Don’t Cut Coffee, Cut This Instead

Ever wonder why it’s popular to slam on buying coffee?

It’s because of David Bach’s The Latte Factor.

In The Latte Factor, we learn that everyday little purchases can add up. If you buy a $5 cup of coffee every day, you’ll spend $1,825 in a year. Invest it at 8% return each year and in 40 years, you’ll have close to half a million dollars.

It’s a powerful idea but morning coffee was just an example. Bach’s point wasn’t about coffee, although it resulted in a convenient term, but about mindless spending in small amounts. They add up.

What happens, though, this advice is then parroted by other people because they see it working well for David Bach. All the gurus want a piece of the action too. (the latest is Suze Orman on Morning Joe)

Despite the popularity of David Bach’s concept, coffee remains undefeated.

But just look at Starbucks’ revenue – $9.4 billion in the first quarter of 2024. (+8% year over year)

People aren’t cutting out coffee.

It’s because coffee is an integral part of many lives. I know I love my morning cup, albeit it’s from our drip coffeemaker. (I work from home, I’m not getting into a car just to get a cup of coffee)

What’s the solution? It sounds obvious but it’s all about how you implement it:

Cut the expenses you won’t miss.

Table of Contents
  1. A Simple Way to Find Expenses to Cut
  2. Keep a Journal
  3. Ask for a Discount
  4. Reduce Your Service Level
  5. Don’t Try to Cut Your Favorite Things

A Simple Way to Find Expenses to Cut

Use a budgeting app!

If you hate budgeting, just hear me out. You don’t need to budget, you’re just using the apps to help you identify expenses quickly across multiple credit cards and bank accounts.

Budgeting apps are great at pulling in all of your transactions and categorizing them. Then, in an instant, you can look at where your money is going and start making active decisions. You don’t have to keep using the app (though it’s not a bad idea!), use them once just to get a look back at your last few months.

Then, dig into the recurring expenses and to find expenses you might want to cut or reduce.

(if you want help, you can always use an app like Rocket Money to identify your subscriptions and help you cancel the ones you don’t want)

You may go out with friends to a trivia night at the local bar every week. It’s fun, you enjoy it, and it’s not something you want to cut out. Keep it!

But you might see something you’re paying for that you didn’t even know you were paying for it.

What if you see an expense and aren’t sure if you can live without it?

Try this:

Keep a Journal

A few years ago, I decided to put a notepad next to my television. Every single time I turned it on, I wrote down what I used.

There were only three options – playing video games, watching Netflix, or watching live TV.

Over the course of a month, I realized that I was basically 75% video games and 25% Netflix (or some other streaming service).

It was 0% live TV. ZERO.

I was paying about $65 a month ($50 for service and $15 to rent the cable box!) for a service I wasn’t using!

I cut it.

The only time I ever notice is Super Bowl Sunday (and that’s only if we’re not at a friends’ house for it).

The best way to know is to keep a journal of how often you use something.

This is a great technique for services that you pay for monthly or annually.

When we had a local gym membership, we were paying $100 for two people and we were going 2-3 times a week. Sometimes we’d go more often but 2-3 was the average across the three months we tracked.

In my experience with the cable box, I was not using it at all. Even if I used it once a week, it didn’t make sense to keep it. And with a journal, I know whether cutting it will be a relief or a burden.

Ask for a Discount

If you see a recurring cost and you kind of like it but can’t really justify paying the current rate, try to ask for a discount.

You should try to get a discount on everything you regularly spend money on. This could be joining a loyalty program and getting the same discounts as frequent customers. Or it could be asking.

Sometimes, you might need to threaten to cancel the service to get them to give you a discount. This is especially true when it comes to major corporations where employees don’t have as much latitude to give discounts.

With our Verizon cell phone hack that can save you $10 per month per line, you’re getting the app to recognize you’re switching service providers by asking for a Number Transfer Pin. Sometimes you have to threaten to leave to get a company to ask you to stay with a discount!

Reduce Your Service Level

If you can’t get a discount directly, you could always request to lower your level of service to a cheaper plan.

If they have multiple tiers, this can be a great way to reduce your expenses while still getting something similar to what you were enjoying before.

With many streaming services now, you can pay a little bit less if you’re willing to endure a few extra ads during your show.

Related: How to Lower Your Cell Phone Bill

Don’t Try to Cut Your Favorite Things

Unless you’re in an extremely dire situation, don’t try to cut your favorite things and “endure it.” It might work for a little while but life should also be a pleasure to live. 😆

For coffee lovers, is this a statement you would say? “If I don’t get a cup of coffee in the morning, I’m a mess.”

If so… cutting your morning coffee is going to mess up your entire day. You won’t be as productive at work, you won’t be as attentive a parent, you won’t be yourself. The $5 expense is just the beginning.

Sometimes we believe the “good thing to do” is whatever is the hardest thing. Sometimes it is. Lifting heavy things is hard. Running for a long time is hard.

But really the “good thing to do” isn’t what’s hard but what is sustainable. Lifting heavy things but not a weight that will hurt you. Run but not so fast or so long that you’ll hurt yourself. Built up to it. 1% gains are gains.

Cutting something, whether it’s expenses or calories or something else, is the same. You want to do what’s sustainable.

Get that budgeting app and find something you won’t miss… then cut it.

And savor that morning coffee.

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About Jim Wang

Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

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