Lattes, magazines, fast food…these purchases seem tiny and insignificant, but they can add up to a huge amount that keeps you in the tiresome cycle of living paycheck to paycheck. In his new book Start Over, Finish Rich: 10 Steps to Get You Back on Track in 2010, author David Bach discusses how you can escape the confines of debt and start building personal wealth. He’s a former senior vice president of Morgan Stanley and he’s written eleven books, so I guess he knows what he’s talking about!
His website also features a Latte Calculator which you can use to enter your expenses and discover how much those little purchases are really costing you. Track your expenses for a day, week, even a month. Once you identify your Latte Factor, David suggests you cut back or eliminate it completely. Then take that money you’re no longer spending and devote it to savings. He says that before you know it you’ll see your fortune start to grow.
David makes a lot of good points, and I try to follow his advice (I make my coffee at home!), but I don’t think it’s a good idea to cut off all spending. You have to live life and be happy. I think it’s sad if you never go out to eat or never splurge on anything. It’s just a matter of finding a way to do it while still living within your means.
