1798: The Time Value of Money (or why 25 years of cable TV doesn't cost as much as you think) by Stephen Popick with GRS

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🗓️ 10 February 2022

⏱️ 10 minutes

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Summary

Stephen Popick with Get Rich Slowly discusses the time value of money Episode 1798: The Time Value of Money (or why 25 years of cable TV doesn't cost as much as you think) by Stephen Popick with GRS J.D. Roth has been reading and writing about personal finance for a decade. Today he’s financially independent, but ten years ago, his money life was a disaster, with over $35,000 in consumer debt. He started turning everything around in 2004. By being the boss of your own life, you, too, can be the master of your own financial fate. The original post is located here: https://www.getrichslowly.org/the-time-value-of-money-or-why-25-years-of-cable-tv-doesnt-cost-as-much-as-you-think/ Visit Me Online at OLDPodcast.com Interested in advertising on the show? https://www.advertisecast.com/OptimalFinanceDaily Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	This is Optimal Finance Daily Episode 1798, the Time Value of Money, or why 25 years of cable
0:08.0	TV doesn't cost as much as you think, by Stephen Poppick with getrichslowly.org,
0:14.7	and on your host and personal finance enthusiast Diana Mariam.
0:18.9	Now let's get right to today's post and start optimizing your life.
0:22.6	The Time Value of Money, or why 25 years of cable TV doesn't cost as much as you think,
0:33.4	by Stephen Poppick with getrichslowly.org.
0:38.0	Just after Christmas, Carl Henley of the Motley Fool wrote about his cable bill and how much
0:44.0	a lost investment income that money represented. As an economist, I was intrigued by the notion
0:50.2	and couldn't help but run the numbers. We economists are strange like that.
0:55.3	Henley's calculations assume that the average person cares only about nominal time
1:00.4	insensitive returns. That is that a dollar today is worth a dollar tomorrow.
1:06.0	But we economists know from all of our fancy pants research that generally speaking,
1:11.4	that's not how people make decisions. Instead, when most folks make personal finance decisions,
1:17.5	they take into account the time value of money. The time value of money.
1:23.6	The time value of money is a complex term for a simple concept. Any given amount of money
1:29.4	is worth more today than the same amount in the future. Assuming a 5% interest rate, for example,
1:36.5	a hundred dollars today is worth 105 a year from now, or working backward with the same assumed
1:43.5	interest rate, a hundred dollars in a year is worth 95 dollars in 24 cents today.
1:49.5	And what? They're not the same? Nope. The time value of money has two main components,
1:55.6	inflation and personal valuation. While Henley's main point is correct, reoccurring monthly charges
2:02.4	can be costly in the long haul and can dramatically affect your retirement savings.
2:07.8	The real long-term cost of his cable bill isn't actually $132,683.
	...

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