Here is a trick to prevent yourself from buying something you don't really need. Whenever I really
want something, I always think about just how much money it is actually going to cost me down the line.
The alternative to buying something is to not buy something and save the money. You then put the money
to work for you and suddenly that small purchase really starts to make a difference.
Take lattes for example. Say you buy a latte at $5 a pop everyday you go to work. Figure that there
are about 230 work days in the year and you see that lattes will cost you about $1150 a year. Now say
instead of buying those lattes, you save the money and at the end of the year put the money in an index
fund. After 30 years, assuming a 10% rate of return, that money turns into $20,000.
This is even more true for big ticket items or things that are reoccurring. That $3000 LCD flat
panel? That cost you $52,000. Want to buy a new car instead of just keeping your current one? That could
cost you almost $500,000. This is not to say that you should live like a miser and not buy anything. You
should of course enjoy your life; you just need to be aware how current consumption will affect your
future net worth. The latte example only considers one year. Imagine if you don't do it over 30 years. The numbers get staggering.
Want to try it out yourself? Just enter the cost of some item above, and it will
calculate what the real cost of that item is 30 years down the road. If you want to adjust the numbers
from the default, you can do that too.