Latte, Schmatte?

By now, we’ve all been inundated with David Bach’s “Latte Factor.” Some are proponents of it, others think it’s hogwash. By some accounts, if your “latte factor” is actually, well, latte’s, depending on how often you swing by your local Starbucks or what not, you may end up giving them over $1,800 of your hard-earned money a year. That, invested over the course of thirty years would have made you a hefty sum well into the six figures (different expert’s calculations yield different results).

But is focusing on the proverbial “latte factor” the most effective way for you to cut expenses and grow your retirement fund? Even though I discussed the merits of tracking your latte factors here, especially if you are just learning the basics of money management, I’m not entirely sure that it is. That being said, I do think that it’s a good idea to keep an eye on your latte factors. I know that if I’m not careful, my “latte factors” can get expensive. Even though I do track all my expenses and use budgeting software, I can sometimes lose a bit of self-control, especially when I’m stressed, tired and it’s the end of a long work day.

Depending on what you’re spending, you can potentially save a nice chunk of change every year. About ten years ago, I was in a really bad spot financially. So, yes having a ton of small expenses was no good when I didn’t even have $500 in the bank for emergencies. But is that change enough to actually change your life? Don’t get me wrong, $1800 a year is nothing to sneeze at, but you may gain more traction cutting back larger expenses.

The irony is that larger expenses are often the toughest to cut back on quickly. Reducing housing and car expenses can yield big bucks, but it takes time to make the arrangements to do that. So what did I do?  Caveat: Though I’ve done some things right, I’ve also made some poor financial decisions in the past and apparently I’m still making them.

Thing that I did right: A few years ago, I found cheaper housing. I could have really cut back on housing expenses, but I absolutely love the town I live in. I’m currently in contract with my current lease, but plan to move to even cheaper digs when my lease ends.

Thing that I did wrong: I went and leased my car since I didn’t have enough saved to purchase one when my old car finally died. Bad, bad move. I discussed a bit of my foolishness here.

Other really bad thing that I did, I got into debt (half of it being consumer debt). This IS the biggest money drain out there. For those who are in debt, getting out of debt is the best way to begin super-charging your savings. Once I’m out of debt, I can use the money that was going towards my debt payments, along with the money saved by having cheaper housing and car costs, to really supercharge my countdown to freedom. I believe that once that money is available, a little indulgence in the “latte factors” won’t matter.

Do you think that “latte factors” are a significant inhibitor to saving money?



  1. I have to agree with you on car leases. Some people don’t realize what a real waste of money car leasing is and it’s clever how you included it in with your “latte factors”. Excellent post!

  2. I always thought Bach used that because it made the process sound simpler than it really is. The idea that someone is going to never drink a 5 coffee again, in thirty years, is one of those assumptions I just can’t accept. You are right, in my opinion. Cutting back Credit card debt, then cutting them up, can produce a permanent saving which, when combined with investing, can add to wealth over time. My first debt battle was with Student Loans. I figured I would one day get another car payment or worse, credit card/installment loan. But I’ll never have another Student Loan. Great and honest post, thanks.

    1. Yes, keeping an eye on smaller expenses is always beneficial, but it’s the much larger, often expensive (think debt), that really keeps us from becoming financially free. Great job paying of your student loan. Thanks for stopping by!

  3. I admit when I started budgeting, I thought I could continue with the “lattes” in my life if I made one or two large and unnecessary expenses gone. I thought that was a lot better as it would mean I could continue my life style as it was. Now I think cutting both the small and big expenses are great.

    In my experience, noting I can finance a new and recurring expense (such as my pay-per-session gym fees I am planning to start as soon as my back feels better) by cutting another small expense (the bagels I used to have at the weekends) makes me quite happy.

    This is one example of a latte factor that can help with saving. When I count all such small savings, it does make quite a big sum. So yes I think the latte factor is powerful. All the best with your savings 🙂

    1. I remember when I was struggling to just save $500 in my bank for emergencies, and cutting back my “latte factors” was huge in helping me accomplish that task. Also, like you stated, deciding what “latte factor” to partake in does help with money management too. Thanks for stopping by!

  4. It all matters! Cutting back on the larger expenses will provide a greater impact in the long run, of course, but the small expenses matter too. Not just because they add up and turn into larger expenses, but because they’re the easiest to do. Cutting down on the small stuff makes you feel in control and provides immediate gratification, which then motivates you to tackle the big stuff. It’s a win win.

    Of course, one or two lattes every once in awhile isn’t that bad….especially during Pumpkin Spice Latte season 🙂

    1. I agree, starting with the small things can definitely motivate you to tackle the larger expenses. And yes, never let the “latte factor” conundrum get in the way of Pumpkin Spice Latte season.

  5. I think people become almost addicted to buying coffee like they “need” the latte to make it through they day. It becomes a habit and that habit is hard to break. I used to be one of those! To break the habit I started going size small instead of the medium or grande and got rid of the extra shots or syrups- it ended up helping my waist as well!

    1. I agree, I think a lot of our purchases are just habits. For many, they may have Monday morning back-to-work blues, so a coffee stop makes the start of the day a little better, but the next thing you know, it’s become an ingrained habit a year later.

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