This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
At the age of 33, I picked up a habit that most people who have made it this far into life managed to avoid. Last fall, I decided I liked coffee. I could blame peer pressure on this new expense, as my wife has had coffee for most of her life, but really I just like it and decided why not enjoy a cup or two a day?
One of the benefits to my wife with me picking up her habit is that it was easier for her to justify purchasing a Keurig coffee maker that she had been ogling for almost a year. With only one of us in the house drinking coffee, it didn’t really make sense to both take up the counter space as well as to spend the approximately $150 on a single-use machine. She bargained hard and in the end (after much deliberation) ended up getting one of these machines.
When I was examining the purchase, I looked at what my wife by herself was currently spending on coffee. Although she occasionally made coffee at home, she mostly was going to a shop down the street which roasted its own beans and was locally owned (and happened to be on her walk to work). A cup of coffee there was $1.80…..expensive right? (The “Latte” factor discussion had no impact on her coffee spending).
One of the main factors that was stopping her from just bringing a much cheaper cup from home was the quality of the coffee. She had tried buying fresh coffee from the coffee shop and using our coffee machine, or our French Press, and neither really measured up. Prior to purchasing a Keurig, we had tried several types of coffee from my mom’s machine and she really enjoyed it.
An average K-Cup (for use in the machine) costs between $0.60 and $1.00 (from what I could find), so I figured the machine would pay for itself if she used it for about a half year or so (saving $1 per cup x 180 days). We found a Canadian site which sold coffee “pods” (essentially coffee tea bags) that we tried and enjoyed and got the cost down to under $0.40 per cup, while significantly reducing the amount of waste caused by the K-cups. The coffee is roasted in Canada and most are Fair-Trade-Organic (which is perhaps a sketchy label, but makes us feel better). This significant reduction in marginal cost both reduced the amount of time the machine took before it “paid” for itself, as well as decreased the overall cost per cup in the morning.
So, we now have a Keurig machine sitting on our counter. My wife really likes it, and we both really enjoy the convenience in the morning, as well as having the ability to switch flavours of coffee more easily.
Much to my wife’s dismay, this convoluted type of thinking goes into many of the purchases (or lack of purchases) made around the house. It’s the reason we don’t have a clothes dryer or a dishwasher, opting for an indoor/outdoor line and a rack to dry clothes on, and our wrinkly hands to wash dishes for two. We also used this type of marginal “return” when looking at cars to purchase. I really liked a couple of hybrid cars when we were shopping, but figured gas would have to more than double in price to make it worthwhile (financially) to spend almost double the $11,000 (after taxes) cost for a 2-year old Nissan Versa.
For me, especially with larger-cost items I need a reason or some sort of calculation to “justify” the purchase. It allows me to reduce the risk of buyer’s remorse and ensure that the purchase is really worthwhile having.
How do you decide when (or when not to) buy consumer goods?