Of Cigarettes, Lattés and Investments

 

But it’s just a pack of cigarettes, or a latté, or a glass of . . .

I'm no killjoy, but you might think otherwise by the end of this article. I love a five-dollar coffee now and then, especially cold ones on hot summer days. But my calculations regarding the cost of a single pack of smokes has compelled me to slow down grocery store checkout lines with Sunday coupons.

It all started one day recently when I decided to collect some figures of the cost of a single pack of cigarettes for the sake of capturing the attention of those smokers whom I love. My thinking was that since the obvious hadn't persuaded them to quit (you know, dead people, things like that), perhaps a monetary reality check would. Daily expenditures seem to have less of an impact on people, after all, what's five bucks? Easy come, easy go. No big deal, right? Little did I know that the calculations would become more a commentary about financial stewardship in general and less about smoking and its costs in particular. Keep in mind here that I use the cost of a single pack of cigs in Washington state, along with noted variables, to arrive at the totals. All YOU need to do is insert whatever cost you incur yourself for your daily latté, text messages, or ale sipping to generate your own convictions. How,indeed, are you blowing your money? Or, rather, how are you managing the financial resources God has granted you? Check this out.

If an average cost of a pack of smokes in Washington state is $5.86 (and it is as of July '07), then saving that $5.86 every day for one year yields $2,138.90. Now, invest that total for 10 years yielding a meager 6 percent interest compounded annually and the money grows to $3,830.44. No big deal, you think? Keep in mind that these figures are in today's dollars, and the calculations don't consider several other pertinent variables such as associated health care costs or annually rising taxes and prices of tobacco.

Now, let's put that $3,830.44 again in some dopey 6 percent return investment . . . it grows to $6,839.73 in 10 years. Still no biggy, eh? Well, then, how 'bout this more realistic scenario:

Cost of a single pack of cigarettes per day for 10 years = $21,389.

Let's say you save the cost of a single pack of cigarettes ($5.86, about the current cost of Venti Frappucino at Starbuck's) every day for 10 years. Again, keep in mind that this is just a single pack or a single coffee without considering rising costs and other associated variables AND the calculations are in today's dollars. The total accumulated dough is $21,389. That ain't chump change, friend. But it gets better, or,rather, worse, much worse.

Invest the $$ for cigarettes for 10 years = $64,243.14

Take that $21,389 and invest it in a 10 percent yielding mutual fund AND add a mere 500 bucks to the investment once a year for each of the 10 years. The total amounts to $64,243.14. And that's just a single pack or a single Frappe! The numbers become quite unwieldy and "lottery-esque" when you calculate realistic expenditures, like regular and multiple trips to Starbuck's or, heaven forbid, two-packs of smokes per day. Things get really alarming when you consider multi-smoker households or multi-consumers of frilly coffees. Note: You should see the numbers associated with playing the lottery. Yikes!

What are you spending your resources on? Don't think this article is intended to guilt anyone out of enjoying a cigar, a good beer (my favorite is McEwan's Scotch Ale), the prospect of winning a jackpot, handy cell phone technology, or even from enjoying good coffee, but it is intended to make you think about how well you're managing the resources God has granted you, especially when money is often the difference between who does and doesn't hear the gospel.

Final note: The main focus of this article has been the enormous savings that can be realized were one to simply reign in some splurging expenditures, then invest the dough. But think about the example used, a single pack of cigarettes. Not only could one save an enormous amount of money by not smoking, just think of the investment in one's health by totally abstaining from those cancer-sticks.

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For more of Tyler's articles, see his site: Truth Enterprises