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Literally Setting Money on FIRE (The Financial Impact of Smoking)

Smoking really is setting your money on fire

Taking a break from app reviews and optimizing credit cards to talk about financial health. In my youth I made a number of poor decisions that did not factor well into my future. This is the example of one such decision that has had devastating financial effects: I’m talking about starting smoking and what it has cost me over my lifetime.

But here at the Bad Budget Blog, I’m a math nerd when it comes to money. So I’m not just going to recount some vague “the average smoker spends X over their lifetime…” I’m going to do the math (and show the math) with historic market performance data!

Thankfully I made the decision to quit smoking a couple of years ago and have stuck to that. I made the decision because of working through this math and trying to switch to a better kind of FIRE for my money (Financial Independence/Retiring Early, of course). I may still have a long way to go to get to that point, but the money is going toward my goals now instead of up in flames with an addiction. Not to mention I’m no longer supporting Philip Morris advertising and legal defense funds.

First up, the good news –

I’m no longer a smoker.

Next up, the money –

In the ~26 months since quitting, I have saved about $7,500 dollars by not smoking. Considering average savings of around $300 a month (since I was a pretty heavy smoker).

But because you should learn from my mistakes, I’ll admit here that I have not taken that money and put it in an investment account every month. Because of that, I have missed out on gains of $1,175.41 in the market over the last 2 years which would have made my $7,500 worth a present-day total of $8,175.41 (or about a 9% lift, which definitely out-paces inflation). That number gets worse when we look historically.

Smoking beats you slowly –

Lost financial opportunity from smoking

It’s been 27 years since I originally started smoking, but I only started calculating the financial cost from around the summer (August) of 1996. I vaguely remember that’s when I moved from taking my parent’s cigarettes and bumming off of friends to actually buying my own.

I got Dave’s brand when I first started because it was cheap. I had my friend’s mom buy them for me for around $18 a carton. I smoked maybe half a pack per day in 1996, particularly between being in high school and considering my parents didn’t find out I was smoking until around the Spring of 1998.

After a full year of paying for cigarettes, my costs more than doubled in 1997 as I smoked even more. My smoking costs increased even further in 1998 when my parents found out and I worked at a diner where we only got breaks if we were smoking (so suddenly I was smoking 3 packs a day). I also moved up in price from Dave’s to Camels and Lucky Strikes as we got into 1999, the year I graduated high school at the ripe old age of 17.

Now for hitting the wallet where it hurts –

Compounding the market monthly and looking back on all of the years of spending as much as $4,320 on cigarettes, I have blown a grand total of $131,775 dollars. That’s $46,505 dollars of direct spending and $85,270 dollars of lost opportunity if that money had instead been put into the stock market. My life would be drastically different today with an extra 100+ grand lost to a 25 year, quarter century, habit.

It gets even worse if we adjust the spend for inflation. In inflation adjusted 2018 dollars, I spent a total of $55,951.01 (in 2018 dollars) on cigarettes. And this doesn’t even factor the medical cost from years of seeing specialist doctors and taking asthma drugs including emergency Albuterol and a variety of steroids that had cash prices up to $400 a month. I was completely off all the drugs of within a month of quitting.

This is an incredible amount of money to literally set on fire and watch it hypnotically go up in smoke.

I gained nothing from smoking. It cost me years of my life spent outside alone in the cold, wind, and rain while burning my future to the ground.

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