Join me and 101,000+ others on my Substack to upgrade your life.

Dave Ramsay’s $4 Latte Rule Is Idiotic. Drink Your Starbucks.

by | Jul 4, 2022 | Money, Personal Finance

I’ll murder a small child for my Starbucks Frappuccino.

Okay, maybe not. But it’d be a tough decision *not* to mutilate a child out of frustration if anyone ever cancel-cultured my coffee. (Kidding)

Dave Ramsay is the guru of finance for many people in America. One of his most powerful ideas is simple: give up your $4 lattes.

I strongly disagree.

Buying $4 lattes is about so much more. Let me explain.

“That dang coffee habit is going to make you broke”

Dave is angry at your local cafe.

He claims in his famous coffee habit article that there’s a 300% markup on your cup of sexy goodness.

You’ll spend $63 in a month.
You’ll spend $766.50 in a year.
You’ll spend $22,995 over the course of 30 years.

Old man Ramsey is pissed. $23K over 30 years is a sin. That’s a lot of money. “It adds up, dontcha know” I can hear my grandma screaming from the grave.

Ramsey (oops … nearly wrote Gordon Ramsey) thinks we should use our $700 a year on a trip around America instead. Not sure about you, but with today’s crazy inflation, you ain’t gonna get far on that Chief.

Or he says you could pay off your student loan. Or you could invest your coffee money in the S&P 500 and just not have fun or pleasure. Ever.

Dave Ramsay wants us to make our coffee at home and hide under the staircase in the freezing cold to drink it … alone … with no interaction.

Screw that. Don’t listen to old mate.

A story of the life-changing magic of a $4 latte

My friend Dakota wrote about his experience with $4 lattes.

He grew up living in a lower-class part of America in a motorhome. He has some wild stories of what his parents got up to as full-time crack addicts. Needless to say his life was no Cinderella story.

One night he went to a dance music festival. On the way home he walked with his friends down a dark street. They brushed past a junkie walking on the footpath, looking like a zombie.

His friends laughed.

But Dakota stood frozen.

That strange zombie was his mother who he hadn’t seen in ages. She was out of her mind. Lifeless. Homeless.

Two weeks later she died of an overdose. His last memory of his mother was a bad one. All he wanted to do was tell her he loved her before she died. He can’t go back and change it.

So now he aims to make her wrongs right through his ability to write. This has helped him create a decent-sized writing business. Every day he goes to his local cafe to buy a $4 latte and work on his online business.

“Value isn’t just measured in dollars” pleads Dakota.

Dakota thinks of his $4 purchase as buying an environment where he can sit down and focus away from his two ratbag housemates.

An environment to focus helps him get more work done. That focused work done in a flow state creates way more money than his $4 latte.

You can meet people making $100K+ a month

Dakota’s latte addiction helps him find serendipity.

While he’s at the cafe on his laptop there are random encounters — because cool as f*ck people hang in cafes.

One guy bumped into him and they got talking. They have a lot in common and have now become good friends. And they even did a business deal together.

Another chance encounter last week caused him to re-meet a person a mutual friend had introduced him to. Turns out the guy works for a well-known Fortune 500 company.

It came out in conversation that Dakota runs a ghostwriting agency. The nice man referred him to someone he knew needed exactly that. In a few weeks, that call will likely land him a $25,000 a month client.

After he finishes his work for the client he’s likely to get a referral to another new one.

What that means is the cost of his $4 latte is compounding.

Wasting $4 to make an extra $25,000 a month? Terrible investment. Stupid. Dakota should have listened to Dave Ramsay. Nottttttttt.

Dakota urges us to *not* solely make decisions based on price. That’s thinking small. He thinks we should think bigger and see a $4 latte as an investment.

There are hidden dividends to every purchase — Dakota Robertson

Dave Ramsay calls giving up coffee a “sacrifice”

Dave wants us to know that we have to make sacrifices.

He’s giving us a good ol’ fashion navy seal pep talk. I don’t get it. You only live once. Why make sacrifices at all?

Why not focus on living your best life and drinking your $4 lattes instead? Financial sacrifices are great. You know what’s better?

Learning how to not have to make petty $4 latte sacrifices.

Caring about $4 lattes keeps you broke

The $4 latte mindset is a broke mindset. It requires you to ruthlessly save and be an absolute tight ass with all expenses. That’s no way to live.

Do this instead:

Focus on making more money

We can always make more money. There are endless opportunities, especially if you have wifi:

  • SaaS
  • Web design
  • eCommerce
  • Writing online
  • Public speaking
  • Online education
  • Coaching/consulting

Focus on skills

Learning new skills helps you make more money. It’s the one thing you can do to get out of $4 latte hell. Outside of work you can use free Youtube to learn high-income skills (like the ones above).

Focus on having multiple income streams

Stacking income streams de-risks your career.

Sure, if you only have one income and solely rely on a salary then you have to be more careful during the upcoming recession with your $4 latte habit.

But if you choose to add more income streams then the lattes you pay for become less of a concern over time. It’s why the phrase “side hustle” has become so popular.

It’s the idea you can make multiple small bets outside of work to test new areas of competence and find other ways to make a living.

Focus on investing in assets

This is one thing Dave Ramsay did get right.

Investing in financial assets is key, especially when they’re on discount right now. That’s how you build long-term wealth.

Saving on a few lattes isn’t going to build a massive investment portfolio, though — your income does that.

Fastest way to grow your income? Become a business owner. That’s the harsh truth people like me refused to accept for far too long.

Closing Thought

Drink your Starbucks latte. Life is too short to be a tight ass. And the networking opportunities at your local cafe can be worth a lot of money.

This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.

Are You Operating With Maximum Energy?

For those who are tired of dragging through the day, who want to get back the fire they once had, who are ready to reclaim your natural energy… this is your book.

Unleash the fire within