Penny Calculator

by Dual Income No Kids on March 7, 2007 · 0 comments


We DINKs love calculators! This means that we can sit here and dream up financial scenarios and have someone else do the math.

Tonight we got a request to swap sites with a fellow blogger, themoneyalert, and found this kickin calculator, among others. The basic jest is that you can enter the price of an item that you normally buy and then see how much a difference it would make if you switched to a cheaper brand, or small size.

It was pretty cool to see how a penny really does add up. Here are the three scenarios that we did, which any of you could easily apply in your lives. All scenarios presume starting at age 30 and living to 95, James’ grandmother recently died at 97 and my grandmother is still kickin it at 91. It also presumes that we would invest the savings at 7% interest, but the calculator also tells you how much it would be without investing.

1) Large versus small cup of coffee
If you were to permanently switch from the $1.59 product to the $1.39 product, and then invested the resulting monthly savings in an investment that earned .07% per year, between now (age 30) and age 65, you would then be able to withdraw $26 from your investment each month…for the rest of your life! That’s $9,370 over the course of your life time!

2) Spending a $1 less at lunch ten times a month
Summary: If you were to permanently switch from the $6 product to the $5 product…you would then be able to withdraw $130 from your investment each month…for the rest of your life! That’s $46,853 over the course of your life time!

3) Not going out to dinner and a movie once a month
Summary: If you were to permanently switch from the $60 product to the $0 product …you would then be able to withdraw $785 from your investment each month…for the rest of your life! That’s $282,714 over the course of your life time!

Thus, if we choose to get a small cup of coffee, spend a dollar less at lunch, and forewent going out once a month, this would amount to $66,528 in cold hard cash, or $395,800 if invested at 7%

Now that’s some pennies!

Miel

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