I would like to have one day of the year when I can go to the closest coffee shop and pick up my one free cup of coffee. There is a way you can do that and I started implementing it. I do not give financial advises on this website, anything you read here is my personal opinion and should not be treated as advice.
Before we continue I would like to point out that I that there is no such thing as free lunch or coffee for that matter. Everything costs something may it be your or someone else’s money, labor or time, everything has a cost. Free stuff is only a false promise, no matter who is promising it. However there are ways how you can passively earn money to cover your costs, that is true for coffee as well.
Think about it, for you to have that free cup of coffee per year:
- someone has to plant, grow and collect the beans in Peru,
- someone has to ship those beans to you
- someone has to roast the beans
- someone has to brew the coffee and write your name on the cup
How moral would it be not to pay these guys?
Off course there is a cost, but there is a way how you can pay everyone and still get you cup of coffee technically for free. By technically I mean pay for the cup of coffee but get the money back. The way you do it is called Capitalism: here everyone gets paid for their labor and everyone gets payed in relation to how important is the job they are doing. The most important job in Capitalism is called “allocation of capital”, and that is what I will do to get my cups of coffee.
OK, so here is the plan:
- For 100 consecutive days I will brew my own coffee every morning. The brands I like are Café Bustelo and Dallmayr (the second one is my favorite especially “Dallmayr Prodomo” mmm..).
- Every morning I will act as if I had spent the money buying a “Venti latte” at Starbucks but I will be actually putting $4 in a mason jar for 100 consecutive days. This process I will call “capital formation”. Not only will I have the the joy of brewing my own coffee but also seeing money accumulating in my jar. Basically it has two steps to it every morning:
- put $4 in the jar
- start brewing your own coffee
- I will keep myself motivated so I can stick to the plan. I already started jogging again, I jog every day so I can think about all the great stuff I will achieve while I am jogging, it keeps me fit and motivated. For this project I will also create a calendar where I can add check marks at the end of each day to see the progress I made.
- After the 100 days are over I will spend 3 hours per day for 3 days (in total of 9 hours) to do research on a company that pays me dividends at least 1% per year. When I am picking a company for this purpose these are the qualities I will be looking for:
- company’s ethics and policy should be in line with my views
- should have dividend yield somewhere between 1 – 3%
- “large cap” company with a market capitalization value of more than $10 billion
- company should be older then 25 years
- I will start with “Dogs of the Dow” and extend my research from there
- After I have picked the company that I see fit I will go ahead and buy stock in that company. I will call this step “allocation of my assets”.
- The dividends payed by the company every year will cover the cost of a cup of coffee for one day of the year.
- I will reinvest the dividends in the same company to keep up with coffee price inflation.
- I will buy a cup of coffee to celebrate my achievements.
After all this is done I will nominate 1 day of the year that I will call “My free coffee day”. On that day I will put on a top hat, go to my favorite coffee shop, purchase a cup of coffee and enjoy life like the coffee magnate that I am. Awesome!
David Bach points out in his best selling book “Finish Rich” that the small trivial things we spend on everyday adds up to a large amount over time. What if you would put this money to work for you instead of spending it? A very interesting read, I highly recommend it. I also recommend the Bialetti Venus espresso maker for making great tasting coffee at home. Cheers!