I’ve mentioned our “Monster Vacation Fund” in a previous post. It’s a catchy name for our vacation fund that has the extra benefit of keeping me motivated to make at least 1 healthy decision each day.
A little over a year ago I learned about the Rules of 752 and 173 from a Coach Carson blog post.
It was a simple concept that showed how even small, consistent deposits into an S&P index fund could turn into a considerable amount of money. The idea is that you can take a weekly expense and if you eliminated that expense and instead, invested that money into an S&P 500 index fund, you can estimate the amount you would have after 10 years. I was blown away.
How Can I Get Some of That??
I wanted to find something to test this theory. What frivolous weekly spending could I eliminate and put that into a brokerage account and invest in index funds. How am I even going to find ANY frivolous spending habits? I’m so great at saving and not wasting my money on junk (/sarcasm).
The website mentioned a weekly Starbucks habit.. I didn’t have exactly that, but I did have something very similar (and probably worse): Monster Energy Drinks. Every day on my way in to work I would stop at the gas station across from the office and buy 2 Sugar Free Monster Energy drinks, 2/$5. I would have one in the morning from ~8-11am and one from ~1-3pm. Using the Rule of 752, I quickly discovered that I could turn the Monster Energy drinks into $18,800 (!!!).
$25 (weekly energy drink habit) x 752 = $18,800
These are just some of the tabs I have accumulated at work.
I know that if you asked me in 10 years time, “Would you rather have $18,800 or 4,990 Sugar Free Monster Energy drinks?” No doubt I would say the money. But would it REALLY be worth nearly $19,000 after 10 years? I needed to check with the handy investment calculator, and sure enough:
Ok. This was serious. I needed that future money much more than I needed the energy drinks!
After realizing what the future cost was of my Monster Energy drink habit was (not including the unknown health impact), I decided I wanted and needed to switch to water and (free) coffee at work. I opened a brokerage account and started by investing in a high dividend yield ETF but eventually switched to a rounded group of ETFs. I set up the account to automatically deduct $25 from my bank account every week. By setting it up automatically, I wouldn’t miss the money.
The Monster Vacation Fund is Born
I started the account in Jan 2017 and currently have $3,033; about $2,660 in contributions and $373 in market gains.
The plan for that account isn’t retirement – it’s vacation! We thought that, when we started the account in 2017, 10 years would put our kid/future kids between 5-11 years old, the perfect ages for Disney World! I think we could probably stretch that money into 3 Disney Vacations over 5 years. Or several smaller vacations all over the country. I can give up Energy Drinks for some Disney vacations! I want my children to experience some great family vacations much more than I want to drink a Monster Energy drink.
There it is. The Monster Vacation Fund. The little fund that will pay for memories that will outlive me. I’m almost thankful that my energy drink habit has given me the opportunity to make this relatively painless change and maybe create stories that my children will tell their grandchildren about the summers that they went to Disney World as a family. How cool is that?
Do you have any weekly expenses that you could eliminate? Buying lunch at work every day? Starbucks? A smartphone game? How much could you have in 10 years if you gave up some (or all) of that weekly expense? If you were able to give an expense up and save that money instead, what would you do with it?
EDIT – For a laugh, be sure to scroll all the way down to the Amazon ad at the bottom.