Today, a $1 cup of coffee has been replaced with a $4 caffe latte (with sugar-free vanilla syrup, in my case). Free TV reception has given way to subscription cable and satellite service. Even water now comes bottled and costs more than most sodas. Welcome to what personal finance guru David Bach calls the Latte Factor. (A small latte every day at work is a $650-a-year habit.)
And an increasing number of us are not willing to give up these everyday mini-luxuries. Add to the mini-luxuries a cell phone bill, high-speed Internet access, a health club membership and Netflix, and a family can pay $300 a month (or $3,600 a year) in bills that mostly didn't exist 10 years ago.
In his new book, Start Late, Finish Rich, Bach calls these new expenses the Double Latte Factor. Calculate your hidden costs here.
To keep track of these costs, Bach suggests:
- Keeping track of where every penny of your money goes.
- Paying for nearly everything with cash.
- Waiting 48 hours before committing to any purchase or service that will cost more than $100.
- Looking for ways to reduce the cost of luxuries that you feel are important.