money spending habits

Diet Soda Made Me Broke

I’m completely addicted. Despite my devotion for clean living and organic food, I can’t seem to give up my diet soda, which is completely hypocritical.  Anyone who knows me, expects to see me lugging around my drink.

Like a true addict, I know that it is killing me slowly, and I don’t seem to mind. Well, of course I mind, but I don’t seem to care enough to quit . . . nor do I even want to quit!  And, like most soda fanatics, I am very particular about the form in which my diet soda is served. It can’t come from a can or a bottle, and it has to be of a certain brand. It must be poured from a fountain machine and served with ice and a straw. This means I usually purchase it through a drive-thru, and it is a requirement that the cup fits in my cupholder, when purchasing a new car. You know you have a problem when the drive-thru employee says, “The usual?” through the speaker. I’ve even gone so far as having researched putting in a soda machine dispenser in my office and home.

Like a true accountant, I love using accounting software to track my every penny. So when I noticed my husband was spending a small fortune on his designer coffee, I decided to look into how much I was spending on my own addiction, before I broached the subject of “Honey, it’s time you start brewing your coffee at home.”  At $5 per day, (monthly cost $150), the annual cost came to $1,825. That’s a lot of moolah for soda.

Most shockingly, according to businessman and radio host Dave Ramsey, your $5 a day coffee or soda habit can cheat you out of a whopping $19,564,358 in retirement (if invested at 12% from age 16-76). You read that right!!! Close to $20 million big ones! Granted, I don’t know any 16 year old investing, and 12% growth cannot be guaranteed. It seems as though my habit is costing me way more than just my health. It may be costing me the ability to retire poolside in Boca . . . soda in hand.

This little experiment of where my dollars are going is a good wake up call to create a household budget. I know this sounds like no fun. However, budgeting allows you to use your money wisely, helps keep you out of debt, and affords you the ability to purchase things you need, and maybe even things you just want.  

Sounds restrictive and scary, but financial freedom is liberating. And, you don’t need to be wealthy to be out of debt. In fact, we all have heard of very wealthy celebrities going bankrupt and that age old adage “A penny saved is a penny earned”. You don’t need any fancy accounting software or any accounting knowledge. Pick a time frame that you would like to track, (a month minimum), and keep every receipt in an envelope. You must even include the $2 you spent at the vending machine.  I personally like to use my credit card, because I get a nice detailed statement each month. But if you tend to overspend using plastic, and will not pay it off immediately, then this method is NOT for you.

At the end of your selected time period, simply tally up all your costs and arrange them into categories such as, groceries, restaurants, entertainment, rent/mortgage, clothing, babysitters, etc. Take your monthly income (after taxes) and subtract out your expenses.  Was there any money left over? Were you in the negative? This is a good time to set your goals and maybe some life changes. Are you living above your means or just spending frivolously?

An exercise like this seems like common sense and tedious, but most people find it eye opening and jaw dropping.  Simply being aware of your money spending habits will actually impact how you spend your money. The next time you reach for those pair of shoes that you aren’t in love with, but are on sale, you just may reconsider!.  

Category: Lifestyle, Money