What is in a dollar?

A dollar saved, is more than a dollar earned.

Ergo a dollar spent, is more than a dollar spent.

But a dollar spent on credit, is much more than a dollar spent.

A dollar saved, is more than a dollar earned


When you save $1 from your paycheque, after income and taxes, it might end up being much more.


Because you had to earn $1.50 or $2.00 (depending on what tax bracket you fall into) to earn that $1 after taxes.

Ergo, a dollar spent is more than a dollar spent

Any time you have to spend $1, it is coming out of your savings after tax.

So that $1000 TV set? Let’s assume every $1 earned is $1.50 earned in your gross salary after taxes and fees.

So it’s $1000 x 1.5 = $1500 in gross income you had to earn to pay for it.

And if you earn $20 an hour, that’s 75 hours of work! ($1500 / $20 = 75), or approaching very close to 2 weeks of work.

This is assuming you pay in cash.

But a dollar spent on credit, is much more than a dollar spent

If you don’t pay in cash, and you put it on a 19% interest credit card, the numbers change.

Let’s say you don’t pay the TV off for a year.

For whatever reason.

Bills, the dog got sick, you had to replace the water heater…

The good news, is that you didn’t add to that $1000 balance on your credit card.

Assuming the above variables where you work for $20/hour, that $1000 TV set is now:

$1000 x 19% = $190/year paid in interest

$190/year divided by 12 months = $15.83 per month in interest charges alone

Not bad right?

$1000 + $190 in interest = $1190

$1190 x 1.5* to get your gross earned = $1785 you have to earn before taxes

*I assumed $1.50 gross to every $1.00 earned after taxes

Doesn’t look so good now, does it?

You have to basically earn almost double before taxes to pay for a $1000 TV, if you decide to put it on a credit card charging you 19% interest.

Earning $20/hour, that’s $1785 divided by $20 = 89.25 hours, or over 2 weeks of working.

Want to get fancy? Think about compounding interest..

$1 invested each year at at 7% return after 30 years, will yield approximately $102 at the end.

Out of $30 you can have around $102 in 30 years.

Imagine if you saved more than $1.

You don’t need to do these calculations all the time for every purchase you make

That’s just insanity.

But you do need to be aware of what it’s costing you in lost savings, interest charges, and time spent working to pay for it.

About the Author

Just a girl trying to find a balance between being a Shopaholic and a Saver. I cleared $60,000 in 18 months earning $65,000 gross/year. Now I am self-employed, and you can read more about my story here, or visit my other blog: The Everyday Minimalist.