How You can Drink Starbucks Everyday and Still Retire Early

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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 Mrs. RRR 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. Mrs. RRR’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….

14 Comments

Brandon Chase

August 7, 2017 at 3:40 pm Reply

Nice article! I agree that some people get too wrapped up in the minutiae and stop seeing the forest through the trees or become ‘penny wise and pound foolish’. This is a good reminder to keep the bigger picture up front–it’s when the extraneous expenses start to snowball that you run into FIRE issues, but then again that’s indicative of bigger problems!

jlowery9597

August 7, 2017 at 5:00 pm Reply

Thanks, Brandon! I think you’ll enjoy my next planned article.

Claudia

August 7, 2017 at 4:27 pm Reply

Great Job! I really appreciated the math laid out. I love learning new things from my fellow FIRE starters! I wish you much Success! I will continue to read…

jlowery9597

August 7, 2017 at 5:01 pm Reply

Thank you, Claudia! It’s funny how the math definitely changes your perspective. Stay tuned for more unorthodox advice.

Paula Garrett

August 8, 2017 at 12:31 am Reply

Excellent points made, enjoyable reading. Nice catch on that condo, too. I find that people who make bad financial decisions on the large side, also tend to make bad ones on the small side. Looking forward to more unconventional points of view.

James Lowery

August 8, 2017 at 1:52 am Reply

I agree 100%, when you can rationalize large financial decisions that are detrimental, the small choices are a drop in the bucket. Thanks for the encouragement, Paula!

Josh Lowman

August 9, 2017 at 8:45 pm Reply

Great read James. Making sure the savings actually get invested a big stumbling block in todays culture. Retirements dont just happen by themselves. You need big actions, like you did, to even consider and early retirement. Looking forward to your next article.

James Lowery

August 9, 2017 at 9:29 pm Reply

Josh, thanks for the feedback! Your comment actually gives me an idea for another blog post, particularly the part about making sure the savings actually gets invested. I hope you don’t mind if I use it for inspiration.

James Lowery

August 10, 2017 at 3:47 am Reply

Nice, Michael! $20k all in seems like a steal. I wish there were more properties like that in my area. I’m going to be doing a write up about my real estate ventures so be sure to check back.

Michael B Wallin

August 10, 2017 at 9:36 pm Reply

Pittsburgh, PA , Akron, Oh, Detroit, Mi, Saginaw, Mi , Green Bay, Wi easy to find homes in that price range.

C. Mark Perry

August 10, 2017 at 5:34 pm Reply

Thanks for the post … I enjoyed your perspective. I would suggest it does not have to be an A or B decision, but rather A & B! My thinking would be: 1) make Folgers at home (yes I am a coffee slut); skip the overprices Starbux and 2) also take the Adequate Condo. Then go fishing when time and money allows 🙂

James Lowery

August 10, 2017 at 5:50 pm Reply

C. Mark Perry, thank you for the feedback! You’ve read my mind. I’ll be covering how wasteful Starbucks and other coffee places are in the next couple weeks. We are definitely on the same page. Be on the lookout for a new article every Monday.