Smart Spending - Why You Are Richer Than You Think

I’m not a rich person by any measure, but I make enough to put a roof over my head, have 3 meals a day (or more), and enjoy the tiny perks that life has to offer time to time. However, I woke up this morning and I came to a realization that I should actually have much more money in my savings than I do now. Let me just make it clear that I’m not writing this to teach you about smart spending, but this entire article is going to be about how and where you shouldn’t spend your money on. Most people think that they need more than what they are making now and they feel that they are barely getting by (I was one of them), but you’d be surprised at how much wealthier you actually are once you analyze your spending.

I’m a single man living alone in a 1br apartment and the apartment is 1000sq feet. For the exception of the few days out of the month in which I have my friends or family over, I really have no use for my living room and the dining room space. I’ve been living in this apartment for the past 4 years and if I had gotten a roommate by sacrificing a little privacy, I could have had an extra $20000+ in my bank account by now. That’s a lot of money for almost everyone I know and I’m sure it’s pretty much the same case for you.

The next thing I realize is that I have a V6 midsize sedan. I barely drive the damn thing, but it costs me $180/mo to insure it and it only averages 19miles per gallon. The day I bought that car, I was contemplating whether to buy a 4 cylinder compact car for the first time or a V6 midsize sedan as I always have throughout my adult life. If I had chosen the compact car, I would have saved $10000 from the purchase alone, probably another 1k on the interest for the 68month loan, 5k for the insurance rate difference for the 5yrs of running the car, and probably 1k for running on octane 89 instead of 91 and of course the overall better fuel economy of a compact vehicle. So that’s another $17000 I poured down the drain.

Then I look around my room and I see so many wasted purchases. The items may be different, but I’m sure you can more than relate. Here are few of the dumbest purchases I have made in the past few years, but please bear in mind that this is not about the quality of these products, but rather how my needs did not justify the purchases. First is the Polaroid Pogo, an instant photo printer which I only got to use to print about 90 pictures. It’s been gathering dust for over a year now and its print papers have been expired. The machine + the papers, that’s $250 down the toilet.

Next dumb purchase is my Nintendo Wii. It’s not that the Wii is a poor system, but the problem was that I already owned an XBOX 360 and I don’t have enough time to play them both. Wii + few games, that’s another $300 wasted. I also happen to have 3 PCs. One is for work only, the second one is for play only, and the third one sits pretty in the living room gathering dust. I know many of you have a laptop, couple of PCs, and really, having that much idling computing power is just such a waste. I was also dumb enough to buy one TV for each eyeballs. I could only be in one place at any moment, but for some reason I purchased two LCDs and put one in the living room and one in the bedroom. I know for a fact that I’m not the only one doing something as dumb as this and if you are in the market for a new TV, please buy one TV for both your eyeballs.

I could go on and on with these dumb purchases and wasted money, but I think I said enough to make my point. Yes, the wealth distribution across the globe is out of whack and we all deserve a bigger piece of the pie than what we are getting right now. But since that’s not going to change anytime soon, perhaps it’s better that we learn to live within our means and be happy for once for what we have.