Never Have Any Money to Invest? Maybe It’s that Dinner You Had in 1984.


A common reason many people never start investing is that they don’t have enough money left over at the end of the month to build up enough cash to invest.  This is true whether a family is earning $40,000 per year or $100,000 per year.  The reason for this may not be that your current expenses are so high.  It might be all of the things you bought a while ago for which you are still paying.  If you weren’t paying all that interest, you’d have a lot more to invest.  For example:

New Car:

Original Cost: $40,000, Interest Rate: 5%, Term: 6 years, Payment $644/mo

Totals Cost:  $46,382

Buy a four-year old used car for cash instead (or even an 8-year old car to start) and go without a car payment.  That will leave an additional $6400 to invest.

Dinner Out (on credit card):

Original Cost: $100, Interest Rate: 15%, Term: 10 years, Payment $1.61/mo

Totals Cost:  $193.60

That meal cost almost twice as much because you financed it over 10 years.  Always pay cash when you go out and you’ll have a lot more to invest.

Student Loan, kept as pet: 

Original Cost: $50,000, Interest Rate: 4%, Term: 20 years, Payment $302/mo

Totals Cost:  $77,717.64

Even at low rates, that loan cost you an additional $27,700, and you wonder why there is nothing in your kid’s college account.  Only go to a college that you can afford and get scholarships like crazy.

Vacation (on credit card):

Original Cost: $3,000, Interest Rate: 15%, Term: 6 years, Payment $48.40/mo

Totals Cost:  $5,808.06

Once again, with the credit cards you’re paying for that vacation twice.  You can have an extra $3000 per year to invest if you pay save up and pay cash.  You’ll also feel better when you get back and not have a credit card bill awaiting.

Now, what would happen if you had an extra $1000 per month to invest (because you didn’t have any payments) for a 45 year career and made the market average of 12%?

Investing Savings:

Original savings: $0, Interest Rate: 12%, Term: 45 years, Payment $1000/mo

Value at Age 65:  $ 21,669,239.98

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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