Tuesday, December 23, 2008

coffee geek

I am a geek. I embraced that fact long ago. But there is more than one way to be a geek. It's not all pocket protectors, homebuilt computers and glasses with tape on it. I am also sort of a financial geek. No, I am not a multi-million dollar market maker. But I watch the market, read some number of books and watch a whole lot of financial TV. One (of many) I watch is Suze Orman -- who I might add is sort of hot in spite of her being over 50 and a lesbian.
I have always known of David Bach's Latte factor, but my knowledge of it is sort of second hand. (Sometimes when Ellie Mae reads something, she enthusiastically shares the data in such detail that I feel like I've read the book even if I haven't. Seabiscuit.) But the point never really hit home until a show about a week ago.
If you haven't seen Suze's show, she has a cute little segment called "Can I Afford It?" where folks call in, give basic financial information and say "I want to buy a ___". Suze tells them if they can afford it.
So a doctor calls in. She wants to buy her Starbucks triple something or other half decaf mocha blastoff every day for a year. And while I think this was sort of a setup, it truly illustrates the point. The cost is something like $1733 a year. And, as a doctor with a boatload of student loans, she cannot afford it.
This pretty much illustrates my whole philosophy of life: It isn't what you make, it's what you spend.
And (borrowing from Mr Bach) if you make some assumptions about the new doctor you start finding some serious cash. Let's assume she is 28 (she is newly out of med school) and will retire at 65. That's 37 years of latte. At that price, this comes out to $64 thousand dollars. Add in the power of compounding interest it comes out to $185K at 5%, $394K at 8% and $1.1 million dollars at 12%. Now I'm not saying you'll necessarily make those rates, but historically they are feasible. And even if you stuff it in a mattress, $64K will buy you a whole lot of Costco coffee that you brew yourself. I recommend the dark roast Costa Rican coffee.


Kari said...

Hey, I tried to get you to read the David Bach book, but when I saw that he was going to be on Oprah, that puppy went on Ebay. $20 profit on a book I bought used isn't too shabby.

I'm ignoring the Seabiscuit comment.

Og Make Blog said...

Is 'Seabiscuit' code for "shut up b____?"

Spork In the Eye said...

Seabiscuit is a book. About a horse.

Kari said...

That Ug is such a troublemaker. And after he ate all my Oreo truffles, too. Now I see why that midget beat him up.

Og Make Blog said...

Great, now I,m Ug and a troublemaker. OK, I can live with that. I told you before: that midget (female) wanted me.