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Friday, July 11, 2008

The Cost of Everything

I found a comic on the Internet today called “The Joy of Tech”. It is probably one of the funnier and more thought provoking comics I’ve seen in a while. The point it raised was also a message that I felt I needed to share with as many people as possible.

If you’re too lazy to click on the link above, or they move the comic and break the like, the basic premise of the comic is; would you rather have an iPhone or a million dollars?

While the assumptions are a little off (the interest rate used was pretty high for him to be able to get to his $1,000,000 total from the small amounts of money he’d be stocking away - roughly 10% for 45+ years), it was an interesting way of looking at a future purchases. How many times have you actually sat down and thought, prior to making that next big purchase, “I can have ‘X’ or $100,000 when I retire,” or “I can have ‘Y’ or invest in something that will bring in a lot of income over the course of a lifetime.” Sure, $300 here, $1000 there may not seem like a lot of money when talking about a new piece of jewelry, the latest video game system, or that new laptop computer that you absolutely have to have, but over the course of a lifetime the money lost from not saving that can be quite shocking.

As an example, when I graduated from high school, I went out and bought the best laptop computer I could. 7 years later it sits in a box, nearly useless because of it’s antiquated technology. Had I decided to just purchase a tower (which I ended up doing two years later anyways) and saved the difference instead of spending it, it could be worth $1500 today versus the negative $20 it’s currently worth (assuming I drive to the dump to get rid of it). That may not sound like a lot, but take it out over the course of my working life, and that $1000 could have been $42,000! An amazing price to pay just because I had to have that laptop.

I’m, of course, not suggesting that you should not go out and buy what’s important to you. In the comic above, the guy obviously felt that his iPhone was an important purchase, and what’s life without a little fun? But viewing wasteful spending by what it truly costs, and not by the present value, all you’re doing is gaining an appreciation for the true value of money. Which brings us to the most amazing point of this whole converstaion: isn’t it astonishing what a little compounding of interest and dividends will do for you?

3 Comments:

Anonymous Anonymous said...

that was a funny comic lol and i liked your point on your "awesome" laptop lol isn't that what i did?
Lisa

July 11, 2008 at 10:18 AM  
Blogger Ross S said...

Yeah, that's pretty much exactly what you did. Was it worth $42,000?
And I loved the guy holding the Rocky Pose with his new 3G I-Phone

July 11, 2008 at 10:30 AM  
Blogger Don said...

funny funny
oh how true if more people thought
the long term cost of a purchase
Dad

July 12, 2008 at 12:56 PM  

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