Most Bad Habits are a Bargain

I like Wallet Pop. Just thought I’d throw that out at the start before I got into today’s topic.

Latte crop Tim Boyd The other week Wallet Pop ran one of those lists-with-stock-photos features that are popular on sites with a lot more production value than this one. The subject was 10 Bad Habits and What They Cost You. It is a list of minor vices and what they will set you back over the course of the year. The feature does not actually say that if you didn’t do these things you’d be rich, but we know that’s what they mean.

This is, of course, the latte thing again. The idea is that your budget is leaking cash on a daily basis to pay for little luxuries and conveniences. Plug those holes and all will be well. And Wallet Pop gets a total annual cost for its collection of indulgences of $12,289, which is real money for many people. The difference between saving and spending that amount over many years could translate into a significant difference in retirement lifestyle.

The 10 habits, sorted by me in descending order of annual cost, are:

On-Line poker $5200

Smoking (one $5 pack a day) $1825

Daily Starbucks visit $1442

Soft drinks $547

Ignoring car maintenance $376

Lottery tickets $365

On-Line porn $300

Text messaging $240

Getting fries with your fast food $80

Gossip magazines $78

The first thing you might notice is that this adds up to only $10,453. I am not sure how Wallet Pop got their total. Perhaps they understood that $5 for a pack of smokes was unrealistic in most parts of the country and assumed that $10 a day made more sense. Still, $10K is still meaningful for many.

But about half of the total is $5200 a year for on-line poker, which assumes a weekly session in which you drop $100. Maybe I am just (typically) out of touch with mainstream culture, but I can’t believe this is even remotely normal. If 10% of the US population spent this on average, on-line poker would be a $156 billion industry. Annual take for all US state lotteries is around $18 billion.

But what do I know? Perhaps most real Americans drop $100 a week hoping for a good flop. For them I have some simple advice: play for lower stakes. Keep lowering the stakes as long as your average result from playing is noticeably negative.

After on-line poker, the cost of sin drops off pretty quickly.

Cigarettes probably cost the average smoker a more than $1825 a year. Also, it will kill you, which really ought to be factored in somehow. Nothing puts a crimp in your retirement lifestyle like not being alive to have one.

The daily cappuccino (lattes are just so 90’s!) at $1442 is next up. That’s cheaper than the Latte Factor® figure of $2000/year used by David Bach, but still not nothing. But, as I have argued in the past, it is conceivable that it is a good use of your money after all, that you really enjoy those coffee breaks enough to justify the cost.

The remaining seven items are trivial. They may all be a waste, but even collectively they are a small waste. Sure, most are things you could probably do without even if you didn’t save money. On-line porn may or may not be bad for you, but there is no reason to ever pay for it. On the other hand, although I’m too old to get the whole texting thing, I will concede it is totally worth $240 to many people.

But from Starbucks on down, only skipping on car maintenance is obviously a waste of money and, depending on your income level, cutting these vices out may not make a noticeable impact on your finances at all. Indeed, in some cases, e.g. gossip magazines, these expenditures may be some of the best uses for your entertainment dollar.

The point is that outside of a few obvious examples, smoking, problem gambling, and several forms of addiction come to mind, most bad habits are relatively cheap. They may still be bad, and you may feel better about yourself if you drop them, but you are not likely to enjoy the further reward of monetary riches.

Bad habits are bad and expensive things are expensive. Any overlap is coincidence. Saving more may be a question of willpower and psychology for some people, but they should not let that confuse sound personal finance with living a clean vice-free life. Being rich and feeling good about yourself are two different things.

[Photo – Tim Boyd]

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