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The Red Pill or The Blue Pill: Down The Rabbit Hole

in Debt, Learning, Personal Finance

Which one will you take?

“You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in wonderland, and I show you how deep the rabbit hole goes.”

– Morpheus, The Matrix

Well, a little while back I decided to take the red pill to stay in wonderland and explore the potential for endless possibilities. Yeah, that Matrix reference is definitely not on accident. Once you decide to commit to the path and follow it down, looking at things the same way becomes nearly impossible. You become aware of everything that is going on around you. I’m not going to lie. It’s pretty surreal, and if you make the choices I encourage, you’ll come to notice the same thing in time. Now, on with the show! Last night the future missus and I were invited to a friend’s birthday party in Indianapolis. She (the missus) had just accepted a new job on Thursday after searching for a few months and we were in the mood to celebrate and let loose a little (so, in anti-freedom pursuing style, I caved slightly on expenditures). Several of our other friends met us out there. We started off the night at a bar, one which I would consider the most expensive for the least value.

Pick one...but pick the right one...seriously.

Pick one…but pick the right one…seriously.

I hadn’t been to bars in a while, so I was slightly in shock at how much a shitty beer costed. Geeze ’em crow, I thought. People actually pay this much for a Miller-Goddamn-High Life, the piss of beer? Much to my chagrin, several of the guys (many of whom I consider my friends), were caught holding this watered down urine in their hands – and exchanging their hard earned currency for shit drink. I went for the most bang for my buck and got a long island iced tea. As I sat there sipping on my gigantic drink, and getting into the groove of the social setting, I began asking questions of my woefully under-learned (especially in personal finance) comrades to see how things had developed for them in the months and or year since I had last seen them. After all, several had graduated or at least had full-time jobs, so they must be able to at least somewhat afford throwing their money away on swill (nothing I would ever endorse of course). Here are some of the conversations:

ThatLearningGuy: So, ShortyDark, have you graduated yet? I’m surprised you’re not working out in California yet.

ShortyDark: Oh, nah. Unfortunately, I decided to take a semester off (he said in between gulps of his $4 beer).

ThatLearningGuy: Huh, I didn’t think you had that many credit hours left.

ShortyDark: I don’t. I just needed to work more. I needed the money.

ThatLearningGuy: Well, you’re going back, right? It’s going to just get harder to go back the longer you wait.

ShortyDark: Yeah, I just need to do it. It just sucks because if I do it, I need to take a couple extra classes for taking time off, and I have to start paying student loans back now too.

Don’t get me wrong. I love this guy to death, but his philosophy towards money, personal finance, and life was a shocking 180 degrees from where mine now lay. I was flabbergasted. This guy should not have been out at bars. He should have been in and graduating ASAP. Another surreal snippet of conversation:

ThatLearningGuy: How’ve you been, BoyScout?

BoyScout: I’ve-uh been alright, ThatLearningGuy. Just workin’ ya know?

ThatLearningGuy: I feel ya for sure.

I then turn around to speak to someone else, and had finished my drink at this point and was sipping on water. I get a tap on my shoulder, and another Long Island Iced Tea gets placed in my hands. My eyebrows raise in both surprise and concern. Why is someone buying this?

BoyScout: You’re welcome, ThatLearningGuy! Drink up.

I also love this guy, but he is working forty hours a week at Menards in a stocking position. There is absolutely no reason he should be throwing a third(ish) of his hourly income on drinks for himself at a bar, let alone drinks for other people. A solid self-punch to his solar plexus would be a great wake up call, as I’m not sure what else would help him at this point. Finally, another guy – the individual who had set up the evening – is currently unemployed, and going out to the bars. As stated above, after taking the red pill and continuing the adventures in Wonderland, I now have the superpower to notice terrible, possible life smashing habits that can only end in bad situations. I believe everyone should have the ability to live life as they see fit, but – in my humble opinion – there are better more fulfilling ways to live than others.

Now, to show how wasteful and money-damaging a bar habit is, let’s just do some very brief math.

Let’s say you were to go out to the bars three weekends a month on Friday night. Typically this is when drinks are most expensive with no specials, so like above, let’s say that the average beer is $4. If you’re a normal, male (170 lbs) bar goer and you want to get (and stay) drunk over the course of three hours. This would mean 4 to 5 beers an hour over that time period to maintain the same BAC, which is legally .10.

$4 x 4 (or 5) = $16-$20/hour

So, assuming all other variables are held constant (buying drinks for others, buying food, etc.), this hypothetical bar goer would spend $48-$60 over one night.

3 x $48 (or $60) = $144-$180/month

So, over a year, this guy would spend somewhere in the range of…

12 x $144 (or $180) = $1728-$2160/year

Oh, God…that’s freakin’ rough. I’m physically cringing just writing this all down. For me, that would be the equivalent of nearly 2.5 months of rent, or over 4 months of student loan payments. Finally, let’s really get the opportunity cost here as far as investments go. If this guy did this same thing for 5 years:

5 x $1728 (or $2160) = $8640-$10,800/5 years

KAMEHAMOLY SHIT! Uh-oh, here comes more:

A = P(1+r/n)^nt <– This is the compounding interest formula

A=Petr <– This is the continuously compounding interest formula

**Look these up right freaking now and try to internalize them. These are some of, if not the most important equations that control your life.**

Watch that money compound and stack...for better or worse.

Watch that money compound and stack…for better or worse.

If you were to take that same amount for one year of going to the bars almost every weekend, and invest it all into stocks and got the average historical rate of return (7%), the formula would look like so:

A=1728e(5)(.07)

A = 2452.15

So, instead of losing $8640 over a 5 year period, if you were to invest that $1728 from the first year, it would become $2452.15 – a net gain of $724.15 over 5 years. That’s pretty hard to beat for doing absolutely no work, no?

Well, even if you still wanted to drink on those weekends, you could stay in, and over 5 years, get 432 cases-540 cases of beer at $20/case. That’s pretty damning how terrible bars are, and that’s just financial reasons (hint: bars suck in every conceivable way).

So, before you decide that socializing at bars is the best way to do it. Think twice, and pop that red pill. The things you notice and hear people say from then on out might be a little surreal, but you’ll be better off for it (even if you feel like you may need to punch some people in the solar plexus). Thanks for reading, my learning friends! I hope you’ve been informed a little more. Have a great rest of the weekend! Let me know if you have/had any of these surreal experiences in the comments!

– That Learning Guy

P.S. I spent approximately $40 dollars across 5 bars and 6 hours. Waaaay too much, and I apologize for it. However, I was trying to be a little more lax for the night in light of my fiancee’s achievement. Improvement and the March Toward Total Freedom is always an uphill battle. Thanks for your understanding. It’s appreciated!




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