PDC #5: Change Your Own Oil, Earn $400,000
A favorite Benjamin Franklin axiom is “Small strokes fell great oaks”. Meaning small actions, done over and over again over a long period of time, can have a meaningful and substantial impact. This is certainly the case when it comes to personal finances. Small savings here and there add up, or I should say, compound up.
One of the things I feel anyone can do to save a few bucks, here and there, over a long period is to change your own oil. It’s really a simple thing to do once you learn how. So today’s Payday Challenge is to change your own oil.
Before I get into the financial benefit of changing your own oil, let me address the most common argument against doing it: time. The common belief is going to get your oil changed at a quick lube place or a local service station saves time. Really? ‘Cause that is simply not my experience. The closest quick lube is a few miles from my house. The ride alone takes 10-15 minutes and that’s if I don’t catch any red lights on the way. Once there, for some reason the “10 minute oil change” advertised on the side of the building never seems to pan out. There’s typically a line and by the time the technicians have finished upselling me on some “Executive Service” of wiper-blade changes and new fuzzy dice for my rear view mirror, I’ve been there a half hour or more. When I have finally returned home, I’ve spent nearly an hour of my day.
A semi-experienced do-it-yourselfer however can change her own oil in 5 and certainly no more than 10 minutes without ever leaving her driveway. Now, that 45 to 60 minutes spent going to and from the quick lube spot may be worth it not to have to get a little dirty. But there’s always soap and water to remedy that situation.
Time savings aside, there is a real money savings to changing your own oil. The way I figure it, a regular oil change, with no added services typically costs about $40 in my area. On the other hand, I can purchase a 5-liter jug of Castrol High Mileage for $25 and change the oil myself. Now a $15 savings may hardly seem worth it. I mean 15 bucks barely buys a large buttered popcorn and small Diet Coke at the movies. But if you were to forego the movie popcorn and instead place the savings in a well-invested portfolio of stocks, it would make a hearty difference in your wealth over the long haul.
How long do you plan on being a driver? For most people, it’s at least 50 years. If you were to change your oil 4 times per year, invest the $15 savings in a general stock mutual fund (which return about 11% historically), at the end of your driving life, you’d have saved over $100,000. That’s the price of two or three luxury-ish cars over that period. If you were lucky enough to find an advisor or fund able to get you returns in the 15% annualized range (not unheard of), you’d have saved about $433,000 over your driving life.
Would you be willing to get a little dirt under your nails for $400,000?
Yes, fifty years is a long time. But that misses the point. Small savings, in several areas of your life, whether it be changing your oil, reducing the minutes on your cell phone, clipping coupons, foregoing a night out drinking or whatever - small changes over time mean a lot and when added together can amount to substantial savings in relatively short order. Imagine you could find 10 other cost saving actions of equal measure. Now we’re talking $4 million. Nothing to sneeze at.
Market
"Why I'm Still Buying Stocks" by Knight Kiplinger, Editor in Chief, Kiplinger publications
Portfolio:
Forest Laboratories Sends Open Letter to Shareholders
"Forest Labs: Proxy Firm Backs Its Entire Board Slate" by Wall Street Journal
"Forest Labs CEO Won’t Be Barred on U.S. Government Contracts, Company Says" by Jef Feeley; Bloomberg
Life:
"Sesame Workshop: Bert And Ernie Just Friends, Have No Sexual Orientation" by Eyder Peralta; NPR
"How Obama Can Win The Fall" by Andrew Sullivan; The Daily Beast
"Whatever You Do, Don't Buy an Airline Ticket On …" by Scott McCartney; Wall Street Journal
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