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Saturday, August 30, 2014

78. Smoking... An expensive habit? Yes!

I first started thinking of this topic on a recent trip I took for business. On the door of the bathrooms in the airplane there was an ash tray. Considering the flight was non-smoking and it was illegal to smoke in the airplane bathrooms I found this to be quite humorous.   



Recently someone mentioned that they had saved a lot of money by quitting smoking. This peaked my curiosity. I looked up the cost for a pack of cigarettes and came across thisarticle which said that a pack in Texas cost $6.69. 

I thought for sure this had to be way high. I personally thought it would be close to $5.50 or less. So I called 3 local gas stations and they gave their prices: $6.00, $7.35, and $5.75 for the same pack of Marlboro cigarettes. 


Basic Math


So let's do some basic math here. 

Scenario 1: Assuming a person smokes 1 pack a week for 52 weeks a year and smoke for 30 years that is $9,937.20. 

($6.37 x 1 pack x 52 weeks x 30 years = $9,937.20)

Scenario 2: Increase the consumption to 3 packs a week goes up to $29,811.60 in 30 years. ($6.37 x 3 packs x 52 weeks x 30 years = $29,811.60)

Scenario 3: Increase the consumption to 7 packs a week (or 1 pack a day) it goes up to $69,560.40 in 30 years. ($6.37 x 7 packs x 52 weeks x 30 years = $69,560.40)


Investing the Money Instead?


Question: What if instead of buying cigarettes you'd invest that money?

Interestingly enough this investment calculator was the first to pop up on my Google search.

If you were to take Scenario 1 and instead of spending $27.60 a month on cigarettes invest the money at 7% annual rate of return for 30 years you would have $33,475.34.

If you were to take Scenario 2 and instead of spending $82.81 a month on cigarettes invest the money at 7% annual rate of return for 30 years you would have $100,438.29.

If you were to take Scenario 3 and instead of spending $193.22 a month on cigarettes invest the money at 7% annual rate of return for 30 years you would have $234,351.85.



That's not even accounting for inflation, etc. Or the financial consequences of lung, tongue, throat, skin, or other cancers/diseases that can impact a person who smokes. It can also significantly impact those who live around the smoker with 2nd hand smoking. Health challenges in children particularly can be compounded by 2nd hand smoking. 



What could you do with say $10,000, $30,000, or $70,000? Have you ever smoked? Do you still smoke regularly? If you did quit what made you quit?


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