Convenience vs. Compound Interest

We live in the Bay Area, the epicenter of all things digital and delivery. Seeing driverless vehicles and Amazon delivery vehicles is an everyday occurrence. Don’t get me wrong, it’s amazing that I can get groceries delivered in under an hour and pretty much any food I could dream delivered, but it all comes at a cost.

When I was living in the city and working late nights, it wasn’t uncommon that I would place a DoorDash order as I was leaving work so I could arrive home to my favorite Indian takeout. And when Brian, my now-husband, and I were dating, we would rarely brave our respective roommate-shared kitchens, so taking turns ordering delivery was common. Even though we thought we were ordering the best deals, cheapest food, and making sure not to get the “extras,” it was about $50 for every meal we shared. $50 + delivery fees and tips added up fast. We were each spending about $500 a month ($1,000 total). And on top of that, I was still buying groceries with all the ambitions of meal prepping (insert facepalm here).

When we finally moved in together that was the first habit we broke. We had our own kitchen, we had all the tools, and one of us was a professional chef. We could no longer live in denial that delivery was an extravagance. It’s not just food, it’s groceries, shipping, streaming, subscriptions, and service fees. It’s the $.99 here the $4.99 there and the 15% tip on top.

One example that really highlights what all these charges are worth is our HBO NOW subscription. We loved it for Game of Thrones, but now there is not a ton of value we get from it. Let’s say we took the $14.99 monthly charge and invested it in a Match-the-Market style stock with the average rate of return on 6% (the recommended calculation rate from NerdWallet.com). Over 30 years, we would have paid about $5,400 to HBO, or we could be looking at $15,000 in savings. And that’s just one subscription.

Take a look for yourself with this compound interest calculator. For those of you new to the idea of compound interest it is the principle of reinvesting the interest back into the principal amount which then can also accrue interest in the following period.

I am a firm believer that you get to spend your money however you want so I say this not to shame anyone, but to encourage you to take a moment and ask yourself if convenience is worth it for you. Is there something in your budget that would make a better investment than service? You’re going to have to pry Amazon Prime from my cold, dead hands (pays for itself in our household), but I make my own Indian Food now.

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