Sweat the small (and big) stuff
payoff: If you decide to spend, say, $650 for a white set instead of $2,517
for the burgundy pair, you save $1867. Make a one-time investment of that amount
in a tax-deferred retirement account earning 8 percent, and in 15 years (about
the time when you'll need to replace the washer and dryer) it will grow to nearly
$6,000. By the way, I chronicled my own quest for a different appliance in "The
search for the perfect bisque dishwasher."
3. Dining out
The choices: This is America's
weak spot and often gets us into credit card trouble. We enjoy well-prepared food
without having to cook it ourselves and clean up afterwards. We can easily justify
such a treat on a weekly basis because we work hard and deserve to be rewarded.
So perhaps too often our hunter-gatherer instincts propel us in the direction
of quality restaurants where attentive waiters, varied menus, soft music and delicious
There's no scientific way to calculate how much
we would save if we ate at home, but let's use approximate numbers. Let's say
it costs $85, including tax and tip, for a couple to enjoy dinner out. The seafood
entrees -- Chilean sea bass with mango salsa and Ahi tuna with pan Asian sauce
-- cost $18 each; the fried calamari appetizer, $9, plus three glasses of Cabernet
Sauvignon at $8 apiece. Do this every Saturday night, and you spend $4,420 a year.
course, you're going to need to eat Saturday nights regardless of whether you
go out. So let's imagine that alternatively, at home you make a delicious fettuccini
dish with fresh scallops in olive oil with lots of garlic and parmesan cheese.
Cost of the meal: about $18. A bonus: You know exactly the type and how much fat
is in your food. Throw in a bottle of wine that you bought on sale for $12, and
you're up to $30.
payoff: If you were to avoid dining out on Saturdays and instead eat at
home, your savings would be $2,860 a year.
But let's not be too rigid; let's say that you go
out once a month instead of every week, so that your monthly restaurant
expenditures plus Saturday night meals at home equal $2,220 a year.
(12 x $85 = $1,020 + $1,200 for 40 dinners at home.) Subtract that
from the $4,420 that you would spend if you dine out every Saturday,
and you save $2,200 a year. Invest that amount for 30 years in a
tax-deferred account earning 8 percent annually, and you will have
nearly $250,000 saved up to spend on early-bird specials in retirement. (Make
sure to skip
the trans fat.)
These types of decisions may not seem like
a big deal on a day-to-day basis, but over time they can make a huge difference.
That's why it might make sense to sweat the small as well as the big stuff.
financial journalist Barbara Mlotek Whelehan earned a certificate of specialization
in financial planning. If you have a comment or suggestion about this column,
write to Boomer Bucks.