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I'm Sarah DeShaw. I have a minimalist's heart  and a business mind.
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How I'm Saving An Extra $8,000 This Year

My passion for smart finances is tightly wound around my heart for freedom. In a lot of ways money = freedom. As much as I wish it were different, I think we can all agree that to varying degrees, this is true for everyone.

Earlier this year I read "Smart Couples Finish Rich." In the book, the author talked about what he calls the "latte factor." It's the idea that all you need to do to finish rich is look at the seemingly tiny areas you are spending that you could redirect towards investing. In the book the author says you don't need to make more to get rich. You actually just need to spend less, even if it's as little as $5/day. 

The more I read about money the more I come across this idea all the time: it's not how much you make, it's what you do (or don't do!) with it. There are couples who make a joint income of $50,000/year who finish millionaires. And sadly, there are couples who make a joint income of $750,000/year who retire broke.

You can imagine how much the minimalist part of me LOVES all of this. Refine & declutter. Less, but better. 

I'm an anti-debt person, and although I have some items I spend lavishly on after much consideration (with the less, but better belief and long term use in mind I consider certain items investments), I'm frugal in most areas. We only use credit cards for the points; we pay them off each month. We have a paid off car, and we worked diligently to pay off my husbands student loan from chiropractic college (which we did last year!!!). We currently don't have any debt and don't plan on ever having any.

With the latte factor in mind, each year it's super important to audit each item in your budget and ask yourself the following questions:

  • Is there somewhere I can get the benefits of this expense cheaper/free?
  • Have rates dropped on this/is there a promotion I can snag somewhere?
  • Is this expense important to me anymore (is it necessary/does it bring me joy)?

Note: be sure to check your bank/credit card statements regularly to make sure there aren't any sneaky subscriptions that you're being charged for that don't send you receipts when they charge you!

By auditing my personal and business budget this year and finding our latte factor, we will save an additional:

  • $450 annually on our 2 person cell phone bill (We switched from Verizon to a special account with Sprint-- thanks to my sister and her husband for getting us a hook up!)
  • $252 annually on video editing software (switched from premiere pro's monthly subscription to apple's free imovie)
  • $1,188 annually on funnel software for my business (switched from clickfunnels to working with my website + email provider to design my own funnels with what I already have-- btw they are much prettier! Thanks Emily for sharing this option with me!)
  • $6,000+ annually by pre planning meals + finding less expensive meat/fish options (check out Aldi for amazing prices on grassfed beef and more! One pound of grassfed beef is $5.29 at Aldi. We were previously getting it at Whole Foods for $8.99!). We are also saving by buying our staples in bulk, mostly online.

Needless to say, groceries were our latte factor. I have a high value for making sure I'm eating organic, healthy food so it was easy for me to give a "pass" on the high price tags. However, I've found there are lots of substitutions I can make that are still organic and just as healthful that I hadn't thought of before wracking my brain to figure out how as a couple we could save a minimum of an extra $10/day. Additionally, pre-planning meals means for the most part we only eat at restaurants when it's planned, instead of out of straight up reactivity.

By saving an extra $10/day, in 40 years, assuming a modest 5% interest rate when that money is invested, that $10/day that would've been $146,000 will turn into $462,965 or more. Amazing, right?!

To calculate your latte factor approximation, go to: https://davidbach.com/latte-factor/ and scroll down to the middle of the page.

What can you cut out of your budget to add more freedom to your life?

Sarah DeShaw3 Comments