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What That Cup of Joe Really Costs

It’s just a cup of coffee right? It’s not going to break the bank. But fast-forward a year and that $4 latte per day has now become $1,460. While for many people the cost of this daily caffeine fix may still be well within their means, think instead of what that money could become in the long-term. Some financial industry representatives maintain that to this day, investing remains one of the easiest and most efficient ways to make and save money.

Say you invest your yearly coffee budget, assuming an average return rate of 9%. In five years, instead of spending $7,300 on coffee, you could be sitting on a nest egg of $9,393. That’s more than a $2,000 gain in just five years. In ten years, you could have $23,846—enough to purchase a small car—and if you hold onto it for 30 years, you could have $213,928 and can afford to buy a small house or condo!

 

While compound interest may do wonders for your coffee budget investments, when it comes to debt it can make your life a whole lot harder. To incur debt means that you pay interest to the lender. So, paying the minimum amount on your bills and neglecting to pay more than the interest rate, causes your monthly bill to grow. The best way to avoid this trap is to make sure you're paying off your debt as quickly as possible and paying more than the minimum each month.


What if you just can't give up that delectable latte from your favorite cafe? Not to worry, there are plenty of small things we can cut out of our lives and put towards big savings. Check out this compound interest calculator to see what your daily expenses could become if you saved them!

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Have your read "The $500 Cup of Coffee?" The idea behind the book's title is that small amounts add up over time. When you invest rather than ingest your coffee money, you can achieve financial independence one coffee cup at a time. See www.500dollarcupofcoffee.com.

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