An interesting debate about the price of coffee and its impact on personal finance has emerged among financial highflyers. Dave Ramsey, owner of financial advice firm Ramsey’s Solutions, says that the average consumer spends a staggering $22,000 on coffee over 30 years, and investor Suze Orman said Americans are “peeing” millions of dollars “down the drain.” Similarly, Entrepreneur Kevin O’Leary advised people to stop buying $5.50 coffees and $15 sandwiches and then watch their bank balances rise.
O’Leary issued the advice on Twitter and sparked a raucous debate. Financial expert Ramit Sethi replied with a sarcastic question, asking O’Leary whether making his own coffee is what made him rich. Sethi said that level of “frugality” does not make people millionaires, and after doing the math, said a consumer would need to skip 181,818 cups of coffee, at $5.50 each, to save a million dollars, and calculated that this would take almost 500 years to achieve.
Mr. Sethi has outlined his approach to wealth creation and claims he can teach people how to become rich in ten minutes. He said the first thing to do is define what a “rich life” means to each individual. For example, he said he always orders appetizers at a restaurant because, as a child, his family could not afford them. The self-made millionaire also advises people to buy what they love and cut back on things that don’t particularly matter. Balance is the key, he argues.
The coffee row between the two millionaires is not their first, and last November, Sethi called O’Leary “out of touch.” He said people should not cut back on their cups of coffee based on the advice of a man who wears $11,000 suits.
However, Mr. O’Leary insists he makes his own coffee and never spends money on things he won’t use. He said before buying anything, he asks himself if he really needs it, and if he doesn’t, he doesn’t buy it.
