Would you rather smoke your way to an early grave, or knock $350,000 off your mortgage?

One of the most regularly trotted-out reasons for quitting smoking is that it's expensive. Well, duh.

But cigarettes are about to get a whole lot dearer, and many nicotine junkies may not fully grasp what an enormous sum of money is going up in smoke.

We'll leave the preaching about quitting for the whanau to the health campaigners.

This is all about the money - and it's a compelling enough reason to quit, all by itself.

When you buy a pack of smokes, most of the purchase price goes to the Government through an excise tax.

The purpose of the tax is to try and put people off smoking, as well as to collect revenue. Incidentally, far more than smokers actually cost the health system.

This month, the excise tax went up another 10 per cent, and that's not the end of it.

There are another two 10 per cent hikes planned, which means that in 2016, a pack of 20 cigarettes will cost at least $20.

Whatever you think of the Government's social engineering, the end result has quite a nice symmetry to it. Each little cylinder of death you suck down is the equivalent of a shiny gold coin.

The standard money calculations used by health campaigners only take into account the upfront cost of cigarettes.

But that's just the start of it.

Imagine what productive uses you could have put all the cash you've spent on cigarettes over the years. Economists call this the opportunity cost.

What if all those dollar coins were being funnelled into savings and investments, rather than sucked into your lungs in a cloud of poison?

We'll use an interest rate of 5 per cent for our scenario, which is a reasonable after tax-return for a diversified portfolio of shares.

For simplicity we'll run the numbers for a diehard, pack-a-day smoker. $20 a day is $140 a week, $600 a month and $7200 a year.

Now we introduce the magic of compounding interest. It starts off slowly. In the first year, compounding monthly, you would have earned an extra $200 on top of the up-front cash savings.

By the 10th year, you'd be earning a staggering $4400 worth of extra income each and every year simply by giving ciggies the flick.

After 20 years, you'd have a tidy quarter of a million bucks saved, almost half of which would be investment returns.

Debt repayment works the same way, except in reverse.

Let's say you have a chunky mortgage. Every dollar you put towards repaying it gives you a return equivalent to whatever the interest rate is, tax-free.

You're compounding the balance downward, instead of up.

While mortgage rates are currently coming off historic lows, long-term data suggests you could expect to pay an average of about 8 per cent over a 20-year period.

With our adjusted interest rate, you'd save a whopping $350,000 on your mortgage by channelling all your cigarette money into paying it off.

Even if you're more of a casual smoker, it's worthwhile. Someone who puffs their way through a measly three ciggies a day would still save $37,000 to $53,000 in our scenarios.

And someone who smoked for even longer than 20 years - a yellow-fingered, tooth-stained life-timer - would stand to save an absolute fortune.

With all of that in mind, those who have made a New Year's resolution to give up the fags are definitely on the right track.

Don't let it become one of the usual feeble goals proclaimed to the world at large on Facebook, and promptly abandoned by February.

Quitline communications manager Sarah Woods says January is always the busiest month of the year, and 2014 is shaping up to be no different.

"Last year we helped 7000 people [in January], the year before 8500. In a typical month it would be around 3500," she says.

This year, the agency is being hit with a double whammy. There's not only the usual rush of resolutioners, but those who are acutely aware of the price hikes.

"Interestingly this year we had a lot of people who contacted us between Christmas and New Years ... and they talked about knowing the tax increase was going to come into effect," says Woods.

The three main catalysts for quitting are health, family and money - with the latter undoubtedly becoming more of a pain point.

Thankfully, it only costs $5 for a subsidised eight-week supply of nicotine gum, and after six months, 25 per cent of those who join the programme have successfully quit.



If that sounds low, bear in mind that only 4 to 5 per cent are successful when they go it alone.



Of course, not every smoker is trapped in an addiction that they want to be rid of.

There are plenty of grown adults who are fully aware of the health implications, and make a free decision to smoke for the sheer pleasure of it.

If you count yourself among them, there's a way you can have your tobacco and smoke it too.

Take the example of Southland woman, Liz, who's beating the tax hikes by growing her own.



Friends and family members have also successfully grown their own baccy - which is reportedly not too bad, especially when mixed with a pouch of commercial stuff.



Surprisingly, it's totally legal. Like homebrewed hooch, you're not allowed to give away, sell or barter the finished product. But if you grow on your own land for personal use, it's fine.



You can get about 1000 seeds for a few dollars, either from seed stores or on Trade Me.

A staff member for King Seeds reports there's a regular surge in tobacco seed sales following every tax hike.

The seeds need to be planted in seed mix, then potted out and separated before being planted outdoors.

Once the leaves mature, they have to be cut and cured in a cool, dry place where they won't go mouldy.

It will require some patience. The usual advice is to cure the leaf for at least a year - which is not much help if you've got the nicotine jitters right now.

Once it's cured, it's a simple matter of chopping it up finely enough to be used.

With almost no costs involved, you can still divert all that cash out of the pockets of the Government and big tobacco, and into your own.

Put that in your pipe and smoke it.



SCOTTY'S STORY

Scotty Darnill's nicotine habit was costing him a fortune.

Starting from his late teens, the TR Group account manager smoked at least 25 cigarettes a day for the better part of 25 years.

In September 2011, he decided to kick the habit once and for all.

While Darnill had tried to quit several times before, this time he went cold turkey and soldiered through, with the help of Quitline's online forums.

Now there's more money to go around - and more marital harmony - with wife Linda pleased by the decision.

"She hated smoking, and she hated the amount of money I was spending on smoking."

Darnill reckons he's already saved about $22,000 since quitting.

"Last year, we did another trip to Thailand. It goes towards things like holidays and that. You kind of notice you've got a bit more money!"