Saving 101 Expenses Tracking: The True Cost of an iPhone, a Car, and Other Things You Don’t Know About Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Mint Published Jul 20, 2007 6 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. Budget planning and expenses tracking are two things that we care about here at Mint. Learn more with great budget planning tips in our blog article index. Budget Planning: The True Cost of an iPhone = $2,200 The iPhone will run you about $2,206. And if you live in Tennessee, where the sales tax is at a lovely 9.4%, it’ll cost you about $2,218. Wait a minute, two thousand and two hundred dollars, for a cell phone? How did that happen? Welcome to the concept of expenses tracking. Like with so many things in life, owning the iPhone doesn’t just end with a single purchase — it stretches on with service plans, taxes and more. By the end of the two years required contract, you’re talking real money. Let’s take a look at the math: $599 iPhone x 8% sales tax ($47.92) = $646.92 $60 required cellular plan + $5 (taxes & fees) x 24 months = $1560 Total cost: $2,206.92. Note: Engadget has a great compare and contrast on the iPhone vs. other smartphones. Again, this is just for owning the phone for two years. What else can we dig up to show their true value? More than you know. The Total Cost of Pet Ownership ~ $12,000 “All right,” you say, “what about this pet number you have going on here. Surely my dog won’t cost me $12,000?” You may be right there, as your pet can easily cost more if you have a larger breed, or if you live in a costlier area. Here are the budget planning numbers to owning a 50 pound dog (living in the Midwest)1: $1,977 first year cost $807 yearly cost x 14 years Total cost: $12,468.00 According to the Wall Street Journal2, the average cost of ownership for a small dog that lives 15 years will cost almost $12,000 — and more than $23,000 for a larger breed that lives for 12 years. These are averages, mind you. The Total Cost of Car Ownership ~ $42,000 Let’s take one of the best selling cars of 2007, a Toyota Camry LE (Automatic transmission, because who drives manual in America?), and punch some numbers3. For a five year ownership, this is the cost break down: Total depreciation cost: $11,482 Financing: $4,580 Insurance: $10,026 Taxes & Fees: $2,318 Fuel: $8,653 Maintenance: $4,310 Repairs: $689 (whew, thank goodness it’s a Toyota) Total: $42,058 Once again, these are average numbers. They’re based on 15,000 miles per year, in a region that isn’t terribly expensive. Insurance can fluctuate from low prices to high prices depending on your situation. If you live in a costlier city, or drive more miles per year, many of these numbers can easily increase. The Cost of Raising a Child Over 17 Years ~ $170,460 In this example, the numbers are based on a survey by the U.S. Department of Agriculture along with data from the U.S. Department of Labor4. They are numbers for a dual-parent family with medium household before-tax income of $39,100 to $65,800. The cost of raising a child over 17 years: Housing: $57,360 Food: $29,550 Transportation: $24,510 Clothing: $10,470 Health: $12,180 Child care/Education: $17,430 Miscellaneous (the occasional iPhone and pet): $12,720 Total cost: $170,460 Here’s a kicker. These numbers are updated with 2001 numbers using the Consumer Price Index. So yes, raising a child these days will most likely cost you more money. The Costs of Buying a Home Over 30 Years ~ $1,073,000 Here are some numbers from a recent Wall Street Journal Article5, based on the average mortgage-interest rate in 2006. The national median home price was $222,000 during the time. Purchase Price (typical single-family home): $290,000 Down payment: $58,000 Principal: $232,000 Interest @ 6.41%; total = $291,000 (after tax: 33% bracket): $195,000 Taxes & Insurance ($6,000 / year): $180,000 Maintenance ($300 / month): $108,000 Major Repairs & Improvements: $300,000 Total Cost: $1,073,000 Average numbers? You bet. If you live in a more expensive area and have subpar credit, expect to add quite a bit more to the price tag above. Okay, So… Don’t Ever Buy or Do Anything? Obviously, we can take any expenses we have, figure out its cost of ownership or its total opportunity cost in the long term, and make a big fuss. When you see the numbers in a big picture, things will always seem a bit intimidating — and that’s kind of the point. In the world of personal finance (as in, your money), it’s common adage to focus on the long-term cost of your financial choices and expenses tracking so you can make better financial decisions today. No one really sits down and breaks out the calculator before they buy a cup of coffee and donut (unless you happen to be a glasses-wearing blogger working at a start-up called Mint.com); most people also don’t input their night-out expenses into the spreadsheet before they pick up their date. The point of seeing the numbers in a bigger picture is so that you understand the financial commitment you may face when you make a decision to buy an iPhone, Pet, or even a car. Consider this: let’s say for whatever reason you have financial trouble in the future. You’re living paycheck to paycheck, and suddenly one month becomes extremely difficult. Would you wish you’d had $2,200 so you can provide food for your family? Would you wish there’s an extra $12,000 laying around so you can take another step towards that down payment for a home? Would you wish you had an extra $42,000 so you wouldn’t have to worry about how you’ll pay your bill next month? Wait, that’s not fair, you say. “I love my dog and I don’t care how much he’ll cost me.” You have a point there. Whether you got to make your calls with a “frigging sweet iPhone,” let your child experience the joy of pet ownership, or just have a car so you can get to work — sometimes we just have to spend some extra money. And that’s how it should be. Money is for living. It’s a tool that we use to better our own lives and those of our loved ones. It is, however, a tool you need to use wisely. You certainly don’t want to buy a gadget — or another financial responsibility such as a pet — if you’re between a rock and a hard place with the bank. Even if you can afford the current monthly payment, if a purchase will hurt you financially in the long term, you may not be making a responsible financial decision. Remember, reaching financial independence isn’t about spending all day long wondering how much money you could have or should have saved. A sensible financial lifestyle also isn’t about hoarding all your money for that rainy day. Being smart with your money is about fully understanding the financial choices you make and seeing the entire picture – the true cost and total cost of ownership when you commit to a device, transportation, pet, or even a child. In the end, it’s a careful balancing act — a pretty important one that you’ll need to think about occasionally, so that you can live well today and live even better tomorrow. More to Read So You Can Make Smart Money Decisions 30 Free e-Books to Learn Everything You Want to Know About Your Money How To: Tackle Your Debt in Five Simple Steps How To: Stash Your Cash at the Right Places ———————- References: Cost of Owning a Dog from PetEducation.com Calculating the True Cost of a Pet from the Wall Street Journal True Cost to Own Ratings at Edmunds.com The cost of raising children at MSN Money Central Why Your Home Isn’t the Investment You Think It Is from the Wall Street Journal Further Reading on the Topic: Expenses Tracking Budget Planning Personal Budget Plan Previous Post Budgeting Your Money and The Financial Benefits of a Fixed-Rate… Next Post Three Ways to Ask for More Money Written by Mint Mint is passionate about helping you to achieve financial goals through education and with powerful tools, personalized insights, and much more. More from Mint Browse Related Articles Mint App News Intuit Credit Karma welcomes all Minters! 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