I have read several books written by David Bach. He has written books such as " Start Late, Finish Rich" and "The Automatic Millionaire". I really like some of his key ideas such as "make everything automatic" and the "latte factor".
The premise of the "Latte Factor" is based the idea that most people spend money on small things, such as a Latte, and these small amounts add up, and should the money be invested, people would see a greater return.
My "Latte Factor" is actually lattes.....well...actually, my weakness is Starbucks. During my coffee breaks at work, my co-workers and I walk over to Starbucks, stand in the line up, and immediately feel better. We look at the shiny espresso machines, coffee mugs with Starbucks logos, coffee beans, and all the little chocolate treats and after-coffee mints.
This is usually how pathetic I am. I know that the after-coffee mints are just gums, rather really expensive gums. Well, the first time I bought them, I did not know, but now that I know, I still buy them. Usually, I pay something like $2-$3 dollars for these mints in shiny tin boxes. At any gas station, regular gums cost a dollar. The point is that I know this is wrong, and I shouldn't pay that much for gum, but there is something I can do about it. I still bend over backwards for them.
Now, back to Lattes. I love the Non-Fat Vanilla Lattes. Depending on the size, I can spend between $3-$6. Sometimes, I buy two Lattes a day.....plus some mints. If you add everything togather, at Starbucks along I can spend anywhere between $5-$10 dollars a day. I think I am being conservative, because there are days I can't say no to those dark cherry chocolates. Oh, and on some days, I also can't say no to new mugs.
In David's book, there was a simple calculation of how much $5 dollars a day can mean in the future:
$5 per day (the average cost of a latte and a muffin) x 7 days = $35 per week
$35/week = $150/month
$150 per month invested at a rate of 10% annual return =
1 year = $1,885
2 years = $3,967
5 years =$11,616
10 years = $30,727
15 years = $62,171
30 years = $339,073
40 years = $948,611
So, according to David, I have been a bad bad girl....
So, today was my first real attempt at changing my ways. I brought snacks to work! In my "snack bag", I had an orange, a sandwich, a breakfast bar, a yogurt and some juice. I can't even bring myself to say that it was great, because it wasn't. It was very hard. The problem with bringing snacks to work is that you tend to eat them too quickly, because they are readily available! By mid morning, I only had an orange left. Then the Starbucks urge kicked in. Also, it doesn't help that going out for Starbucks is almost like a social outing. So, not only can I not have my Starbucks, but I can't socialize either. I struggled until the end of the day, ate my orange, and gave dirty looks to the empty Starbucks cups on other people's desks.
At the end of the day, I saved myself $5-$10 dollars. One day down, many more to go.....
You can learn about David Bach at: http://www.finishrich.com/pages/home.php
Take a Latte Factor test : http://www.finishrich.com/free_resources/lattecalculator.php
