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I think that's too defeatist of a view. The boring reality is that small things done consistently over time seriously add up. It's true for health and exercise

I think that's too defeatist of a view. The boring reality is that small things done consistently over time seriously add up. It's true for health and exercise. It's true for relationships. It's true for finances. A $5 pick-me-up every now and then isn't a bad thing by itself. But if it becomes a daily habit, then you're missing out on other choices with better long-run returns. The immediate costs are small, but the eventual opportunity costs are huge. Younger people have a resource older people don't: time. That's time for habits to compound. May as well choose good ones to compound, because you're never getting that time back again.

acuozzo 3y ago
> if it becomes a daily habit, then you're missing out on other choices with better long-run returns If you quit that habit, it might make you miserable enough to make even worse financial choices. These petty expenditures are a tax on misery. Anecdote: My father's criminal history (racketeering) more-or-less forced him into a career in backbreaking construction in order to support his family when he got out of prison. He would come home after work with burns from creosote and often looked as if he had gone balls-to-the-wall in the gym all day. Back then, I wouldn't dare think to try to separate him from his cigarettes and lottery tickets. It would have been cruel.
Sebb767 3y ago
> because you're never getting that time back again. Which can also as easily be used as an argument to actually spend that money and enjoy it. In the end, it's important that the money is well spent: If you enjoy that 10$ coffee or 25$ takeout, it's awesome. If it's a daily habit that you're used to and doesn't give you much joy anymore, it's wasted money.
- ryandrake 3y ago
  It's not the $5 latte or $10 avacado toast that's keeping young people broke. I think we can all agree that that number is a drop in the bucket compared to huge expenses they are struggling with. The problem is the mindset of "I should be able to have a luxury because it makes me feel better" which, if you accept it, starts to pervade all of your spending. It justifies the Netflix subscription. Then it justifies the weekly beer bill and food delivery. Then it justifies a few video game DLCs or virtual items. Then it justifies blowing $500 on a banger birthday party or a nice vacation somewhere. Before you know it, you're buying a new wardrobe and a pickup truck you don't need. All because "You only live once and I deserve those little luxuries that bring me joy."
DonsDiscountGas 3y ago
It's not a point of view, it's just math. $5 every day is $150/month, $1800 per year, save that for 30 years and maybe you can have a down payment on a house (assuming the interest on your savings has kept pace with the increase in housing prices, which is likely but not certain). There's no one weird trick to get rich from no income.
- vel0city 3y ago
  Saving $1,800/yr for 30 years for a down payment is extremely hyperbolic. Loads of people manage to buy a house for far less than 10% down. The average is 8%, and one can get an FHA loan for only 3.5% down. 3.5% of $200,000 is 7,000, which you'll have more than that in under 4 years. For a $300,000 house you'd have that in under 6 years, assuming you only saved that $5/day and ignored any interest or other gains.
  - 1_1xdev1 3y ago
    Using this as a retort is totally missing the point. Ok so I only have to save up 7,000 now, so I can do it in 6 years, I guess. But that extra 1800 a month I'm continuing to save each year afterwards by forgoing my late doesn't actually cover the 7% APR on the additional loaned 33,000 (interest rates only high as of recent, but still)
    - vel0city 3y ago
      Using this as a retort is totally missing the point. The person I was replying to was saying it would take 30 years at that savings rate to have enough money for a down payment. You do agree, it wouldn't take 30 years to have a downpayment right? Like, we've now both done the math, and found its significantly less than 30 years, right? And actually, at 6.96% for a 30 year FHA loan, the added payment for the additional $33,000, is ~$218/mo. $1,800/yr is $150/mo, so it covers 68% of that amount if you're looking at it that way. Cut out another ~$2.26/day or $68/mo and you'll have completely covered it while owning a house. But I'd look at it this way, your mortgage taking out a $293,000 loan is ~$1,950. Property tax rates vary a lot, but we'll add ~$3k/yr to that (250/mo), budget $3k/yr for repairs as well, so $2,450/mo in the end. What are you paying for rent? How much of that are you keeping as equity? And yeah, property taxes will probably tick upwards a bit, you might need more repairs than budgeted here, but chances are you'll refinance your mortgage and cut that part down to like $1,300/mo or even less in several years if interest rates fall to like 4% or lower. Is your rent going to get lower?
marcosdumay 3y ago
I was almost 30 when I decided to put all my money-flow on paper and discovered that all the savings and spending, compound interested or not, having car problems and being broken for a while, everything up to almost that time meant absolutely nothing for my financial future. I guess most people just get the signal empirically, so they discover it in real time. Now, after that time savings started to matter. But must people are completely unable to relate to people that aren't an exact copy of themselves. Even when they once experienced the same thing. And yeah, people tend to get worse on this when they age.
throw0101b 3y ago
> The boring reality is that small things done consistently over time seriously add up. ~30 years ago the median house price in Toronto (Canada) was 4x the median household income. It is currently 13x the median income. * https://www.youtube.com/watch?v=NFlIfg0XoJk&t=47s https://www.youtube.com/watch?v=NFlIfg0XoJk&t=47s No amount of skipping lattés is going to add to make a dent in that difference. (I say this as someone in participates in /r/PersonalFinanceCanada who helps people educate themselves on living with-in their means and saving for the future (while enjoying the present).)

acuozzo 3y ago

> if it becomes a daily habit, then you're missing out on other choices with better long-run returns If you quit that habit, it might make you miserable enough to make even worse financial choices. These petty expenditures are a tax on misery. Anecdote: My father's criminal history (racketeering) more-or-less forced him into a career in backbreaking construction in order to support his family when he got out of prison. He would come home after work with burns from creosote and often looked as if he had gone balls-to-the-wall in the gym all day. Back then, I wouldn't dare think to try to separate him from his cigarettes and lottery tickets. It would have been cruel.

Sebb767 3y ago

> because you're never getting that time back again. Which can also as easily be used as an argument to actually spend that money and enjoy it. In the end, it's important that the money is well spent: If you enjoy that 10$ coffee or 25$ takeout, it's awesome. If it's a daily habit that you're used to and doesn't give you much joy anymore, it's wasted money.

ryandrake 3y ago
It's not the $5 latte or $10 avacado toast that's keeping young people broke. I think we can all agree that that number is a drop in the bucket compared to huge expenses they are struggling with. The problem is the mindset of "I should be able to have a luxury because it makes me feel better" which, if you accept it, starts to pervade all of your spending. It justifies the Netflix subscription. Then it justifies the weekly beer bill and food delivery. Then it justifies a few video game DLCs or virtual items. Then it justifies blowing $500 on a banger birthday party or a nice vacation somewhere. Before you know it, you're buying a new wardrobe and a pickup truck you don't need. All because "You only live once and I deserve those little luxuries that bring me joy."

DonsDiscountGas 3y ago

It's not a point of view, it's just math. $5 every day is $150/month, $1800 per year, save that for 30 years and maybe you can have a down payment on a house (assuming the interest on your savings has kept pace with the increase in housing prices, which is likely but not certain). There's no one weird trick to get rich from no income.

vel0city 3y ago
Saving $1,800/yr for 30 years for a down payment is extremely hyperbolic. Loads of people manage to buy a house for far less than 10% down. The average is 8%, and one can get an FHA loan for only 3.5% down. 3.5% of $200,000 is 7,000, which you'll have more than that in under 4 years. For a $300,000 house you'd have that in under 6 years, assuming you only saved that $5/day and ignored any interest or other gains.
- 1_1xdev1 3y ago
  Using this as a retort is totally missing the point. Ok so I only have to save up 7,000 now, so I can do it in 6 years, I guess. But that extra 1800 a month I'm continuing to save each year afterwards by forgoing my late doesn't actually cover the 7% APR on the additional loaned 33,000 (interest rates only high as of recent, but still)
  - vel0city 3y ago
    Using this as a retort is totally missing the point. The person I was replying to was saying it would take 30 years at that savings rate to have enough money for a down payment. You do agree, it wouldn't take 30 years to have a downpayment right? Like, we've now both done the math, and found its significantly less than 30 years, right? And actually, at 6.96% for a 30 year FHA loan, the added payment for the additional $33,000, is ~$218/mo. $1,800/yr is $150/mo, so it covers 68% of that amount if you're looking at it that way. Cut out another ~$2.26/day or $68/mo and you'll have completely covered it while owning a house. But I'd look at it this way, your mortgage taking out a $293,000 loan is ~$1,950. Property tax rates vary a lot, but we'll add ~$3k/yr to that (250/mo), budget $3k/yr for repairs as well, so $2,450/mo in the end. What are you paying for rent? How much of that are you keeping as equity? And yeah, property taxes will probably tick upwards a bit, you might need more repairs than budgeted here, but chances are you'll refinance your mortgage and cut that part down to like $1,300/mo or even less in several years if interest rates fall to like 4% or lower. Is your rent going to get lower?

marcosdumay 3y ago

I was almost 30 when I decided to put all my money-flow on paper and discovered that all the savings and spending, compound interested or not, having car problems and being broken for a while, everything up to almost that time meant absolutely nothing for my financial future. I guess most people just get the signal empirically, so they discover it in real time. Now, after that time savings started to matter. But must people are completely unable to relate to people that aren't an exact copy of themselves. Even when they once experienced the same thing. And yeah, people tend to get worse on this when they age.

throw0101b 3y ago

> The boring reality is that small things done consistently over time seriously add up. ~30 years ago the median house price in Toronto (Canada) was 4x the median household income. It is currently 13x the median income. * https://www.youtube.com/watch?v=NFlIfg0XoJk&t=47s https://www.youtube.com/watch?v=NFlIfg0XoJk&t=47s No amount of skipping lattés is going to add to make a dent in that difference. (I say this as someone in participates in /r/PersonalFinanceCanada who helps people educate themselves on living with-in their means and saving for the future (while enjoying the present).)