Monday, April 30, 2012

The Accounting Hat: Coffee?!?!?

So if you know me you know I love coffee. The no caffeine at all while prego regiment that my OB had me on killed me!!! KILLED me. And I will admit that before I was pregnant a certain Mr Horton supplied me coffee on an almost daily basis. Once I couldn’t have coffee anymore, at least not any worth having. Decaf?!?! What’s the point?

Well after I decided that those $2.00 a day was more than just $2.00 when you add it up, I did a lot more math on this.
$2.00 a day is $10.00 a week – not that much right? But $520.00 a year is an extra mortgage payment for the average homeowner(if you do bi weekly payments)! Hello – coffee or being out of debt faster.

Now let’s face it, most people have more than one coffee a day – $20.00 a week - $1040.00 a year. Hmm. That’s a month closer to owning your own home.

I emailed a friend of mine who’s a Mortgage guy. Here’s what he said to me! (all numbers are illustrations and for this purpose only.)

If the home value is $500k, I’m using a loan to value amount of 80% so the mortgage amount is $400k
Also, the amortization I raised to 25 years as this is a standard for most.

So the payment per month using todays average “best rate” is $1953/month.

Let’s assume the average cost of a coffee is $2, and the average consumer buys two a day.
At $4 per day for 5 days a week, using an average of 4 weeks a month, that money put towards the principle balance of the mortgage every month can reduce the total interest charged to you over the 25 years by roughly $37,000 and will reduce the time from 25 years to 20 years.

Did you see that - $37,000.00 over the lifetime of your house, your half million dollar house. All for a few coffee’s a day. OMG!! I stared in shock at that number for a minute. Emailed Brian that number and then started in shock some more. 5 years closer to owning a home, and saving $37,000.00. OMG!!! And I say it again OMG!!!

So if you’re buying 2 $2.00 coffees a day, what about going to Starbucks for a latte every day, or twice a day. Can you imagine how much money you could be saving?!?!

I will admit I went to an expensive coffee place on the weekend for a latte. However I made myself 2 other latte’s at home this week. Not an excuse to go and buy one, I just wanted one yesterday. 

I’m not telling you to give up your lattes or coffee. I just thought I would share a small something you can do to help save a bit of money – or some big money if you look at it over 25 years.

Let me know your thoughts? Are you a coffee addict? Did the numbers shock you as much as they did me?  
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