Saturday, April 28, 2007

Nickle and Dimed

I was at the ticket counter at the train station. I asked for a round trip ticket to Chicago. She offered to sell me a weekend pass that would get me where I needed to go and home when I wanted to return.

"You'll save 15 cents," she said.
"Whatever," I said. "It doesn't make much difference."
"The difference is 15 cents," she said.

She's right. Fifteen cents - a nickle and a dime. It made me wonder how often I casually disregard a small sum of money. Seems like the more I have the greater the amount that I tend to disregard, and the more money I spend. Really, what does 15 cents get you nowadays anyway? (Now I sound like my Grandmother.)

But the point is, small amounts really do add up. I'm not going to sweat over 15 cents. But how many times have I spent $15 more than I should? The grocery store is the hardest time for me - I see a food item and I just buy it without checking the price. If it looks good and it's healthy (no chemicals, transfats or high fructose corn syrup) AND if it's low in calories, too, I buy it. Maybe I can justify the price because I'm a bit particular about food. But I am also a sucker for convenience foods. I could easily save $15 a week by cooking more at home.

If I saved $15 each week, I'd have $780 more in savings at the end of the year. At retirement, that $780 could grow to nearly $4,000 (that's in 25 years at an average rate of 6.50% without contributing any more money!) If I put away $15 every week for the next 25 years ($60 per month for 25 years at an average rate of 6.50) I'd have nearly $45,000.

Direct deposit or automatic transfer is the easiest way to do this - you don't even have to think about it then. We can arrange to automatically move whatever amount of money you want, into a separate savings account.

$45,000 - That's no small change!

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