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Tuesday, 11 April 2017

Another way of looking at 'cost' (and a Chilli Con Carne recipe)

 It's not a secret that I like money. I like having it, I like investing it. I'd like to have enough of it invested that the invested money makes enough money to cover my living costs. Then I can stop trading time for money. Time is pretty finite, I can't earn more of that.

Most Early Retirement blogs will tell you the process is simple, earn more, spend less, invest the difference. Then the negative comments on those blogs will try and tell you that spending $5 less per day isn't going to make you a millionaire, or significantly delay your retirement. It took me a while to really cut into the heart of this, but there are a few ways of looking at your expenses, and what they really cost you.

Number 1: The actual cost per week/month/year

 This is pretty obvious, and it's the first on that people think of. $5 per day is $35 per week, $150 per month, or $1,825 per year. Put that way it doesn't really seem like much.

Number 2: The ten year value of that money if you invested it

 This is the number that Mr Money Mustache always tells people to consider. Assuming 7% interest (which is a viable number, stop being so negative!):
  • to calculate a weekly expense compounded over ten years, multiply the price by 752
  • for a monthly expense, multiply by 173
That $5 a day could be $26,320 in ten years if you invested it, rather than spending it.

Number 3: The amount of money you would have to invest to cover that $5 per day.

This is my favourite way of looking at the long-term cost. It's also the best because I didn't directly steal it from someone else. I'm sure other people look at on-going costs this way, but I've never seen it formally written, so here I go.

If you want to retire on the income from your investments, that income needs to cover your ongoing costs, plus covering inflation. Most financial gurus will accept that you can (reasonably) safely withdraw 4% of the value of your portfolio each year and stay ahead of the game. This assumes that your portfolio is continuing to grow through reinvested dividends.

Now - what we have is a $5p/day ($1,825) expense that needs to be covered by your portfolio. You can only withdraw 4% of your portfolio, so therefore your portfolio needs to be 25x that expense to cover it (that 25x comes from 100/4). So to cover a $5 per day expense, which is costing you $1,825 actual dollars per year, you need $45,625 invested to cover that $5 a day. The Australian Bureau of Statistics says that in November 2014 the average full time salary was 76k per year. That means you would need to invest 60% of a years income just to cover a $5 a day habit (probably take-away coffee).

Is a daily coffee really worth $45k to you? Cause it definitely isn't to me. But another perspective is the food budget. Currently my food budget is $6.50 per day (plus whatever Mr. FIRE spends), which means investing $60k to cover my food expenses. $6.50 per day averages $2.15 per meal. I can make Chilli Con Carne for $1.15 per serve.

Of course, I don't eat that cheap every night. Some nights we have steak and chips, for about $6-$7 (good steak is pricey!). For one meal it's barely $5 difference, but if we were to eat that way every meal we could easily need another $100,000 just to maintain our lifestyle. A few nights of delicious budget chilli con carne brings our early retirement much closer.

Chilli Con Carne

This recipe made me 20 serves.


  • 1 tbsp oil
  • 1 large onion
  • 1 red pepper
  • 2 garlic cloves, peeled
  • 1 heaped tsp hot chilli powder (or 1/2 level tbsp if you only have mild)
  • 1 tsp paprika
  • 1 tsp ground cumin
  • 500g lean minced beef
  • 1 beef stock cube
  • 400g can chopped tomatoes
  • 1/2 tsp dried marjoram
  • 1 tsp sugar
  • 2 tbsp tomato purée
  • 200g dried red kidney beans
  • 5 cups (uncooked) rice


  1. Cook your kidney beans the day before. Boil for 10minutes, then toss in a slow cooker for about 5 hours.
  2. Put your pot on over a medium heat. Add the oil and leave it for 1-2 minutes until hot. Add the diced onions and cook, stirring, for about 5 minutes, or until the onions are soft, squidgy and slightly translucent. While the onion is cooking slice open red peppers, discard the seeds and dice.
  3. Add the garlic, red pepper, chilli powder, paprika and ground cumin to the pot. Give it a good stir, then leave it to cook for another 5 minutes, stirring occasionally.
  4. Brown the beef. Turn the heat up a bit, add the meat to the pot and break it up with your spoon or spatula. The mix should sizzle a bit when you add the mince. Keep stirring and prodding for at least 5 minutes, until all the mince is in uniform, mince-sized lumps and there are no more pink bits. Make sure you keep the heat hot enough for the meat to fry and become brown, rather than just stew.
  5. Crumble beef stock into 600ml hot water. Pour this into the pan with the mince mixture. Open the can of chopped tomatoes and add these as well. Tip in marjoram and sugar, if using, and add a good shake of salt and pepper. Squirt in tomato purée and stir the sauce well.
  6. Simmer it gently. Bring the whole thing to the boil, give it a good stir and put a lid on the pan. Turn down the heat until it is gently bubbling and leave it for 20 minutes. You should check on the pan occasionally to stir it and make sure the sauce doesn’t catch on the bottom of the pan or isn’t drying out. If it is, add a couple of tablespoons of water and make sure that the heat really is low enough. After simmering gently, the saucy mince mixture should look thick, moist and juicy.
  7. Bring on the beans. Rinse red kidney beans in a sieve if you haven't already and stir them into the chilli pot. Bring to the boil again, and gently bubble without the lid for another 10 minutes, adding a little more water if it looks too dry. Now replace the lid, turn off the heat and leave your chilli to stand for 10 minutes before serving, and relax. Leaving your chilli to stand is really important as it allows the flavours to mingle.
  8. Serve with rice. To get the $1.15 per serve value I served 2 scoops of rice with 1 scoop of Chilli Con Carne.


  1. Wow, great post! I really like the last method of comparing a $5/day habit to how much you need to invest to cover this habit. $45K is a crazy figure. I don't have any daily $5 habits but we do like to splurge on a good meal (at home) at least once a week. I just worked out that it costs us at least $50-60/week for that one meal. It's a tough one but definitely something to consider as the cost implication is huge. The problem is where do you draw the line? With an unhealthy habit like smoking or something, the choice is easy. With a healthy habit like a sporting activity or healthy food, the choice is tougher.

    1. Hi Len, you're absolutely right! It's not easy to decide what is valuable enough to delay your FIRE plans - there's no hard and fast rules but if you're going to be miserable without it, there's no point in removing it from your life.

      Mr. FIRE is really good at reminding me that if I'm going to cut something to reach FIRE I'm going to have to live without it forever. That's generally a good way to balance the decisions - can I live without smoking forever? Absolutely. Can I live without ever lifting weights again? I'd rather not, but I can buy a set for home much cheaper than an ongoing gym membership.

  2. I definitely agree that eating out and dropping $5-$10 every single day really adds up. I am astounded by those figures those. That's a ton of money being thrown away every year especially if it's a habit vs. actually enjoying what you're buying. Definitely a huge eye opener!!! Thanks for sharing.

    1. Hey MSM, Thanks for dropping by. It's scary the amount of money we can waste without even realising. On the upside it means that if you can find a way to shave $5 a week out of your budget, that's $6,500 less that you need for retirement :)

  3. Fabulous post! I've added up ongoing expenses before and compared it to how much it would grow to in 10 years, but you are right, I've never thought about how much I'd need to have invested to draw down to support my lifestyle for each little thing, only as a yearly figure.
    I'm so up and down with food, when I'm at home I eat cheaply - it is eating out that causes the big spikes in my food expenditure.

    1. I love looking at the investment cost because it's such a massive slap in the face for me. I find myself justifying costs because it's only a couple of hundred a year, but then finding another $5-6k to cover that seems impossible.

      Since Mr. FIRE and I moved about 3 years ago we haven't found any nice restaurants, which keeps the cost down. Until we spotted a Fancy Burger within walking distance! So dangerous, so tasty :D

  4. Probably a bit off the main point of your post, but I'm making chilli con carne right now. It is bubbling away in the pot. It smells freakin delicious! My small apartment is going to smell delicious for days.

    1. Nothin' wrong with talking about food! I think about food a lot.. I love food...

      We had leftover taco mince the other night that turned into chilli cheese fries. Depending on how much Chilli Con Carne you made, if you're in for some variety try serving it over chips instead of rice. With a gigantic handful of cheese :D

    2. I made way too much. When I start improvising in the kitchen, I often start adding ingredients with reckless disregard for the final amount. I'll definitely be eating it for a bit and freezing some!

      Sounds good, I'll try some fries with that :D


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