
Buy Yourself a Latte - iron0013
https://ritholtz.com/2019/04/buy-yourself-a-fking-latte/
======
ineedasername
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, 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.

~~~
DoreenMichele
_that $5 a day adds up_

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.

~~~
thaumaturgy
There was an illustrative article on this topic a few years ago [1]:

"It’s not like the sacrifice will result in improved circumstances; the thing
holding me back isn’t that I blow five bucks at Wendy’s. It’s that now that I
have proven that I am a Poor Person that is all that I am or ever will be. It
is not worth it to me to live a bleak life devoid of small pleasures so that
one day I can make a single large purchase. I will never have large pleasures
to hold on to."

(I really recommend reading the whole thing, for those that have never lived
that situation long-term.)

There's additionally a more recent study on the cognitive effects of long-term
poverty [2], which essentially finds that poverty skews prioritization in
financial decision-making and produces long-term decision-making stress which
amounts to a massive ongoing cognitive load.

Attitudes like ~ineedasername's are just fucking infuriating, especially when
posted in response to an article in which the entire point was that saving
money on coffee is not a habit which in isolation will make a huge difference
in anyone's financial future.

It's only about one step removed from victim blaming. Impoverished people
aren't poor because they occasionally buy coffee. They're poor because there's
an economic system currently in place which is slurping as much wealth away
from as many people as possible to feed it to just a few.

[1]: [https://www.theatlantic.com/business/archive/2013/11/your-
br...](https://www.theatlantic.com/business/archive/2013/11/your-brain-on-
poverty-why-poor-people-seem-to-make-bad-decisions/281780/?single_page=true)

[2]: [http://review.chicagobooth.edu/behavioral-
science/2018/artic...](http://review.chicagobooth.edu/behavioral-
science/2018/article/how-poverty-changes-your-mind-set)

~~~
ZeroFries
It's infuriating in the same way that "move more, eat less" is infuriating to
obese people. It's infuriating because it doesn't pan out in practice for a
lot of people trying. However, the advice is still sound to some degree,
because it _does_ work for the people who are actually able to follow it.

Now, to blame it on the economic system is going too far IMO. Can you point to
an economic system in practice with lower poverty rates than capitalism? Also,
a well balanced capitalist system doesn't "slurp" wealth away, it increases
it. Someone invents an axe, gets massively rich, and wealth inequality grows a
bit. However, everyone who bought that axe is now better off for it. The total
amount of wealth has increased in a non-zero-sum fashion.

~~~
bigmanwalter
Everyone who buys the axe is better off for it, and everyone who sells wood at
the market but doesn't own an axe is worse off for it.

------
codr7
I grew up in a poor family, could never afford anything unless miracles
happened, never went on any trips etc. I later scaled all the way up to much
more than I needed as a software developer and lately I'm pretty much down to
nothing.

The main thing I learned over 42 years of going back and forth is that a warm
place to sleep, good health, good food (and coffee) and nice, caring people
are priceless.

Money is the ultimate drug, yet piling it up and walking over dead bodies to
get ever more is seen as successful and worthy of admiration. I know a junkie
when I see one, the fact that the drug is legal changes nothing.

Dropping $5 you don't have on overpriced coffee is proving that it has no
power over you.

Posting this here is likely karma suicide, but here we go; this is my
perspective, and it's as valid as any other.

~~~
benj111
"Dropping $5 you don't have on overpriced coffee is proving that it has no
power over you"

Surely it depends on motivation?

I wouldn't say money has power over me, but I want to be a responsible member
of society, pay my own way etc, so I make sure I have money to buy coffee now
and in the future. Whereas if you're buying overprice coffee with money you
don't have, just to impress your mates, that think you're rich and successful,
and you want to impress them...

Further, if you're spending $5 you don't have (assuming it isn't stolen), its
borrowed, which means someone else has power over you.

~~~
codr7
Who said anything about impressing anyone? Why do you feel the need to attack
me and put words in my mouth?

If I couldn't care less, how can someone have power over me?

~~~
dyarosla
I believe the parent comment to your post was speaking in generalities ( see
the ‘if’ )- not misquoting you at all.

~~~
benj111
Yes, that was my intent.

------
AdmiralAsshat
Counterpoint:

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 home), and some whole
beans from your favorite hipster coffee shop. And the 5 minutes it takes
start-to-finish (1 minute for prep, 4 minutes for steeping) is probably less
time than it will take to slip by the coffee shop, stand in line, and get your
order.

But that's just me. If they're one of those people who uses the
coffee/espresso/latte as a caffeine-delivery mechanism and rely on being a
frozen whipped-cream confection with chocolate and a little coffee in it to
make it palatable, then my self-brew method won't help them.

~~~
falcolas
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. ;)

~~~
ineedasername
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.

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

~~~
adamisom
Ok, but even then, surely it takes about as much time?

The time component of having to go somewhere + get your order + get back is
mysteriously ignored all. the. time. Not just with coffee, but with making
your own food. Like, you don't want to meal prep it takes too much time--but
then you probably spend _more_ time overall getting lunch every day instead!
_Especially_ if you have the luxury 'need' for variety every. single. meal.

It drives me a little bit crazy.

~~~
falcolas
> Ok, but even then, surely it takes about as much time?

Sure, but it's on your own time, not your employer's time (at least, that's
how I read "I have it at my desk").

That said, I will solidly defend the notion that _not_ spending a solid N
hours at your desk is a good thing. Stepping away from your desk on your lunch
hour, whether it's to purchase a latte, a lunch, or to eat a homemade meal in
a nearby park, is a good thing.

------
CompelTechnic
To 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 live
paycheck-to-paycheck because they adjust their consumption to match their
income. There are people that live paycheck-to-paycheck at all levels of the
income distribution. The power of saving adds up more than people think. The
author of the article may very well be rich and successful because his $5
daily coffee frees up his mental bandwidth enough to concentrate on his
billion-dollar daily problems. However, many poorer folks need to learn self-
control and the power of saving. His advice is not actionable.

To use the featured quote against him: >If spending $5 a day on fancy coffee
puts your retirement at risk, you’ve got bigger problems.

Yes. The bigger problem is that many grown adults are financially ignorant.
Spending $5/day on a pure luxury despite being flat broke is a symptom of this
ignorance, but analysis of this symptom can lead to self-reflection and better
behavior.

Savings Calculation:
[https://imgur.com/a/Au00aeJ](https://imgur.com/a/Au00aeJ)

~~~
yellowstuff
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.

~~~
CompelTechnic
It is true that the U.S. over the last ~150 years has outperformed a lot of
the world, but it maintained 7% real over that period of time. Ritholtz was
all over the damn place in his article, and attacks the strawman of 12%
growth. In comparison 7% has some backing.

Due to volatility, it is unsafe to retire on a planned drawdown rate of 7% (4%
is a good rule), but it isn't unrealistic to expect 7% growth.

------
csomar
Sure. How about saving up that $5 coffee until you die. Then you can enjoy
your millions in your grave-yard. I'm close to turning 30 and one thing I
learned: There are certain experiences you only enjoy when you are at a
particular age.

You can't go hiking when you are 75. You'll probably be sitting on a chair.
You can't also go drinking and dancing in some cities around the world and
coming back to your hotel room with a date. That can't happen at 75 unless you
are paying for it. I also don't think you'll enjoy it as if you were 22.

The truth is: You should save/spend and optimize for your perceived
livelihood. Unless you have an agenda of passing your wealth to your children.
I'd rather cease my existence at 75 or 80 than struggle with illness and pass
my wealth to pharmaceuticals and doctors.

But back to the issue. $5 coffee? Yes but only because I can sit at Starbucks
for 2/3 hours. They give you electricity, WIFI and some starbucks do have
rather, very nice, views. Buying a take-away starbucks everyday because you
are too lazy to make coffee is stupid, however. (or rich enough)

~~~
Ayesh
I'm a full-time freelancer, and I spend quite a lot on traveling now that I
can work from anywhere. It certainly costs a lot of money, but for the past 8
years I've been doing this, I never felt it as a waste of money.

Those $5 coffees not only have helped me relax, recharge my gadgets and use
their wifi, but also to get my work done. Not working at all vs paying for a
coffee to earn some money is an easy decision to make.

On hindsight, though, money I've spent on cloths and jewelery, or super fine
wine and alcohol, or high end restaurants feel like a massive waste of money.

~~~
csomar
> On hindsight, though, money I've spent on cloths and jewelery, or super fine
> wine and alcohol, or high end restaurants feel like a massive waste of
> money.

You can get designer brand clothes from department stores like TGMaxx pretty
cheap. And if you look around enough you can find new stuff that fits you very
well. Super fine wine and alcohol is pretty much the same as cheap wine and
alcohol. High end restaurants are a connection mechanism for rich people. So
unless you are networking there, there is no reason to go to one.

------
esotericn
The 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 $10K, then a significant percentage of your discretionary
expenditure has gone on a hot liquid.

Ultimately though this just comes down to saving enough, which I think is
intuitively obvious to anyone who sits down and thinks about it without
invoking some sort of "magic beans" lens.

If you have a 40 year working life, and 20 years in retirement, saving 33% of
your income and investing it in something that tracks inflation should be
enough for you to maintain your average standard of living.

I don't think that 33% is a hard bar to hit for most people that aren't on
minimum wage. I also don't think most people actually consider it that way,
they think of pensions or other schemes as wizardry that will return them
vastly in excess of inflation.

~~~
lostmsu
$5 coffee for 300 days is $1500/y, which, IMO, is not insignificant even
compared to $50K

~~~
opportune
Personally I think if you have $50k/y discretionary spending it's not
unreasonable to spend $10k-20k of that on things you enjoy. Personally I save
more, because most of the things I enjoy are free and I want to take advantage
of compound interest while I'm young, but that's a personal choice.

But if there are things aside from investments that you do want to spend your
money on while you have such a significant (compared to the rest of the world)
amount of disposable income, why deprive yourself just so you can retire with
25% more money? Your life would not be much different retiring with $2mm vs.
$2.5mm, or really any two numbers over $1mm or so.

~~~
lostmsu
How about retiring 25% earlier?

------
Moodles
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 on?

The article is a bit rant-y for my taste, but I do agree people need to
consider more the big expenses: if you live in New York/San Francisco, saving
just $200 on rent seems pretty negligible when rent is like 1.5k-3.5k, but
it's way more of an important decision than a half price toothpaste or
something. I have a friend I went on vacation with recently. She has an
amazing apartment which she barely ever lives in due to being a consultant,
yet she was worried about saving a few bucks on her flight. Our brains tend to
focus on relative rather than absolute values.

~~~
somethoughts
Yes - its really meant as a symbol for recurring monthly subscriptions such as
full Comcast triple play at $200 + $10 for Netflix + $10 for Hulu + $10 for
Disney+ + $10 for Amazon Prime + $20 for Apple News/TV+ + $10 for NYTimes +
$15 for Costco as well as luxury car payments instead of a basic car payment,
etc.

------
neogodless
With 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.

~~~
MRD85
Does the US not have a compulsory savings scheme? In Australia, we have
superannuation which employers must pay and it goes into a fund that is
invested. My scheme gives me approximately 17% and after around 12 years of my
working life, I have a couple hundred thousand dollars in my account. By the
time I retire, it's likely to be worth around 1.5 million in today's dollars.
I also invest some of my own money.

~~~
neogodless
We do. It's called social security. Technically, it should be enough to pay
the bare minimum of your needs upon retirement, if you're in a low cost-of-
living area. It does not ensure a comfortable retirement, and we have enough
problems in our government to erode our trust in getting the full payout from
the system.

It's also "100%" paid out if you wait until 67, or 75% at 62. Also, I note you
said "employers must pay"; we pay social security as a deduction from our
paychecks in the form of a 6.2% tax. Employers also match that.

~~~
MRD85
I just researched social security, it appears more like a pension plan. Our
superannuation is entirely our money. When I reach retirement age then every
cent I've paid (plus interest) is returned to me. If I run out of money I'm
still eligible for the pension. I'm not entirely sure but I think my
superannuation is more similar to a compulsory 401k.

~~~
cpfohl
The US is, as a rule, for better or worse, pretty opposed to"compulsory" in
most situations

------
krisrm
Great article. I never understand why "financial advisors", when making
pitches for consumer frugality, invent a wildly optimistic interest rate
(12%?!) and say things like "you could have had $X million dollars, IF ONLY.
Well, sure... you could have. Or you could have had no dollars, and also no
coffee, since return rates from the type of investments that have any chance
of making 12% are anything but guaranteed.

~~~
MuffinFlavored
[https://en.wikipedia.org/wiki/S%26P_500_Index#Annual_returns](https://en.wikipedia.org/wiki/S%26P_500_Index#Annual_returns)

> Total Annual Return Including Dividends

10.53%

> 25 Year Annualized Return

11.93%

~~~
jfk13
Sure, that's nice. (Although it seems to have been heading somewhat lower for
the past decade.) But if you'd started investing in 1998, say, and then in
2008 something happened such that you unexpectedly needed access to your 10
years' worth of accumulated resources, things wouldn't have looked so rosy.

Overall, the long-term trend may be pretty reliably positive. But that's
little comfort to an individual who may not have the luxury of waiting out a
poorly-timed, lengthy downturn.

~~~
PButtNutter
Right, and most of the gains will be in the last year because exponents - so
if you have to pull out early those gains are ded.

------
ChrisRR
I think this article misses the point. The daily coffee isn't the only problem
with people's spending, but is representative of all the small daily spends
that add up without people realising.

It's the petrol in your car when you could've walked, it's the extra bar of
chocolate that you add to your lunch, it's the daily newspaper you buy.
Everything adds up very quickly and the coffee is just one example

~~~
nytesky
That’s the authors point. Unless you are an extreme outlier and buying a LOT
of small purchase (like to the point you don’t have time to work), they really
are meaningless. The big fixed items in your budget really drive everything,
housing, medical, education, which have all far outstripped inflation. And the
income has remained flat for most people (save tech workers who get great
coffee for free).

~~~
GuB-42
Sure, the big fixed items drive everything, but they are the baseline.

Saving on housing is hard, and saving on medical and education is more or less
impossible. If you have, say, a $3000/month income, resulting in a $2000/month
budget and you need $1000/month expense just to survive, that's $1000/month
expendable. A $5/day latte ends up as 15% of that budget, that it is 5% of
your income is irrelevant because you don't have access to these $2000.

7 of these "small" expenses and you are left with nothing. No extra money for
a nice car, a more comfortable home, holiday trips, etc...

~~~
yellow_postit
Not sure savings on those fixed costs are as impossible as you make them out
to be, rather they may take substantially more effort than the "skip a coffee"
line.

Housing -- do more with less. How many people buy houses (or cars) beyond
their means or bigger in size than needed?

Health -- daily movement is a life long commitment (as is finding time for
sleep) and has outsized long term health benefits. No this doesn't address the
"hit by a bus" scenario, but in terms of some of the most prevalent chronic
health conditions it's amazing ROI.

Education -- while there is an undeniable tyranny of geographical
circumstances, being able to evaluate using community colleges for prereqs,
considering alternatives like trade schools, and taking into account expected
lifetime earnings for career path all can play into this fixed expense.

------
Insanity
My argument would be that you might as well enjoy the money that you earned.
You can't take it with you when you die, so make the most of it here.

Not saying you shouldn't save money, but if the 5$ cup makes you happy, just
go for it.

Edit: typos!

~~~
dspillett
The same arguement is valid for time that could have been spent more
productively. Time that you have enjoyed wasting is not really wasted time. In
fact a bit of fun or idle time can have a significant mental health benefit.

Of course, you need to find a balance. You have to have enough good productive
time to be able to afford the idle time that you need/want...

------
gdubs
We started budgeting, finally, around the time we had kids. We got tired of
doing it all based on feeling, and wanted to actually know where our money was
going, so we could make more accurate plans. A lot of people look at budgeting
as a chore, but I’ve found it to be liberating. When you sock away some money
for “personal spending”, you can get a coffee and not think twice about it.
You’re not wondering whether your rent or mortgage is funded. You can start
funding future costs (like an annual car registration renewal) instead of
being surprised by them. And if it seems like a ton of effort, it’s pretty
nice when tax season comes around and all your expenses are already
categorized.

At the end of the day you have X expenses and Y income, with some unknowns and
variations thrown in the mix. There’s no reason it has to be a mystery. You
can actually make an informed choice about that latte, and balance it with
your desire to save for the future, live a little now, etc.

------
ebg13
So far people in the thread seem to be focusing on whether the use of
inflation is appropriate and whether coffee is specific or merely
representative or whether small costs add up.

But they've all missed what I think is the true takeaway:

> _Please excuse my lack of enthusiasm for discussing 4-dollar lattes while we
> ignore 30-plus years of zero real wage gains._

~~~
esotericn
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.

~~~
fwip
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.)

~~~
esotericn
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.

------
winkelwagen
Just to get my 5 cents in (as an ex-barista), you can get the best (single
origin) coffee's in the world for between 8-12 euro's for 250 grams.(there are
more expensive Geisha coffee's, but that's really hi-end) Lets assume you use
18 grams of coffee for a cup. That yields you at least 13 cups of coffee (from
the 250 grams. Raw resources would cost you between 0.62 to 0.92 euro a cup.

Manual ceramic grinder between 30 - 45 euro's Aeropress about 35 euro.

Both of them last at least 5 years.

That is quite a bit less than the 5 dollars. Yes it takes you about 5 min to
brew a cup. But from having worked in a espresso bar for many years, during
morning rush hour, you would be happy to get your coffee in less than that.

I think the article is interesting, because it deals with culture. First is
the, go buy a cup of coffee at starbucks culture, and pay premium for the
coffee. What I've noticed from working it's that people have their rituals
when it comes to coffee. It's about getting fuel to get to work. It's about
taking a break from the environment they were in 5 min before. It's about
comfort.

That is what you get for the 5 dollars in the article. It's not only about the
coffee, it's about taking a break, rewarding yourself.

If you can find a way to get the above pleasures from home-brewed coffee, or
stop drinking take-out coffee. Great! But I agree that only seeing it "5
dollars not used for your retirement" is really short-sighted. There is a
deeper problem if that is the difference between you able to retire when
you're 65.

~~~
joerickard
I agree entirely. I've changed my routine to avoid coffee shops in the
morning, and make coffee at home with nice beans. I've come to enjoy the quiet
process each morning, reading news while waiting for the water to boil, and it
has definitely been saving me a significant amount of money each month.

------
ashelmire
> “Let’s say you spend around $100 on coffee each month. If you were to put
> that $100 into a Roth IRA instead, after 40 years the money would have grown
> to around $1 million with a 12 percent rate of return.”

...why not both? :-)

But seriously, coffee is a drop in the bucket. Most of us spend 30% of our
income on housing alone. And you have to eat. And coffee makes us happy and
productive. The cost of not having that coffee - being unproductive and
unhappy - is much greater.

And of course, what's the end goal? Have the most money at the end of your
life? What do you win for that? Nothing. Your goal should be to spend all of
your money living the best life you can, with enough money to retire on and
enjoy the lifestyle you want (with a rainy day fund, of course). Teach your
children what they need to know to succeed, so none will need to depend on any
inheritance, and leave them whatever property or money is leftover.

~~~
neogodless
Both should be "coffee" and "saving" \- not __$5 __coffee and _maybe_ saving.
In other words, if you figure out how much you need to retire at the lifestyle
you want, in the time frame you want, and put the money into your investments
(retirement, brokerage, etc) and then pay all your bills and then you have
$5/day to spend on coffee, go to town. If, instead, you spend $5/day on
coffee, pay your bills, and don't have any money left over each month, so you
skimp on your retirement contributions, you've lost control of when and how
you retire.

The end goal for any conscious saver is not "the most money at the end of your
life" but almost certainly something more meaningful and useful. Retirement
when and how you want! Having retirement accumulate faster such that you have
enough to retire when you're 55 instead of 65 means 10 years of meaningful
autonomy over your life. Of course that probably isn't possible if $5 coffees
interrupt your retirement plans entirely. There's a spectrum of incomes, cost
of living and what your optional spending looks like.

~~~
PButtNutter
Right, but if all you are saving is $5 a few times a week you aren't really
saving... and that's the point the article is making.

~~~
neogodless
The math seemed pretty compelling. Even $100/month invested in index funds
returns several hundred thousand after a few decades (or the typical working
career.)

Should you ONLY skip daily lattes but living beyond your means otherwise? Of
course not! But it's just one of many places to start making changes in your
life towards the things that really matter to you.

------
gringoDan
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 entrepreneurial,
don't work in tech, etc. sticking to a strict budget can be the difference
between having money for retirement and not having it.

~~~
larrik
I call this the "sales mindset" vs the "accounting mindset". In my opinion,
once you see the accounting mindset take hold of the leadership of a company,
it's prospects are dead. It's not growing any more. Granted, a company can
make a ton of money during its slow decline.

There are, of course, industries that are different (Walmart seems to make way
more via cost savings than by sales incentives, for example).

~~~
plorkyeran
Walmart shows how the accounting mindset can work for a company: the more you
drive down costs, the more markets you can make a profit in. They cut costs
for the sake of being able to expand into places that they otherwise wouldn't
be able to, rather than to boost profit from stagnant sales.

------
jshaqaw
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.

~~~
hannasanarion
Who in the world buys ten fancy coffees or equivalent every day?

~~~
ineedasername
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.

~~~
hannasanarion
None of those things get you even close to $50/day. The "meal box kit"s are
hundreds of dollars a month, yeah, but they also come with hundreds of dollars
worth of food. Blue Apron comes out to about $10 per meal and they're
considered the expensive choice.

TV packages get you up to $60 per month, or $2 per day. Wow, so wasteful,
almost the price of a one-way commute and all you get in return is broad and
unlimited 24/7 entertainment.

So we're up to $20 per day: $8 for food delivered to your house (which
shouldn't even count because you need to eat anyway), $10 for two nice
coffees, and $2 for television. Tell me about all the other outrageous luxury
spending that gets us up to $50 per day.

$50/day is $1500/month. _nobody_ spends that much on little luxuries. 46% of
Americans can't afford to spend that much on _rent_.

~~~
jshaqaw
I don’t think you live in NYC hannasarion. A cab here and there instead of the
subway etc...

Also, the numbers jump by multiples if you have kids and include them in the
little luxury buys. Again, my point isn’t to deprive yourself unnecessarily of
joy. It’s just to be conscious of purchases which do add up and yet don’t
actually make you much happier.

------
PascLeRasc
A lot of comments here are debating whether a 12% interest rate is reasonable
or not - I don't know enough to comment on that since stocks and investing is
one of those things I try to know as little about as possible.

What I'm interested in is where the promoters of "save for 40 years" are
getting a guarantee that they'll be alive in 40 years, and in good enough
health to do the things they planned to do when they started investing.
Especially if you live in a third-world country like the US, where mass
shootings happen nearly every week, and regular medical expenses can bankrupt
even the most thrifty saver, I think there's something to be said for enjoying
life right now. I'm very thankful for the trips I've spent money on instead of
saving it, because exposure to different cultures changed me as a person, and
now I have the rest of my life to live differently with new ideas and values.

If you like coffee, $4 or $5 can get you literally the best coffee beans in
the world, prepared by a master barista. It's not like wine or whiskey where
you need to spend hundreds of dollars to get a taste of the high-end stuff. I
still make my coffee at home 6 days a week because it's cheap and I like the
process, but getting an espresso once a week is one of those little joys that
make life worth living for me.

~~~
TomVDB
It's very simple. Despite the weekly mass shootings in your neighborhood, the
life expectancy of an American is still 79 years. And if you're commenting on
Hacker News, chances are that yours will be higher. And the majority of
American don't get bankrupt on medical expenses.

Unless you're willing to live in poverty, or be a burden on your children,
saving enough for your old age is your only option.

That doesn't mean you shouldn't splurge on the fantastic lattes of your master
barista.

------
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 !

------
mjamesaustin
When I met with a financial planner, he stressed the importance of setting
aside enough money to spend on myself every month that I would feel confident
to start investing.

The latte scare is a great way to make sure people who are apprehensive about
investing never even consider it. Starting incrementally is way better than
criticizing people for just trying to live their lives.

~~~
tcfunk
> The latte scare is a great way to make sure people who are apprehensive
> about investing never even consider it.

It's like fad dieting, but for your wallet.

------
Glyptodon
So... my personal experience is that many people who make less than median
household income do buy $5 lattes or similar drinks/beverages multiple times a
week.

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.

------
pjohri
as an immigrant who came to the US with nothing and having held high paying
software jobs for the past 20 years, I still find it unacceptable to drop $5
on lattes.

the reason has little to do with whether one can afford the $5 latte or not.

the $5 latte/day or multiple lattes as most of my Starbucks card toting
colleagues go for even when we have gourmet free coffee in the office is a
symptom of something else.

usually, it is a classic symptom of consumerism - and not having one’s overall
finances in order. of not having a plan in place to save first and spend
later.

when one drops $5/day on a latte when a 50c coffee at would do, one drops
similar amounts on most everything else - an expensive shampoo instead of a
basic one, branded shoes and clothes, ... and so on

at least that is where I find myself today - my habits have changed over the
past two decades - from being able to find happiness in simplicity to getting
addicted to consumerism.

------
ace_of_spades
To me the article is somewhat missing the most interesting point of the whole
discussion and that’s the impact that the money is having when it is spend.
Let me be a little provocative :)

While a great coffee can be a pleasurable experience that can actually make
you more productive and happy in the short-run with possible positive long-
term flow-trough effects (e.g., on life satisfaction), there are likely going
to be more impactful uses of that money. As the most obvious examples, for
instance, saving childrens lifes in Africa [givewell.org], improving the messy
factory farming situation [gfi.org], etc. So wouldn’t you have the moral
imperative to spend that money in a way that it’s impact is higher or at least
comparable than those possible alternatives?

I would argue that in many cases this is actually possible when you are buying
a coffee but not regularly, though... then you could likely find more
effective alternatives, thus, the habbit would be obviously harder to justify
for the vast majority of people.

My major quip with all of this is that our institutions could be designed in a
way that would help us to make smart decisions (for us and others) but at the
moment it is computationally really expensive to find a good path that
balances all interests in way that leads to a great life for all.

------
DrSayre
I wonder if the author would be ok if people spend $1 on a coffee a day from
McDonalds or a gas station and save the other $4?

I always hate how people always jump to "but inflation..." or "12% is not
realistic...". Ok, maybe 12% isn't reasonable and $1M won't be as much decades
from now. But having $500k or $750k or however much you end up saving by
saving a few bucks each day could still be a pretty good chunk of change when
you are ready to retire! That's much more than $0! The earlier you start,
let's say when you're 18 buying a $5 cup of coffee and not really thinking
about retirement, gives you more time to build wealth when you're ready to
retire.

As more people start to reach retirement age, there's going to be a lot of
people surprised to realize they can't afford to retire. With few companies
offering pensions and some uncertainty about social security with Baby Boomers
reaching retirement age, millennials better start thinking about how they can
retire as soon as possible. Saving a few bucks each day (whether it is by
giving up fancy coffee or something else) can be a great way to get started!

~~~
deadmetheny
>millennials better start thinking about how they can retire as soon as
possible

Most millennials have been blackpilled to the point of just accepting that the
way things are currently going means we'll never be able to afford to retire.

~~~
DrSayre
yep, I agree with that. Which is why Im not crazy about people (like this
author) who is discouraging millennials from even getting started. If you're
in college, or just out of college, you have decades to figure out how to be
able to retire. There's no need to just accept whatever happens, or to just
assume people will figure out how to fund Social Security between now and
then.

------
klunger
I love fancy coffee, lattes especially. When I was younger, an explicit goal
of mine was to become financially secure enough that I could afford a latte a
day without sweating it. I used it as a yardstick for success and also knew
that it would make me happy.

And, you know what? I was right. I have a good job and drink a latte a day
now. It brings me immense pleasure every single time. Even after years of
doing it, my daily latte remains a source of joy. I will probably do it the
rest of my life, circumstances willing.

None of this is the point though! The point is that economic growth has
stagnated while fixed costs have risen. Quibbling over this is ridiculous. The
author is absolutely right. In the big picture, $5/day is not what should
matter. If income equality was not so absurd and fixed costs not so out of
control, everyone would be able to afford it.

Until those systemic injustices are resolved, we are just fighting over crumbs
here. It's time for major tax reform. Or revolution. That's what we should be
focusing on, not critisizing people for taking care of themselves in our
nightmare of a society.

------
droithomme
When I was younger I walked to work in the big city and there was a great
coffee shop on the way and every single day I bought a $4 extra large soy chai
latte. It was fantastic and an exclusive secret recipe to that non-chain shop.
Back then a normal coffee cost $1, so this was a splurge. Inflation adjusted
that would be $6-7 these days. I regret nothing, though I did feel
uncomfortable sometimes spending so much.

My next job there was no comparable coffee shop and I was driving to work. So
I reconstructed by experimenting with spices until I exactly duplicated the
original. Then I made the base in batches and would have some all week long, a
week's worth was $3 in fairly pricey spices in bulk and $3 in soy, so $1.20 a
day.

I later dropped soy from my diet and got more interested in espresso,
cappuccino and cafe au lait with various non-dairy non-soy whiteners. By this
time I had a $30 espresso machine and a grinder. I've replaced both a couple
times. Sometimes I try a commercial coffee, but my own is better. And I'm OK
with one big coffee a day, more than that I get too wired and can't think as
well. Cost now is around 50 cents a day including everything such as prorated
equipment costs.

$5 lattes from a store every day is fine if you can afford it. But it does add
up. And some folks that buy such things also treat themselves to lots of other
things that they don't prepare themselves, whether avocado toast, movies,
cable TV, delivered water, on demand fashion, always having the very latest
iPhone, car leasing, or whatever.

Being aware of these costs and keeping track of them can help. If one is not
investing well for retirement then they should start looking at all these
little expenses, not just the big expenses.

I'm very well off now and can afford to buy all the $5 lattes I want but I
don't buy any lattes at all these days. When I was poor I bought a lot of
them. There's not really a connection between the two but there could be for
some.

~~~
TomVDB
You can't just write this and then not post a link to the secret recipe!

------
matthewaveryusa
If you're going to add inflation, add inflation to _all_ your numbers. i.e:
the cup of coffee will be subject to inflation, and what you save will also
increase with inflation. If you run the numbers propagating inflation
everywhere instead of cherry-picking, over 40 years you get:

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...](https://docs.google.com/spreadsheets/d/1_-5SuX3mn_3GBQEOMoIstuJN-
DYPiwPNa2KPS-4HGxk/edit?usp=sharing)

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.

~~~
summerdown2
Actually, the S&P has delivered 7% after inflation over its history, not 5%,
so the returns are even larger than this.

[https://www.investopedia.com/ask/answers/042415/what-
average...](https://www.investopedia.com/ask/answers/042415/what-average-
annual-return-sp-500.asp)

The real thing the article misses, though, is the mindset that giving up a
latte is meant to symbolise. That's best expressed in this article:

[https://jamesclear.com/marginal-gains](https://jamesclear.com/marginal-gains)

The point isn't to just drop the latte and see a massive gain. It's to
understand that a set of marginal gains made across your life can, together,
have a huge cumulative effect.

------
dejaime
I have never seen anyone saying that $5 a day of anything is ruining someone's
retirement plans. But yes, spending $5 on a latte, $5 on a croissant, another
$5 on candies and a tenner on Uber, ..., and the daily wasted money will
eventually add up.

That article is nothing more than a spineless Straw Man fallacy.

------
scarmig
I remember when I had my first real salaried job out of college. I had a
salary of around $40k, and I was extremely strict about how I spent my money.
I managed to limit myself to $10k/year in the inner Bay Area. This was in
2010. And, yes, I accumulated some savings.

At the same time, I deprived myself of many experiences, which had a cost, in
happiness, connections, and knowledge.

Nowadays I make and spend order of magnitude more. I would never have gotten
to the point I am, though, if I had stuck to spending $10k a year. Even if
you're crassly trying to maximize wealth-at-the-time-of-retirement, extreme
frugality is a suboptimal strategy.

Set a budget. Don't waste money stupidly. But spend it, and spend it on
meaningful experiences that provide you value.

------
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.

~~~
rflrob
I assume that the Suze Ormans of the world would tell you to be not just
pennywise but poundwise as well. The $5 latte is emblematic: once you start
thinking about that $100 monthly expense, you sit and look at your $90 cable
bill or your $200 car lease and think whether there are ways to cut back on
that as well. The value of cutting out lattes is that it's easy to ask, on a
regular basis, "is this making me $5 worth of happy?", whereas a big car
payment you can more easily justify as "I need it to get where I'm going",
even though a cheaper vehicle could do just as well.

I agree it's more efficient to start with the big expenses and work your way
down, but it's sometimes easier, especially if you're just starting to turn
your finances around, to start with the little stuff and build your way up.

------
tomsun
I think the point of the Latte factor, isn't that you shouldn't buy expensive
coffee drink. The bigger problem is mindless spending racks up the expense
column without adding much value.

Once you get into the habit of getting a coffee from an artisan coffee shop
everyday, the value of that great cup of coffee diminishes, and you start to
spend money out of habit, not because it adds any more joy, pleasure, or value
to you. This is the same as eating out everyday for lunch.

And if mindless consumption seeps into every other aspect of your life, then
that's going to cost you dearly.

------
foxhop
I disagree. My goal is to retire early so every time I actively choose not to
buy that coffee and instead save is days off my retirement ETA. If you learn
to act frugal during you income generating years you will more easily live
with less when you are feeding off your savings.

Substitute the "latte" for any consumable which costs $3-10 a day. These costs
really do add up.

I still hit up Starbucks or my local coffee shop about once a week for the
experience, since I work from home it's nice to get out.

My coffee from how on my $99 Delongi espresso machine tastes as good as the
machines at the shop.

------
puranjay
I find that the author seems to speak far too much from his own
entrepreneurial perspective.

If you have that bent of mind, as so many of the people here do, you always
think of money as an investment. You can rationalize a $5 latte purchase if it
means you are more productive at work.

But the average guy working a regular job on a fixed income doesn't and
shouldn't see money the same way, especially if there is no corporate ladder
to climb anymore. What's a $5 cup of coffee do for a line cook at McDonald's
except give him a momentary dopamine kick?

------
kileywm
A lot of this discussion centers around retirement and how many will end up
with little-to-no savings to live on when they exit the workforce.

General question: what recourse does someone have that retires with no savings
now, in the US?

Some ideas...

1\. Gov: Social Security (Income)

2\. Gov: Medicare (Healthcare)

3\. Gov: Various assistance programs (Food, utilities, etc)

4\. Social: Add roommate(s) to split cost of living expenses

5\. Lifestyle: Downsize

Follow-up question: if the majority of people do not save sufficiently for
retirement, then what might the recourse options be 20, 30, 40 years from now?

------
peterwwillis
Amazing. This article is an argument _for_ the thing it rails against.

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.

------
war1025
Giving up Lattes and Avocado toast is classic penny wise, pound foolish logic.
If $5 / day is going to break the bank you have bigger problems. If $5 / day
isn't going to break the bank, you almost certainly have larger expenses that
could be trimmed to much larger effect.

Financial insecurity is often a lifestyle problem, but it more often revolves
around excessive debt than a few frivolous habits.

------
isoskeles
Author is trying to advocate that people think of themselves as victims in the
world, where things simply happen to them. Wages are stagnant, inflation
happens, etc. Some of this may be true. But regardless, I'll attempt to save
money as I can, rather than throw my hands up and say none of this matters and
piss it all away on coffee.

------
ThrustVectoring
"Buying yourself nice things" and "saving enough for retirement" aren't
mutually exclusive for a lot of people. IMO, the way to go is to start off by
figuring out how much you need to save, setting up your accounts to save that
automatically, and then spending the rest guilt-free on whatever you want.

~~~
HenryBemis
It has to do with the intention. If someone is planning to redirect these £€$
5 per day (150 per month, 1825 per year) on something else, e.g. algo forex
trading with a safe 0.20% profit per day, then those 5-per-day will become
650k in 10 years. I like my coffee just as the next guy, but if 'depriving
myself' from the daily coffee will help me get to my F.I.R.E. [1,2] ten years
sooner, then I am dropping it.

By the way I have quit drinking coffee (only decaf) and juices, but it was
more of a health-choice than a financial one. But of course everyone decides
what to do with their £€$ 5-per-day :)

[1]:
[https://www.financialindependenceretireearly.com/](https://www.financialindependenceretireearly.com/)

[2]: [https://www.investopedia.com/terms/f/financial-
independence-...](https://www.investopedia.com/terms/f/financial-independence-
retire-early-fire.asp)

Edit: also.. converting that 5-per-day to 650k in ten years, can make life SO
MUCH easier when your kids will have to go to University.

------
siliconunit
I think part of the problem is how real estate costs and huge franchise a la
Starbucks are configured. When you travel in Mediterranean countries
independent coffee shops 'bars' are the norm, and a good Italian espresso
costs 0.80 euros. Part of it comes from the fact that bars sell a big
assortment of alcoholics(and yes Europeans don't seem to have mental
association between selling alcohol and getting wasted, so most bars are
family friendly), sodas and indigenous sandwiches. That makes selling coffe
not a central part of the business hence the reasonable cost, which won't dent
your retirement plan nor make you feel miserable. What happened in the
Anglosphere (and not only) is fundamentally a habit appropriation without the
surrounding conditions to support it and this drives the prices to stupid
levels.

------
exachtly
This article is pointing out the problem with individualizing environmental or
social problems. "The reason people are so broke is because they don't have
the moral fiber to not buy that $5 latte. If they were smart and frugal, their
problems with money would be solved."

No amount of decreased latte consumption will make up for the underlying
problems people face - stagnant wadges, increased prices on fixes costs,
student debt.

It's the same shaming related to obesity. Has obesity risen because people are
now more lazy than in the past, or is because we live in a culture saturated
with the marketing and availability of energy-dense, nutrient-poor foods?

------
rland
I agree with this a lot.

1 ambulance ride = 2 years of daily coffee. 1 minor knee surgery = 5 years of
daily coffee. 1 major knee surgery = 10 years of daily coffee. 1 diabetes
diagnosis = 3 cups of coffee/day, lifetime. 1 cancer diagnosis = 1 daily
coffee for every one of your children, and their children.

It really is insulting.

------
pascalxus
1800$ per year will adds up to a lot for anyone still working. if you earn 20K
after taxes then that's 9% of your income! If you earn 140K before taxes, 100K
after taxes that's still almost 2%! that's almost enough to pay rent for a
whole month in many parts of the country!

~~~
cimmanom
Almost enough? In many parts of the country? You can rent a small studio
apartment, or a room in a luxury apartment in New York for significantly less
than $1800/mo -- in the second or third most expensive rental market in the
country.

------
degrews
I think most of this argument is based on a false dichotomy "Saving on coffee
is bad advice because there are other things wrong with our finances that have
a much bigger impact". The author is also not making a clear distinction
between "things that are wrong with our financial/economic system" and "things
one has direct and immediate control over", like the money they spend on
coffee every day.

Also, no one is claiming that coffee specifically is the key to financial
health. But it's the most popular example of frivolous habit-spending that
doesn't actually make people happier, a category which makes a up an
increasingly large part of Americans' spending.

------
screye
The article misses the point of the proverb competely. It erects a strawman by
taking the advice at face value.

The coffee stands for any and all small, regular and avoidable expenses, where
minor lifestyle adjustments add up to major savings.

Using a family plan on subscriptions and phone plans, cooking your own meals,
weighing the actual cost of owning a certain car / carpooling...... All of
these are things are very small, yet regular expenses in a person's life.
These things add up.

The lack of mindfulness of such expenses leads to fast and untracked lifestyle
creep. The proven also warns against that.

My peers living expenses went up 5 fold, and each of them claims that nothing
has changed.

------
Schwolop
Something this article really brought home for me was just how f*^king
privileged I am. Not because I can trivially afford a $5 coffee each day. But
because of all the linked terms in that article like "Stanford Marshmallow
Experiment", "Fixed Costs", "Finite Willpower", "Delayed Gratification" and so
forth that I implicitly understand and gloss over.

The fact that I can _read this very article_ is why I can trivially afford a
$5 coffee. Maybe if we focussed on education instead of $5 coffees, we could
get to the point where we could justifiably ignore the coffees.

------
rdiddly
While I agree that there's a macroeconomic component to everything and it's a
bit disingenuous to Ayn-Rand-blame people 100% for their own economic
situation, I also don't think you have to be a new genetic race of super-human
to be able to focus on the big things AND the little things? Maybe in that
order? The oppositional stance is just theater.

Also if this formulation is true:

 _If you can 't afford a coffee you've got bigger problems._

..then this is also true:

 _If you 've got bigger problems, you can't afford a coffee._

Bigger problems might include having an 18% interest credit card. That needs
to be treated as an emergency, as someone said, probably Mr. Money Mustache.

------
thomasfedb
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.

------
m0zg
I prefer $0.50 lattes that I make at home with my Rancilio Silvia that I
bought nearly 5 years ago. At 4 double shot lattes/americanos between myself
and my wife, the machine has paid for itself many, many times over. We use
$4.99 medium roast beans from Trader Joe's and regular non-organic milk or
half&half. Best of all, over the first month or so I dialed in my grind and
brewing technique so well, that it's better than what you'd get at a normal
coffee shop. I pity the fool who pays $5 for essentially a glass of hot water.

------
k4ch0w
I have thought about this quite a lot. I read a lot on FIRE and on personal
finance. I think the thing no one mentions in this thread is the possibility
of you not making it to 25 years? What if you get a disease or a car accident?
You saved all that money for nothing.

I think it's important to enjoy the here and now, but also plan for a future.
You never know what could happen. I think it's silly not to just enjoy the
moment while you have it. Yes, be fiscally responsible but don't forget the
purpose of money is to barter for things you enjoy.

------
JudgeWapner
> Inflation Adjust It

false. Because the coffee cost also "inflation adjusts", and would probably
put the target closer to the $1mm that Orman originally claimed.

> If you earn only the median income of 61,372 – and never receive a raise for
> 40 years – that adds up to $2,454,880

Only if you're committing massive tax fraud. Last I checked, the gov lightens
your load by about 37% each year.

She's not perfect, but if she gets a large amount of people out of financially
clueless to financially "aware and avoidant of obvious mistakes", she's doing
a lot of people a great favor.

------
slothtrop
I can remember a time not long ago when refraining from frequent coffee
purchases definitely helped, but mostly for opportune leisure spending in
other instances. That's when I was barely breaking even as a student.

The budgeting habit stayed with me. I do like to buy my coffee out regularly
enough but I'm conscious of what I spend.

It's not always about fighting financial difficulties though. I know some very
well-off people who wouldn't spend on anything other than instant coffee at
home. Choose your vice/luxury, basically.

------
Zenbit_UX
Can someone explain this Starbucks obsession to me?

Both their raw espresso and the filtered coffee taste like absolute dogshit to
me. (I can stomach the milk based drinks as it masks the actual coffee
though.)

I'm not a coffee elitist either, I can drink Canadian swill (timmies) and just
about any corner store brew, instant packets... Whatever. Just not Starbucks.

The absolute best I've found at a chain by a mile is McCafe but I've never
heard an American mention it. Is McDonald's trash in the states? Is Canadian
Starbucks different?

------
Raphmedia
It's not about not buying things for yourself. It's about not paying $5 for
something that is the equivalent of $1 of coffee and $0.50 of milk.

You can spoil yourself and spend money on yourself but do it for things that
will actually last and be of use to you. You shouldn't be buying $5 coffees
twice a day if you are sleeping on an old mattress, wear old boots, etc.

Do buy yourself expensive coffees, cupcakes or quality aged beer and wine...
but make it a special occasion. You will enjoy it more that way anyway.

~~~
fermentation
There's other factors at play as well. If I had the coffee beans and milk, I
may not necessarily be motivated to make myself a cup. I also probably
wouldn't have an espresso machine or know how to make the coffee taste like I
want.

------
fma
I know latte is the common reference but I'm shifting my mindset lately,
especially having a family. I brew my own coffee at home and pretty frugal.
But now if things cost a but more and is convenient, I'll pay for it. For
example, parking at the venue vs free street parking. Having two kids in tow
is pretty difficult to get them orderly in the car.

Paying a little extra for 2 hotel rooms, versus squeezing youe in laws, 2 kids
and yourself and spouse in 1 room...

------
1337shadow
Really glad i invested in a grain coffee machine. Get 1kg of "fair-trade"
grain for 15 euros, does this make 200 lattes ? ok, so that 0.075 euro per
latte. So yeah, paying $5 for a latte does not seem like a good deal from my
point of view. Of course you have to buy the machine, you could probably get a
second hand one for 200$, or even a broken one for 100$ and fix it.

------
docuru
I usually have 2 coffee a day, or 3 some other days. Let say $5 a cup, it will
cost $3560 a year.

Well, I learn to make coffee. In 2 weeks it cost ~$15 (5$ for a 250g ground
coffee, 3$ for 2-3 liters of milk for 2 weeks, $5 for a fancy chocolate power,
exclude things like electricity to boil water)

Saved $3160 a year while enjoying 2 coffee a day

~~~
skyyler
Don't forget to account for the cost of the equipment you're using as well as
the time it takes to use and clean the equipment.

~~~
docuru
I use a Vietnamese coffee filter ($5-$10), yes water and electricity costs are
excluded

------
pytyper2
I feel articles like this should recommend an annual income threshold, if you
are buying these lattes with a credit card while your checking account is
over-drafted then it is going to indirectly affect your retirement. But I do
acknowledge that most people reading this are probably not in an over-drafted
position.

------
ck425
What this article ignores is hedonistic adaptation. Only having a fancy latte
every week or two will make it far more enjoyable. Having it every day will
make you by and large indifferent.

It's not just about saving money, it's about optimising for happiness.

------
BenMorganIO
Just a summary:

\- Budget to be able to buy lattes. The inflation and results from $100 a
month may be better spent frivolously than conserved. In other words, budget
for frivolous expenses. \- Don't spend money on this stuff if you've got
bigger problems.

My opinion:

I mean... It's a drink. I'd recommend Tim's instead of Starbucks if money is
tight. As a person who spent two years homeless, this stuff is helpful for
mental health. Being able to have less worries than more worries is important.

Don't forget the old 50/30/20 rule. 50% on needs, 30% on wants, 20% on
savings. Recalculate that not to your needs or wants, but how often your
unemployed and if that number is more than 20% a year you should increase
savings to cover that as well. Then recalculate needs, review on current
bills, and rebalance and so on.

Also keep a month or two of cash reserves for emergencies.

Now go buy a mocha, they're better.

------
randomacct3847
Time value of money discussions never take into the fact that 1) tomorrow is
never guaranteed and 2) there are certain things or experiences you can buy
that are more enjoyable when you’re young than when you’re old.

------
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...

------
whalabi
One coffee every working day was 1% of my income.

So it's not huge but it's not trivial at all.

Especially considering I live in one of those western cities with stagnating
wages and absurd property costs.

------
mrfusion
Daily expenses are wierd.

Say your rent is 1000$ a month. That works out to 33$ a day. So if you spend
$5 a day on coffee you’re spending 15% the amount of your rent in coffee.

------
jonnycomputer
or you could blow your ten year latte budge on a bigger fancier car. but
nobody talks about having to drive a budget compact vehicle to become a
millionaire.

so puhlease.

~~~
qwerty9876
Or you could study, improve your skills and get more money to be able to
afford the bigger car, among other things while still having the latte.

------
djrobstep
Advice like this isn't real financial advice. It's a thinly veiled way of
telling the poor and middle class to accept less or starve.

------
jorblumesea
I think the issue is more around $5 purchases add up. Once a $5 latte becomes
acceptable, then $5 pizza, $5 crap from a retail place etc etc.

------
mrhappyunhappy
Did the article even mention fees and taxes? 8% adjusted for inflation will
more than likely be just 3% once you figure in fees and taxes.

------
VectorLock
My brain parsed this at first glance as "Buy Yourself a Lathe." Of course, I'd
already been thinking about buying a lathe.

------
mrfusion
I disagree.

Your reuccuring daily spending is the innermost loop in your retirement saving
program. That’s where you’ll get the most bang for your buck.

------
lixtra
If I was doing paid work instead of reading HN I could afford several extra
lattes per day.

You can just have your latte and decide it is worth it.

------
qwerty9876
Agree. It's just basic micro vs macro. If you've played any video game
competitively you would know the difference.

------
sgt101
Also you might die without any of the minor joy that a coffee might give you,
and none of the benefit of the savings.

------
ErikAugust
Save up some 12-15 lattes and buy yourself a share of SBUX. Then go to
Starbucks and buy yourself a latte.

------
negamax
Depends on the people $5 x 20 days = $100 a month = $1200 a year. That's not a
small amount

~~~
SketchySeaBeast
One of his points is "Focus on large fixed costs, not small discretionary
ones", so while that isn't a small amount, that might be half how much your
mortgage costs a MONTH. Until you optimize the mortgage, the coffee is less of
a concern.

~~~
negamax
Pay $1200 a year more towards the mortgage is pretty good financial decision

------
youeseh
$5 latte + $6 + 1 hour ($50 in opportunity cost?) for a round trip. It adds up
if you do the latte thing every day.

How many people in this country spend $3k/year in lattes but don't invest
$3k/year for their retirement. Wasn't there an app that did just that -
rounded up your spending to put the remainder in an investment account?

------
bubblewrap
I guess at least by the "it costs you 1 million dollars" logic, you could
afford a latte per day if you can also afford to save 10$ a day. Then by the
same calculation, you would accumulate 2 Million $ for retirement.

------
jryan49
It sure as hell matters if you're poor.

------
fulafel
tldr; inflation-adjusted, a $5 daily latte might put about $80-$100k dent in
your retirement coffer. An opinion is presented that this is a good tradeoff
if you like latte.

------
epscoe
What I don't see mentioned in the article or comments is the fact that the
latte isn't the only $5 decision we make every day. We can choose not to buy
the latte, and to pack our own lunch, and to choose cheaper veg instead of
meats at the grocery store, and on and on. Frequently it's multiple smaller
choices that add up to noticeable benefit, even when a single latte or lunch
out won't break the bank.

(of course there are frequently good reasons to buy things, particularly when
there's a social component -- e.g. as a byproduct of spending time with
people, as an informal break with coworkers)

------
huffmsa
Say you make the US average $56k, you're spending 3.2% of your income on
coffee.

3.2% on bean water.

But who with a latte addiction _just_ buys the latte? Kick in one of AOCs $7
croissants a day (extreme for the sake of example) and you're up to $12/day =>
$4380 a year, or 7.8% of your annual income on one meal a day.

So maybe consider buying a latte machine instead.

~~~
esotericn
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?

~~~
huffmsa
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.

~~~
mathgeek
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.

