Sunday, September 28, 2014

Moving our blog

We are going to move our blog to a newer and better host:

https://retirement-blog.herokuapp.com

See you there!

Saturday, September 27, 2014

Water Cooler Stories - Brown Bag Lunch

Nowadays, we all sit in small spaces in modern office buildings. Row after row of cubicles like diligent worker bees. Because of the tight spaces, I tend to overhear many interesting stories. Today I would like to share with you a story about brown bag lunches.

One of the younger worker bees decided to increase some of his cash flow by making sandwiches, instead going out for lunch every day. One of his friends stopped by and said it was not worth the effort and the time. He stated that each lunch was probably less than $10 and it did not really add up that much for a year. 

I listened and smiled. Then I did some simple math (see below) the same night. The following calculation assumes that lunch is $7 and there are 20 work days per month. It also assumes that the average American works for 35 years. To be safe, I only used a 6% rate of return on investments.

At $7 per lunch at 20 lunches a month, it is really only $1,680 per year. On a salary of $55,000, that is roughly 3% of total income per year. It is not that much, you might think to yourself. However, given enough time, saving that little money a year - it can turn into almost $200,000 by the time it's time to retire. Again, this is because of the time value of money.  However, the calculation is fairly conservative.  The average return is probably around 8-10%, which would significantly increase the total savings amount.



Usually people who do not bring lunch to work, will also end up buying dinner as well. Enjoying good food is never a bad thing. However, it can be affect your overall health, in addition to creating holes in your cash flow. Restaurant food sure tastes great, but it also means high sodium and more oil/fat you're putting into your body.

Home cooked food can also be delicious and can save some money on the side. Home cooking might take some time, but can be a great experience trying new things on our own without breaking the bank.

Financial independence is our ultimate goal. Anything we can easily do to save that extra dollar without greatly affecting our life experience is good. With that in mind, we will continue to bring our own tasty home made lunches to work.