I’m a man of small vices—and have been since 2007, when I enrolled in college. That’s when I started smoking three packs of cigarettes a week, bought two or three coffees a day from the campus cafe and regularly imbibed on “Thirsty Thursdays.”
After I graduated and landed my first full-time job at a software company—and my $64,000 of student debt was still in deferment—these vices compounded.
I bought coffees and lunch every day, met friends for happy hour twice a week and smoked a pack of cigarettes a day. By the time my almost $1,000 monthly student loan payment kicked in, the habits were ingrained—and I found myself living paycheck to paycheck, wondering where all my money was going.
In my mind, it didn’t make any sense; big-ticket purchases made my stomach drop. You’d never catch me buying a new camera or taking a trip around the world. I wore my clothes until they fell apart and still use the laptop I bought after high school graduation—in fact, I’m typing on it now. Yet I never had any money.
It wasn’t until I sat down a year later and plotted out my expenses that I realized I was tossing money out the window on tiny, everyday purchases. That’s why I call them “small vices.” They’re fairly insignificant when looked at one by one: What’s a coffee here, a pack of cigarettes there? Just a handful of dollars. But when you look at them together, you realize the net effect of those vices is anything but small.
A small coffee cost me about a buck every morning I went to work, which totals $260 over the course of a year. Spending $8 a day on lunch equals $2,080. Two $10 happy hours per week comes in at $1,040 a year, and a daily $9 pack of cigarettes adds up to $3,285 a year (not to mention the cost to my health). Throw in my weekly $1 lottery ticket, and I was spending a grand total of $6,717 a year on these seemingly small indulgences.
Looking at that number in black and white made me sick. Every coffee, beer, cigarette and lunch special had convinced me there was nothing I could do about my mountain of student loan debt, when, in reality, I was making more than enough to handle it. Sure, indulging provided some joy in the moment, but it was fleeting—and ultimately keeping me from the much greater joy of reaching my financial goals.
As it turns out, coming to this realization was the easy part. I stumbled a number of times trying to break the habits. I’d quit smoking cold turkey or bring lunch for a few weeks, but never do anything with the savings. Rather, the money sat in my checking account, ready to be spent later when I inevitably slipped up.
Finally, I realized that if I really wanted to be successful, I needed a daily reminder of why I was forgoing things I enjoyed. So every time I didn’t stop for a coffee on the way to work, I moved $1 from my checking account to savings. When I packed my lunch, I transferred $8 (opting not to deduct the cost of groceries I bought to make lunch, which averaged about $2 a day) and when I passed a gas station without buying cigarettes, I moved over $9. If friends invited me to happy hour, I’d decline and transfer $10—or go and socialize, but limit my order.
Those daily transfers proved that my sacrifices were leading to real savings, and watching my balance climb spurred me to stick with the plan. After about four months, my new routine was set, and I switched my daily to weekly savings transfers.
At first, I used the extra cash to bolster my emergency savings until the account reached $4,000. Next, I shifted my focus to my student loans, tackling the highest-interest ones first. This savings, added to what I’d already carved out of my budget to devote to loan payments, helped me pay off $8,500 in just a year’s time. After that, I decided it was time to start investing.
I knew that the earlier you start, the longer your money has to grow—and I couldn’t afford to wait until I was debt-free. So I opened an investment account and created a portfolio consisting of ETFs (exchange-traded funds), where I began transferring half my savings each week. I used the other half to continue paying down debt.
Today, I have an investment account balance of nearly $6,000, thanks to my savings habits (as well as efforts to earn extra income, like picking up freelance writing work when I can). I’ve also increased my emergency fund to $5,000, shaved a total of $24,000 off my student loan burden and regularly contribute to a Roth 401(k) account.
And beyond the financial gains from cutting my vices, I figure I’ve saved my future self even more by becoming healthier. (I’ve even taken up running and dropped 70 pounds.) I still indulge in my old habits from time to time, but I can honestly say that the increased savings, shrinking debt and a growing investment account balance make me happier than greasy burgers, beers and cigarettes ever did.