Is that Starbucks worth another decade of working?

Published November 16, 2014   Posted in How to Retire

During my [now old] commute into work every morning, I rode by a Starbucks coffee shop whose drive-through line would not only wrap around the building itself, but out into the main road.  Every morning, drivers line up outside of Starbucks anxiously awaiting that $5 to $6 cup of coffee only to commute to an office or work place that likely already has coffee available.

Starbucks coffeeA few dollars a day may not seem like a big deal, but over time that cost adds up tremendously.  Your monthly cable television service or high speed Internet follows the same principles.  Multiply an average of $5 for a morning cup of Starbucks coffee over 20 working days, and you quickly spend $100 every month on coffee.  That is probably the cost of your cable television service as well.  Oh, and what about that cell phone plan with unlimited data?

Spending money vs. Saving money

Human nature dictates that we want immediate satisfaction.  Buying “stuff” makes us happy, and we like happiness.  We get a raise or bonus at work, and we proceed to spend that extra money on items or services that bring joy into our lives.  But,  how many more years are our spending habits keeping us at work for the sake of this temporary joy?  Shouldn’t several more additional decades of life free of listening to bosses drone on about mission statements, profits and additional overtime be far more satisfying?  Why doesn’t early retirement make us more happy than temporary enjoyment derived from “stuff”?

Take a minute and estimate how much money you save every year and how much you spend.  Be honest with yourself and your current situation.  Then, think of it in terms of retirement, and remember, the more you spend while young, the longer you work when you are old.

Mr. Money Mustache wrote a cleverly simple blog post that reveals just how easy retirement truly is.  Sure, the more you save the earlier you can retire.  But paying attention to the percentage that you are saving every year is the first step towards ensuring your most productive years of life are not spent in an office.

How would you like to retire by 45?  If you saved about 50% of your income since you were 30, then 45 would probably be a reasonable age at which to quit the rat race.

Save 50%?!?  Are you crazy?  How could anyone save half of their income every year?  I might as well live like I’m poor!

Look at where your money goes and calculate the true happiness derived from those expenses.  Your $100/month cable television service – do you NEED that?  Is there content that you watch that you just can’t possibly miss?  If so, ask yourself this question: is watching those “can’t miss” television programs worth another 5 or 6 YEARS getting yourself up at 6am every morning for work?

Is it really?

Invest those unnecessary expenses

For the next year, what if you invested that $1,200 annual cable bill into the stock market instead of spending it on cable television service?  According to Fool.com‘s calculations using historic stock market rates of return, that $1,200 invested in the stock market will turn into $2,841 after 10 years.  Or after 40 years, it climbs to a whopping $37,691.

What if you permanently kill your cable service and invest that same $1,200 every year?  In 10 years, your investments turn into $22,713.  After 40 years, your nest egg balloons into a $479,642 stockpile.  Is 40 years of cable television service worth almost a half million in lost wealth?

Remember that $5 Starbucks every morning?  That adds up to another $1200 a year.  Combine the value of cable and your morning cup-of-Joe and you’re treading in the neighborhood of $1 million in lost wealth over 40 years because of these temporary pleasures.  $1 million!

Your salary does not matter.  Whether you earn $100,000 or $50,000, think of your savings in terms of your yearly expenditures as a percentage of your salary.  Many families live off of $25,000 a year and save the rest.  This makes retiring early on a $50,000 salary possible if 50% is invested every year.  It is possible, and it happens every day.  The trade-off?  No morning Starbucks.  No cable or satellite television.  No $40,000 car.   You trade stuff for quality of life.

Most people do not need a lot of stuff.  They buy stuff because it provides temporary happiness.  I was just as guilty as the next person when it came to spending more than necessary on extraneous items that only provided temporary enjoyment.

I eventually realized that I am not looking for temporary enjoyment.  I want permanent bliss!  When I am 45, I want to wake up on a Monday morning at 8am and look forward to a day walking through the park with my lovely wife, or riding my bike around town, or throwing my camera in the car on the spur of the moment and taking a leisurely trek out to the mountains on a photo expedition.

Whatever it is I want to do, I want to do it…on Monday when everyone else my age is working.  Or perhaps Wednesday.  Heck, any time is good for me.

How about you?

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Comments

5 responses to “Is that Starbucks worth another decade of working?”

  1. […] I’ve done this too.  I’ve talked about how costly that morning trip to Starbucks really is.  I have also talked about some pretty basic techniques to save money while eating […]

  2. […] about standard American spending habits – in fact, my first ever blog post was an easy one, Starbucks!  That was cool, but slowly I began to […]

  3. […] aka: ThinkSaveRetire.com – he turns one!  A year ago today I published my first post about Starbucks and the retirement-killing habit that the place has quite literally turned into for a lot of […]

  4. Jaime says:

    I like Starbucks and other coffee shops but my teeth can’t handle the amount of sugar in those drinks, so I only go there once a week now. I make my daily coffee at home now. I can’t believe it’s possible to spend $ 1 million on “small stuff” like cable and coffee. That’s crazy. Definitely makes you take a look at the little things we spend, eh?

    • Steve says:

      Hey Jaime – oh yeah, the sugar that’s in some of those drinks are just outrageous! I used to drink the occasional white chocolate mocha from Starbucks. It was good, but super, super sugary. Delish! 🙂

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