A coffee is my excuse to go for a walk and fresh air when I'm bored and not being effective. When I get back in way more likely to get stuff done. As a freelancer that's a money-maker I'll happily invest $5 in.
Buy Yourself a Latte
41–50 of 351 posts
Re: Buy Yourself a Latte
#42Earlier quoted context omitted.
In year 40 a coffee is no longer $5.
These are in real dollars, not nominal dollars. Inflation has already been accounted for, for both investment returns and savings. I make no claim as to whether the price of coffee will grow faster than the consumer price index, or slower, so I assume it matches it.
Can you share your spreadsheet?
I find it difficult that you can safely earn 0.5% every month over inflation.
Using HP12C, a -100 PMT, 0.5i (0,5% over inflation), 480n (40 years * 12) gives me a 199.149,07 future value (FV).
Re: Buy Yourself a Latte
#43Counterpoint: The debate is framed as "$5 a day is a waste--put it into your piggy bank every day and drink office sludge instead". I instead say that yes, the office coffee still tastes like fertilizer, but I still think $5 a day for a latte is waste because I can make some excellent coffee at my desk for about a dollar a day using an inexpensive French Press, a hand-grinder (or grinding the beans that morning at ho…
You're exchanging time for money. It's a highly common tradeoff. Prep, brewing, and cleanup amounts can work up to around $3-4 of opportunity cost for a tech professional. Not to mention, french press coffee is not quite equivalent to a latte.
Also, I recommend 5 minutes steeping, personally. ;)
Re: Buy Yourself a Latte
#44To give this conversation a more concrete example, here is (linked below) a calculation of saving $5 a day over 40 years, in real (inflation adjusted) dollars, assuming returns on invested assets are 7% per year. This is a realistic number based on >100 years of U.S. real (inflation adjusted) stock performance. You end up with $377k after 40 years. In my opinion, a lot of Americans and people around the first world l…
7% real return is a relatively high assumption. In the article Ritholtz assumes 8% nominal returns and 2-3% inflation, so 5-6% real returns. Even assuming 5% real returns is somewhat optimistic. Developed countries in the last 100 years or so have achieved that, but most places in most time periods have not.
Re: Buy Yourself a Latte
#45I think the author misses a point here. The issue isn’t that 5$ cup of coffee alone but rather a mindset of all these little purchases which can add up to say $50 a day which is both real money and don’t actually bring joy/value to your life. If the coffee actually makes you happy go for it. But if it’s just inertia/laziness then it is money flushed down a drain which yes adds up over the long term.
Who in the world buys ten fancy coffees or equivalent every day?
Re: Buy Yourself a Latte
#46If part of your audience consists of people living without much a safety net, that $5 a day adds up. Also, the author's point that saving that much isn't going to be $1 million, but "only" as much as $500,000 then that point rather falls flat. Sure, inflation may decrease the utility of that amount of money, but it will also increase the cost of that latte, so you'll be saving more than just the $5 over time. Finally, this piece ignores the entire mindset of the "avoid the latte" point, which is that it's intended as much literally as metaphorically: don't waste money on the little stuff. $5 for coffee, another $100/month subscribing to every video streaming service and gold-plated cable package, etc.
Obviously if you're already socking away 15% of your income into a retirement account, Have at least 6 months of salary in a savings safety fund, and generally live about 10% below your means, this advice probably doesn't apply to you: you have more than enough to spend on the little stuff. But congratulations, you're in a significant minority, and this advice is aimed at the rest of the working populace who aren't in that situation.
Re: Buy Yourself a Latte
#47Earlier quoted context omitted.
These are in real dollars, not nominal dollars. Inflation has already been accounted for, for both investment returns and savings. I make no claim as to whether the price of coffee will grow faster than the consumer price index, or slower, so I assume it matches it.
Can you share your spreadsheet? I find it difficult that you can safely earn 0.5% every month over inflation. Using HP12C, a -100 PMT, 0.5i (0,5% over inflation), 480n (40 years * 12) gives me a 199.149,07 future value (FV).
https://www.investopedia.com/ask/answers/042415/what-average...
>One of the major problems for an investor looking at that 10% average return figure and mistakenly expecting to realize a nice yearly profit from investing in the S&P 500 is inflation. Adjusted for inflation, the historical average annual return is only around 7%
Here is the structure of the spreadsheet (had to rebuild it real quick, didn't save the original): https://imgur.com/a/jOaHUoT
Re: Buy Yourself a Latte
#48Counterpoint: The debate is framed as "$5 a day is a waste--put it into your piggy bank every day and drink office sludge instead". I instead say that yes, the office coffee still tastes like fertilizer, but I still think $5 a day for a latte is waste because I can make some excellent coffee at my desk for about a dollar a day using an inexpensive French Press, a hand-grinder (or grinding the beans that morning at ho…
You're exchanging time for money. It's a highly common tradeoff. Prep, brewing, and cleanup amounts can work up to around $3-4 of opportunity cost for a tech professional. Not to mention, french press coffee is not quite equivalent to a latte. Also, I recommend 5 minutes steeping, personally. ;)
Not sure how much time you save. Standing on line and waiting for that latte would take a comparable amount of time to what it takes me to make my own cup at work.
Re: Buy Yourself a Latte
#49With many people saving approximately nothing for retirement and hitting 65 with roughly $0 to show for it, even his modified example of having $300-400k after 40 years is... a pretty damn good argument for saving $100/month.
Whether that $100 comes from lattes or apps/micro-purchases or junk food or brand labels or holding on to your car 2 more years before you replace it or cutting the cord on cable TV or more frugal vacations -- is all up to the individual.
Sorry but if you've literally got a billion dollars, you might be able to advise on growing your money, but you are (almost certainly) not able to advise on frugality. It's almost as if the argument is that if you spend $5 on lattes, you'll mysteriously be a much richer person who no longer has problems saving for retirement. That must be one damn good latte.
Re: Buy Yourself a Latte
#50The article seems a bit all over the place WRT inflation. If you're inflation adjusting, then you're not socking $100 a month away, because towards the end of that 40 years coffee will cost way more than that. As others have said though, it's not really about the $5 coffee. It's about whether you save or not. If you have $50K a year after expenses, then yeah, a $5 coffee probably is irrelevant. If you have $5K or $10…
33% is a hard bar to hit for a whole lot of people.