Another Starbucks Post

Suze Orman has already whipped this dead horse enough, but here goes one more study on what a Starbucks habit really costs. Obviously, the same logic applies to cigarettes, lunch at the cafeteria, or whatever your particular convenience vice might be. The occasion is a recent price increase by Starbucks. It has been announced that in the New York area the cost of a “tall” which means the smallest cup they sell went from $1.91 to $2.01. It is expected that the cost of a large latte will exceed $4.00, not including tip.

My employer does not supply us with coffee. Instead a group of employees band together and form what is called a “coffee mess.” We buy our own coffee, supplies, and machines. Our primary machine is a standard Bunn commercial drip type coffee maker such as one sees at restaurants all over the country. We buy Dunkin Donuts, Starbucks, and similar mid-premium brands of coffee from Costco. Occasionally someone brings back a bag of super premium coffee from a trip to share with his coworkers. We charge 25 cents a cup, any size, the typical personal coffee cup runs about 10oz, and we turn a profit. Think about that—we make a profit charging 25 cents a cup.

We charge $3.20 a gallon for Starbucks coffee and we make a profit.

Starbucks is charging you $21.44 a gallon for plain old black coffee.

Coffee math from “What Your Starbucks Habit Really Costs You” by Kathy Kristof

“If you buy one $4 latte each day, that coffee habit will set you back $28 a week, about $120 a month and $1,460 per year. Keep that up for five years, and you've slurped away $7,300, not including any money you might have earned by investing your cash instead. If you account for missed investment returns, the loss amounts to roughly $9,300 (assuming a 9% average return).

After 10 years, your Starbucks habit costs you a car. After 30 years, the $239,891 that you drank away (including investment returns), could have bought a house. Over 40 years, the Starbucks habit could reduce your retirement nest-egg by an astounding $634,428 -- enough to generate an income of more than $2,600 a month.”

I’m not sure where she is getting a guaranteed 9% on her coffee money over the next 40 years but I think you get the idea. Little changes in your behavior can reap enormous rewards over time.