While I was reading Smart Couples Finish Rich and Smart Women Finish Rich by David Bach, I had a minor dilemma about a key portion of both books: Bach loves to kick off his books (all of them) with some anecdotes about the “Latte Factors” in the lives of his clients and seminar attendees, but I didn’t feel that the Latte Factor applied to my situation.
In brief, a person’s Latte Factor is a small regular expense that he or she doesn’t even think about which, over time, can add up to quite a lot of wasted money. Examples of this are:
- a daily $4 Starbuck’s morning latte on the way to work
- the afternoon snack from the vending machine
- dining out for lunch each work day
- post-workout smoothie from your gym’s juice bar 3-4 days/week
- a pack of cigarettes every one or two days
- paying for a laundry or cleaning service instead of doing it yourself
Bach writes that EVERYONE can afford to save (aka pay themselves first) by simply giving up some of their unrecognized Latte Factors. This is true enough, but not really useful to me since my unnecessary purchases don’t fall into the Latte Factor pattern of regular spending. Let’s just say that with over 20% of my gross income already going into my combined Roth IRA and 401(k) retirement accounts, I have already eliminated nearly all of my Latte Factors and am not exactly a slacker in the savings skills department.
I prepare my own food at home and bring my lunches and snacks to work at least 95% of the time, even stuff like shakes and smoothies. I keep a bag of coffee and a tin of green tea leaves at work in case I get the urge to have a cup of something hot instead of heading across the parking lot to the Nature’s Table for a $2 cup. I don’t smoke. I have more or less given up vending machine foods except for the occasional yummy yogurt, raisin and nuts trail mix that sells for $0.60 a bag. (I cave in about once a month and buy one.)
So, while the Latte Factor might be a good starting point for the Level 0 savings newbie, those of us who are a bit more advanced and yet still aware of some remaining leaks in the financial boat need a different paradigm to describe our type of unnecessary spending.
This is where the “Gazingus Pin” analogy defined in Joe Dominguez’s Your Money or Your Life comes into play. Unlike a Latte Factor, which is like a small but constant leak in your wallet generally in the category of food or perceived necessities, a Gazingus Pin could be anything that you, as an individual, find nearly impossible to resist. Purchases of Gazingus Pins may not be daily or even weekly, but their cumulative damage to your budget is enough to be noted over a year of expense tracking. A person with a Gazingus Pin problem may go for months without purchasing something from their GP trigger categories, but as soon as they are exposed to their Pins again, they will almost always bite. Common Gazingus Pins are clothing, shoes, bleeding edge tech gadgets, hobby items, and just about anything that falls under the category of “Collectibles.”
My Gazingus Pin when it comes to spending is the online too-good-to-pass-up deal. I’m a sucker for $10 after mail-in rebate + coupon code + Ebates.com kickback deals, discounted software upgrades, random $0.99 music downloads, Half.com books, garden catalog seed and plant sales, and clearance offers of just about any kind. I won’t buy unnecessary things at full price, but I WILL pick them up at 70% off MSRP, even if I don’t need them (yet). As a result, I have about 3 years’ worth of video and PC games I have yet to play, enough books to keep me engaged for at least ANOTHER 3 years, more seeds than I know what to do with in my dinky garden (I barely managed to squeeze in the 16 impulse buy daylily clumps I got last fall) and about two dozen other seedlings that need to go outside ASAP, a truly astounding collection of humorous t-shirts from Jinx.com and Threadless.com, and a stockpile of backup running shoes that should last me through 2008.
I won’t even go into the Target clearance swimsuit collection.
It doesn’t help that I am a regular reader of sites such as Slickdeals.net and Bensbargains.net. Browse through the posts of these sites on any given day, and you will come face to face with temptation. I’ve had to remove them from my Bloglines subscriptions and auto-delete any merchant sales and specials emails that land in my inbox to keep myself from buying stuff I don’t actually need (at the moment, though might in the future…).
Do any of you have a Latte Factor or your own Gazingus Pins? What are they?