Just from reading the title, you can already hear the condescending murmuring in the back of the room. Everywhere you look, from financial independence blogs and Facebook groups to podcasts and subreddits, people are adamantly against paying for coffee daily. Don’t even suggest getting a pastry, unless you want to be metaphorically spit in the face over the interwebs. This is such an abomination in the eyes of the FIRE community that anyone who admits to such blasphemy are in risk of becoming excommunicated.
Well…I’m here to tell you that you can still drink Starbucks, or any other overpriced coffee, every working day and still be able to retire early. Sure, you can sacrifice quality and save a couple bucks, but an existence that’s only sustenance is Maxwell House coffee isn’t an existence worth living. That murmur at the beginning….they’ve now become a full fledged lynch mob. Please, put down your weapons and bear with me while I explain.
Lets just break down the numbers of this terrible decision for a second. Buying a $4 coffee every weekday works out to $20 a week. Multiply that by 52 weeks in a year and we are looking at a cost of $1040/year. If this amount was invested over the course of 10 years, assuming a compounding interest rate of 8%, we are looking at a $16,271 decision that you are making everyday. If you made it past the first two paragraphs and are still with me, you’d think I’m doing a pretty bad job of showing how to buy coffee everyday and still retire early.
The inconvenient truth is that not getting coffee is an easy choice. The hard choices are the ones that save you exponentially more money. I’ll give you a real life example: before my wife and I had even found the concept of early retirement we bought a condo. It was in one of the nicest neighborhoods in our town. We rationalized it because we had plenty of disposable income, we were both young and had just gotten married, neither of us had ever had a place of our own, and we had no kids. We bought a 1 bed 1.5 bath 1200 sq ft. condo for ~$160k (which was a pretty good deal for a condo in this building because the property was a foreclosure). The HOA fees for being in this nice area was a premium price of ~$330/month. Our monthly total for mortgage, taxes, insurance, and HOA fees was ~$1,500/month.
Now for the hard choice. We bought another condo about 6 months after finding early retirement though MMM. This condo was also a 1 bedroom, but it was only 1 bath instead of 1.5 bath…what a huge sacrifice. It was located around 7 miles away from the first condo. But, it was the same distance from my work, so my daily 4.5 mile bike ride remained relatively unchanged. My wife’s driving commute was cut in half. It was move in ready. And now for the kicker, we bought the condo for ~$40k, which meant our mortgage, tax, and insurance came out to $245/month and our HOA is $115/month equaling a total of $360/month. So, to expound on these numbers.
$1,500/month (Fancy-Pants condo) – $360/month (Adequate condo) = $1,140/month savings
For those of you still keeping track, the amount we saved in one month by moving into a cheaper condo is more than I would save in an entire year of skipping Starbucks coffee. Compounded over the same time period, one hard choice of moving can save you over $214,000 vs an easy daily choice of $16,200. The $214k at this point is generating a SWR (safe withdrawal rate) of $8,560 a year compared to the measly $648 that the $16k is producing. Do yourself a favor and make the hard choices early. You’ll thank yourself during the years of watching your Average Joe or Josephine neighbor plod out to the car to make their daily commute continuing their sad reality of a daily monotonous grind, being a drone for 40 hours a week for over 40 years of their life, while you sit on your porch and sip your daily Starbucks….