Next time you're buying food, multiply the cost of it by 365. That's the "lifestyle cost" of eating that kind of food every day.
So, having a $15 lunch every day costs $5,475 per year.
For once-per-week costs, you can multiply by 52. So, $70 drinking every Friday night has an annual cost of $3,640.
Why is this useful to do? First, you'll realize that many things that seem cheap, aren't. You might very well be spending $7,000 per year on coffee, if you're at cafes a lot. That might be a fine expense, but it's worth knowing.
Much more importantly, you'll realize that some things that seem expensive, also aren't. If you're spending $7,000 per year on coffee and you're a very heavy internet user, you might consider scaling your cafe-habits back slightly and buying the highest end laptop possible. A lot of people will get a cheaper laptop to save a few hundred dollars, but spend thousands per year in consumption that they don't really enjoy all that much.
Likewise, the cost of having a massage once a week is probably lower than the cost of a night of drinking at a nice bar. But for many people, drinking seems like no big deal, but getting a massage seems like luxury.
Try it out. For a daily cost, multiply by 365. Weekly, multiple by 52. Do this regularly and you'll get a lot more bang for your buck.
But but this Starbucks coffee and expensive lunch is just a treat! I'll start brewing my own coffee and making my own lunch... tomorrow.
Just kidding. Someone on Lesswrong once had a good point: assume in any situation you'll always make the same decision next time you're in that situation, so choose right. EG if you're tempted to buy McDonalds on the way home from work 'cause it's late and you're kinda tired... next time you're walking home late and tired, you'll buy more McDonalds. So choose right.
One Big Win for me has been buying food in bulk. Just go to Lidl and get a cart full of frozen meats, veggies, canned goods, etc. Then I have a base for cooking almost anything + I have survival inventory for those lulls in consulting income that inevitably happen. It's a nice feeling to know you can feed yourself for 30 days straight with no cash outlays.
Ramit Sethi says to ignore latte wins because they are too cognitively costly and instead go for Big Wins (renegotiate salary, get better credit rating, freelance a bit on the side, things like that). Thoughts on that?
This reminds me of playing poker. Once you start getting serious about poker, especially if you play online, you start getting stastical. It's easy to track which hands you tend to make or lose money on.
You realise that playing the rare, big hands (AA, KK, etc) right is important, because so much money is at stake. But also playing the common hands right is important. Your average winning with, say, low pairs, might be +5% -- if you can increase that to 10%, it can add up to a big win.
I have done and thought about this a lot in the past, still remember when I was an intern I actually multiplied the bus cost by 365 - which in the end made me decide to go by bike to work and save about 500$ per year (hey - that could be one month's rent!)
I really recommend to start doing some personal finance accounting, recording stuff you might not be taking into consideration, such as food, restaurants, travel costs, etc. I use a software called You Need a Budget and it has helped me to keep on track and see the impact of certain recurring costs.
One of the most profitable ways of investing money is actually finding ways to save money. Where else can you get sometimes a return of 200% or more?
Three weeks ago I added cash numbers to my weekly review. What I'd make actively, passively, spend. Two weeks ago the line on my review read:
What'd I spend this week? Not sure. Figure out expenses next week
This week it looks like this*:
What'd I spend this week?
Expenses: July 18: room $32, food $12, coffee $4 July 19: room $15, food $10, coffee $4, transit $2 [groceries $18, vitamins $66] July 20: room $15, food $0, no other expenses July 21: room $15, food $12 coffee $4 [groceries $3] July 22: room $15, food $0, no other expenses July 23: room $15, food $0, no other expenses July 24: room $15, food $0, no other expenses July 25: room $22, food $12, coffee $7 [groceries $13 - but bought at convenience store, and had to throw away two things I bought because pork was in it] 26 room $15, food $0 Total: room $144 ($18/day), food $46, coffee $19, groceries $31, transit $2 -> I also bought vitamins for $66, but that's a long term expense over the next two months, not an expense for just this week.
We've been in Panama for two days now, but it seems like weeks. There's obviously still TONS to explore around the city, but I'm already comfortable here and it even feels a bit familiar.
First of all, I love it. For me it has the ideal balance between chaos and structure. It's very safe... people are at least as friendly as they are in the US, if not moreso. They go out of their way to help us and put up with our mediocre Spanish. Our hotel right now isn't in a great area (though not a bad one either), and I feel totally safe walking a few blocks to go to a diner.
Even though it's safe, there don't seem to be a lot of minor enforced rules. Taxi drivers ignore speed limits and stop signs. The drinking and gambling age is 18, but I've heard even that's not enforced. You don't get the feeling that you're being overprotected or treated like a child.
The food has been MUCH better than expected. There are several vegetarian cafeterias that we've found already which are incredibly good and cheap. The one we visited tonight was owned by a very friendly Chinese couple (have you ever heard Chinese people speak Spanish?). There were maybe forty different dishes they had, and a serving of any one was only fifty cents. I asked for orange juice without sugar (most fruit drinks here have sugar) and they fresh squeezed it for me for only $1!