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.

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]

Frugality, PF Blogs | Frank Curmudgeon | April 7, 2010 11:59 am

8 Comments

By Lance, April 7, 2010 @ 12:13 pm

“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.”

On the other hand, it does mean that your 401(k) doesn’t have to last for nearly as long, allowing today’s smokers to spend a small amount of money today to increase the odds that their nest egg will last for their entire retirement. From a broader perspective, cigarette-induced early graves could easily solve medicare’s funding crisis, so long as nobody is inconsiderate enough to discover an effective but expensive treatment for lung cancer.
By Ivy, April 7, 2010 @ 12:34 pm

These lists are endlessly stupid. This one was particularly so because in addition to the whole “give up your latte” vibe they missed a couple of huge financial risks that actually could matter.

Smoking for example. The real cost risk isn’t in the $5 pack of cigarettes, it’s in increased health and life insurance premiums now and potentially increased medical costs later. $5 a day won’t bankrupt you, but your out of pocket costs treating emphysema certainly could.

And car maintenance? Carrying crap in your trunk isn’t the risk here, it’s the possibility of needing to purchase a replacement car years sooner. Real regular maintenance (and I’m not talking about tweaking tire pressure here) can extend the life of your car significantly. Since vehicles are expensive depreciating assets, it makes sense to keep the one you have running as long as possible.

But quantifying these kinds of risks is hard. Real ROI for giving up smoking? Well, insurance companies hire very smart, math-savvy people just to figure that kind of stuff out. And that doesn’t make for snappy “top 10 ways of…” copy for a blog — that takes real thought and consideration. Not as easy as “give up your coffee and buy cheaper porn.”
By jim, April 7, 2010 @ 1:14 pm

Interesting that booze isn’t on their list. Guess the author is a drinker.
By Adam, April 7, 2010 @ 2:36 pm

I love anything lampooning the Latte(R) Factor. I hate nickel and dime frugality because to make any real difference you have to give up so many conveniences and vices that your life becomes only about saving money.

Of the 10 bad habits to drop listed on the site, I spend about $4 a week day on coffee (assume $1000/year). Porn is free where I come free…you can’t surf the net without stumbling across it whether you want it or not. Paying to see naked people? What is this the 80s?

As jim says, drinking at bars is probably my most expensive vice, I can regularly drop $100 a weekend on what my budget calls “going out”. More if I’m on vacation. Probably $5k a year. But f*ck if I’ll give that up, that’s one of the main sources of happiness in my life outside of friends/family and work satisfaction.

Well, at least he didn’t mention making your own laundry detergent.
By bex, April 7, 2010 @ 4:49 pm

“my friends, my habits, my family, they mean so much to me” — modest mouse

I think that $1500 a year is stupid to spend at starbucks… but that’s just because I hate coffee. My indulgence is $10 worth of high-quality tea that lasts me about a month.

I’d agree that “avoiding repairs” in general is the big money sucker… but it should also cover house repairs, medical check-ups, and general lifestyle changes that people avoid.
By Boston Steve, April 8, 2010 @ 9:14 am

Many years ago Mark Twain said that 90 % of deaths are suicide. And it turns out he was right.

Something like 75 % of deaths in the 40-65 age group are lifestyle related. If you make it past 40 you will probably smoke, overeat, under-exercise, drug or drink yourself to death.
By Craig, April 8, 2010 @ 3:04 pm

So the person in this example drops fifty bucks a month for a porn site membership, loses a hundred a week at poker games, smokes a pack a day, has a fancy espresso drink every morning plus three soft drinks, and never misses an issue of “People.” No wonder he doesn’t have time to get his oil changed.

I was also struck by the lack of restaurant meals, bars and so forth. Skip the fries? You want to save some scratch, dig your stove out from under that pile of pizza boxes and do some cooking.
By Oskar, April 10, 2010 @ 5:06 am

What often is missed in these conversations is that the goal is to give up stuff that does not matter to you in order to be able to spend more in the areas that do matter. At times this could be time with family and not stuff but anyway its not about saving money its is about redirecting resouces to the stuff that matters. Most frugalists understand that however it does not usually come accross in quick ’10 ways to’ lists.