Your TV costs you $100,000. Don’t believe me? I’ll show you!
This sounds a little unbelievable, so let me explain myself. I want to introduce a concept that may be new to you, maybe not. It is called Opportunity Cost.
Opportunity cost, talking about money, is the cost of losing an opportunity to do something with your money to earn money because you spent it. In other words, it is the lost opportunity to save your money or invest your money because you weren’t willing to give up something now for something better in the future.
So, with your TV, how does it cost you $100,000? According to the NPD Group, the average pay TV service bill for the American family in 2011 was $86, with it climbing an average of 6% a year. So, about now we are right around the $100 a month mark, which sounds about right. So, we fork out $100 a month to stare at a black box with Miley Cyrus twerking at us, right? If you started an account with $0 and invested $100 a month for 30 years, at a 6% rate of return (that’s a conservative number you can get in guaranteed products like LifeBank™ without market risk) you would end up with a balance of $100,451.50!
So, the opportunity cost for most American families for having TV over a 30 year period, the same period of many mortgage loans, is over $100,000 taken out of your retirement, taken out of your qualify of life, taken out of your legacy for your children and grandchildren. I’m not talking about the time waste or anything intangible, just the plain, hard costs.
TV is just one example. Over the past decades we’ve coached thousands of families, and here is what we have found statistically. If you work on your spending by Reviewing, Tracking and Forecasting your spending like we’ve taught before, you will find 1% of your annual income you are wasting monthly. For example, if you make $70,000 per year, you can find $700 a month you’re wasting. Do you know what that could add to your retirement? How about getting out of debt?
So, challenge me if you don’t believe me. I’ve “bet” a lot of clients about this and I’ve never lost. The numbers we show are $300/9/$300,000. That’s $300 a month we find (easy), out of debt in 9 years or less (including mortgage) and add $300,000 to your retirement (we are 1/3 there just with TV!). Next week we’ll talk about debt plans and run a few for you. Until next week!