Mr. Money Mustache calculated that his sister's backyard pool, which saw regular use for 18 years, cost $18 per plunge.
Whenever I'm in need of a mental reset when it comes to personal finances, I head to Mr. Money Mustache's blog. He never fails to put the excesses of modern life into perspective and fill me with determination to become more frugal. An article from last week, titled "The Twenty-Dollar Swim," did precisely that.
In it, MMM (whose real name is Pete Adney) describes jumping into his sister's pool, at which point she hollered, "Please do use the pool! You’ll help get my cost per use down because it’s still way up there in crazy territory. Every jump into that pool has cost almost twenty bucks, if you average it out.”
Puzzled, MMM did some calculations and realized she was right. Based on a $30,000 price tag back in 2000 -- money that could have been invested and compounded by 7 percent for 18 years, transforming into an amazing $101,300 -- plus the annual cost of electricity, chemicals, and other maintenance, even with the family using it every day of the season (7200 jumps in total), the cost per use was about $18.
This is mind-boggling when you stop to think about it, and that's why MMM was invited for a quick interview on CBC's Ottawa Morning on Friday. As he told host Robyn Bresnahan, people tend to think about the upfront cost and the maintenance costs associated with a luxury purchase like a pool, but rarely do they stop to think about what that money could be used for otherwise. (Nor did he mention that pools have a tendency to reduce house values in Canada.)
"As soon as you sacrifice that money, that's like giving away thirty thousand employees that would have worked for you your entire life, and they would be feeding you cash flow or lower mortgage interest or whatever. Money is employees."
Owning a cottage is no different, arguably even more wasteful because it's a pricier item. It almost certainly requires a drive; for people in southern Ontario, who flock to the cottage regions where I grew up and now live, anywhere from 3 to 4 hours each way is fairly standard. As MMM reminded in the interview, the cost of gas represents only a quarter of the cost of driving; you should think of a car "as a volcano of money-shredding waste," not just transportation. A cottage works out to anywhere from $800 to $1,000 per night when you divide the cost of the cottage by the number of nights you actually spend there.
So, what would a better option be? You could rent or stay in an Airbnb or go to a swanky resort and still be much further ahead. Renting a cottage allows you choice, flexibility, a possible move south in the winter.
The appealing thing about Mr. Money Mustache is the way in which he presents his viewpoint. He doesn't tell people not to do these things, and acknowledges the many personal benefits they can offer, but urges people to weigh the pros and cons. These are simply luxury items that you might not want to pursue if you want to get your finances to a certain point.
"You are going to spend money on experiences and it's definitely worth it, but it helps to understand what you're doing, instead of going in blindly and then waking up at 55 years old and saying, 'Oh darn it, I'm broke. I have two truck loans and am never going to be able to retire.'"
Out of curiosity, I asked my fellow TreeHugger writers for their opinions. Lloyd, who owns a water-access, uninsulated rustic cabin on a lake in Muskoka, Ontario, says his family's cottage purchase in 1990 was the single best thing they ever did. Because he paid so little for it at the time, it hasn't been a financial burden, compared to the million-dollar places on the market now.
Editor Melissa grew up with a pool and swam in it nearly every day as a kid. She pointed out that, given the choice between a $30K car or pool, she'd take the pool in a heartbeat. As an urban dweller, perhaps her reaction to the pool criticism was a bit stronger than mine would be, but she makes a good point:
"Sure, you can be frugal and not spend any money and have no fun and stay on your couch and have the kids watch TV, or you could have a pool!"
So, it looks like the TreeHugger team isn't entirely convinced by Mr. Money Mustache's logic, but still, I found it eye-opening and thought-provoking. I liked his closing words in the CBC interview:
"If you have any choice, just don't buy the thing instead of going into debt to have that thing."
We could all benefit from doing more of this.