The Latte Factor — Investing in your Future (Part I)


Alright, so this is kind of not a topic that a lot of people enjoy, but I just recently started trying to figure out my finances.  Because I’m 23 years old and that’s responsible, right Mom and Dad?

The more I looked into it the more I was like what am I doing?  Should I consolidate my loans? (well, first off, what does consolidating even mean?)   Should I start saving for my retirement?  What is the best way to tackle my student loans?  What is normal to spend in a month?  And more and more questions!

So finally, I had a coworker, recommend a book called “The Latte Factor” by David Bach.  Which I was like “Oh, no another self-help book, that I will get half way through and then quit because my attention span can only take so much lecturing.”   BUT I bought it any way, AND IT WAS SOOO GOOD. And helpful.


Now I’m not going to list out the three tips that were essentially the whole point of the book, because y’all should read it for reals, BUT I will give you some of the changes I made in my life to begin living out the advice given, regarding some of the questions I’ve had since graduation.  I am going to give you my unprofessional advice (learned partially from someone educated about finances).

Here is what I will focus on:

  1. The dreaded & kind of unspoken about, 401k
  2. The ruin your life & give you anxiety in the middle of the night,  Student Loans
  3.  And lastly, the tricky & sometime unnoticeable,  Latte Factor

Because these topics are huge, and I have a lot of thoughts on them.  I am going to split these up into a TWO part blog post!  Here we go on number #1:

ONE:   The dreaded and definitely scary….401k.  First off, for those who do not know, this is basically one of the more common options for your retirement plan.  Every year or every pay check, you will take out a small portion of the money you make (that is tax free), and put it into your 401k, which basically, invests it into different markets (you change your own settings or just have it pick for you, that’s what I did because this part still confuses me), which will hopefully, get you a great interest rate that will allow that lump sum of money to keep growing.

Now you may be like, “Nelson, what do you mean my money will keep growing?  It’s just sitting there.”  So there is a magical thing called compound interest, and this is the whole benefit of investing/ your 401k.

Now compound interest rate, what does that mean?  Basically, depending on the market, your money that you have put into a 401k will gain compound interest.  Say the market is good that year and it has a 10% interest rate.  This means that your lump sum of money, which lets say is a total of 1,000.  That will gain 10% interest, so by the end of the year.  You will have  (1,000 * 0.10 = 100)  $1,100 in your bank account.  That is the magic of compound interest rate.  The more you add to the 401k, the more money you make off the interest rate.  It’s kind of money magic!

Basically, your best friend with your 401k is time, so start now!  Doesn’t matter if you are 18 or 60 years old, start putting money into your 401k.   Because the more time your money is gaining the compound interest, the more your money will grow!  Even if it is a little at a time!  This book does recommend to  PAY YOURSELF FIRST!  Now what does that mean?

Right now, 60% of Americans have less than $1,000 in savings! (Elkins, 2017).

Now how does that make sense when 1/3 of our lives are spent working? The answer is…we don’t PAY OURSELVES FIRST!

We spend our money on rent, house payments, student loans, emergencies, food, transportation, clothing, etc!  BUT we forget to save for ourselves and for our future.  The book recommends you save your first hour of every days wage, and put that into your 401k.  That means if you make $25 an hour, you put $25 into your 401k every day you work, totaling to $125 a week.    Now on your 401k, the setting is based on percent, so this means you should be putting 12.5% of your wage going into your 401k.   Now this might seem like a lot, so start with 5%, then a week later, bump it up to 6%, and continue to bump it up until it reaches that 12.5% rate.  By taking it slow, you won’t even notice the money being taken out, because you learn to live with less.

That’s another lesson from the book: “Making more money is not the answer.  Because the more money you make, the more you spend.”  That is why the statistic above is true that over HALF of Americans only have $1,000 or less in their savings.  Because even as we make more, we find ways to spend it on more.  That’s why rich celebrities declare bankruptcy all time!  Because even though they are making millions off their songs, or TV shows or whatever, they are not saving their money.  They are just increasing their spending.

For a single person to live in a America, it states that the living wage is between $20,000 to $30,000 depending on where you live (Martin, 2018).  THAT MEANS, anything above that is not necessary for life.  It might be what you spend on clothing or vacations, but it also should be what you put into your retirement or savings accounts!

So 401k (all the things I know at least) done.   Come back next week for my thoughts on student loans and the “latte factor” and the best approach to tackling them!

Please subscribe and leave any comments below!   ❤







Emmie Martin, July 20, 2018 –

Kathleen Elkins, Sept 13, 2017 –


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