How much is your smashed avo & coffee really costing you?

Pillar Financial   •   September 15, 2017

With all the media hype about younger generations and their smashed avo addicted ways, we often forget about the spending patterns of the older generations.

If you walk in to most café’s in Melbourne, you’ll find gen Xers and baby boomers indulging in all sorts of fanciful breakfasts, teas and lattes. It’s no surprise, given that these generations have almost twice the disposable income of your average 18-25-year-old, so they can afford to splash out a little.

However, with mortgage stress on the rise, perhaps it’s time to revisit the household budget and better understand the true cost of some of those items that we’ve slipped into buying. Things like lunch at the local café, breakfast on the run or the first or maybe even second coffee of the day. These all certainly add up.

Before we get into the calculations, there’s one thing to think about. If you have a mortgage, everything you buy has compounded interest attached to it.

What do I mean by this?

Well, let’s take the morning coffee for example. Instead of buying the coffee, you could have paid $5 off your mortgage. This puts an end to the interest on that $5, not just for this year, but for every year moving forward.

This is the ongoing cost of your mortgage. Interest repayments are ongoing, so the sooner we can pay off the mortgage, the less interest we pay, the more you can enjoy your morning coffee with a smile, knowing that you are debt free.

The below table shows you, how much these purchases cost you yearly and how much you could save in time and money off your mortgage if you reinvest the money spent on these items into paying down your loan.