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No. of Recommendations: 15
Is it possible that a cup of coffee can cost someone six years of their life? The figures below say yes.

Let's assume that a married couple is average in every way. Both the man and woman are 35 years old. They have managed to pay off school loans and have now got their combined family income up to \$60,000 (above the overall average of just under \$40,000, but close to the norm for families with two incomes). They are now ready to start saving for retirement at age 65. They turn to the advice in the average personal finance magazines, which say to save 10 percent of their income (\$6,000) a year.

Now let's assume that both the husband and wife spend \$2.50 each morning for coffee at Starbucks. That's \$5.00 a day, \$25 a week, over \$100 a month, and over \$1200 a year. In other words, 20 percent of the amount this couple is devoting to retirement it is devoting to coffee.

The couple has 30 years until retirement. Presumably, a 20 percent increase in the amount it is putting aside for retirement would reduce the number of years of saving needed to meet that goal by 20 percent. Since 20 percent of 30 years is six years, it appears that the morning cup of coffee is requiring this couple to work six years more than otherwise.

Please don't take the numbers here too seriously. I suspect that the couple's retirement plan is not realistic (although I haven't run numbers to check). But it does seem to me that many people devote just about this much thought to their retirement plans; they become concerned that they need to start doing something by their mid-thirties, aim to put 10 percent aside a year, and hope for the best.

The point of the mind exercise is to show that, by the logic of their own retirement plan, this average couple is working for six years to support a coffee habit. The reason why the Retire Early philosophy works is that, instead of using rules of thumb propogated by investment magazines and seat-of-the-pants calculations, it calls for a systematic, rational examination of the retirement possibilities.

It's not magic, but it's reason applied to an area of life where reason has not been applied in most cases. Is there anyone who could look at an example of this sort and say, yes, I realize that I am planning to spend six years of my life working to pay for a cup of coffee, but I choose to go ahead with the plan because I think it makes sense?

No. of Recommendations: 6
You have just convinced me to quit drinking coffee. Will switch to whiskey in the morning; it's cheaper.

No. of Recommendations: 0
Thanks, Badger! I never cease to get at least one good laugh at this board...I think that must be a given with early retirees--a great sense of humor! But then again, being free of the rat race would put a big grin on anyone's face!

Also, congrats to you windhoven! I'm mucho impressed at your age 34 and I agree it's nice to be in the power seat!!
No. of Recommendations: 0
Just to poke a little additional fun; I have determined that by switching from coffee to whiskey in the morning (therefore saving a paltry \$1.50 per day) my grandson (as yet unborn) will be able buy the state of Montana for \$4.6 billion, 100 years from today.

No. of Recommendations: 0
Just to poke a little additional fun; I have determined that by switching from coffee to whiskey in the morning (therefore saving a paltry \$1.50 per day) my grandson (as yet unborn) will be able buy the state of Montana for \$4.6 billion, 100 years from today.

Not to burst your bubble, but he's gonna have to try to outbid Bill Gates V, who by that time will own 48 of the 52 states, including Puerto Rico and the Phillipines, and will be worth an estimated \$150 quadrillion.

Bob H, aka Blues
No. of Recommendations: 1
and will be worth an estimated \$150 quadrillion.

I need a little help here. Is it million, billion, trillion, quadrillion; or is there something between trillion & quadrillion?

Which four states won't he own?

No. of Recommendations: 1
I need a little help here. Is it million, billion, trillion, quadrillion; or is there something between trillion & quadrillion?

Nope, you got that right. Now just don't ask me what's next in the progression of: megabux, gigabux, terabux, ???

Which four states won't he own?

California, Texas, Florida, and New York. Those will be owned by Medellin.com, your source for all your pharmaceutical needs. :-)

Bob H, aka Blues
No. of Recommendations: 0
Bill Gates says he and his wife plan on leaving a mere \$10 million each to each of their children and giving away the rest.I guess they didn't want to spoil them with gazillions! ;-), but I wish my Dad spoiled me a little more than the \$10 I got!In some ways, we have to respect Bill for this if it turns out to be the case.

I always wondered about those who think the rich should giveway x amount of dollars to charity vs multiplying it themselves while providing jobs and boosting the economy and eventually giving it away, but in a trust fund of investments where only so much of the returns could be taken? Wasn't it Ben Franklin who left a small sum to the city of Philly, but it couldn't be touched for a 100 years while earning interest or something like that? What if the rich (greater than 10 mil? net worth) and large corporations had to give a fixed % of their profits to charity, medical causes, etc.Would this be a bad or good idea in your opinion?

PS, are you sure he will want New Jersey?
No. of Recommendations: 1
I need a little help here. Is it million, billion, trillion, quadrillion; or is there something between trillion & quadrillion?

BluesH replied:
Nope, you got that right. Now just don't ask me what's next in the progression of: megabux, gigabux, terabux, ???

gigabux, terabux, petabux, exabux

But don't quote me. 8^)

-Jason
No. of Recommendations: 1
You have just convinced me to quit drinking coffee. Will switch to whiskey in the morning; it's cheaper

This reminds me of an incident in which I was standing in the hallway waiting for a down elevator to go to the bank. A co-worker (who I later learned was going through bankruptcy at the time)was waiting as well and I asked where he was headed. He said "to Starbucks." I quickly starting running through the numbers cited in the post. The bell for the elevator rang, and he actually turned around and headed back to his desk. I felt sorta bad and sorta good at the same time.
No. of Recommendations: 0
I always wondered about those who think the rich should giveway x amount of dollars to charity vs multiplying it themselves while providing jobs and boosting the economy and eventually giving it away, but in a trust fund of investments where only so much of the returns could be taken? Wasn't it Ben Franklin who left a small sum to the city of Philly, but it couldn't be touched for a 100 years while earning interest or something like that? What if the rich (greater than 10 mil? net worth) and large corporations had to give a fixed % of their profits to charity, medical causes, etc.Would this be a bad or good idea in your opinion?

Well, in order to make the rich give directly to charity, we'd have to pass a law, which is unlikely given the fact that the rich people are essentially the ones who make the laws. And if we'd did the same for corporations, we'd all just end up paying x% more for the things we buy anyway.

I'd never heard the thing about Benjamin Franklin, but I think it's pretty cool. When you think about it, a not-particularly-wealthy person could make a relatively small investment today that would let their great-grandchildren be set for life. Kinda makes you wonder why more people don't do that. Maybe because they figure they'll never even SEE their great-grandchildren, so why bother making them rich.

I think it would be cool, assuming I died with say \$100,000 in assests, to leave those assests in a charitable trust with the stipulation that they be left alone for the next 250 years or so. Even with modest returns after inflation, the results would be staggering. Of course, we can't really predict what changes will take place in the stock market over the next 250 years, but still it's nice to pontificate. :)

-john
No. of Recommendations: 1

I need a little help here. Is it million, billion, trillion, quadrillion; or is there something between trillion & quadrillion?

Depends on where you live. In most places, a billion is a thousand millions (ten to the 9th power).

But in Britain and I believe also in Germany, a billion is a million millions (ten to the 12th).

I usually just think of such numbers as gazillions and since a googol is 1 followed by 100 zeroes (ten to the 100th power), I think of an astronomically large sum of money as googolbucks.

No. of Recommendations: 0
xhail,

I don't think donations count as charity if they're non-voluntary. I believe the non-voluntary category of asset redistribution is better know as "tax" which is required to be paid in fixed percentages for the purposes of charity and medical causes.

I think it's a wonderful thing when people choose to make gifts of time and money to others--on whatever scale they choose. There's a wonderful couple here in Wasington, DC who have started a foundation called Mary House. This couple is not at all wealthy (I think the last thing I read about them said they earned about \$40K/year between the two of them), but they believe firmly that if someone needs a home and they can provide it, they will. They've developed a wonderful first-rung-on-the-ladder network for new immigrants to the US. They help with everything from lodging to English lessons and have numerous success stories among the people they've helped (it's always a big celebration when one of their families can actually buy their own home).

--Gabrielle