The “Shit-That-Doesn’t-Inspire-You” Factor

in Do What You Love, Money Basics, Rants

The Latte Factor

By now, I’m sure you’ve heard of The Latte Factor.

Cutting out a $5 purchase per day (let’s say, a latte), will result in just under $1,000,000 dollars over 40 years.

The concept is mind-numbingly simple:  Over time, our small, daily purchases cost us much more than we may initially realize.

“It’s only $5″ is much harder to swallow when phrased, “It’s only another million once I retire.”

While I’m a fan of anything that promotes conscious spending, I must admit I have a couple problems with The Latte Factor:

  1. It doesn’t discriminate.
  2. Math that takes 40 years bores me.

People encourage discovering the ‘latte factors’ in our own lives.  What the hell does that mean? What qualifies an item as a latte?  Wait… what if I like lattes?

Luckily, I found the solution to this problem.  I’ve dubbed it the “shit-that-doesn’t-inspire-you” factor.  Same concept.  Better name.

When examining your spending habits simply stop and ask, “Does this inspire me?”

Tired of dropping $20 bucks a week on Saturday morning bowling?  Quit going.  Vending machine addiction at work make you feel like crap all day?  Stop carrying coins.

Spend your discretionary money on crap that you are passionate about.  No… not stuff that makes you feel happy for 15 minutes.  Focus on causes you’d take a bullet for.  (Yeah, don’t touch my coffee)

Lastly, stop thinking 40 years in advance. You could very easily be dead by then.

Get fired up about shorter, more tangible dreams.  Chuck the money toward whatever debt you hate the most.  Aggressively max out this year’s Roth IRA contribution.  Start a travel fund or buy a happy meal and give it to the homeless guy down the street.  Find something that speaks to you. I couldn’t care less about a million dollars in 40 years.

Whew…  maybe I should lay off the caffeine…

What do you think?  Share your thoughts below!

photo by denniswong

{ 57 comments… read them below or add one }

mr crash September 21, 2009 at 6:47 AM

This is a great article! Very timely for me.

I was just thinking this today! Was driving along to post some parcels and caught myself thinking “I should just grab a Red Bull or something…” – not only do I not really even like Red Bull (though I will admit it does a fine job of keeping me awake), It was just something I was doing out of habit rather than any real want.


Baker September 21, 2009 at 4:54 PM

I’ve had many of these ‘red bull’ moments, myself!


jan in chesterfield September 21, 2009 at 7:24 AM

Coffee makes me happy so I make it at home for a lot less money than Starbucks. When I do go to Starbucks it is a special treat.


Baker September 21, 2009 at 4:54 PM

I buy mix and make it at home, too. Unfortunately, sometimes that leads to me drinking too much (different problem)!


Matt Jabs September 21, 2009 at 8:10 AM

Another huge help is to eliminate time sucks from your life.

What is a time suck? Anything that is meaningless that sucks your time. Like TV – turn is off and go accomplish something important to you. Another time suck is pending an hour worrying about “What should I wear” – just comb your hair, put on some jeans and start working on something you love!

Once you eliminate a few time sucks, turn the time you gain into passion building time. Quit making excuses for why you’re not successful and go be successful.
.-= Matt Jabs´s last blog ..Debt Testimonials – Personal Responsibility Beats a Bailout Any Day! =-.


Baker September 21, 2009 at 4:55 PM

So true man. This same principle applies to money, time, stress, etc..


Kyle September 21, 2009 at 8:29 AM

If nothing else you are more likely to stick with it if you are doing it based on inspiration as opposed to desperation. I totally agree with 40 year math, I could save $365 dollars a year just by spending one less dollar a day, but I probably won’t do it, if I could save $365 today I would do it in a heartbeat. Weird how that works out.
.-= Kyle´s last blog ..25 Songs About Money =-.


kosmo @ The Casual Observer September 21, 2009 at 8:34 AM

Caffeine = good :)

I fall into the vending machine trap. Every once in a while, the candy box is out of the good stuff, or the pop machine is out of Pepsi, and I swing by a store on the way to work and re-stock. It’s a lot cheaper that way … but it doesn’t take me too long to fall back into the routine.
.-= kosmo @ The Casual Observer´s last blog ..Can Zack Greinke Win the Cy Young? =-.


Cody McKibben September 21, 2009 at 9:06 AM

Awesome post Baker! I love this shit-that-doesn’t-inspire-you approach and I can get behind you when you say not to focus on lattes! I for one love and need my morning coffee! But in either case, we should be looking at the bigger picture: you’re certainly right when you say nobody knows if they can count on being around for something 40 years down the line, and a lot of people don’t have that much time if they don’t start those money behaviors young.

If you’re going to spend 40 years trying to get rich, work on building a kick-ass business for 40 years. Do something that will earn you an extra $5 per day for 4o years, and eventually you’re bound to find something you like and can be great at, and in that amount of time you’re sure to find yourself much more prosperous for it.
.-= Cody McKibben´s last blog ..A Reminder of the Shortness of Life =-.


Baker September 21, 2009 at 4:57 PM

I love this! Take those 40 years and work towards something you love and can also live off of. I feel another post coming on…


Don Davidson September 21, 2009 at 9:39 AM

I’m a fan of spending money on experiences and not waste money on stuff.
.-= Don Davidson´s last blog ..DonPDavidson: http://www.compete.com is a great tool to see how your web traffic compares to your competition. =-.


Baker September 21, 2009 at 4:57 PM



Studenomist September 21, 2009 at 10:25 AM

I see the whole latter factor thing as a simple way of telling people how to save money. I have friends in college that try to save money the most ridiculous ways yet they don’t have a part time job and they go out every weekend. They are so proud to save a couple of bucks on a coffee yet they go to bars where they pay $6 a beer.

I’m working on a coffee cup debate post for my blog and I will definitely link to this.
.-= Studenomist´s last blog ..Which Debt To Pay Off First? =-.


Baker September 21, 2009 at 4:59 PM

Yeah, sometimes it’s hard to be honest about what really inspires us, haha. While experiencing life is a HUGE part of college, I doubt very many $6 beers will help this. $1.50 beer on the other hand…


Jack @ Master Your Card September 21, 2009 at 10:31 AM

Amen to Matt’s comment on time sucks. Not only that, time sucks – like TV – can be massive money sucks, too. While it probably won’t be like at the end of Cable Guy when everyone immediately picks up a book once the TV goes out, you will probably be more motivated to do something worthwhile once you’re freed from the time wasters.
.-= Jack @ Master Your Card´s last blog ..Trick or Treat?: Bank of America Rolls out Basic Visa Just in Time for Halloween =-.


Neal@Wealth Pilgrim September 21, 2009 at 10:38 AM

I’ll tell you what Baker, what I love about this one is that you put your own spin on a concept that makes sense in order to make it meaningful to you. Rock on!

Allow me to do the same….

I want to spend my money and time in ways that are affirming. I don’t want to do anything with my time or money that I’m not going to be proud of. For me, that takes care of a lot of crap.

It also tells me when I should be spending more time and money so it works for me.
.-= Neal@Wealth Pilgrim´s last blog ..Married Couples Fighting – How Do You Deal With An Overly Frugal Spouse? =-.


Baker September 21, 2009 at 5:00 PM

That’s another great way to phrase it, Neal. Spend money in ways that you can be PROUD of. I like it.


Jessica September 21, 2009 at 10:55 AM

Dude, caffeine = way good, especially if you work with hyper teens all day.

I started bringing my own coffee and lunch to work this year, and I’m already feeling the difference. But much like you, I’m not looking 40 years own the road. I’m whittling my debt away, maxing my Roth IRA and putting money into an emergency fund, all very immediate goals. Will they pay off in the long run? Absolutely! But they’re much more tangible when I can actually SEE the difference.
.-= Jessica´s last blog ..Puke Happens =-.


MoneyEnergy September 21, 2009 at 11:06 AM

I like what you’ve said re: stop thinking 40 years in advance. We need to plan for the future, but we need to live the present. We should all find our own “$5 dollar factor”, whatever it is, and just make sure we’re spending in accordance with our values. Any result that takes 40 years to happen is boring unless you’re also seeing some results today, so it’s great if you can do both at once – the planning ideally fits with long term goals, but gives you the rewards you need in the present too so that you can live an inspired life today. Nice way to point that out!
.-= MoneyEnergy´s last blog ..How Much It Costs to Apply To Graduate School =-.


Craig September 21, 2009 at 12:03 PM

I am the same way. I can’t add that little bit up, its too boring and small at the point to make a difference for me. I don’t get morning coffee but I’m sure there are other small things I could cut out. If you enjoy it, go for it and work on saving elsewhere.


Jon Griffith September 21, 2009 at 12:29 PM

If you have a plan, and it involves wealth building, and you include your coffee in that plan, then you’re golden. Drop the crap that slows you down not only financially, but emotionally, and physically. There are more benefits to gain besides financial benefits when you change behavior.
.-= Jon Griffith´s last blog ..Declaration of War =-.


Baker September 21, 2009 at 5:03 PM

“Drop the crap that slows you down not only financially, but emotionally, and physically.”
This is an excellent point. The awesome thing is that helping remove frivolous crap in one area of your life, often bleeds into the others.


Jamie @ Make Money 4 Life September 21, 2009 at 1:18 PM

If not latte, it will be something else. I find it interesting that people will make a huge deal over a 5 cent a gallon difference when buying gas (when getting 20 gallons is only $1.00), but will not even flinch when it comes to paying over $5 for a cup of coffee a minute later.
.-= Jamie @ Make Money 4 Life´s last blog ..How To Make Money Working From Home =-.


Baker September 21, 2009 at 5:04 PM

Yeah, I hate the whole drive across town to save 5 cent gas thing. Luckily, I haven’t bought gas in nearly 4 months! :-).


Tyler Karaszewski September 21, 2009 at 1:59 PM

I agree. I hate these situations people propose — “Given average market returns of 9% for 43 years, and a bunch of other stuff that may or may not (probably not) happen, you *will definitely* have $1,000,000 when you retire if you stop going to Starbucks!”

No you wont. Even if you did, who cares — if you’re this anal about your money you’ll retire with more than you know what to do with, anyway. What good will an extra million do you?

Even if this all worked out as advertised, what should I do to pass the time for the next 40 years until I get my million bucks? Isn’t that question worth considering? The people who propose the fantastic miracles of compound interest never seem to bother.

All this personal finance stuff is really about *making it easier for you do spend your life doing the things you want*. It’s ultimate goal is *not* to produce the highest number on a computer screen at the end. If I was interested in that, I’d just play World of Warcraft.
.-= Tyler Karaszewski´s last blog ..Summer Update =-.


Baker September 21, 2009 at 5:06 PM

“What should I do to pass the time for the next 40 years until I get my million bucks?”

A FANTASTIC question to ponder. This isn’t about giving yourself permission to be an idiot with your money. It’s about leveraging more tangible immediate goals to help you actually give a crap about saving the money.

Great comment.


Paul @ FiscalGeek September 21, 2009 at 2:02 PM

Getting a little edgey Baker, I like it. I can fall victim to the latte factor and frankly it is boring. While we are smashing our debt my wife just decided she absolutely needs a cheap massage once a month. You know what, take it, but find that crap in your life that really leaves you feeling terrible after purchasing and ditch it. Do you really need a shamwow, a quick chop or a battery powered wine opener? No. Do I want to stop by Starbucks occassionally? Yes.
.-= Paul @ FiscalGeek´s last blog ..Sinking Funds: taking Budgeting to the Next Level =-.


Baker September 21, 2009 at 5:08 PM

Once I got going… it just kind of happened. It was like I had a blackout and when I came to, this was what I had wrote. 😉


Barb McMahon September 21, 2009 at 2:31 PM

Brilliant again Baker! Perfectly explains why my husband and I gave up cable without a backward glance but still go to our favourite restaurant once a week for breakfast – the breakfast (with friends) inspires us. Cable so doesn’t.
.-= Barb McMahon´s last blog ..My Minimalism Includes Feasting =-.


Baker September 21, 2009 at 5:08 PM



Nancy L. September 21, 2009 at 2:51 PM

What I like about this concept is that you acknowledge that there are expenses that may seem frivolous to others, but enrich your own life. In my budget, I include an amount for concerts that most people would perceive as irresponsible. Yet I am able to afford this amount because I carefully make economies in a lot of other categories. I’m sure that if I ever put my budget out for comment, I would hear a lot of criticism for “wasting” money on concerts. But the joy and happiness I gain from going to shows and the friendships I’ve made through the years are worth a lot more to me than money in the bank.

This attitude initially was one of the reasons I found myself in debt, as I could always justify an experience *now* over a larger bank account *later*. Quite a few times, I tried to use the “latte factor”, and just stop spending on anything extraneous. I always felt horribly restricted and would fall off the wagon within a few months. It wasn’t until I learned how to successfully incorporate the “shit that *does* inspire me” into my budget in a healthy way while paying down my debts that I was able to stick to my budget and make real progress.


Baker September 21, 2009 at 5:10 PM

Wow. This is actually much better than the post. I’m seriously considering copy and pasting this over the text above.

This is 100% what I was trying to convey and 100% how I feel about my own experience. I love you.


Michael Harr @ TodayForward September 21, 2009 at 4:22 PM

Baker – you are HILARIOUS!!! If there was such a thing as a ‘funniest blogger’ award, you’d have my vote. This is a great post and it definitely has a better ring to it. The way I see it, whatever it is that gets you to make better decisions with your money, use it. The ‘shit that doesn’t inspire you’ factor is OUT-standing. I just call them mundane expenses, but you’ve turned it up about a dozen notches.


Baker September 21, 2009 at 5:11 PM

Turning things up is what I do. Occasionally, though this can blow up in my face! :-) I’m glad this one didn’t (at least so far). 😉


Chase September 21, 2009 at 5:21 PM

We can always rely on Baker to tell it like it is. This is why I keep coming back.

The concept behind the Latte Factor is great… come on America, another Venti? Really? But you got at the root of the issue. We’ve misplaced our passions. And we’re bored. Really Bored. 3 hours on Facebook Mobsters-and-What-DC-Comics-Character-are-You? bored.

that shit just doesn’t inspire me. Posts like this do.
.-= Chase´s last blog ..Launch Day =-.


Baker September 25, 2009 at 7:39 PM

You nailed the point, man. Glad I could help!


Dave - LifeExcursion September 21, 2009 at 5:49 PM

I love the concept of the latte-factor, but you are right, you’re name for it is much cooler. I try to put $5 cash away in a safe place in my home as an immediate emergency. I also do this with my invisible cash aka bank accounts but doing it physically at home makes me think of it everyday.

Good post Adam!



Lakita September 21, 2009 at 7:05 PM

Fast food definitely does not inspire me! It’s taking up too much of my money and it’s gotta go! I quit “cold turkey” a few months ago and went a full 30 days without eating out (trust me…that’s a BIG DEAL)….maybe if I approach it a little slower this time and have more permanent results.

I’ve been “finance conscious” for about a year and I’ve seen some great results, eliminated some debts and accomplished my “year one goals”….now it is time to kick it up a notch!
.-= Lakita´s last blog ..Carnival of Praise Dance #2: Equipping the Saints Edition =-.


Teejay September 21, 2009 at 11:24 PM

I’m just curious. How old are you? The ‘latte factor’ is biased on the very young. Not particularly on the older population.

I am in my mid-twenties and I don’t want to wait 40 years. I have a plan to save and invest for 25 years but not 40 years.
.-= Teejay´s last blog ..The Best Books I’ve Read or Listened to About Personal Finance =-.


Baker September 25, 2009 at 7:40 PM

25. :-)


Luke September 21, 2009 at 11:38 PM

Baker, I totally agree! “Get fired up about shorter, more tangible dreams” this sums it up for me, if forgoing the “shit that doesn’t inspire you” helps you get somewhere in the short to medium term, surely the long term will look after itself.

If you worry about the long term, then Cody’s advice is bang on! Sort something that is going to allow you to take advantage of time and make the money/experiences/lifestyle that you need in 40 years time.
.-= Luke´s last blog ..Emergency Fund: The end of the beginning =-.


SailboatFamily September 22, 2009 at 11:24 AM

Great blog entry.

It is very easy to forget that each dollar we spend represents some unit of work. Money helps remove some of the issues of a completely based barter system.

Each time I spend a dollar, I ask myself, “Was it worth x minutes of my life in exchange for this item?” When I do this, I find that I’m much less apt to spend on the “frivolous”, to me, things. The thing must matter if it is to be exchanged for a portion of my life.

As money acquisition becomes easier (that is, I earn more $ per hour), and the item that may have taken 37 minutes of my life to acquire now only takes 5, well then maybe I am more willing to make the exchange!
.-= SailboatFamily´s last blog ..Happy Autumnal Equinox/Vernal Equinox!! =-.


Scott September 22, 2009 at 12:29 PM

Nice post. For me it was the lunches out @ work and the time suckers are more insidious I think because they could turn into life suckers. Can’t put a price on that.
.-= Scott´s last blog ..Dogfish Head Punkin Ale – Beer Review =-.


Robert September 22, 2009 at 6:06 PM

Just think how much money people spend on little things. A latte in the morning, a bottle of water at lunch, a Snickers bar before dinner. The total cost over a lifetime is astonishing. Great post.
.-= Robert´s last blog ..Car Insurance Claim Tips =-.


BB September 22, 2009 at 10:21 PM

At $5 per day for 40 years and 9% (post-tax) growth it doesn’t work out to $1 million but around $750k – still seemingly a lot from just saving $5 per day. But remember this is largely bullspit to take at face value. The real average after-tax growth rate you can expect to earn on your money over 40 years has historically been about 5% assuming a typical asset allocation that moves away from riskier assets as you age. And at 5% it works out to about $230k you would have saved over 40 years. Now that isn’t so much if you really enjoy your lattes to give them up. And the $230k is the actual dollar amount, it doesn’t take inflation into account. If you take the average historical inflation rate of 3% than it works out to about $110k extra that you will have saved after 40 years for giving up your “lattes” for life. The choice is up to the individual, but people should no the actual numbers and not be alarmed by inaccurate postings that rest on a bunch of unrealistic assumptions. The basic premise of the argument is completely valid though, savings add up. When the market crashed and I felt poorer because my stocks had fallen so much I remember reading an article about cutting your bills (e.g. cellphone, utilities, cable, insurance, etc) down by just asking for a discount. I tried it and I was able to get discounts on almost everything. I had an expensive cable/internet package that cost around $200 per month and they knocked it down to $140. My cellphone package was $110 per month and they knocked it to $70. I got both my car insurance and gym costs dropped as well. All in it came to around $300 a month I saved just by asking, it may not sound like a lot but that is $3,600 per year which isn’t bad.


Baker September 25, 2009 at 7:42 PM

Woah, man. Use the ‘enter’ key!

Not sure the math is 100% sound here, but I definitely agree with your overall point. This factor can be applied to both small victories and big wins.


Michael Harr @ TodayForward September 22, 2009 at 11:06 PM

@BB – lest you forget in your analysis that the cost of those lattes will increase with inflation so the amount saved and placed into investments becomes greater with time. In addition, you forget that more than 80% of those eligible for a Roth IRA do not contribute. This means that 80%+ of those with latte factors would be able to contribute to a Roth IRA and enjoy completely tax free growth and withdrawals. Therefore, you would need to (1) adjust your deposits annually for inflation, (2) allow for a full 7% or 8% growth rate to a future value, and (3) bring that future value back to a present value using your inflation assumption.

Of course, we could also bring into the discussion the fact that most baby boomers will have less than $100,000 in assets outside of home equity and personal use assets. In short, the latte factor is a VERY big deal and certainly not something to dismiss as trivial.


Millionaire Mommy Next Door (Jen) September 22, 2009 at 11:13 PM

Baker, you wrote, “I couldn’t care less about a million dollars in 40 years.”

When I was in my twenties, I felt the same way. 40 years into the future felt light years away. I mean, I’d be ancient by then…

When I hit thirty, I decided a million bucks would, in fact, be nice. I had an intrinsically motivating goal in mind for it. But again, there was no way in hell I was going to wait 40 years for it.

10 years was my goal. I wasn’t willing to be miserable while I saved money, so I kept the lattes (gotta have my caffeine), my hobbies, weekly massages, and travel. These are the things that make my life good. I ditched the stuff (aka shit) that didn’t impact my life satisfaction and happiness. For me, this = new cars, big homes, electronics, bling. (Funny thing is, I don’t think most Americans are apt to call these things shit. Guess I’m lucky that I like the small stuff better than the big shit!)

10 years later, I had a million dollars and more importantly, I was happy during the process and happy with the results.

I’m working on a chapter in my book right now about monetary goals vs personal goals and delayed gratification. Baker (and readers/commenters here), I’m curious, do you care about having a million dollars within ANY time frame? Why or why not?
.-= Millionaire Mommy Next Door (Jen)´s last blog ..Are You Saving Enough For Retirement? Use These 4 Simple Rules Of Thumb And Find Out Now. =-.


Baker September 25, 2009 at 7:45 PM

Don’t get me wrong… I’m not going to reject a million dollars at any point. I’m not against money or being wealthy.

I just don’t find the APPROACH inspiring. I find financial freedom (the point of a million bucks) inspiring. But there are different ways of quantifying this. That’s the essence of why the LATTE doesn’t work as well for me as SHIT THAT DOESNT INSPIRE.

I’d love to help you with ideas for part of your book. You know how to get a hold of me. We can talk more if you’re interested.


Diggy - Upgradereality.com September 23, 2009 at 6:39 AM

Heya Adam!
Cool no-nonsense post.
I’d bash more on cigarettes and alcohol, those are really expensive habits and not to mention super bad for your health. With coffee you can opt to make it yourself at home for a fraction of the price, just don’t get takeout coffee anymore :)

I agree, spend money on stuff you like and really want, or take the money and put it away to save for a really cool vacation or something!

.-= Diggy – Upgradereality.com´s last blog ..Embrace your Insecurities =-.


Karen September 23, 2009 at 8:40 PM

I LOVe your twist on an old concept. Plus, I’ve never liked that concept because I am one of those that loves my lattes. Don’t take away my lattes, because it’ll make me angry.

But those other frivolous expenditures? Fast food that’s not good for you… but your too lazy to cook the food at home? That’s what I’m talking about. I love your idea of cutting out “Shit that doesn’t inspire me”. I’m huge on inspiration, so if it doesn’t inspire me, it’s not worth wasting my money on it. LOVE IT!
.-= Karen´s last blog ..10 Lessons I’ve Learned Since Becoming A Blogger =-.


Andy September 28, 2009 at 12:06 PM

Does a latte really cost $5? I have never had a cup of coffee, so I have no idea. However, $5 per day is $25-35 per week or $100+ per month. It seems like a lot to me no matter the time frame. Your point isn’t lost on me, but at what price would you be “inspired” to give up a bad habit that gives you immediate satisfaction?


Baker September 29, 2009 at 4:54 AM

If you buy a premium coffee drink from a chain like Starbucks it can run between $4-5.

It IS a lot no matter what the time frame, but the key here is what is a *bad* habit. While I mix my own at home (saving money), it still costs a bit. And it’s still not the most healthy habit.

But we can’t win every fight. This ‘factor’ is about choosing our fights based on what inspires us and doesn’t. It’s about qualifying what a ‘latte’ actually means to us, etc…


Celeste @ Coors Credit Union Blog October 5, 2009 at 11:15 AM

Yes! I hate the latte factor. Who cares if you can squirrel away a couple of hundred a year or $1mil in a lifetime. Anyone who is worrying about how much a cup of coffee costs has some weighty debt issues and needs solutions that make a bigger dent.

Life is to be enjoyed. Debt is to be overcome.
.-= Celeste @ Coors Credit Union Blog´s last blog ..Estimating Your Needs for the Future: 12 Times =-.


wendy October 7, 2009 at 10:47 AM

latte factor is for amateurs! i cut our budget by almost half (cancelled satellite tv, micro budgeted grocery trips, cancelled landline, etc), and now we have saved almost $12K in a 12 months so we can travel the west coast for a year starting 2010. of course, there is a little voice that i have almost snuffed out that says “you should save that money for the future!” but we could be dead in a year. we are doing it NOW!


lattemoney December 21, 2009 at 5:46 AM

Hi, this is a nice article. I personally like the Latte Factor idea and it has inspired me to start my new blog with a similar name.


Ricardo Bueno November 23, 2010 at 9:04 PM

Love the title!

Normally, Redbull (and Starbucks) is my vice. Miscellaneous snacks fall under this category for me as well but luckily my office has a fridge full of Redbull and snack to keep me happy :-)


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