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Stop Smoking and Save Over $100K

{ Posted on Aug 11 2010 by Marcus Alston }

Stop smoking and save big bucks!  In many states, cigarettes cost over $8 a pack these days and one of the reasons they cost so much is because the government imposes an excise tax (often called a “sin” tax).  The government claims it is trying to discourage smoking consumption, yet it relies significantly on the revenue to pay for items in its budget.  Additionally, cigarette manufacturers use trade discounts, coupons, and other promotions to limit the discouraging effects of taxes.  Some frugal and or addicted smokers will travel to other states to stock up on cigarettes such as North Carolina where the cigarette taxes are much cheaper ($.45), Virginia ($.30) or Missouri ($.17) versus other states such as New York ($4.35) or Connecticut ($3.00).

Real Story.  I overheard a conversation in which a chain smoker confessed to smoking a pack a day and that her husband smoked 2 packs a day.  She has been smoking since age 11.  For those of you who do not know, each pack has 20 cigarettes in it.  You can do the math.  Her daughter only smokes about a pack every 3 or 4 days.  At $8 a pack, as a family, they spend over $10K a year on cigarettes alone.  If the chain smoker were to invest on her own $8  spent on cigarettes per day for 25 years at a conservative interest rate of 3.%, she would have over $100K in savings.  See the chart below from Dollartimes.com.

Looking at it another way, the cigarette habit will cost her over $100K over 25 years!  She could have paid off a mortgage for a modest house in some places.  Add her husband into the mix and the number grows to well over $300K over the same time period.

Smoking Facts.  1.35 Billion people or about 1 out of 5 people smoke worldwide.  The average smoker in the United States will live until age 64 versus a non-smoker who will live until 78.  As a result, smokers get charged more for things such as health, life, and property insurance.  A smoker typically has more health problems and is more likely to become disabled due to smoking versus a non-smoker.  Annually, in the United States, smoking costs $96 Billion in additional health care costs and another $97 Billion in additional lost productivity.  About 1 in 5 deaths are attributed to cigarette smoking, which is more than alcohol, car accidents, suicides, homicides, AIDS, and illegal drugs COMBINED!!!  Additionally, smoking pollutes the environment with over 4,000 different chemical compounds.  Source:  Onlineschools.com.

More Smoking Facts. 29 states, DC, Puerto Rico, the Northern Marianas, and Guam have cigarette tax rates of $1.00 per pack or higher; 14 states, DC, and Guam have cigarette tax rates of $2.00 per pack or higher; 5 states and Guam have cigarette tax rates of $3.00 per pack or higher; and 1 state (NY) has a cigarette tax rate more than $4.00 per pack. The median tax rate is $1.339 per pack.  The Federal cigarette tax is $1.01 per pack.  There are also local/city cigarette taxes in some areas. The U.S. Centers for Disease Control & Prevention estimates that smoking-caused health costs total $10.47 per pack sold and consumed in the U.S. The average price for a pack of cigarettes nationwide is roughly $5.51 (including statewide sales taxes but not local cigarette or sales taxes, other than NYC’s $1.50 per pack cigarette tax), with considerable state-to-state differences because of different state tax rates, and different manufacturer, wholesaler, and retailer pricing and discounting practices.   Source: http://www.tobaccofreekids.org/research/factsheets/pdf/0097.pdf.

Conclusion.  Between the cost of cigarettes and the health related consequences, the case for not smoking is clear and is a no-brainer”.  If you do smoke, get the patch, get hypnotized, go to therapy–whatever it takes to stop.  Its a worthwhile investment in yourself, and your financial and personal health.  If you are able to stop, save the money you used to spend on cigarettes and start controlling and reducing your debt or  increasing your savings significantly.

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