CNNMoney.com Article: Easy ways to save $400,000

Good read on CNNMoney.com by Walter Updegrave, Money Magazine Senior Editor.  While I don't agree with all of Walter's articles, he's one of the better personal finance writers on the internet.  In this article, Easy ways to (really) save $400,000, he takes on the "Latte Factor" popularized by David Bach.

The Latte Factor is simple and, in principle, I agree.  The idea is to cut out the small, unnecessary expenses in your everyday life.  Like that daily six dollar Starbucks latte and muffin, or the daily afternoon juice with protein boost.  Like I said, in principle, I agree.  If you are spending six bucks on lattes and muffins, and another four bucks on Razzmatazz smoothies every day, you need to slow down.  Your wallet and your waistline definitely need a break.  Some quick nutritional facts:  Grande Latte, 260 calories (160 from fat), Razzmatazz Original size, 480 calories (112g of carbs).

But the simple truth is that few have daily routines such as that.  If you do, slow it down.  The five or ten bucks a day adds up quickly.  For the rest of us, the biggest ways we can save are not adding up the little things, but recognizing the big ones.

Walter offers three suggestions that can save you $400,000 over a lifetime.  1)  Drive less expensive cars, 2) send your kids to public (not private) university and 3) cut vacation spending by $1,000 per year.

I would add, 4) don't overextend your house purchase.  Yes, a larger house may have the potential for greater price appreciation, but while you are living there you will pay higher taxes, more mortgage interest, higher utilities and have more house to furnish.

Comments

[S/100/30]

2) send your kids to public (not private) university

This is bad advice in general. I was a special case because I happened to win a very competitive scholarship to my state university, but had I not and had to pay full price for my state school, it would have been almost as much as my heavily-discounted-via-need-based-aid private school offers.

I do agree with him that there's little evidence that elite and/or expensive private schools are worth the money (especially if your state school has an honors program), but that's very specific advice and I'd hardly classify it as an "easy" way to save $160k.

[Golbguru]

The public/private arguement is valid even for later years of education. My brother had to choose a public university "XYZ State University" over Stanford...just because Stanford was too expensive.
Two years later when got his masters, he says not joining Stanford was a very good decision.

But, like 100by30 says above, it's field specific, so you can't extend it to everyone.

[Finance Guide 101]

I agree with 100by30 and Golbguru comments about Public and Private college education.

There are more unnecessary things, on which we spend money... like buying a new car instead of used car (a good conditioned one), buying things which we already have at home and going back to the store to replace or get another one (extra gas expenses), spending money on unnecessary shopping and going to an expensive restaurant. These small things end with large amounts at the end of the month.

When we compare education with these simple things kids need a good education for their bright future.

[Michael Evans]

I thought the advice to estimate the savings and increase your retirement savings contributions by that amount was a good idea.

For me personally, if I'm already saving enough to comfortably meet my retirement plan then I would rather treat myself occasionally.

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