One Snarky Chica with Issues

I saw an article on the front page of Yahoo this moring on how to make a million dollar by not watching TV.  A million dollars? That sounds good to me, so I had a look.

What I discovered was that the author had made some generalizations that don’t apply to everyone. Sorry, not all of us could be millionaries if we give up television.

For his example, the author makes this assumption:

• $2,000 for new TV, dvd player, entertainment stand, gaming system
• $100 per month for cable
• $10 per month for electricity related to TV usage
• $20 per month on movie rentals
• $25 per month on video games
• $20 per month for pay-per-view
• $525 per month you spend due to influence of commericals

The author says if you take the $700 per month and the initial $2,000 and invest it at 8% for 45 years then you will end up with more than $3.7 million.

This would not be the case for me. I have a television that was $400, a $60 dvd player, a $75 TV stand and a $150 gaming system that I never use (I actually need to sell it on eBay - anyone need a slimline PS2?) I get my basic cable bundled with my high speed internet, so the cost of the cable is only $25 per month. I’ll take their word on the $10 per month for electricity. I don’t rent movies. I don’t buy video games. I don’t do pay-per-view. I don’t do a lot of wild spending, but i’ll say $125 per month just for argument’s sake.

So that is $685 initially and then $160 per month. Using my favorite compound interest calculator, I plug in the numbers at 8% for 45 years and get $874,235.

The moral of the story - if you spend loads of cash each month like a dumbass you are missing out on compoud interest. That’s not a new story, but the premise of the article sure did reel me in. I bet it did a lot of other people too. Unfortunately it didn’t point people to any investing sites so that they could take positive action after reading the article. Guess there won’t be a lot of millionaires in 45 years then, eh?