Ten Things Americans Waste the Most Money On

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black jack
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Ten Things Americans Waste the Most Money On

Post by black jack » Sun Feb 27, 2011 7:38 pm

http://247wallst.com/2011/02/24/ten-thi ... -money-on/

Waste is rather judgemental; the money I spend for bicycling and watching football on tv is certainly not wasted, though the money you spend on dry cleaning and watches probably is. :)

Things in the article that surprised me:
The BLS divides households into nine income groups. The lowest is households with income less than $5,000 a year. It is hard to imagine how such a household could exist. But, the government definition includes people who rent rooms or other living spaces, so in reality a college student or group of college students would qualify. The highest income group contains households with incomes of over $70,000 a year.
The highest income group in the BLS categorization starts at $70k?!
The average household spends more than $380 each year on tobacco products and smoking supplies, which includes cigarettes, cigars, pipes, and chewing tobacco. It is worth remembering that this average includes households where no one pays for tobacco products. Despite this fact, tobacco’s portion of the average household’s budget, 0.8%, is larger than what Americans spend on fresh fruit and milk combined. A person who smokes a pack of cigarettes a day in New York state will spend more than $4,000 a year, which is roughly 10% of the average American income before taxes.
According to the National Center for Health Statistics, approximately 20% of adult Americans smoke. Didn't see how many households.

Who'll be the first to respond that they spend most of their money on booze, tobacco, and women; the rest they waste?
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Post by Opponent Process » Sun Feb 27, 2011 7:48 pm

people have to get whatever joy they can out of their short brutish life. not everyone can afford to delay gratification; they have to grasp at whatever short-term gratification they can stumble upon. booze, tobacco, and loose women make life bearable for the masses who make less than $70K.
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Post by filmtheory » Sun Feb 27, 2011 7:56 pm

The word "waste" needs to be defined. I spend money on 9 of these 10 and consider them part of life. I do save and invest but I'm not only earning money to squirrel into my index funds.

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Post by daytona084 » Sun Feb 27, 2011 8:07 pm

They forgot to include all food and drink other than bread and water.

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Post by RadAudit » Sun Feb 27, 2011 8:37 pm

Gifts? Which one of us will be the first to tell the grandkids that someone shot Santa Claus?
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Post by bob90245 » Sun Feb 27, 2011 8:38 pm

Here is where I "waste" money according to the article:

Sports equipment. I bought dumbbell sets as part of physical exercise and weight control plan. Had I not done this, I would likely have to buy new pants to go along with my expanding waistline. Now that would be a waste of money! :D

Gifts... and Food Away From Home. Though, I am way under the average amount cited in the article.
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Post by SSSS » Sun Feb 27, 2011 8:39 pm

wjwhitney wrote:They forgot to include all food and drink other than bread and water.
Not sure about the bread. Carbohydrates, although important for good health, are not strictly necessary just to stay alive. Some Inuit groups survive on nothing but whale blubber. Although that might be more expensive than the bread unless you kill the whale yourself.

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Post by VictoriaF » Sun Feb 27, 2011 8:56 pm

Tobacco is an appetite suppressant. People who smoke probably spend less on food.

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Post by White Coat Investor » Sun Feb 27, 2011 9:05 pm

That list doesn't include most of the big categories on my budget. What about the money people spend on transportation or housing that they don't need to? How about utilities (cable, smartphone data plans, internet etc?) Groceries?

It's the coffee analogy frequently trotted out. If you just didn't buy coffee in the morning you'd be rich. It's B.S. It isn't the little things that keep you poor, it's the big ones. Like working for too little money, working too little, buying too much house, driving too much car and turning it over too often etc.
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Post by rayout » Sun Feb 27, 2011 9:32 pm

EmergDoc wrote:That list doesn't include most of the big categories on my budget. What about the money people spend on transportation or housing that they don't need to? How about utilities (cable, smartphone data plans, internet etc?) Groceries?

It's the coffee analogy frequently trotted out. If you just didn't buy coffee in the morning you'd be rich. It's B.S. It isn't the little things that keep you poor, it's the big ones. Like working for too little money, working too little, buying too much house, driving too much car and turning it over too often etc.
Yes but for folks earning below the median income the little things add up. Eating out for lunch, the morning coffee, renting a movie each weekend, etc.

When your budget is smaller, these little "escapes" destroy any hope of saving anything at the end of the month but people are just entitled to them...

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Post by black jack » Sun Feb 27, 2011 9:57 pm

VictoriaF wrote:Tobacco is an appetite suppressant. People who smoke probably spend less on food.

Victoria
To judge by appearance, some smokers (including relatives of mine) seem to have found a way to neutralize the appetite-suppressing effects of tobacco. Perhaps they are also smoking marijuana.

Or perhaps, if asked, they would paraphrase Evelyn Waugh's response to Nancy Mitford when she asked how he could behave so atrociously while claiming to be a practicing Catholic ("You have no idea how much nastier I would be if I was not a Catholic"): you have no idea how much fatter I would be if I didn't smoke.
Opponent Process wrote:people have to get whatever joy they can out of their short brutish life. not everyone can afford to delay gratification; they have to grasp at whatever short-term gratification they can stumble upon. booze, tobacco, and loose women make life bearable for the masses who make less than $70K.
I'm sympathetic to that perspective. As a poster once observed, many people here act as if saving money was an absolute virtue, whereas the only reason for saving now was to enable us to have more money to spend in the future (which may involve passing it on to our heirs). But while many people have difficulty choosing to delay gratification, who (aside from the terminally ill or those in hyper-inflation environments) cannot afford to delay gratification?
We cannot absolutely prove [that they are wrong who say] that we have seen our best days. But so said all who came before us, and with just as much apparent reason. | -T. B. Macaulay (1800-1859)

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Post by White Coat Investor » Sun Feb 27, 2011 10:07 pm

rayout wrote:
Yes but for folks earning below the median income the little things add up. Eating out for lunch, the morning coffee, renting a movie each weekend, etc.

When your budget is smaller, these little "escapes" destroy any hope of saving anything at the end of the month but people are just entitled to them...
No, when you're earning below the median the problem is your lack of earning power or your lack of work. That's a big issue, not a small one. Median household income in this country is $50K. Let's see that's between two earners. So $25K a piece. Divide that out by 40 hours, 50 weeks (2000 hours) that works out to 25000/2000=$12.50/hour, or about what one would make working at In N Out Burger. A little education can go a long way.

http://www.glassdoor.com/Salary/In-N-Ou ... E14276.htm
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Post by trico » Sun Feb 27, 2011 10:27 pm

We are all bosos on this bus called life, and the death rate is 100%. So I would say that what ever soots your fancy is fine, just be nice to other people that might not agree with your thoughts. Jesus said those who have not loved have not lived, and money is the route of all evil. So lets try to love our neighbor as ourselves, but lets not tell everybody how to live there life.

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Post by infecto » Sun Feb 27, 2011 10:32 pm

Opponent Process wrote:people have to get whatever joy they can out of their short brutish life. not everyone can afford to delay gratification; they have to grasp at whatever short-term gratification they can stumble upon. booze, tobacco, and loose women make life bearable for the masses who make less than $70K.
I make $125k a year and prefer loose women and cocaine.

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Post by black jack » Sun Feb 27, 2011 10:44 pm

trico wrote:We are all bosos on this bus called life, and the death rate is 100%. So I would say that what ever soots your fancy is fine, just be nice to other people that might not agree with your thoughts. Jesus said those who have not loved have not lived, and money is the route of all evil. So lets try to love our neighbor as ourselves, but lets not tell everybody how to live there life.
Good points, though I'm not sure about the authorship. I don't recall Jesus saying those who have not loved have not lived, but perhaps that's a new translation. It is the love of money that is the root of all evil, according to the author of the First letter to Timothy (traditionally attributed to Paul, but that's doubtful).

Though I like your formulation too: money does seem the route of much evil in this world.
We cannot absolutely prove [that they are wrong who say] that we have seen our best days. But so said all who came before us, and with just as much apparent reason. | -T. B. Macaulay (1800-1859)

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Good things to waste money on

Post by shawcroft » Sun Feb 27, 2011 10:44 pm

Reminds me of a eulogy about a man who died penniless:

"He spent half of his money on wild women and liquor- and wasted the other half!"

Shawcroft

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Post by VictoriaF » Sun Feb 27, 2011 10:49 pm

black jack wrote:Though I like your formulation too: money does seem the route of much evil in this world.
Route or root? Both fit ;)

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Post by The Wizard » Sun Feb 27, 2011 11:03 pm

The article referenced by the OP is a waste of digital ink.
But I assume that site makes $$ off of all the commercial links, which I think is the real reason for writing financial porn such as this.

And it appears that SHAWCROFT has won the OP's challenge!

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Post by ruanddu » Sun Feb 27, 2011 11:31 pm

Thanks for the article. I have a love for audio/video gear, so I'd definitely fall that category among a few others.

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Post by scrabbler1 » Mon Feb 28, 2011 12:44 am

I spend money in only 5 of the 10 categories, and not a whole lot in any of them. I don't drink or smoke, for starters. And with gifts, I receive about as much in gifts as I spend on others, so it is pretty much a breakeven proposition.

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Post by interplanetjanet » Mon Feb 28, 2011 1:06 am

infecto wrote:I make $125k a year and prefer loose women and cocaine.
Shouldn't you diversify into a portfilio of vices so you can DCA into them when supply rises and some become better deals? ;)

-Janet

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Post by Winthorpe » Mon Feb 28, 2011 2:28 am

Opponent Process wrote:...booze, tobacco, and loose women make life bearable for the masses who make less than $70K.
...and for the masses who make more than $70k.

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Post by TT » Mon Feb 28, 2011 6:33 am

Fancy Cars and Big Trucks.
It is inconceivable the number of people that lease the big BMW and Heavy Duty trucks and turn them over every 3 years for a new one and start paying on a new lease. I remember reading that BMW leases somewhere are 70 -80 % of the new vehicles. Why don't people understand that the lease price is the highest depreciation of a new vehicle and they are paying for it?? For me personally that is a huge waste of money.

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Post by Triple digit golfer » Mon Feb 28, 2011 7:05 am

Pets are a waste of money?
A watch is a waste of money?

I guess anything but wearing a bedsheet for clothing and eating bread and water for nutrition is a waste of money.

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Post by gd » Mon Feb 28, 2011 7:35 am

I agree it's infotainment, designed to fill space and attract eyeballs at minimum cost and effort. This information is of little value without at least income distributions. Does anyone think that spending on hotels is uniform across income classes, for example? I know a guy living on SS who smokes a pack a day. His tobacco expenses are more than .8% of his budget, trust me. And I'm pretty sure that the average family budget in my working-class, semi-rural town for dirt bikes, ATVs and snowmobiles is considerably higher than presented here.

Making a two-dimensional presentation of the parameters including income groups would be an obvious improvement and easily done on a web site.

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Post by Kenkat » Mon Feb 28, 2011 8:47 am

Triple digit golfer wrote:Pets are a waste of money?
A watch is a waste of money?

I guess anything but wearing a bedsheet for clothing and eating bread and water for nutrition is a waste of money.
You've got a bedsheet???!!! Spendthrift... :wink:

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Post by Grt2bOutdoors » Mon Feb 28, 2011 9:10 am

Purchases of candy store candy - why pay $1 a bar or small bag of candy/chocolate when you can buy bulk and save over 25%?

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Post by porcupine » Mon Feb 28, 2011 9:28 am

Men waste money on clothes. Looking at the photos of men and women from the Oscars yesterday, I can safely say that the amount of clothes on each actor would be more than enough to drape four-five actresses :wink: Surely a fig leaf per actor is enough?

- Porcupine

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Post by cyclegirl » Mon Feb 28, 2011 10:09 am

$435 Annual Ahcohol...Yikes! I must be drinking for a lot of households out there.

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Post by manuvns » Mon Feb 28, 2011 12:21 pm

cars and bigger homes .

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Post by Kulak » Mon Feb 28, 2011 12:27 pm

EmergDoc wrote:It's the coffee analogy frequently trotted out. If you just didn't buy coffee in the morning you'd be rich. It's B.S. It isn't the little things that keep you poor, it's the big ones. Like working for too little money, working too little, buying too much house, driving too much car and turning it over too often etc.
I agree entirely with this. My thoughts when I first heard "Your Latte Factor" (and "Save Your Raise" and related memes) were: Wow, I believe the exact opposite. The presumption that we're a few tweaks away from financial soundness is nothing less than denial. We need to make massive cuts in our biggest expenses. I mean moving out, selling the shiny car (taking the negative-equity hit, yes), forgoing the 4+ hours/day of TV/digital media to do productive work (or at least socialize "IRL"), not eating half your meals in restaurants. But once that is sorted out and you've built up some savings, go ahead and live a little. Buy the $4 latte if that makes you happy. When you get a raise (in real $), blow it on something fun.

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Post by monkey_business » Mon Feb 28, 2011 4:00 pm

Pretty stupid article, in my opinion. The things they list, for the most part, are what life is about. I shouldn't "waste" money on travel, admissions fees, hobbies, eating out, electronics, etc? What should I spend it on? Beans and cans of heating oil?

I agree with the other posters about big items being the real finance killers. The big items also provide a fairly poor cost vs satisfaction ratio. How many people would truly be happier if they had a bigger house and a more expensive car vs how many would be happier if they traveled more, had more to spend on their hobbies, and went out more to parks/theaters/etc? I'd much rather live in a studio and drive an old car but have enough to fill my free time with things/activities I enjoy than have a mansion and a new BMW and have to stay home because I can barely afford a plane ticket.

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Post by Triple digit golfer » Mon Feb 28, 2011 5:32 pm

EmergDoc wrote:That list doesn't include most of the big categories on my budget. What about the money people spend on transportation or housing that they don't need to? How about utilities (cable, smartphone data plans, internet etc?) Groceries?

It's the coffee analogy frequently trotted out. If you just didn't buy coffee in the morning you'd be rich. It's B.S. It isn't the little things that keep you poor, it's the big ones. Like working for too little money, working too little, buying too much house, driving too much car and turning it over too often etc.
EmergDoc:

Big items are wealth killers, but so is that $4 latte to a lot of people. That's $1,460 per year if you buy one every day. For someone making the median, $25,000 (per your figures), that's 5.84% of a person's salary. Eating out twice a week at $15 instead of eating at home for $2 is $1,352 per year, or 5.40% of salary. Just those two small things equal over 1/9 of a $25,000 salary. That's big however you want to slice it.

Now, you're right, foregoing those things won't make a person rich. But they will absolutely help those people, particularly those making $25,000. For the average Boglehead (yes, Bogleheads as a whole are rich, whether people admit it or not) a $4 cup of coffee is nothing. But to a person making $12.50 per hour, $500 per week, those things are huge.

I absolutely agree with you that not earning enough money and buying too big of a house or car are the real wealth deterrents. Let's face it, if you make $25,000 per year, you're never going to be rich unless you earn money some other way. But in terms of survival for low-income earners, a cup of coffee or dinner out makes an enormous difference.

On your "working for too little money" reason...it's easy to say, but with unemployment over 10%, more if you use the real number (but let's not make this political), is it really the place of the employee to demand more money? My company just put out an ad for a staff accountant, 1-3 years of experience required. In four days, we received over 600 resumes. With all due respect to job-seekers out there, demanding a lot of money, or even average money for your particular job or area of expertise, probably isn't a great idea if you're desperate for a job. Surely there's someone out there who will do it for less, as people are desperate these days.

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Post by cubedbee » Mon Feb 28, 2011 5:54 pm

Triple digit golfer wrote:
EmergDoc wrote:That list doesn't include most of the big categories on my budget. What about the money people spend on transportation or housing that they don't need to? How about utilities (cable, smartphone data plans, internet etc?) Groceries?

It's the coffee analogy frequently trotted out. If you just didn't buy coffee in the morning you'd be rich. It's B.S. It isn't the little things that keep you poor, it's the big ones. Like working for too little money, working too little, buying too much house, driving too much car and turning it over too often etc.
EmergDoc:

Big items are wealth killers, but so is that $4 latte to a lot of people. That's $1,460 per year if you buy one every day. For someone making the median, $25,000 (per your figures), that's 5.84% of a person's salary. Eating out twice a week at $15 instead of eating at home for $2 is $1,352 per year, or 5.40% of salary. Just those two small things equal over 1/9 of a $25,000 salary. That's big however you want to slice it.

Now, you're right, foregoing those things won't make a person rich. But they will absolutely help those people, particularly those making $25,000. For the average Boglehead (yes, Bogleheads as a whole are rich, whether people admit it or not) a $4 cup of coffee is nothing. But to a person making $12.50 per hour, $500 per week, those things are huge.

I absolutely agree with you that not earning enough money and buying too big of a house or car are the real wealth deterrents. Let's face it, if you make $25,000 per year, you're never going to be rich unless you earn money some other way. But in terms of survival for low-income earners, a cup of coffee or dinner out makes an enormous difference.
ER Doc's number is wrong. The $50k is indeed the median household income, but that includes the huge number of households of one http://www.census.gov/prod/2010pubs/p60-238.pdf Page 5, bottom, shows the median income of a full-time worker is $47k for a man and $36k for a woman.

Doesn't change your point that regular small expenditures can be signifcant to those below the median and can help contribute to cycles of debt/poverty.

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Post by greg24 » Mon Feb 28, 2011 6:10 pm

GRT2BOUTDOORS wrote:Purchases of candy store candy - why pay $1 a bar or small bag of candy/chocolate when you can buy bulk and save over 25%?
Buying candy in bulk is a terrible idea for me... :D

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Post by eas » Mon Feb 28, 2011 6:59 pm

monkey_business wrote:Pretty stupid article, in my opinion. The things they list, for the most part, are what life is about. I shouldn't "waste" money on travel, admissions fees, hobbies, eating out, electronics, etc? What should I spend it on? Beans and cans of heating oil?

I agree with the other posters about big items being the real finance killers. The big items also provide a fairly poor cost vs satisfaction ratio. How many people would truly be happier if they had a bigger house and a more expensive car vs how many would be happier if they traveled more, had more to spend on their hobbies, and went out more to parks/theaters/etc? I'd much rather live in a studio and drive an old car but have enough to fill my free time with things/activities I enjoy than have a mansion and a new BMW and have to stay home because I can barely afford a plane ticket.
Agreed - but this community isn't exactly the intended target of the article. The one thing that I found kind of odd was the dry cleaning entry. Sure, not every bit of dry cleaning done is essential, but most of mine is done for business clothes - hardly a waste.

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Post by SP-diceman » Mon Feb 28, 2011 8:02 pm

I like the “Americans” part.

I guess the rest of the world is too smart to
fall into the trappings of “Americans“, or
too impoverished to have such “King like”
luxuries as tobacco, alcohol, pets.

Of course there may be an uproar if one
wrote about things the French waste money on.


Thanks
SP-diceman

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Post by VictoriaF » Mon Feb 28, 2011 9:24 pm

SP-diceman wrote:Of course there may be an uproar if one
wrote about things the French waste money on.

Thanks
SP-diceman
Ten things the French waste money on:
1. Wine
2. Cheese
3. Hors d'œuvre
4. Baguette
5. Coiffure
6. Mer
7. Chateau
8. Bric-à-brac
9. Negligee
10. Femme fatale

Victoria
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Post by The Wizard » Mon Feb 28, 2011 9:39 pm

I don't think people are taking this topic seriously.
:(

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Post by TheEternalVortex » Mon Feb 28, 2011 11:40 pm

SSSS wrote:
wjwhitney wrote:They forgot to include all food and drink other than bread and water.
Not sure about the bread. Carbohydrates, although important for good health, are not strictly necessary just to stay alive. Some Inuit groups survive on nothing but whale blubber. Although that might be more expensive than the bread unless you kill the whale yourself.
Bread has a fair amount of protein, however.

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Post by Ody » Tue Mar 01, 2011 3:02 pm

The Wizard wrote:I don't think people are taking this topic seriously.
:(
The article is kinda funny. :)

Besides, why do your own laundry when you can pay someone to wash and fold it for you?
Brevity is the soul of wit

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Post by centrifuge41 » Tue Mar 01, 2011 4:07 pm

Ody wrote:Besides, why do your own laundry when you can pay someone to wash and fold it for you?
You could even pay your spouse to do the laundry :shock:

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Post by robertras » Tue Mar 01, 2011 6:27 pm

It's true that little expenses can add up, but really, the big ones are the ones that hurt. It also depends on how "big" the small expenses are. If you spent 5-10 dollars a day eating fast food*, and you cut that out and instead made your own food (for lunch at work, etc) you would save around 1,000-1,500 a year. You can decide if that's a lot to you or not much.


*7.50 X 5 days a week X 50 weeks a year = 1,875.00

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Post by bigH » Sat Mar 05, 2011 12:51 pm

EmergDoc wrote:That list doesn't include most of the big categories on my budget. What about the money people spend on transportation or housing that they don't need to? How about utilities (cable, smartphone data plans, internet etc?) Groceries?

It's the coffee analogy frequently trotted out. If you just didn't buy coffee in the morning you'd be rich. It's B.S. It isn't the little things that keep you poor, it's the big ones. Like working for too little money, working too little, buying too much house, driving too much car and turning it over too often etc.
+1 The little things add up. However, the large purchases and income choices make or break you.

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Post by dgdevil » Sat Mar 05, 2011 1:08 pm

centrifuge41 wrote:
Ody wrote:Besides, why do your own laundry when you can pay someone to wash and fold it for you?
You could even pay your spouse to do the laundry :shock:

You could even pay Eric Clapton to do the laundry

http://www.tmz.com/2011/03/04/eric-clap ... tmz-on-tv/

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Post by norm » Sat Mar 05, 2011 2:09 pm

I guess the only way to save money is to sell everything you own, buy a coffin and lay in it until you die.

Thank goodness they didn't include KY jelly.

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Post by MuchMoore » Sat Mar 05, 2011 2:11 pm

interplanetjanet wrote:
infecto wrote:I make $125k a year and prefer loose women and cocaine.
Shouldn't you diversify into a portfilio of vices so you can DCA into them when supply rises and some become better deals? ;)

-Janet

There is a vice fund out there with the ticker VICEX.

"It normally invests at least 80% of net assets in equity securities of companies that derive a significant portion of their revenues from alcohol, tobacco, gaming and defense/aerospace"

Expensive though.

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market timer
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Post by market timer » Sat Mar 05, 2011 2:15 pm

Aside from the obvious -- house, kids, and cars -- the biggest waste I've seen is the amount of time spent watching TV instead of focusing on career and side businesses.

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Post by Triple digit golfer » Sat Mar 05, 2011 2:19 pm

market timer wrote:Aside from the obvious -- house, kids, and car -- the biggest waste I've seen is the amount of time spent watching TV instead of focusing on career and side businesses.
Why are you on here instead of focusing on your career and side business?

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Post by market timer » Sat Mar 05, 2011 2:26 pm

Triple digit golfer wrote:
market timer wrote:Aside from the obvious -- house, kids, and car -- the biggest waste I've seen is the amount of time spent watching TV instead of focusing on career and side businesses.
Why are you on here instead of focusing on your career and side business?
Good question. I do use many of the ideas from here and similar sites to make money, but am guilty of wasting time as well.

I try to work at least 60 hours per week on my primary job and another 10 on side projects. You don't pay off $210K of debt in two years following Charlie Sheen.

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