Back to the Basics with the Latte Factor®

Getting a handle on your spending can be a big challenge. You have to really work to keep what you work so hard to earn. Luckily, there’s an easy, fun way to do that. You have to find what I’ve termed, The Latte Factor.

What is The Latte Factor®?If you’re a regular reader of my books and articles or if you have seen any of my appearances on various TV shows such as NBC’s TODAY show – Money 911, you may already know about this phenomenon that I call the Latte Factor.

The Latte Factor® is based on the simple idea that all you need to do to Finish Rich® is to look at the small things you spend your money on every day and see whether you could redirect that spending to yourself. Putting aside as little as a few dollars a day for your future rather than spending it on little purchases such as lattes, bottled water, fast food, magazines and so on, can really make a difference between accumulating wealth and living paycheck to paycheck.

Example: In purchasing a $3.50 latte every day for a year, one would spend $1,260. If that money were invested at 10% over 10 years, it would grow to $21,870!

Use the Power of The Latte Factor®
Over the years, I have received thousands and thousands of emails, letters and thank-you cards from people who have used the Latte Factor—and the Latte Factor Challenge—to change their lives by changing how they think about spending money and how they really spend it. Some saved $5 a day by brown-bagging a sandwich from home instead of buying one at work. Others saved hundreds of dollars a month by giving up cabs for buses, dropping their premium cable channels, and foregoing regular manicures and massages.

Everybody’s spending habits are different, and so are everyone’s solutions. What we all have in common is that every one of us is capable of cutting back. Find your Latte Factor now! Go to, to calculate your Latte Factor, download the Latte Factor worksheet and your complimentary Latte Factor iphone app!


Wow! I picked The Automatic Millionaire up in frustration over my finances. My frustration quickly disappeared to give way to excitement. What a great read a real eye-opener! I did your latte factor test and found that I was spending $5-$10 a week just on the cheap movie rentals each week at the Drug Mart. I have a habit of going there after work to get something for unwinding and relaxation in the evening. The Latte worksheet is very clear and amazing in the reality of compounding interest in the few entertainment dollars. Just eliminating this habit will increase my cash allocation for more practical and long-term purposes. I realized that little spending habits like these does not help with debts. I am 28 years old and have credit and loan debt. I am setting up automatic deposits for savings to pay myself and making extra payments on my debts in advance such as the examples in your book suggest. This feels amazing and liberating. Thank you so much for your awesome book to empower anyone in every situation.
- Amber, Mount Gilead, OH

As I was reading about the Latte Factor, I already knew what my “latte” was. I travel a lot and get bored on airplanes so I buy magazines…about 4 per week. At $3.99 and $4.99, that adds up. What I didn’t realize was all the other little incidentals I pick up in airports. Gum $1.99, bottled water $1.99, playing cards $4.99 and I even spent $40 on wine at an airport last week! In fact, in one day, I spent over $90 of my own money on a company expensed trip. I wasn’t even paying for my own food or gas! And I complain that my debt is too high and I never have enough to pay bills, much less save, but after seeing this I think I can find free ways to entertain myself and carry a refillable water bottle and SAVE $90! Thanks David for opening my eyes.
- Joy, Burleson TX

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6 Ways a Nonprofit Counselor Can Help You (From

Nonprofit credit counseling

Four years ago one, of my closest friends, Bill, came to me to share he was more than $100,000 in credit card debt. Bill needed more then a Debt Diet—he needed professional nonprofit consumer counseling. Fortunately, that’s exactly what he got, and last month Bill became officially debt-free! Bill’s not alone. Each year, millions of Americans turn to nonprofit credit counseling to help them get out of credit card debt. When people turn to these organizations, they have, on average, more than $20,000 in credit card debt. With that said, you don’t need to be this far in debt to get professional help. I’m an advocate of getting nonprofit credit card counseling if you feel you can’t get out of debt yourself. If you’re having trouble paying your bills on time, are only making minimum payments or have skyrocketed interest rates on your cards and can’t make a dent in the debt, it may be time to get some professional help. The key, however, is to get “trustworthy, honest help” from a reputable nonprofit credit counselor. Let’s take a look at what these organizations can do for you.

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Deal with Your Credit Card Debt (From

Credit card debt

If You Can’t Afford to Make the Minimum Payments, Here’s What You Should Do

First, take advantage of Help With My Credit, a resource for struggling consumers created by a group of major card issuers, including Bank of America, Capital One, Citi, and Discover Card, plus the MasterCard and Visa networks. The service—which is available through both a toll-free number, (866) 941-1030, and a website—offers tips on managing your credit cards, communicating with the card companies, and finding an accredited credit counselor.

To read rest of my article on dealing with your credit card debt on, click HERE!

The 10-Step Plan to Improve Your Credit Score (From

Credit score

So let’s get started. The simple truth is that raising your score isn’t that hard if you know what to do. It just takes time. As I noted above, it’s mainly a matter of understanding the factors that FICO weighs and then figuring out which of them you can change for the better. Over the years, I’ve coached literally thousands of people on fixing their credit scores, and based on that experience I’ve developed a 10-step action plan to get your score up quickly and keep it there. I promise you—regardless of where you are starting from, if you follow this plan, in six months your score will be higher than you thought possible.

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Which Records Should You Keep and Which Can You Ditch? (From

Financial records you don't need
The reason I made the FinishRich File Folder System so specific is that many of us keep too much information for way too long. (I’m guilty of this myself.) The fact is, except in cases involving fraud, the statute of limitations on income-tax returns is only three years, so the Internal Revenue Service does not expect you to hang on to tax records and receipts for any longer than that. The main exceptions to this are if you’ve underreported your income (in which case you should keep your records for six years) or have claimed a loss from worthless securities (seven years).

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David Bach’s File Folder System (From

Organize your files.

Let’s face it—organizing your finances can be a real chore. Every month, you get sent dozens of statements, bills, and other financial documents in the mail and online. It can be overwhelming. The good news is that there’s a way to get organized that’s amazingly easy and relatively painless—a system that allows you to find your bills and important documents quickly and without worry.

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