Tuesday, September 24, 2013

Everyday Spending Really Adds Up


What would happen if you sacrificed spending money on everyday little things, such as eating out for lunch a few times a week or getting your morning cup of Joe?  What might happen if you canceled or downsized your cell phone plan, and canceled your Cable TV?   How much money could you have if you saved instead of spent it over 20 years?


Lunch


3X per week at $8.00 per meal


starting balance $0.00
interest 7%
monthly contribution: 100.00*
Time: 20 years

Future Value: $52,396.57
Total Interest: $28,396.57
Total Contributions: $24,000.00

Coffee


5X per week at $2.00 per cup


starting balance $0.00
interest 7%
monthly contribution: $40.00
Time: 20 years

Future Value: $20,958.64
Total Interest: $11,358.64
Total Contributions: $9,600.00

Cell Phone


Data Plan X2 $30.00 per plan


starting balance $0.00
interest 7%
monthly contribution: $60.00
Time: 20 years

Future Value: $31,437.89
Total Interest: $17,037.89
Total Contributions: $14,400.00

Cable


Avg of $80.00 per month


starting balance $0.00
interest 7%
monthly contribution: $80.00
Time: 20 years

Future Value: $41,917.11
Total Interest: $22,717.11
Total Contributions: $19,200.00



TOTAL MONTHLY SAVINGS:  $280.00


After 20 years:

By Saving $280.00 a month, at an average interest rate of 7%,

in 20 years you would have:  $146,710.21.  


Here is the breakdown:
Total Contributions (money you saved over 20 years): $67,200.00
Plus Total Interest Earned: +79,510.39
Equals Total Future Value (your savings plus interest): $146,710.21


And after another 20 Years:
Now, suppose you left that amount in your investment portfolio for another 20 years but never added another dime, then in another 20 years, at a rate of 8% interest, you would have $722,812.18!
Starting Contribution: $146,710.21
Plus Additional Contributions: 0.00
Plus Total Interest:  +576,101.97
Total Future Value: $722,812.18


Now, suppose instead of the 8% interest rate you had a 12% return on your investment (the stock market average over time), then your Total Future Value would be:  $1,598,048.91 !

Your small decisions each day can really add up!

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