111–120 of 351 posts
Earlier quoted context omitted.
If you are 20 years old and you start putting away $5/day and have 500k in the bank at 60. Who can argue with that. In fact they should pass a law to make this mandatory on everyone. It would greatly improve the lives of literally everyone.
What do you think Social Security is?
If 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…
The article isn't advocating that you buy a coffee every single day. It's saying a. focus on larger issues and b. it's okay to do a little self care and a little self indulgence.
I sometimes bought myself a fucking coffee of some sort at Starbuck's back when I was homeless. I needed the caffeine to help treat health issues. It let me plug in for an hour and get some electricity for my tablet, plus spend an hour on the internet because I was wi-fi dependent. It helped me feel like a human being and not just go fucking kill myself.
I was working on my larger problems, like getting healthier, paying down debt and developing a better earned income. I eventually got off the street.
I still don't have a lot of money. I still have to make judicious purchasing decisions. I still sometimes find that the best answer is splurging on taking care of myself.
Sometimes, taking care of yourself in some way is the best investment you can make. Sometimes, that means buying an overpriced coffee.
If you're entrepreneurial, I fully believe it's a better use of your time and mental energy to make an additional $5k/yr than to scrimp to save an extra $5k/yr. For the HN crowd, this could mean building a side project that generates income, negotiating a higher salary, etc. That being said, the type of people who have the luxury to focus on those types of things are in the minority. For those who aren't entrepreneur…
That's not how money works though if you pay income taxes. An extra dollar saved is worth more than an extra dollar earned because you pay new taxes on new income. At the high end in the US, saving $5000 offsets earning $7500. "Every dollar that you don't have to spend is a dollar.fifty that you don't have to worry about earning."
total coffee cost: 84k
total investment: 220k
assumes 5% investment return, 2.5% inflation, and 20 coffees/month
spreadsheet here: https://docs.google.com/spreadsheets/d/1_-5SuX3mn_3GBQEOMoIs...
As for whether you should buy yourself a latte daily or not, do whatever makes you happy. Personally I think 220k in 40 years will make me happier, but I can also see a life-long morning ritual going to a coffee shop and reading the paper while being served a latte appealing.
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It is an interesting phenomena, because it's a relatively expensive product for what it is, but it's also an experience. Even though my wife and I do quite well financially (and save plenty for ourselves, our kids college, etc), I noticed we were spending "too much" on espressos and lattes. Not too much for our financial situation, but too much for my comfort level at least. So, we bought a $600 espresso machine, whi…
I could drink coffee/tea at home - but I use going to get a drink as an excuse for getting out of the house for a bit.
While I do not believe that this is a big retirement issue, I do think many of the people I've been acquainted with who have habits in this ballpark would be quite well-served by getting the $1-dollar-any-size regular coffees at McDonald's instead, which would amount to increased savings of about ~$1500/year.
Why? I think this is, for many, more an issue of having a solid emergency fund or paying down moderate credit card debt, than making or breaking retirement savings (which would, in any case, generally come after debt/emergency funds). (Though it's still probably not make or break for most people.)
The above said, which I'm kind of meh about, what I find really jaw dropping is estimating the amount that many people in all income groups spend on alcohol. I don't know how people have the money.
Earlier quoted context omitted.
If you’re not free to spend the money in the bank then you don’t really own it.
And so what? That's 1800 tax on you per year. Say it was charged as something like a tax. Nothing that most people in the Western world would be effected significantly by.
What you propose is not much different from the social security many countries levy.
Typically it’s not an economic efficient way of saving. The absurdity of the forced savings proposal becomes apparent if you cannot afford a life saving operation at age 59 because you cannot access your savings. Please don’t try to add exceptions now. Forced savings is just a bad idea.
The author starts out saying you clearly shouldn't listen to the financial advice, because it is inaccurate. He then goes on to tell you that, adjusted for inflation, you will save up $90k over 40 years.
$90,000 just for not buying a coffee every day. That is amazing. Even more amazing if you're not a highly paid white-collar worker. $90k buys a lot of prescription pills, or pays for an expensive operation, or an upgraded old folks home. You will need every penny you can get when you're old.
And then there's the slippery slope. If you keep spending willy-nilly, with $2.50 here and $9 there, whenever you feel like it, it really starts to add up. $90k on take-out, $90k on movies, ubers, etc. If we keep buying trifles we could (even adjusted for inflation) actually be wasting a million over our lifetimes.
A smarter way to manage your money is to still have a latte every day, but compress the expense. Save up for 2 months and buy a Nespresso latte machine with reusable pods. Save a few more months and buy one for work! Then have a latte any time you want, for pennies on the dollar.
If 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…
I think the "don't buy the daily latte" advice maybe is not meant to be taken literally but is instead meant as a way to demonstrate the affect of compound interest and encourage people to start saving. We have the realize the audience is usually people who have no idea whatsoever about saving or investing. We're trying to encourage them to get in the mindset; if they cut back the latte, what else can they cut back o…