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My daughter and I were talking about cars the other day. Specifically, we were discussing her family’s “need” for a new car. I was trying to convince her that driving her current paid off vehicle for a few more years could yield big financial dividends. I think I was successful, but I’ll know in the coming weeks. However, the whole discussion got me thinking about money wasters, in general. In personal finance, we talk about opportunity cost. In other words, what doesn’t happen or we can’t do in the future, because of decisions we make today.


I thought it would be an eye-opening experience to walk through a few common examples and do the number crunching necessary to highlight, in a compelling way, the concept of opportunity cost:


Constant car payments. This concept and conversation were the genesis of this article. The average new vehicle today costs about $30K. Assuming nothing down and a 5-year loan at 4%, you’d have a car payment of $552. For purpose of this discussion, I’m going to assume that instead of buying a new car when the old one is paid off our future-focused driver sticks with the old car for an additional 3 years and can save the car payment.


  • 40-year result: $611,949


By following this approach, over the ensuing 40 years, there would be 15 years without a car payment. Stash that money earning a hypothetical seven percent return and you’d have a little extra cushion for retirement, travel or whatever floats your boat…heck, you could buy a boat.


Dangerous drinking. No, I’m not talking about alcohol, but the oft-mentioned daily cup of boutique coffee. Brew it at home to save $4 per day and you could be drinking Champagne in France to celebrate your DIY nature.


  • 40-year result: $298,262


And you didn’t even have to give up your coffee…


Cancel one lunch out each week. You can adjust this number to reflect your own habits, but I’m counting on the elimination of one $12/week expense. Maybe that means bringing your lunch every day or just a single day, but it’s not a lot to ask and carries a big payoff.

  •  40-year result: $119,304


The Big Wedding. According to The Knot 2017 Real Weddings Study the average cost of a wedding was $33,391. I’m not calling for a mass exodus to Vegas or the county courthouse as the exclusive venue for these joyous occasions, but just cutting the cost in half.


  • 50-year result: $491,814
    That’s a lot of cash available for the golden anniversary celebration.


A pack a day. The cost of a pack of cigarettes varies widely from state to state, but here I’ll just use six bucks. And no, I won’t account for any additional costs created or generated by this not-so-healthy habit.


  • 40-year result: $437,201
    Maybe that’s enough to have you make another run at giving up the habit?


The ATM withdrawal. This doesn’t necessarily fit with my other money wasters, but I’ve always been irritated when I hit the “yes, I agree” button on the ATM to move forward with my transaction -- and be raked over the coals in the process -- but have you ever thought about what a bad deal an ATM withdrawal can be? Before I go any further, yes, I bank with USAA, so I do get up to $15 of these pesky fees rebated each month, so I’m spared, but that doesn’t lessen the money-wasting nature of a trip to the ATM for a lot of folks. Think about it. A $20 ATM withdrawal to get you through the day could very easily come with a $3.50 transaction fee. That’s nearly a nine percent fee! Fewer and bigger ATM withdrawals are the answer…or being very conscious about where you make your ATM withdrawals.


If you’re keeping track at home, we have almost eclipsed the $2M mark in opportunities lost at the 40-year mark. That equates to a whole lot of financial freedom and flexibility. Seemingly little decisions can add up in a big way.


What money drain would you add to this list?


About the Author: JJ Montanaro is a Certified Financial Planner® professional and part of the Military Affairs team at USAA. He’s a graduate of the U.S. Military Academy and has over 20 years of financial planning experience.


Disclosure: "Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements."


The information contained is provided for informational purposes only and is not intended to substitute for obtaining professional financial advice. Please thoroughly research and seek professional advice before acting on any information you may have found in this article. This article in no way attempts to provide financial advice that relates to all personal circumstances.


No Department of Defense or government agency endorsement.


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Frequent Visitor

Some of these hit upon things I do or have been thinking of.


I haven't bought a new car in 27 years.  The cars I would buy are not in the $30k range but the $60k-$70k range with ridiculously large car payments which are not for us so this is what we do.  When my wife or I feel it's time to get another car for each other, we start researching cars from 5 years ago.  For example my wife's Mercedes needed an "upgrade" in 2011 so I looked at the models that newly came out in 2006.  We picked another Mercedes for her.  The result was a $65k car with 40k miles for $26k.  We keep our cars for 10 years on average before we look for another.  My payments are usually $300 to $400 a month instead of $800 to $1k.  After they are paid off I feel the equivalent payment for a year (i.e. $300 a month comes out to $3.6k a year) should be the maximum amount paid each year for maintenance.  Seems like a lot but not as much as a $800 a month payment.  For the record my wife's two Mercedes have saved us considerable money while my 2008 Audi A6 not so much and my 2003 Saab 95 Turbo not at all.  I was lucky with a used car power train warrenty though, I was able to use it to dodge a $10k bill on the "new" used Audi!  But that's another story.


I don't drink coffee (sugar is my caffiene) so I am saving there.


I do eat out every lunch so I admit I could save but I don't.  It's so nice to not worry about making some lunch and go out with your co-workers.


Hurumph!  I have two daughters who are very pretty (they're half American mutt [that's me!] and half Filipino) and I'm sure I will be talked into lavish weddings for them, sigh!  :]  Their cotillions (a Filipino thing) were big enough.


No cigs.


Even though USAA pays the ATM fees, they are slowly moving up and USAA's $15 limit hasn't changed much.  I do as J.J. said, pull out a large amount of money for my wife and I about once every two weeks.


As for adding a money drain I don't like, that's cell phones.  Sure there are cheaper plans for us four but the coverage is worse and I travel a LOT.  I should do some real research into these plans and pick something more economical.  Changing numbers and possibly phones is not trivial for my girls (not me!) though because as expected they are "welded" to their phones.  Sigh again!  USAA should hook up with a good cell phone company and give some great rates, not just a few percent like most places do (I haven't checked recently what USAA offers though).


Refinancing.  I did 5 (yes five!) refinances between 2000 and 2013 as interest rates fell.  I got discounts on the refiance fees but I realize over 5 refinances the amounts weren't trivial (I guess $10k).  Yet I now have a 15 year 3% loan and it is perfect for us ending when we retire and affordable at this point in our life (the $10k I spent was more than made up by a 8% to 3% interest drop!).  I wouldn't have done it if I wasn't always looking and trying to keep up with the lowering interest by refinancing often enough.  Your mileage may vary though.


Great article.

Community Manager
Community Manager


Thanks for your comments and ideas. And good luck with your daughters…I’m proud of mine, but know they hold special powers and can be a challenge! :)


For the Grandkids...or Tweeners!


Thanks for commenting @Guns1!