Wednesday, July 06, 2005

Latte Funded College Education?

Dear Readers,
I like coffee as well as the next person, but I'm always amazed at the constant lines I see at every corner expresso stand in town. This isn't just in Wenatchee, but everywhere I go. These stands aren't there for you to order a 50 cent or $1 cup of Folgers to go... but rather a coffee with some hoity toity fancy schmancy name (that costs $2.75 and up each)! Who would have thought???

Anyway, I got to wondering, if a person buys one of these lattes every single day of the year, how much are they spending? Even more interesting, what kind of a savings could be built over the years if they forgo the spendy coffee and, instead, opt for the "old fashioned" coffee of yesteryear?

I found a simple savings calculator, and punched in the numbers (using $2.75 per day). I discovered, at the end of 18 years, you would have saved $29,011.70 (at 5% interest, compounded monthly). Now, if you invested this money in some high quality mutual funds or, I'm obligated to mention, real estate who knows what could happen.

I used 18 years, because I wondered what could happen if a person started saving the day a new child was born. Would there be enough in the fund for college? Well, maybe not much of a college fund for the future, but perhaps if it was invested in the mutual funds (or even better, real estate)... then there would be some serious money to work with.

Here's how the savings accumulation looked:
Year / Balance
1 $ 1,099.73
2 $ 2,169.00
3 $ 3,292.97
4 $ 4,474.45
5 $ 5,716.38
6 $ 7,021.85
7 $ 8,394.10
8 $ 9,836.57
9 $ 11,352.83
10 $ 12,946.67
11 $ 14,622.05
12 $ 16,383.15
13 $ 18,234.34
14 $ 20,180.25
15 $ 22,225.72
16 $ 24,375.83
17 $ 26,635.95
18 $ 29,011.70

By-the way, did you know the founder of Starbucks, Howard Shultz, owns the Seattle Super Sonics basketball team? What does that tell you about the profitability of the espresso business? I once worked with a couple who wanted to buy a house in Wenatchee. They operated a little espresso stand in the Eagle Hardware store (which is now Lowes). I couldn't believe what they said their income was from that little stand.

And... one other side note: I do buy a latte once in a while... but generally only on "double punch" day, so I get my FREE one twice as fast. :-) Hastings (book and music store) has double punch days on Tuesday and Thursday and a small local independent burger joint has double punch day on Wednesday, so I'm pretty well covered. I can get a free one on Monday, Friday or the week-end.

O.K... let's get real. Suppose you can't go without the latte EVERY day. How about joining two other family members, and getting a latte every three days? The possibilities are endless...

Just a few rambling thoughts of mine.

Have a great day!

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