Recently I read a sensible article Gasoline’s New Math: Miles per Dollar.

Miles per Dollar (MPD) = Miles per Gallon x Gallons per Dollar

Simple equation but profound implications.

We are lulled into thinking about the above normal MPG or KPL (Kilometers per Liter for those following the metric system) that we get from our SUVs and even our sedans and forgetting about the all important hard earned dollars that go to pay for it. So we go about merrily swiping our credit card / debit card filling up our tanks either accumulating debts or diluting our savings in the process.

Thinking about MPD (Miles per Dollar) helps us to think if the casual trip to the shopping mall is really necessary. Not only are we burning up our dollars for every so many miles that we mindlessly drive, we may end up buying more stuff (probably with credit cards) that we hardly ever are going to use. Not only can we save on gasoline and related expenses but also the avoidable wear and tear on our vehicles and even prevent the possibility of an accident! We will even start questioning if the so called ‘investments’ in SUVs is really needed for my (our family) needs.

MPD is simple enough to understand for our commuting needs to bring in some financial discipline in that aspect of our lives. What about our other spending habits or even necessities of life? Is there a simple enough measure that we can use?

In my opinion, yes there is. How often do we see TV commercials for charitable donations to destitute children in Africa / Bangladesh and such other poor countries? No matter how small our contribution may be they are welcome. They detail how even a small amount say 39 cents / day can keep a child properly fed and clothed and how say 25 cents /day can provide clean drinking water.

These efforts are commendable but my point is to borrow this concept ‘cents per day’ or better still ‘dollars per day’ (DPD) in our daily lives to make way for productive spending. Instead of thinking, “Switching my service provider I save so many dollars with my Voice/ Data plan and I got a new phone for free”, we should start thinking, “My Voice/Data plan costs me so many Dollars per Day by way of subscription fees”

To give ourselves a start here I have a list just for illustration:

• Rent (or Mortgage including interest) – $ 40.00 per day ($ 1200/month divided by 30 days)
• Credit card Interest – $ 5 per day (Assuming $ 10000/ outstanding at 18% interest)
• Utilities – $6 per day ($ 180/month divided by 30 days)
• Cable TV – $ 2 per day ($ 60/month divided by 30 days)
• High Speed Internet Connection – $ 2 per day ($ 60/month divided by 30 days)
• Cell phone charges – $ 2 per day ($ 60/month divided by 30 days)
• Coffee on way to work and in between – $ 4 per day

And so on.

On the surface of it, this may appear to be meager and so justifiable or at least tolerable. But they add up.
The point is, at the end of the day we definitely have to cough up so many dollars for our needs and wants whether we fully utilized our spending or not. DPD brings into perspective how productive is our spending.

You may ask, “Can you put a dollar figure on the memorable trip I made to Niagara Falls. And it was thrilling to blow away a few dollars at one of the casinos at Niagara Falls. Incidentally I took my girlfriend with me in my SUV”.

While it is debatable whether everything can be reduced to dollars per day, I want you to be wary of credit card companies touting such trips as ‘priceless’.

For me, peace of mind is priceless.