Our lives continued on in the ignorance of the $55 of lazy money just fine, so the next day the money was deposited into an investment vehicle earning 5%.
For the rest of our lives, as long as we don't touch that $55 we didn't even use, we get $2.75 per year! I NEVER have to work for that $2.75 again!! Each year, I will be handed $2.75 with no strings attached. Ahh, that feels good and nice. You know, after awhile, these $2.75's add up nicely. Heck, if next year I don't touch that free $2.75, it too will start to generate free money ... about $0.13 per year, and that too will start to generate even more free money!!!
While typing this up, I began to wonder about the U.S. Federal minimum wage and how much would be required to be put away so that every year I would get one free hour of minimum wage.
Currently, the U.S. minimum wage is $7.25 so that implies that if I put away $145 and never touch it, each year I will get $7.25 in interest, equalling 1 hour of work by a minimum wage earner. Now that is awesome!! One hour of labor ... mine, or buying another person's time. A mere $145. Nice!
Let's extend this a bit further. Let's assume a 40 hour work week. The minimum wage earner makes $290 in a week. Mathematically, if I put away $5,800 and never touch it, that gives me a free week of labor!! I could work for a whole week, at minimum wage, to make this amount or simply put away $5,800 and get that free week the rest of my life.
Okay, this is now really fun. How do we get a month of free labor? 4 times $5,800 = $23,200. So, for the price of a car, I could have an entire month of income! What takes someone busting their ass for an entire month at minimum wage, I get with zero work! All I have to do is not touch the $23,000! I like that. A whole month, I could be sitting on my rear while someone else is working and we would make the same amount of money!!! Imagine the compounding effect if one were to make that free month of money AND still hold their regular job. :)
If you are in the position that $5,800 is a lot, focus on the $145. Do the $145 units. From experience, I can tell you that by being diligent about putting $145 units away, you will hit $5,800.
Oh, as an aside, our investments are tied to inflation. :)