I get a little frustrated by people who are struggling financially and say they want to retire early, but their spending habits tell a different story! Talk is cheap. Walking the talk is what matters. Here are three examples of what I think are really, really bad money wasters.
Coca-Cola®
Picture this ratio:
Numerator (that’s the piece on the top) = Cumulative Revenue Generated by a Product (CRGP)
Denominator (yep, the bottom) = Product Redeeming Value (PRV)
or
CRGP ÷ PRV
See what I’m getting at here? In words: What product has, since its inception, generated the most revenue for its corporate master while offering to consumers the least redeeming value?
I think there’s one clear answer: Coca-Cola®, aka canned obesity, six-pack-o-diabetes, the dentist’s Jaguar® payment, sleep disruptor.
Coke’s PRV (Product Redeeming Value) approaches zero, which is what Coke® aptly named a version of its product. Coke’s nutritional, including hydration, value is zero, or less, which seems to me odd for something that’s to be eaten.
And there’s a direct relationship between one’s healthcare expenses—not to mention healthfulness—and the volume of Coke (and all of its sweet cousins) consumed.
Oh, I know—but it tastes so good!
Try this: stir 10 teaspoons of sugar into 12 ounces of cheap sparkling water, then do a blindfolded taste test vs. Coke.
Or maybe it’s one of these (begin sarcastic tone here) incredibly clever and convincing taglines (end sarcastic tone) that people have found so irresistibly seductive (all registered trademarks, excluding my snarky commentary):
Taste the Feeling
Make It Real
Coca-Cola…Real (wow—the marketing whiz who came up with this gem surely got a huge bonus!)
Life Tastes Good
Coca-Cola. Enjoy (another one off the cleverness scale)
Official Soft Drink of Summer (huh?)
You Can’t Beat the Feeling (if you mean of an obesity-induced heart attack, I disagree)
Coke Is It!
Coke Adds Life (my nominee for most ironic)
and of course, my personal favorite
It’s the Real Thing
And these lead nicely into cash waster #2…
Brand Vapor
I coined the term “brand vapor,” as far as I know. That means I get to define it.
Try this exercise:
Read these words: Apple iPhone
Now close your eyes. (Okay, you have to peek to read this.)
When you read or hear the words Apple iPhone, if you focus inward for a moment, you’ll realize the words conjure in you certain emotions, images, memories, anxieties, desires, preconceptions, etc. This conjured bundle is conglomerated by no accident. It’s mostly the result of hundreds or more likely thousands of carefully crafted Apple and iPhone marketing messages to which you’ve been exposed. The bundle has been thoughtfully, cleverly, meticulously, and purposely constructed in you by Apple Marketing.
Brand vapor is that bundle of feelings that consumers experience when exposed to a company or product name. Why do I choose the term “vapor?” Because there’s nothing there.
Now: why would people spend money purely on brand vapor?
Example: You have before you two sweatshirts identical in every respect except two: 1) the word Abercrombie® is printed in a big, distinctive font across one of the shirts, and 2) the Abercrombie shirt costs twice as much as the shirt with no writing on it.
When people choose the Abercrombie shirt, they’ve voluntarily paid 100% more than necessary for a product because they’ve elected to purchase brand vapor.
Why would they do that? Do they really think that people seeing them wearing a shirt with Abercrombie written on it will conclude that they’re cool, or anything else? (When I see someone wearing an Abercrombie shirt I conclude that the wearer is gullible and not truly interested in financial independence.)
Interest on Unsecured Debt
I’ve tried, and I can think of only one common household expense that yields no benefit whatsoever: interest payments on unsecured debt like credit card debt.
People run up credit card debt that they can’t pay off right away for all sorts of reasons. An unexpected loss of income or big household expense is the most common. The main reason I’m a cheerleader for building a generous emergency fund is to help avoid falling into the high-interest debt trap when negative financial surprises happen (and they always do).
I get that we can’t all afford an emergency fund, or one big enough to absorb every surprise. But people who are forced into the high-interest debt trap still have options. My favorite for most people most of the time is a Debt Management Plan. Or, my Simple Guide “Be Debt Free!
But let’s be honest. What do you think is the #1 reason, by far, people carry credit card debt and waste thousands of dollars a year on interest expense? We all know the answer: people voluntarily spend more than they can afford, period. These folks are, at best, choosing to work more years in exchange for buying something today—and borrowing the money for it at a sky-high rate—versus saving up for the item and then paying cash for it. At worst, a bad overspending habit may make impossible, ever, a secure, comfortable retirement. And having debt makes one vulnerable to forced bankruptcy, limits options, and boosts the odds of becoming a burden on one’s children or other relatives.
What to Do?
Do you want to be financially independent one day? If that’s truly a priority for you, then drink tap water from a reusable bottle (no commercial drink beats out tap water for hydration and healthfulness), don’t be suckered into paying money for brand vapor, and pay off your credit card bill in full every month.
Then stand back and watch the money magic! 
