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 What is Your Latte Factor?

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Posts : 14
Join date : 2008-03-21
Age : 44
Location : Philippines

PostSubject: What is Your Latte Factor?   Mon Jun 23, 2008 6:01 am

What Is Your Latte Factor®?
by David Bach

Most people believe that the secret to getting rich is all about finding new ways of increasing their income as quickly as possible. "If only I could make more money," they say, "I'd be rich." Yet it almost never works that way.

We tell ourselves we'll start saving once we get a raise. Then the raise comes, but instead of saving, we increase our lifestyle and spend a little bit more. That's why there are all kinds of six- and seven-figure earners out there who are broke and in debt.
The question is, how can you stop that cycle, reverse it, and start becoming wealthy on your current income, without living like a hermit or depriving yourself of the rewards you've earned? Part of the answer is by applying the principles of something I call the Latte Factor®.

The Latte Factor started with a real woman essentially telling me I was "full of it." At the time, I was teaching a four-week class on personal finance. After about 10 hours of class time, we had covered a whole series of classic foundational wealth-building ideas: Pay yourself first, save some of your income each month, et cetera.

Near the end of the final class, a woman named Kim raised her hand and said, "David, I've got to tell you something. Everything that you've taught us in this class over four weeks is good in theory but not in reality."

Her problem, Kim said, was that she just didn't make enough money to put any away. She insisted that after paying rent and her basic living expenses, there was nothing left over.
Looking around at the heads nodding in agreement, I could see that this was an issue that had to be addressed before my class ended. So I asked Kim to verbally "walk me through" her typical day, noting all the times and places she spent money along the way. On that journey, we discovered something fascinating.

Before she even got to her lunch hour, Kim was spending an average of $11.20 in cash without even really thinking about it, on daily treats like a muffin, a fresh-squeezed juice drink, a Power Bar and — you guessed it — a Grande Non-Fat Latte at her local Starbucks.
$11.20. Not much, right? Wrong.

I asked Kim to imagine, for the sake of argument, forgoing her morning latte and muffin in favor of home-brewed coffee, an apple, and a piece of toast. That simple little change would give her an extra $5.00 a day — roughly $2,000 extra dollars a year.

Kim had already told me she wasn't contributing to her 401(k) plan at work. "I can't afford it!" she had complained; but without that daily latte, she could. We did a few quick calculations based on her age, the potential length of her career, and her company's contribution match. What we discovered was the real-world effects of The Latte Factor.

If Kim took her $5.00-a-day latte allowance and put it into her 401(k) plan instead, by the time she turned 65 she would have approximately $1,742,767 saved for retirement.
Almost $2 million, all from just $5.00 a day — "extra" money Kim was positively convinced she didn't have. She was stunned, and so was the rest of the class.

Since then, I've shared the concept of the Latte Factor with millions of people all over the world, in seminars, on television and radio programs, in my books and audio programs, and in countless other ways.

Every time I do, the audience reacts in exactly the same way my students did. People are shocked when they realize how much money flies out of their pockets each day, practically unseen, and where that money goes. It's a realization that can and has changed lives.

So ... what is your Latte Factor? Is it bottled water? Cigarettes? Fast-food lunches? Magazines in the grocery store checkout line? Is it a gym membership you never use? How much is your Latte Factor costing you every day ... a few dollars? Ten? A hundred?

The fact is, we've all got a Latte Factor, regardless of our income level. The sooner you find that one little bit of cash that you can redirect, the sooner you'll start to build your wealth.

Of course, you need money not just for the future, but for the things you want to do right now. The point of the Latte Factor exercise is NOT to drain all the fun out of your life. Remember, Kim still got to enjoy her designer juice and Power Bar every day! The point is to get you to change your thinking about your money.

Kim didn't think it was possible for her to save anything at all, based on her income and lifestyle demands. She's not alone. People who make 10 times the salary she was earning believe exactly the same thing.

Yet with a small shift in thinking and a few extremely simple actions, you can easily, painlessly, automatically begin creating secure lifelong wealth that will be there when you need it most.

The Latte Factor is a registered trademark of Finish Rich, Inc.
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