My basement faucet is dripping. It’s on one of those low-basin sinks that the washing machine empties into. The plumbing behind it is old and sclerotic, and I’m not even sure there’s a valve I can use to shut the water off. So I’ve been putting off fixing it.
Leaky faucets waste water, which is bad on its own. But they also cost money. But how much? I’d never really thought to tally it up.
But it turns out I can. Checking out this website, then looking at my water costs, I see that I’m wasting about $6 per month, or $72 per year. I’m not going to go hungry losing this small amount of cash, but it’s real money, and spending the hour (okay, six hours) to fix my leak would save me some real money over the long term.
So often, we don’t know what our financial leaks are costing us. And until we see the number, we’re unlikely to waste our precious time taking action.
So much of our money disappears this way, dribbling away quietly like the leak in my basement. And as more business models become subscription based, we can even actively create background spending that will continue long after you stop using a company’s service. Like the drone of an air conditioner, this spending quickly fades into the background so that we barely notice it’s happening.
Here’s a list of my financial leaks along with their yearly estimated costs:
- Dripping water in the basement: $72
- Checking fee for a bank account I don’t use anymore: $144
- Admin fees on a high-cost mutual fund: 1% yearly (around $100)
- Refrigerator electricity (over what a new, efficient model would use): $60
- An Amazon pay subscription for a magazine I never read anymore: $36
- Dehumidifier that I only need because I haven’t fixed the basement windows: $60
- Yearly fee for domain name I don’t use: $16
Estimated Total: $488
These are leaks in the truest sense of the word. They cost me money yet provide me with no value. I also have my streaming subscriptions like Netflix and Hulu, then Spotify for music. These are a little different, because they provide me with a service I like for a low price. But they’re the same in that they charge me whether I use them or not.
For the true leaks, why haven’t I done anything about them? Well, until I wrote this article, I never really knew how much all of this was costing me. Without knowing the cost, it was easy to keep the status quo.
And actually, even tallying the cost isn’t always easy. Water and electricity bills are like burlap sacks: easy to know the size of them, harder to guess what’s inside.
Now that I know I’m leaking almost $500, I’m not hearing the water dripping anymore. I’m hearing pennies pinging against the sink basin. I’m seeing dollar bills being fed into the dehumidifier. It’s all suddenly very real. I could fill a sheet of paper with the things I’d do if $500 appeared out of thin air.
What if the final number isn’t big enough to force action? $488 is real money to me, but I understand it might be peanuts to others. Well, let’s add a few years. Over five years, my inaction will cost me $2,440. Now we’re getting somewhere. And what if we invested that money, expecting a pretty conservative 6% yearly rate of return? $2,750. My palms are starting to sweat. I don’t even want to extrapolate out to ten years.
When I do this “invest for X years” math in articles, I usually get a few derogatory comments to the tune of: “anyone could pick a long enough timeline and get a huge number. Why not say 100 years and make yourself a millionaire?” My first reaction to that is: I could, because that’s exactly how compound interest works. My second reaction is to admit that yes, partly I’m tricking myself. By finding a scenario that will make for a huge number, I’m tricking myself into taking action. But it’s okay to trick ourselves as long as it’s for the right reasons.
I hadn’t fixed any of my background spending for years because I didn’t have a big enough number in my head. Now I do: $500 is plenty big for me. I’m getting that drip fixed.
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