I had no idea how much a packet of cigarettes cost
It’s been reported the increase in tobacco excise announced in the 2016 Budget will see the cost of a packet of cigarettes increase from $25.00 as it is today, to an estimated cost of $40.00 by 2020.
I don’t smoke, but I must admit to being quite surprised at how much a packet costs.
As a finance expert, my role is to help my customers save money or put strategies in place to be able to pay off their loans more quickly.
Now it’s not my place to judge anyone who does smoke, however, I understand there has been a significant decline in the number of people who do, so if you are thinking about quitting, I’d love for you to consider the following.
The department of health released a report in 2015 suggesting the average number of cigarettes smoked per week had decreased from 111 cigarettes in 2010 to 96 cigarettes in 2013.
I haven’t been able to find any more recent figures, so for the sake of the discussion I will run with the 2013 figures of 96 cigarettes per week.
With 25 cigarettes in a packet that is almost 4 packets a week and today would be the best part of $100.00 per week.
Let’s say the average smoker goes cold turkey and starts to put $100.00 into their home loan.
On a loan of $300,000 with an average interest rate of 4.5% over the 30 years, the principal and interest repayment would be $350 per week.
By paying the $100.00 you are saving from not smoking each week into your home loan you would pay the loan off in 20 years and save $99,665 over the term of the loan.
That is a lot of money and not only will own your home more quickly you may well be a little healthier so that you could enjoy the benefits of being debt free.
Here is a little graph confirming the savings – you could also play around with the home loan calculators to establish other ways in which you could save money.
It is worth noting that life insurance premiums are substantially lower if you have been a non-smoker for 12 months.
As I mentioned, I am not here to judge, but I am here to help my customers save money.
Peter Ritchie is the Principal of intouch Finance Mornington