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Buy Yourself a Latte

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Re: Buy Yourself a Latte

#61

Post by cafogleman »

This is closely related to the idea of being "penny wise and pound foolish." For instance, you are actively depriving yourself a $5 coffee per day (or substitute your vice of choice) but you're leasing a new car every 2 years. In this case, you are not only cutting the wrong indulgences in the name of savings, you are giving yourself a false sense of accomplishment when there are much more beneficial steps that could be taken.

Finances are a hard thing to recommend to anyone else, as there are so many variables in personal finance. But very generally, it's worth considering where the largest single expenditures (or categories) are, and looking at how to lower those numbers first.

Re: Buy Yourself a Latte

#62

Post by pfortuny »

Did I read 12% rate of return?

Come on, it has happened for several years now (well, more or less) but everybody knows it will not last. And, in any case, it has never happened before for 40 years...

Re: Buy Yourself a Latte

#63

Post by falcolas »

dsfyu404ed wrote: post #51
falcolas wrote: post #43

Earlier quoted context omitted.

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. ;)

>Prep, brewing, and cleanup amounts can work up to around $3-4 of opportunity cost for a tech professional. I disagree. The average tech professional is salaried, not billing hourly. It takes about the same amount of time to fill and plug in the percolator or operate a kurig as it does to stand in line and get coffee made for you. Likewise the opportunity cost is nearly $0 There is no economic rationalization for the…

Salaried vs hourly doesn't matter that much when looking at opportunity costs. Most salaried folks stick to a fixed set of working hours.

> It is a pure luxury expense.

Practically speaking, purchasing coffee at all is a luxury line item. There's no actual need for it for anything other than the caffeine hit and flavor. At least with a Latte, there's the protein, calcium and calories from the milk.

Re: Buy Yourself a Latte

#64

Post by ineedasername »

hannasanarion wrote: post #45
jshaqaw wrote: post #30

I 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?

Plenty of people by 2, or 3. Then think of streaming services and other subscription services, gold-plated cable TV packages, etc. That meal box kit that costs you $240/month. It's pretty easy to get non-essential luxury spending up in to a few hundreds of dollars a month. Not to say you ditch it all, but judicious pruning of it down to the essentials/most used/biggest time savers etc isn't impractical. Obviously if you're already socking away savings and retirement, living 10% below your means etc., this may not apply. In my case though, the spouse & I have do the math in war-gaming things like one of us losing their job, having to take a pay cut, etc., and we could cut $1000/month in "extra" expenses with a bit of pain, and twice that if we really had to. Once you start looking for these small non-essential purchases it's not hard to find them, and triage what's more/less necessary.

Re: Buy Yourself a Latte

#65

Post by falcolas »

ineedasername wrote: post #48
falcolas wrote: post #43

Earlier quoted context omitted.

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.

Getting one during the work hours does seem a bit odd to me. Before work or over lunch, however, seems much more reasonable.

Re: Buy Yourself a Latte

#66

Post by falcolas »

vonseel wrote: post #59
falcolas wrote: post #43

Earlier quoted context omitted.

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. ;)

I prefer a clever dripper to a french press. Much less cleanup... toss filter and grounds in the trash in one fell swoop, rinse once or twice under some water in the sink, done. On the other hand, I much prefer a latte to any pour-over or french press coffee, maybe it's the steamed milk, I'm not sure. I don't mess with latte's at home anymore. I've had two <$200 machines wear out on me and it's too much work for some…

Having used both, cleaning the french press is not a lot more work than a pourover device. Swirl some water, throw out on a patch of grass or flower bed, rinse, done.

Of course, if you don't have a handy grounds disposal spot, there will be some additional issues.

Re: Buy Yourself a Latte

#67

Post by esotericn »

fwip wrote: post #55
esotericn wrote: post #40

Earlier quoted context omitted.

As an individual, this is almost a philosophical statement, though. I can actually choose not to spend $5 (just as I can attempt to enter a certain career path). I can't change the median wage significantly. It's not actionable.

You can't change wages directly on your own, no. But the systems that set the wages are not immune to public opinion. (Whether you consider wages to be set by companies, government, or other forces, this holds true.)

Sure, and if I had secured a high income or had established wealth, such a topic might be worth my time.

As an individual, actually saving that money or driving a higher income for myself is a far more effective use of time.

It also has the side-effect of increasing the median wage, because my negotiation provides upward pressure.

Re: Buy Yourself a Latte

#68

Post by mathgeek »

huffmsa wrote: post #37
esotericn wrote: post #24

Earlier quoted context omitted.

I always find these articles kind of amusing. In the UK we have Pret. 99p ($1.30) for a coffee. I'd get it in the middle of a day if I were far from home. Buying fancy coffee in the morning for breakfast strikes me as an extremely odd use of money. You've just left your house?

For a lot of Americans, the first stop they make on the way to work is Starbucks, Dunkin Donuts or McDonald's for coffee. It's bizarre.

As an American it does seem normalized. I found it less expensive to buy a good espresso machine for home and just make my coffee before I start my day. It paid off doubly when I started working remotely.

Re: Buy Yourself a Latte

#69

Post by MR4D »

I like Barry (and love his podcast), but #4 is crap. The number of people who are high income earners (say the equivalent of $150,000+ in Houston) who waste enormous amounts of money on eating out is staggering.

Go ahead - add up all your costs for eating out - I’ll bet you that latte that it’s more than you think...probably a lot more.

Discipline over little expenses is tough, but crucial. The financial advising industry even has an ugly name for these people - “credit card millionaires”. They look rich, but really spend too much on all sorts of things, from lunches, to lattes to cable tv, and end up blowing most of their income.

#SmallDiscretionaryExpensesMATTER !

Re: Buy Yourself a Latte

#70

Post by compiler-guy »

jshaqaw wrote: post #30

I 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.

Although you are right that the broad mindset is what matters, that isn't the example he is refuting. He is refuting (or at least attempting to refute), a specific Suze Orman claim.
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