Daddy Financials

This is a question I used to ask myself a lot. When I wasn't really making any money, which is when you should be really tight with the little you have (a.k.a. frugal), I rationalized every little purchase as "it's just $5 and I haven't had Starbucks all week" or "I only spend $4 for a chicken platter when I go to lunch, my co-workers spend $6 so I'm doing OK" or even "I don't really need a PDA but it's on sale for only $399" or even worse "Damn I haven't hung out all week, I could use a drink, lemme call the boys. It's my last $50 but I get paid again next week". If this sounds anything like you, be verrryyy careful how far you take that mentality.

I'm not telling anybody not to have fun, not to penny pinch and become a hermit. I like to enjoy life as much as anybody, I just go about it differently. What I used to see as lunch for $4 for today, I now as a $20 weekly expense, which adds up to $1,040 a year for the privilege of eating lunch in Manhattan. $4 may not seem like much, but think of it long term. If your a smoker, $7/pack on average and if you smoke even 3 every week. That's $84 a month and $1,008 every year. So if you brown bag lunch and quit smoking, your halfway to a fully funded IRA. If you don't want to quit or it's too hard, cut down to 1 pack a week and see how much extra money you have in your pocket.

For me, I was a heavy drinker. This took a real toll on me physically and financially. On average I would spend at least $50-$75 every time I hung out with my friends, that's without food. We hung out about 4-5 times a week and if I didn't have any cash I ran a tab on a credit card. And I would rationalize probably the same you many of you do, I was young, I was having a good time, I'll pay it off later, it's not like I'm out smokin' crack. I was also into gadgets, PDA's, disc men, Sony PlayStation's, cell phones, anything that used electricity found its way into my hands one way or another. It's 0% financing, I'll pay it off little by little is what I would say to myself.

The lesson here is, what may seem like just $3 today or even just $10 is actually a lot more if this a recurring expense/habit. And just because you put it on a credit card does not make it better, interest counts as money owed too. If you can afford it, go ahead and spend it. Travel, see the world, expand your horizons, go out with your friends, LIVE IT UP. If you know your on a tight budget and can;t spend much, think about how much money would you have in your 401K, ROTH IRA, or your savings account if you put that $4 in there every time you would have spent it on that habit? Think about it......