As we continue on our journey of reasons why we personally mandate ourselves to a life of forced servitude at our jobs while never getting truly wealthy, the simple cup of coffee finds itself in the crosshairs.  So let’s take a look at #6 on my list of ways to increase your wealth.
 
 

 

Now, this is one of the easier things in life to fix. It is also one of the few things that make me very disheartened when I see people willfully standing in line to part with their hard-earned cash in exchange for an overpriced caffeine fix. Really, that’s all it is, a caffeine fix.  Your ADDICTION is causing you to act in an irrational manner by separating you from your hard-earned cash and you won’t let ANYTHING get in your way. I’ve seen firsthand how irate, rude, and irritable people can be before they get their fix from the local Starbucks which tops my list as the worst offender.  If you want some good stories I could go all night.
In America, you can get coffee on virtually every corner. It’s the same reason why drug dealers are found in every neighborhood. They know you NEED a fix!
Regardless, I can’t be completely angry with capitalist businesses profiting from your problem as it’s part of what makes this country great. However, this industry has blown itself up into mammoth cash-draining proportions on the back of the average American’s innocent “Cup of Joe”. If this cash drain was focused on more productive areas society as a whole would be better off in the long run. So I don’t care if it’s Starbucks, Dunkin Donuts, Tim Horton, McDonald’s, or any of your favorite local percolators they are all impediments to you reaching your goals right now.

I’m sure you’re asking, “When can I buy a cup of coffee?”.

Now, I’m kind enough to allow a few exceptions. You can buy coffee at a cafe if you find yourself in the following situations:

 

  1. You are already so rich or financially independent that it does not affect your finances.
  2. You are out of town and are unsatisfied with your hosts, or the hotel’s free coffee. Yes, that’s right hotels give it away for FREE. Well actually you paid for it in your daily hotel rate, but that’s beside the point.
  3. You spill your homemade coffee while around town, and desperately need another cup or you will turn into a mini HULK smashing everything around you!

If you find yourself not in any of these situations but find yourself standing in line to buy coffee at a slimy Starbucks waiting for one of the baristas to spit in your coffee then call me. I’ll do my best to talk some dollars and cents into you.  There is only one beverage needed for survival and that’s water.  

Now I’ll go over some numbers. Let’s say you drink one cup of coffee/tea per day and it costs you $5.00 from your favorite fancy cafe. Or if you’re more down to earth you visit the not-so-fancy place down the street paying $2.50 per cup. For the make at home option let’s assume you buy coffee costing $11 per pound. The make-at-home coffee will be some excessively fancy fair-trade organic coffee which most people would balk at the idea of while shopping.
Here is what it would actually cost you for the entire year:

 

Coffee Costs
Starbucks
Average Cafe
Home**
Cost Per year
$1,825
$912.50
$124.42

 

Making high-quality coffee at home costs 93% less than standing in line like a sucker at Starbucks. Plus you get higher-quality coffee!!!

These numbers are always an eye-opener when I discuss them with clients. It’s absolutely astonishing how CHEAP it is to make the highest quality coffee available right in the convenience of your own home. That means never waiting in line, getting the order all mixed up, or spit in by a cop-hating disgruntled employee. Your time is way more valuable than sitting in line as you wait forever on others to place their orders.

Essentially your Starbucks habit is costing you 1 work week a year if you make average pay in this country. Sounds like you’d be a sucker by voluntarily chaining yourself to another week of unnecessary work when you could be out exploring nature, or working on house projects that actually matter to you.

So there we have it. Making your coffee at home is WAY cheaper along with a HUGE upgrade in quality. Would you love to track your daily caffeine habit? Use our free income and expense tracking app which is easier to setup than saying “save a latte”!

Now you might be thinking saving a few bucks a day isn’t a big deal in the grand scheme of things so let me show you how foregoing cafe trips could actually pay for your child’s college education.

How You Could Pay For College Instead

If you took that daily cup of cafe coffee and invested it earning an 8% return over 10 years you would have $27,807.80*** sitting in your investment account. You could literally buy a whole year’s worth of coffee for yourself and 180+ other people of your choosing with that money, or pay for 1 year’s worth of your child’s college tuition. If you drink one of those fancy mocha frappe fizzys that cost even more it’s ok if you feel like slapping yourself in the face right now.

What if you and your spouse both buy fancy cafe coffee instead of setting aside the funds for your newborn child’s college education?

If you invested that money instead of spending it at the cafe within 18 years earning 8% the grand total would come to $145,946! For sure you could easily fund your child’s entire college education with that money.

The current average yearly college tuition is $27,330. Over four years that equates to $109,320 which means you’ll still have $36,626 to use on another child.

If your children live at home while attending school they’ll simultaneously save themselves from a monstrous student loan debt burden.  For most of us, we can get a quality education without having to live hundreds of miles away. If your children’s school is less than 40 miles away they should not need to live on campus. They should simply develop a schedule with commuting 2-3 days a week for all their classes. I don’t want to encourage sending kids away to school when it can be avoided. I even wanted to study on campus but stayed home instead. That choice put me years ahead of my peers financially. Plus if your child works at the very least a part-time job(20hrs/wk) paying $15/hr they can contribute $62,400 over 4 years which is a huge help!  Overall it’s not much to ask in my opinion.

Who would have thought such a simple change in your daily habits could profoundly impact the future?

For many people helping their kids through college is a non-negotiable goal. Yet many families fulfill this goal with debt obligations that can hamstring children & parents alike since the debt is not extinguished through bankruptcy. That’s insane when you could totally fund it yourself with CASH from money invested through a tax-advantaged savings plan like a 529 offered by the IRS, or even a ROTH IRA account.

Not sure how which is best for you? Valor is more than happy to help guide you through the options that make sense for you. Did you know Valor can even help you determine what your child’s education costs will be based on what school they will attend, and their current age?

Hopefully, this gets you to think twice before standing in line for your next cup of coffee. Understand that this is one of the many trade-offs in life.  We can choose to accumulate more assets by foregoing seemingly small innocent purchases every day. Which actually leads us to living a fuller, more purposeful life. More on why that is in future posts.

**Calculated using 1 tablespoon of coffee needed per cup 365 days a year. Equates to 11.25 pounds of coffee for 1 year. 1 pound of coffee cited costs $11.06/lb for VERY fancy fair trade organic coffee.

 ***Calculated at 8% interest compounded monthly.

 

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