The “Latte Factor”: How much is your debt costing you every day?


Remember just a few years ago, before the recession and the American sub-prime market crash, when the only “personal finance” advice on popular websites amounted to “How much is your latte costing you every day?“* If you lived in a certain Toronto neighbourhood, I might’ve been the one serving it to you.

Like any Starbucks, we had our regulars, and by regulars, I mean people I saw literally EVERY single day. I worked in an interesting area that was near a mix of office towers, flashy condos and a few high-schools in a yuppie-ish neighbourhood, at any time of day I was serving somebody who came once if not twice a day, for their fix. At the time, minimum wage in Ontario was $7.75, and most of my customers were spending more than that on a coffee and some sugary garbage before 9am.

Sure, I loved coffee, I understood the appeal. I made sure to get my free drinks before, during and after my shifts, but I couldn’t understand the constantly parade of office workers spending $10 a day, minimum, just for me to make them a coffee. I didn’t “get” the parade of students who spent $5, $10, $15 for our food during a short study break. The only people I understood were the new moms, they were exhausted, give those women their coffee.

I couldn’t help but wonder if they knew about the daily cost of their little habit? Sure, some guys came in for a regular drip coffee, which was just under $2 (so, $40 a month), but most wanted something a little more personal, a little more “fancy”, and that cost anywhere from $80-$140 a month by my estimation. But maybe they did know the full price and they just didn’t care.

Fast forward a half-dozen years later and I’m frustratingly close to paying off my final student loan from my post-graduate diploma, and I find that I’m obsessed with ONE specific line on my student loan account. While I could obsess about my “debt repayment” by constantly watching the dwindling numbers on the line “Amount Owing” line, my favourite line to watch is “Daily Interest Charge”.

I’ve been paying this loan off for so long, but I don’t think I noticed that particular nugget of information until the spring of 2012, when the amount was enough for a latte, and it freaked me out a little bit.
I had, at that moment, become the person I had judged so harshly just a few, short years earlier! Albeit, not that bad, but I definitely had a one or two cup (black coffee, no latte) habit forming! And when I saw that daily charge? I blanched. It was a nice kick in the pants to help me curb my impulse spending and turned me from a java-house lover to a homebrew gal!

While I don’t obsess over this number and record the fluctuations as much as I do my total, I do enjoy checking in every now and again. And today I was in for a surprise… My current daily interest charge for my debt is only $1!

As long as things keep at this pace, this is just another indicator that this debt is going to be gone in 6-10 months! Wheee!

Serious question time: How much does your debt cost you a day, or even a month? Have you ever figured it out, or are you scared to?

*On that note, if you also LOATHED the “Latte Factor” The Guardian recently wrote a scathing write-up which burns the latte-millionaire myth to a cinder.

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