
Buying lattes is not keeping you from being rich - bookofjoe
https://www.nytimes.com/2019/07/12/business/buying-lattes-rich-financial-advice.html
======
snvzz
From a glance, it's dumb.

Tracking every transaction (with e.g. gnucash), minimizing expenses, setting a
maximum liquid and investing everything above that on a month per month basis
is the basics.

But this silly book suggests budgeting (and spending these budgets whether
needed or not), which is not how to do personal finances.

Be frugal, track everything, and invest. That's the gist of it. Being frugal
starts with _not_ buying the book.

~~~
smitty1e
Budgeting means looking forward, and being deliberate (if not frugal).

Tracking means looking back, and doing the accounting.

[With zero data backup] most do neither; some track; but those who track with
a budget have better outcomes.

Then one gets into relationships, and finding that harmonious blending of
skill/maturity with these concepts.

I just don't spend anything, and the Hausdrachen[1] manages all the YNAB data

[1] [https://dict.leo.org/german-
english/Hausdrachen](https://dict.leo.org/german-english/Hausdrachen)

~~~
snvzz
>Budgeting means looking forward, and being deliberate (if not frugal).

I do agree. But here's one sentence from that article:

>That would leave 20 to 35 percent to spend guilt-free.

The quality of their "budgeting" is self-explanatory.

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dev_dull
One thing I like about the HN crowd is that they’re typically data people, who
can probably add up in their heads how much a $4 latte a day for 10 years
equals, and what that same return would look like if invested in the S&P 500.

Most people won’t come to the conclusion to invest $4 a day in an index, but
might instead buy a nice espresso machine to make the drink at home because
they know exactly when the payoff date is. A successful person probably won’t
stop drinking lattes, but they’ll change their habits, which is often very
hard in practice.

Being successful in finances is about being disciplined, not necessarily about
living a spartan lifestyle. Often times that means trading comfort and
convenience for something else (money) and I’d wager that mental trade is a
winnowing fork for people who will have very different life outcomes.

~~~
jadell
It's an old joke, but relevant to the discussion:

Woman: Do you drink beer?

Man: Yes

Woman: How many beers a day?

Man: Usually about 3

Woman: How much do you pay per beer?

Man: $5.00, including tip

Woman: And how long have you been drinking?

Man: About 20 years, I suppose.

Woman: So a beer costs $5 and you have 3 beers a day, which puts your spending
each month at $450, or $5400 annually. Not accounting for inflation, you have
spent $108,000 in the last 20 years! That money could've been put into an
investment account and, after accounting for compound interest for the past 20
years, you would now have enough money to buy a Ferrari.

Man: Do you drink beer?

Woman: No

Man: Where’s your Ferrari?

~~~
lostmsu
In my backyard o-O

------
coldtea
Or so some random bloke says on a book.

Real life is more complex.

While buying lattes might not keep someone from being rich (as an expense),
buying frivolous things, using too much credit (they can't back) and not
investing their money on things with a ROI (not just in actual investments:
also in self-education, better work tools, and so on) can and does keep many
people from getting richer (where richer != rich).

~~~
bwb
well said! Is it a symptom of a bigger problem, or a well-deserved joy as you
live life how you want.

------
ghaff
I know writers don’t generally write headlines but did this editor even read
the article in question? Buying l daily lattes is pretty much the opposite of
the conscious spending that the book’s author advocates for.

~~~
seltzered_
Guessing the editor went with a "latte factor" headline because it's evergreen
bait. Nytimes has seemingly been putting out similar content / taglines to
cnbc lately.

\- David Bach evangelized it in the mid-2000's.

\- Ramit was using those lines at least back in 2010 "I'll show you how to
earn more, too. Let others worry about saving $3 on lattes. I hope you'll be
earning hundreds more -- or more -- each month." is a line from one of his
emails.

\- Whoever is creating Suze Orman content keeps using it:
[https://twitter.com/CNBC/status/1137464817738952704](https://twitter.com/CNBC/status/1137464817738952704)

I've seen it used as a headline for at least two decades (first time on some
business school poster at UTexas), a bit after when starbucks late 90's
expansion. Arguably since then coffee shops have had more 'business value' for
some as laptop ownership became more common.

------
Hasz
Ahhhhhhhh... Other than making more money, nothing beats the sweet math that
is compound interest.

Saving 1M for retirement by 65 is within the reach of many Americans.

For the worst case scenario, the median wage for a worker with no high school
diploma is 30k. Putting away 5k per year in a Roth IRA, every year, until age
65 would leave them with ~1.1M, assuming a 6% (1.1% lower than historical)
return. While this is a high savings rate -- ~15%, it is not impossible to hit
in most places. This is ignoring catch up contributions, taxes, employer
match, Social Security (rip) etc, but it's safe to say this is totally doable
in most locales.

Given that the median salary for someone with a college degree is about ~65k,
it is well within the grasp of median Americans to save 1M+ for retirement.

However, things like predatory lending, bullshit money gurus, and plain old
ignorance stop most Americans from realizing this dream. It's possible, but
there is simply no substitute for compounding growth.

~~~
RickJWagner
You are so right.

Time is the most important factor. Saving a percentage of income, invested for
growth, executed over decades is a well-proven scheme.

Finanacial education is a rare and precious resource.

~~~
s_Hogg
I'd add something on to this. The simplest way to build wealth is also by far
the most boring. The ones that can handle that boredom are typically the ones
that get there in my experience.

In my opinion, every financial literacy book/seminar/podcast should be renamed
to "Shut up and wait" by law.

------
codesternews
Recently, I realized something. One of my relative who was healthy got the
brain cancer and whole world around him is flipped.

I was thinking we just have only this present moment only and we do not know
what will happen in future.

We should sure prepare for future but enjoy the every moment. Buy latte if you
need it and you want to enjoy that moment than sure buy it. You do not know
you will be able to spend that $5 again or not or enjoy that again.

~~~
gnusty_gnurc
This is such a slippery slope argument that gets repurposed for other
situations. But it's always fundamentally that uncertainty means we should
discount the future.

Well guess what? Our default condition as human beings born into the world is
deprivation, uncertainty, insecurity and suffering. If everyone of the past
used the "live in the moment" argument to discount saving or having children,
we'd never see society advance.

------
dgreensp
Based on a sampling of my friends in their 20s-40s in the SF Bay Area who are
not in tech, it's pretty rare to think one could ever afford a house, or to be
able to save a double-digit percentage of one's paycheck for retirement, or to
spend anything "guilt-free."

That aside, this book apparently says pretty much the same thing as every
other popular book on the subject.

~~~
xiphias2
They can't afford to buy a house, or they can't afford to buy a house in SF,
which has one of the highest cost of living in the world, and actually you're
not getting that much if you're a non-tech person?

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RickJWagner
Yes it is!

It's a mindset. Visit Bogleheads.org, where scads of people will explain
first-hand how they lived below their means (for a few decades), invested for
growth, and now have prospered.

It's a proven methodology. It absolutely works. And yes, a daily latte is not
going to be on the must-have list for most of the proven accumulators.

------
bassman9000
If the advice is not

 _Write a self-help book telling people they can get in the path of being rich
in 6 weeks_

then it's BS.

