This is why you're broke 

This is why you’re broke, coffee edition

Is $5.27 too much to pay for a cup of coffee?My first time at Kaffee 1668, the line was literally out the door. When I got to the counter, I ordered a small mocha. I had barely uttered “no whipped cream,” when the barista looked me straight in the eyes and said, “We don’t do that here.” Still, nothing caught me off guard quite like the tiny beverage’s $5.27 price tag.

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 Personal Finance 

Most Expensive Coffee: The Real Latte Factor

Coffee CupThe Latte Factor is the idea that frequent, small dollar purchases add up quickly. We don’t notice them because the purchases are so small, like a $3 cup of coffee each morning, but over the course of the year that adds up to serious money. It’s not a novel idea, there are plenty of idioms mirror that same idea (death by a thousand cuts, tipping point), but a popular one in personal finance.

Except $3 a cup is nothing. Worry about the $10 a day or $30 mistake you’re making. Forget the latte factor, focus on bigger things. And when you really think about it, $3 for a cup ain’t bad… let’s see how really expensive it can get!

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 Frugal Living 

5 Ways To Green Your Coffee Beans

Organic CoffeeOne thing I have learned during my time on this earth is that there are two kinds of people… those who drink coffee and those who don’t.

I have always been the first kind.

Growing up, at special family gatherings, the adults would make a huge pot of black coffee on the stove, laced with sugar. Everyone, kids included, would get a glass mug of this beautiful dark creation and added a scoop of vanilla ice-cream. I can’t remember whether it was a caffeinated brew or not but based on the noise and activity level that quickly ensued, I bet that it was a full throttle coffee simmer. 🙂

These days, the tradition continues (minus the cup of java for my toddler). My mornings start out with a first-rate hot cup of coffee. The debate regarding the health benefits of coffee will go on endlessly. In the meantime, I drink plenty of water, eat my veggies, and make my coffee eco-friendly.

Here are 5 ways you can go green with your coffee beans, guilt free:
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 Frugal Living 

Brewing Single-Serve Coffee Pods Beats Buying Anytime

Mmmmm CoffeeHardly a week goes by when a personal finance writer doesn’t take a swing at Starbucks and buying coffee, so why not put it all to rest and do some math to settle it once and for all? I know it’s almost a no-brainer but let’s do the math and see how far ahead you can be if you were to brew your own coffee, whether from grounds or with a single serving coffee pod machine, rather than buying it in the coffeehouse.

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 Frugal Living, Personal Finance 

When A $945 Espresso Machine Makes Sense

Espresso ShotsTim Clark, author of The Prosperous Peasant (my review), has a blog called Soul Shelter and he posted a guest article last week where the author’s friend Dave, a multi-millionaire from the dot-com boom, bought an espresso machine for $945. At first I reacted the same way as the author, “It must be nice to be able to afford a high-end, fully automatic espresso maker, I mused aloud.” But as the article continued, I saw the logic.

“OK, consider this: One double latte costs three dollars at a coffee shop, so your outside coffee-drinking habit comes to six dollars a day for you and your wife. That’s $2,190 per year in after-tax dollars,” Dave extrapolated. “Assuming you’re in the 27 percent tax bracket, that means you have to earn $3,000 before taxes to pay for those lattes. That’s more than a month’s wages for a substitute teacher here in the state of Oregon.”

I don’t spend $3 at a coffee shop each day but he and his wife do. I don’t spend $2,190 per year in after tax dollars on double latte’s, but he and his wife do. I don’t have to $3,000 before taxes to pay for coffee each day, but he and his wife do. For him, the $945 espresso machine makes perfect sense even after you factor in the cost of milk, beans, etc. It may not make sense for me, but for him it makes perfect sense.

This is basically the reverse of the monthly payment math trick. The monthly payment math trick is where a salesperson tricks you into paying more for something by justifying it in terms of monthly payments. If I were to argue that he’s making a bad decision, I’d be falling for the trick in reverse by focusing on the $3 a cup cost versus the $1000 espresso machine. When you do the math and find total cost, his logic is sound. You could argue that he shouldn’t be spending $3 on a double latte every day but then you’re not talking money anymore, you’re getting into personal preferences.

The bottom line is that you should always be doing the math. A commenter, Hank, said that his mantra this year is to “just do the math.” When you do the math, the answer is usually pretty clear. In this case it’s crystal clear, once you get past the $945 up-front cost. The other comments for this post are pretty good too, I think many of the commenters know each other so it makes for some lively debate.

What are your thoughts on the purchase?

(Photo: asurroca)


6 Things More Expensive Because of Marketing

Black Pearl EarringsOne of the most fascinating stories I read in Predictably Irrational, by Dan Ariely, was that of Tahitian Black Pearls. It’s amazing because what happened with black pearls has happened with so many other products through the ages, you’d think we’d learn to recognize it… but we don’t! While I won’t reveal the whole tale, Emily Bobrow’s review, which appeared in the New York Observer, remarked that in Predictably Irrational…

We learn that James Assael, a postwar ‘pearl king,’ had little luck in unloading the gunmetal fruits of black-lipped oysters when he first introduced them to America in the 1970’s. But then he convinced his buddy Harry Winston to display a string of these lovelies in his Fifth Avenue window, together with an outrageous price tag. The rest is history.

For those who don’t know, black pearls are supposed to be very expensive. 🙂

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 Frugal Living 

Gevalia Coffeemaker Goes Kaput!

GevaliaLast week, I went through my usual routine of making coffee in the morning. After filling the water reservoir and putting ground coffee in a filter in the basin, I ran upstairs to do some work. A few minutes later, I noticed that I couldn’t smell any coffee. Usually after a few minutes I could smell the rich flavor of glorious coffee wafting through the home, but today that smell was gone. I walked downstairs and, to my horror, saw that the coffeemaker hadn’t made any coffee. The green “On” light was lit but the pot was empty! Try as I might, and this included opening it to see if there was an obvious problem but I couldn’t see one, I couldn’t get it to brew (or even heat up the platter). Boo! I need coffee! 🙁

Sadly, I believe my coffeemaker is kaput.

The solution? I had two. I could either go to the local Wal-Mart/Target/Similar store and spend $20 on a coffeemaker (or buy this Mr. Coffee DRX5 4-Cup Programmable Coffeemaker and not leave my house)… or I could try Gevalia Kaffe again. I opted to go the route of the Gevalia Kaffe trial because for $15 you get a decent coffeemaker and two half-pound bags of coffee. The last time I tried two types of flavored coffee, because I’d never had flavored coffee before, but was less than pleased with it (nothing against Gevalia though, I think I just enjoy normal coffee).

The last time I did it, the offer was for a free coffeemaker and a travel mug for $5. The offer isn’t as sweet this time, this time I got a fancier looking 12 Cup Programmable Stainless Steel Coffeemaker (an estimated $100 value! Wow!), a Stainless Steel Coffee Scoop (a $10 value! Wow!), and two half pounds of coffee for $14.95 shipped. The two types I chose were French Roast and Le Procope, a choice from their European Coffeehouse Collection named after a fabled café in Rome (how could I not try it???).

Update: The offer for a free coffeemaker is part of a trial for their coffee-by-mail program. I’ll have to cancel my membership if I want to avoid getting coffee by mail and pay subscription fees.

I’m a fan of coffee, don’t get me wrong, but I’m not about to spend $20,000 on a coffeemaker. 🙂

(Photo: woo-hoo)

 Frugal Living 

Breathe New Life Into Old Things: My Coffeemaker

We live in a disposable society. We’ve gotten so used to everything being so cheap that we often think about replacement before we think about refurbishment, which is great for companies but bad for our budget and our environment. I experienced this first hand a month ago when I pulled out my coffeemaker to make a cup of coffee.

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