Today’s post is about saving money by brewing your own coffee. I will cut to the chase and tell you that you can save over $5,000 every 10 years by making your own coffee. But if you are one of those softies that likes milk in their coffee (or even worse, coffee in your milk!), you might only save $4,000 instead (still not too shabby!).
Mmmmm, coffee. I love the culture and ritual associated with drinking coffee and coffee shops. Even at home, I think of lazy sunday mornings with the newspaper or a good book, listening to jazz, it is drizzling outside, dog is resting on your lap. Or on a beach vacation, sitting on your porch with some fresh fruit, basking in the rays of the rising sun. Or maybe battling a mild hangover at brunch with your friends waiting for the blue plate special, possibly laying the foundation for a hair-of-the-dog bloody mary. I even get nostalgic about holiday coffee, after big dinners with the family, before bundling up and heading out of the warm camaraderie for a star-lit stroll. Can you tell I like coffee??
Well, here is the tragedy: I stopped being able to drink coffee more than 5 years ago due to irksome reactions such as headaches, heartburn, etc. I’m not one to dwell on the negative, so I just fondly remember “the good old days.” Plus my wife is a pretty big coffee drinker so I still get a little contact high anyway. And I live in Portland, OR, which is a coffee-lover’s paradise.
From what I understand, Portland got really big into micro-roasting before a lot of other cities. It sort of fits with the whole DIY culture here and our craft beer history. But Portland isn’t all about twee, put-a-bird-on-it dandyism, and DIY-ethos. I mean how do you account for the fact that Portland has more strip clubs per capita than any other major U.S. city? And on top of that, the increasing number of bikini baristas around town? Value judgements aside, there is obviously more than meets the eye, at least for the casual Portlandia observer. But I digress.
Back to the coffee analysis! This example is built for the workday coffee drinker. The guy or gal who runs downstairs, or around the corner, or hits the drive-thru on their way to work every morning, 5 days a week. This guy or gal doesn’t get too fancy, s/he just orders a regular coffee and maybe doctors it up with some cream, milk, sugar, agave (?), or whatever. The regular coffee costs $2.00 per cup at the store.
On the flip side, another guy or gal makes their own coffee every morning before work. This works out to about $0.30 per cup. Both the retail coffee drinker and the homemade coffee drinker spend about the same time either making coffee or waiting in line and going to get it. This is probably a little conservative, but I wanted to error on the side of caution.
So here is how the numbers breakdown for making your own coffee:
- 10-Year NPV: $5,230
- 10-Year ROI: 647%
- 10-Year Payback: 0.2 years
As I’ve already mentioned, switching from store-bought coffee to making your own can save you over $5,000 every ten years. About $1,000 of that comes from investing your savings, but even if you don’t invest your savings, you are still looking at an additional $4,000. And as a reminder, these are REAL dollars (vs. nominal), meaning they are adjusted for inflation. From a passive-income perspective, after ten years, this decision could earn you $200 every year for the rest of your life.
And for the milk crew, here is how it breaks out assuming you buy 1/2 a gallon of milk every week to go with that oh-so-delicious-on-its-own black coffee.
And that’s how the cookie crumbles. You know what my recommendation is, but as they say in New Orleans, do what ‘cha wanna.
Stay tuned for more ROI analyses.
Assumptions:
- 6 oz. cups of coffee
- Cost is $2.00 per cup in store
- 1 lb bag of coffee costs $12.50 (peets – my wife’s favorite)
- Filters cost $0.01 per batch (Amazon)
- Coffee maker costs $20 with shipping (Amazon)
- Spend 5 minutes making your own coffee
- Spend 5 minutes buying your own coffee out