Mike Ballew – Financial Planning Association member, engineer, author, and founder at Eggstack.
Eggstack is an independent financial technology company located in Jacksonville, Florida. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future.
Can something as banal as coffee have a significant impact on your finances? As they used to say on Laugh-In, “You bet your sweet bippy!” As a child I always wondered what “bippy” meant. One time I asked my mom and she told me to go ask my father. He said I'd find out when I got older.
I’m not going to say their name because I don’t want to get sued, but they’re a national chain that has locations on every corner. We’ll call them Car-Trucks. You would be hard-pressed to find an American who has never visited a Car-Trucks. Many people can’t start their day without it. You would be equally challenged to find a more expensive cup of coffee. When you order a Car-Trucks cinnamon dolce cappuccino expresso latte whatever, you are paying more for that beverage than you would most anywhere else.
Based on a typical cost of $4 per order with tax, stopping at Car-Trucks every morning on your way in to work costs more than $1,000 per year (52 x 5 x $4). That’s what we mean by the true cost of coffee. Using the S&P 500’s historical return of 10 percent compounded annually over a 40-year career, investing that money would amass a small fortune equal to $503,977.
Since the 70s the conventional way to make coffee at home was with an automatic drip coffeemaker made popular by Mr. Coffee. Then about ten years ago the single-serve coffeemaker came onto the scene. Today they are everywhere. No longer are we faced with the horror of waiting several minutes for a pot of coffee to brew, now we can slip a pod into a machine and have a personalized cup of coffee almost instantly.
We too jumped on the Your-Pig bandwagon (that’s what we’re calling it – same reason). We used it for years before we noticed the cost. An inordinate amount of our weekly grocery bill was going to buy those little single-serve pods.
For whatever reason, probably just because they can, coffee in single-serve pods is wildly more expensive than conventional ground coffee. On the surface it might seem insignificant, but the cost really adds up.
As an experiment we decided to shelve our Your-Pig and go back to a conventional automatic drip coffeemaker. Buried deep within the darkest recesses of our pantry we located our old Mr. Coffee. Purchased at a garage sale some 20 years ago, it’s amazing the thing still works. We dusted it off and put it back into service.
Based on an unscientific survey conducted in our household at random, participants agreed there is no discernable difference in taste between conventionally-brewed coffee and coffee made in the Your-Pig. The same goes for tea (Your-Pig tea pods versus tea bags).
There are two kinds of people in this world (if case you’re keeping track, based on the number of times I’ve said that there are actually at least 20): detailed people and non-detailed people. For those of you who don’t like details, we’ve summarized the findings in an executive summary. For those of you who do, we have a section entitled Details.
Executive Summary
Switching from the Your-Pig to conventional brewing methods saved our household $16.20 per week, or $842 per year. Invested in stocks for 40 years with the same parameters used for Car-Trucks, that adds up to more than $400,000. Each day in our household we consume a total of 4 mugs of coffee and 1 mug of tea. The Your-Pig route required 4 coffee pods and 1 tea pod daily; conventional methods require 2.4 ounces of ground coffee and 1 tea bag per day.
Details
A typical coffee mug holds 12 fluid ounces. Allowing 2 ounces for cream and sugar, that leaves 10 fluid ounces for coffee. In our household we consume a total of 4 mugs of coffee each day which is equal to 40 fluid ounces. One coffee scoop holds 2 tablespoons of ground coffee or 0.36 ounces. Folgers recommends one scoop of ground coffee for every 6 ounces of water. Based on that, 4 mugs of coffee requires 2.4 ounces of ground coffee.
A box containing 18 pods of Folgers Classic Roast Coffee costs $10.98 at Walmart. A box of 18 Earl Grey Tea pods at the same store will set you back $10.58. Based on that, each coffee pod costs $0.61 and each tea pod costs $0.59. Using our consumption numbers as outlined above, the Your-Pig cost $21.21 per week in coffee and tea pods.
Walmart charges $11.68 for the 40 ounce container of Folgers Classic Roast Ground Coffee, and $1.94 for 100 bags of black tea. That equates to $0.29 per ounce for ground coffee and $0.02 per tea bag. Based on the consumption figures outlined above, using the conventional method for making coffee and tea costs $5.01 per week.
Switching from the Your-Pig to conventional brewing methods saves our household $16.20 per week.
The pod cost is what really gets you when using a Your-Pig, but there is also a significant difference in the cost to purchase the machines themselves. On Amazon the best-selling Your-Pig model is listed at $83.99 but ends up costing $102.48 with shipping and taxes. The shipping is expensive because a Your-Pig is heavy. However, even with shipping and taxes it costs less at Amazon than it does at Walmart. The Mr. Coffee 12-Cup Coffeemaker lists for $16.88 on Amazon but costs $23.97 with shipping and taxes.
Our first Your-Pig only lasted 4 years before it failed and we had to replace it. As I’ve said, the Mr. Coffee unit is at least 20 years old and it still works. Over a 20-year period based on our experience with the Your-Pig, you would spend $512.40 to purchase 5 Your-Pigs or $23.97 for 1 Mr. Coffee unit.
A cup of coffee brewed in a drip coffeemaker costs 18 cents versus 61 cents in a Your-Pig. Even more shocking, a cup of tea costs 2 cents using a tea bag versus 59 cents in a Your-Pig. The Your-Pig should be buried deep within the bowels of your pantry in favor of an old-school drip coffeemaker. Same goes for Car-Trucks, you can live without it.
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