My Love Affair with Starbucks
I’m in love with Starbucks. Not only was its stock a phenomenal investment, but I drink so many Starbucks lattes that I had to impose a rule on myself to limit the amount of hard-earned cash I drank away. I currently only allow myself to go to Starbucks on days that I fly or once a week, whichever is more.
However, when I was in my 20s, I almost NEVER bought lattes, but when I did, I bought the ones that cost $130. Crazy right? A $130 latte.
So how did I find these ridiculously expensive lattes? The story begins in the summer of 2008.
My Shelby GT and My Dad
I’m outside of an Alabama car dealership and am standing in front of a shiny black 2007 Shelby GT with silver stripes. I have the keys in my hand, and my hands are shaking. My excitement is barely controllable because this car is mine.
I just turned 24, and in a few days I’ll commission as an officer in the United States Air Force. I feel like I’ve finally established myself as an adult by buying my very first car. My dream car.
The next day, my family arrives for my commissioning ceremony. I pull up to the Montgomery Regional Airport terminal and see my parents beaming with their suitcases in tow.
As I get out of my car to give them a big hug, my dad greets me in a sing-song tone. “Raliena! Wow-wee, this is a nice car, aww man, wow-wee!” These are phrases often used by my father to express excitement and approval. If you know him well, you know exactly what this sounds like!
But, his demeanor turns serious as we drive away from the airport.
Dad: “Have you started saving for retirement?”
Me: “No, I haven’t had the chance to. I’ve only been working for 3 months, and I haven’t been getting paid much.”
Dad: “The most important part of saving for retirement is starting early. You’re losing out on hundreds of thousands of dollars each year you delay investing.”
Me: “Then I’ll just retire a year later than planned to recoup it. It’s not a big deal.”
Dad: “You need to start now. Whatever you can contribute is fine. Just start.”
Enter Dave
I didn’t want to listen to my dad because after all these years of scraping by as a poor college kid, I finally had money. My money. And I worked hard to earn it, so I wanted to enjoy it!
But, as all good daughters do, I decided to follow my dad’s advice. I knew nothing about investing, so I did what most people do when they’re clueless…get advice from someone smarter.
Since I didn’t know about Amazon Prime in 2008, I drive to the closest Barnes and Noble. As I peruse the self-help section, I start to feel overwhelmed because I don’t know what I’m looking for. I read the synopsis of almost ALL the books on finance and decide to purchase Dave Ramsey’s “Total Money Makeover.” That purchase changed everything.
The True Cost of a Latte
I learned that the cost of a $5 latte wasn’t just $5. It was $130. That $5 would grow to $130 at retirement if I invested it. And that $30,000 car I just bought? That would be $860,000 at retirement. I started to regret my purchase, but not enough to get rid of the car. It was just enough to regret to feel terrible and change my spending habits.
I stopped drinking lattes that day and set a goal to reach a net worth of $1 million by the time I reached age 40. Why $1 million by 40? Because if I have $1 million by the time I’m 40, I can leave that investment in the stock market, and without contributing a penny more to it after age 40, I’ll end up with over $6 million when I’m ready to retire at 60. I don’t plan on leaving the entire amount in the stock market the whole time, so I’m expecting a bit less than $6 million. But, you get my point, right?
Investing for retirement at an early age is so, so, SOOOO important because pensions are pretty much non-existent and social security is on its way to insolvency.
I continued to live like a poor college kid and invested as much as I could in my 20s because I knew that money invested in my 20s was exponentially more valuable than money invested in my 30s due to compound interest. If I started investing in my 30s, I wouldn’t reach $1 million by 40 even if I doubled the amount of my monthly contribution.
So, How’d I Do?
I’m 35 now. 11 years have passed since I started my investment journey. Where am I in terms of that $1 million goal? As long as the market gives me average returns, I’m happy to say that I’ll accomplish my goal a few years ahead of schedule. I can finally drink my Starbucks lattes guilt free!
I struggled with the decision to share where I’m at financially. I’m uncomfortable sharing because money is an impolite and taboo topic for many. But, I think you need to know. You need to know that the sacrifice was worth it. I lived as frugally as I could during my 20s. People didn’t understand why, and I didn’t try to explain it to them, at least not until now.
I hope this message reaches and inspires many young people. I hope it’s enough to transform them the way my dad and Dave Ramsey transformed me. Without their guidance and the technique taught to me in my “How to Save $100,000” article, this blog post and my retirement account wouldn’t exist.
Oh, and in case you’re wondering…do I miss all those $130 lattes that I refused to buy? Do I feel like I missed out? Absolutely not. Would you?
