Coffee Maker = Savings Account
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It has been widely publicized by David Bach in the Automatic Millionaire on how much you can save by skipping that Latte every morning and saving the $3.50 every day. But if you are like me, you can’t get through the day without at least one cup of java in the morning. By planning every night and setting your coffee maker to automatically brew can save you significant amount of money through your life, around $6,000 in 5 years.
Here are my assumptions for what I spend today….ie Latte Factor:
Cup of Coffee (16oz) in 2008 price: $3.50
Inflation per year: 4.0%
Annual Interest Rate for the Savings account: 2.0%
How much I would save if I didn’t buy a Grande Latte every morning for the next 5 years? Saving $105 per month will yield $7,159.95 after 60 months.
Making my coffee every morning for the next five years will cost me $1,045.66, assumptions listed below:
1lb bag of coffee in 2008 costs $8.99
100 pack of coffee filters costs $4.99
Annual inflation of 4.0%
To make the same amount of coffee, I would need to purchase about 1.67 lbs of coffee per month.
So in summary, in 5 years I can net over $6,114 in savings by making my coffee at home. Being honest with myself, I know there will be some days that I miss the opportunity to brew at home so I will deposit 85% of each cup of coffee make at home in my account. Why 85%, it is the ratio of savings to expense in my above calculation ($6,114.29 divided by $7.159.95)
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