner and don't invest your money well, you will be much farther ahead than if you just drank it all away.

The numbers you see here on this page would be something similar to what you would see with investing in good growth stock mutual funds sitting in a Roth IRA. The stock market has averaged a 12% rate of return over the long run, and many good mutual funds with long track records have long-term rates of return higher than that.

The "Fungibility" of Credit Cards

The coffee cost calculator actually underestimates the cost of your drinking money because many people buy such purchases on a credit card. Remember, if you have a balance on a credit card, you finance every purchase you make at the interest rate of that credit card (actually the credit card you own with the highest interest rate), even if you don't put that purchase on one of the cards. This is because the purchase could have been used to pay down that piece of debt, so the actual cost of the money is the interest rate of that highest credit card.  Its a scary thought, but its true.  If you have credit card debt, even if you pay for something with cash, you are "borrowing" that money at the interest rate of your credit cards.  This is known as the Fungibility of money.  Money in your left pocket, and your bank account, and outstanding on loans or credit cards, are all on the same terms.   They are the same pool of money, so to speak.