Editor: Crass Cash
There's a General Motors commercial out right now about Black Friday. The terrorized shoppers brags about he saved hundreds. The new GM owners then looks at cars and smirks, "Slept in and saved thousands.".
This highlights an important personal financial principle known as the "latte factor". The latte factor is where you're able to save large sums of money over time with a relatively small amount like the price of a $3 latte.
The latte factor is a very real financial principle made possible by compounding interest. However, this doesn't mean that if you just start brewing your own coffee at home everything with be ok. It's no excuse to avoid or to splurge on the big ticket items!
For instance, driving your car for one extra year will save you an entire years worth of lattes in just depreciation. You can do one or the other or even both. Now what about that exotic trip? That whole new $2,000 winter wardrobe? The public in state tuition vs the private college? The boat that you'd driven 3 times? See where I'm going?
It's not just about the small items. The small items are meant to create awareness in your spending habits, but in the end it's about how much you save after everything is said and done.
RSS Feed