I am getting a jump on the new year with this one. For a while now I have been itching to quit drinking coffee. I'm seriously addicted as many reader's probably are as well, but I am not very thrilled with the financial consequences.
Studying late into the night with a 26 credit course load hasn't helped me accomplish this goal and I'm suspecting it will prove difficult. However, I am throwing it out for the world to hold me accountable. So here are my main reasons for making this decision.
1Little Decisions Add Up
Coffee each day is costing me roughly $3.50. When you consider a freshly brewed medium iced regular from my beloved dunkies and that somedays I have two this adds up.
So $3.50 x 365 days = $1,277.50 WOW!!
Warren Buffett did the same math with his haircut frequency and decided to start going every 4-5 weeks instead of 3. He doesn't spend what you think either.
2What if I Invested that Money
Lets assume 30 years with an average 6% real return annually. This works out to a balance of….wait for it…. $107,056.64
Holy compound interest.
Well that is pretty convincing. Even better is this money is assumed invested over the long term thus if it were placed in a retirement account the growth wouldn't be subject to capital gains tax.
3What if I Saved that Money and Took out Less Student Loans
Considering I am a full time medical student and my tuition is being paid on borrowed money every dollar I spend is really subject to 6.8%. So in my case I am actually doing better than a 6% return by taking out $1277.50 less in student loans each year. Since that is a fixed rate loan it isn't even a hypothetical return.
The rates for the Grad Plus Loan are even higher, but hopefully I can avoid those as long as possible.
4Sometimes you Just Need A Challenge
Yep, giving up coffee is going to be tough for me. After 30 days I am going to check in and after a year I will do the same. Wish me luck and expect some other challenges to pop up soon.
Let me know your ideas for challenges.