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  • Writer's pictureZachP

#78. Buy That $5 Coffee And Save Money Where It Matters

A few years ago, I bought my first car ever. Well, my wife and I did.

Before then, I had been driving my 2001 Chevy Malibu from 18 years old until I turned 27. My mom and stepdad bought me this car.

And fortunately, my next car was a 2005 Ford Focus that was passed down from my now wife after she was gifted a used car by her parents.

Jump to 2020 when we decided to get a new car.

How Easy It Was

This was around the time I was first introduced to FI/RE. I was a newbie to the financial independence movement and still had plenty to learn.

My wife had been itching to get a new car for a while, so we finally decided to pull the trigger. The entire buying process went by in a flash.

I personally knew the car salesman, so I wasn't thinking about possibly getting screwed over.

In a matter of hours, we drove away in our new Ford Escape and $20,000 in debt.

Our Flawed Thought Process

People talk about how much money you can save a year by avoiding that $5 coffee drink or other random frivolous spending. But, what they often leave out are the two primary spending categories - housing and transportation.

According to Bankrate, the average American spent $22,624 a year on housing costs and $10,961 a year on transportation in 2021.

So, how much does that $5 weekday coffee drink cost you in comparison?

If you bought one drink every weekday in a calendar year, it would cost you $1,300 when the year was over.

What Should This Tell You

If that daily coffee brings you daily joy (my daily $2.59 spent certainly brings me happiness), buy the damn coffee!

If you truly want to save money, we should be thinking big picture by focusing on housing costs, transportation costs, and overall food spending (mainly grocery store vs. eating out).

NOTE: If you want some tips on how to save money in the grocery store, here is how we do it!

Looking into renting vs. buying, house-hacking, buying only used vehicles, and eating out once a week are different ways you can start saving $10,000+ a year in expenses.

When you start hitting these big numbers, that's when financial independence starts to become a reality.

How You Should Think Of Cutting Expenses

Nothing is wrong with saving extra money by avoiding frivolous weekday spending. However, if you have not first tried cutting costs with housing and transportation, you are attacking things all wrong.

So, the next time a person tells you they are trying to save money by going to Starbucks less while they drive away in their new car, don't let them make you feel bad about your spending.

That $5 will not ruin your retirement.

Please share your thoughts in the comments below. Let us be a community that helps each other grow. And if you enjoyed this article, don't forget to hit the heart icon, share it with your friends, and subscribe for more content.

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