Two Thought Experiments

1) Imagine if you didn’t own a vehicle and someone told you they would give you a reliable vehicle, but the catch is that every day they’re going to collect $15 from you in person. Every day, for as long as you keep the vehicle, you have to reach into your wallet or purse and pay someone $15 (no extra costs, including gas). And you have to hand over the $15 even on days when you don’t drive the vehicle. Would you accept the offer? What if it were $30 per day, instead of $15, for a better vehicle?

That’s the approximate range of how much it costs to buy, operate, and maintain a vehicle. If you needed the vehicle for work, you’d have no choice but to pay the $15 per day, but probably not the $30. What if all you’re doing is picking up groceries and going for coffees? Is it even worth the $15?

2) Imagine if every time you bought a coffee, and just as you hand your $3 to the merchant, he or she makes you a deal. The deal is that if you leave the coffee behind, the merchant (who happens to be licensed to do so) will hang-on to your $3 and give you $7 after 10-years. And you can do that same transaction as many times per day as you like, for years.

It gets better, you can do it anytime you spend money anywhere, for anything—clothes, furniture, motorcycle, you name it. Whatever the amount is ($100, $5000, $10,000), you’ll receive more than twice as much back in 10-years if you forgo the purchase and let the merchant hang on to the money for you (and it’s totally legit, no tricks). Would that change your spending habits?

That’s the type of deal we’re missing out on every time we spend money, instead of investing it. Those $80 jeans you bought when you were 20-years old will cost your 60-year old self $1200 (inflation accounted for). If 60-year old you could time travel, he would go back and kick 20-year old you in the pants.