The Cost of Addiction – In Dollars

September 21, 2017

Habits can be helpful or harmful, but most people would like to eliminate at least one habit from their life. There are a variety of reasons for kicking a habit, but a common reason, and possibly the most costly (pun intended), is financial distress.

Puff, Puff, Pass

Here are some tobacco stats from the Center for Disease Control:

  • Tobacco use is the leading cause of preventable death in the United States and costs the nation $96 billion annually in health care costs and an additional $97 billion in lost productivity.
  • Americans spend more than $50 billion annually on tobacco products.

With those national figures in mind, let’s consider financial ramifications for the average American.

Smoking (or chewing) 12 packs per month, at $5 per pack, totals $60 per month. This recurring expense, compounded at 7% interest over 10 years*, means a total cost in excess of $10,000.

On the bright side, if you continue to smoke, you may eliminate the need to save for retirement altogether.

Blame it on the Booze

I’m not going to tell you why you should or shouldn’t abstain from alcohol. That’s none of my business. What I will tell you is that alcohol can be an expensive habit:

Let’s say you go out twice per week with your friends at a cost of $15 per night. In addition, you like to have a few beers or a bottle of wine during the week for $20 more. So you are at $50 per week, which we’ll round down to $200 per month.

$200 per month on alcohol, compounded over 10 years at 7% interest, leaves you a tab totaling nearly $35,000.

What if instead, you learn how to brew wine or beer at home? Or, you choose to drink a decent bottle of red wine that you obtained in a package deal on Groupon for $5?

Well, at $20 per month, your 10 year cost totals nearly $3,500. Pretty drastic change.

Daddy Needs New Shoes

The house always wins! Of course you might hit that lucky streak (often mistaken for skill) and win big, but it’s a short term fix. Statistically, you’ll give it all back to the house. The casino, or dog track, or lottery is stacked against you. Why do you think so many governments run lotteries? You guessed it, because they make a fortune on people who gamble.

Let’s say that you play the lottery or blackjack for fun on the weekend. On average, you spend $100 per week and win $60. I think that’s pretty generous, as I’ve witnessed plenty of casino action up close and personal. So you lose $40 per week, which we’ll round down to $150 per month. Compound that over 10 years, and you’ve blown nearly $26,000.

Battling the Blues

I hear that it’s pretty common for people to spend money when they feel down, or alone, or upset, or frustrated. This habit seems counter-intuitive to me, as buying more stuff often places more financial stress on a relationship, furthering the destructive cycle. But it’s a struggle for some, and I have plenty of my own issues to worry about.

Some people might shop for a new outfit or piece of jewelry. Others might prefer eating out and socializing. Whatever the coping mechanism, let’s assume a cost of $100 each month. The compounded price tag on that shopping habit weighs in at more than $17,000.

Conclusions

*If you’re wondering why I compound everything – It’s to account for a 7% return on that money, which has been obtainable in a good stock index fund historically.

Altogether, these common addictions could cost you nearly $90,000 over a 10 year span.

If you’re thinking “He’s crazy, I don’t have those vices!” you might want to first examine your personal situation. There are numerous other money-sucking habits that I didn’t mention.

If you are having a difficult time kicking a habit, it might help to consider the financial costs that accompany your decisions. Money can be a powerful motivator.

What do you think? Do you have any habits that you’re trying to kick?

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45 Comments on "The Cost of Addiction – In Dollars"

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Will
Will

Oh that beer has not done any good for my waist line and my wallet. We try and drink at home as the cost of beer is crazy at bars/restaurants. When we go to a casino close to our home, we are spending $9 a beer. The last few years we have gotten better to just drinking at home, but we love the social aspect of going out with friends and having a few drinks. What a dilemma! 🙂

Liz
Liz

I admit that I have an addiction to shoes. I have more than 50 pairs of sports shoes, and I consider this as addiction as it is costly and I sacrifice more other things. Trying to eliminate this addiction is hard, but I’ll still try.

Josh
Josh

I loved the tone and sarcastic vibe I got from this article. It definitely gave me some great ideas too!

Centsai
Centsai

Wow, seeing all those numbers you calculated made my jaw drop! When you go out to get drinks or buy a bottle of wine twice a month, you don’t think about how much everything adds up to in the long run! Definitely makes me think about how much money I could save in the long-run and spend on something more meaningful then a bottle of Merlot!

Jayson
Jayson

This is the reason why I always try to make a positive habit because bad habit costs me a lot of money like my habit of always watching all movies I want in the movie theater.

Terrence Forest
Terrence Forest

I battled with cigarette and alcohol addiction. Not only are their financially detrimental but physical as well. I thank God for freeing me from those additions.

Jess
Jess

Unfortunately, people with alcohol and drug addictions don’t need to worry about budgets because they just lie and cheat and steal to get what they need. I guess you could consider that “work” but not in the real sense. It’s the people around them that suffer financially. I know one person who just shoplifted vanilla extract from the supermarket because it has like 42% alcohol. No budget needed, lol!

Jack Smack
Jack Smack

What a silly and irrelevant to the article & discussion comment

Josh
Josh
Great article. Thanks for writing this, Jacob. I would point out that your tobacco estimates are rather conservative, although still a whopping figure at the end. Most everyone that I know who smokes, are a pack a day person, and that fluctuates up to 2 packs should they be having a stressful week (ironically, cigarettes are and have been linked to higher stress levels…trust me, as a former smoker I know this). Factor that in with tax, and the average is around $50 per week (of course I do know this figure may not apply to everyone, and is strictly… Read more »
Lauren
Lauren

I completely agree, people spend crazy amounts of money on addictions or related expenses. It’s funny we must have been on the same wavelength, I just wrote about gambling the other day. Glad someone else agree’s with me. I definitely don’t go out 5 days a week drinking but being at university you definitely fill the pinch, it totally adds up.

Jim
Jim

Great post Jacob, this really puts perspective on the cost of addictions. I have a caffeine addiction and am currently tracking my spending to see how much I am really spending, so hopefully that will be motivation to quit!

DC
DC
“The house always wins! Of course you might hit that streak (that you mistake for skill) and win big, but it’s a short term fix. Statistically, you’ll give it all back to the house. The casino, or dog track, or lottery is stacked against you. Why do you think so many governments run lotteries? You guessed it, because they make a fortune on people who gamble.” The way you worded this makes it seem like you think most people think the casino loses money over time??? I think 99.9% of people know that they are going to lose over time,… Read more »
AverageJoe
AverageJoe

An advisor I worked with was the most popular guy at his high-end bar hangout. I asked his assistant how he went out so often….she said he was an alcoholic now and loved the attention….it was addicting.

Worse, was when she tallied his expenses. In 2010 he spent over $80,000 at this bar. No wonder he was so popular there! He spent more there per year than most people earn!

Elena
Elena

Alcohol and tobacco are the biggest money wasters ever. There is no justification for ruining your health and finances. Well-said!

Jake
Jake

Very nice breakdown. It’s amazing how much a seemingly “little” habit can end up costing. I have a few habits that cost money, but I know about them and limit them. Plus, they fit into our budget which fits into our long term financial goals.

Shannon
Shannon

I will confess that we are wine aficionados! We stock up when we’re in wine country and can visit some of our favorite wineries (I hope this doesn’t make me sound like a lush, because I swear I’m not! 🙂 ) I find when people go on shopping sprees because they are blue, or bored or anger – whatever the emotion it may be – is because they assume what they buy will either cheer them up or have earned it after being passed over for a promotion, a bad break-up, etc.

Going Gonzo
Going Gonzo

I buy the box wine for $20. To me it tastes the same as a $50 bottle of wine and lasts a lot longer, one of the benefits of an unrefined palate:)

Sean
Sean

In most big cities it’s costing upwards of $8.00 for a pack of cigarettes. If I was a smoker that along would make me want to quit.

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