Calculating Coffee Costs on Credit
You purchase a 12 oz cup of coffee on your way to work each morning for $1.69. If a programmable filter-free coffee maker costs $34.88, an insulated mug costs $10.95, and bag of Dunkin’ Donuts coffee costs $7.97 (which makes (40) 6 oz cups), how many mornings must your brew your own coffee to break even?
I used this math problem with my Adult Living Skills students today. We are beginning a unit on meal planning. Many of them are going to live in dorm rooms their first year so their meals will be planned by the dining hall. Today, I started the unit with showing how little non-meal purchases can add up.
I demonstrated the latte factor by asking students to write down what they had spent that day on purchases like candy, soda, and snacks. Then they multiplied that out to find what they would spend in a year if those purchases became habit. Many were surprised at what they found.
We took it a step further. Remember that most students in college are living on borrowed money. That is, every dollar they spend has a 6.8% interest rate (or whatever your student loan interest is) attached to it.
First, we finished the math problem:
$7.97 / 40= $.199 per 6 oz cup, or $.399 for 12 oz
$1.69 – $.399= $1.291, the daily coffee savings
$34.88 + $10.95= $45.83, your investment in coffee making supplies
$45.83 / $1.291= 35.5
Your coffee making supplies will pay for themselves in 36 days.
Then we applied interest, assuming it takes ten years to pay off student loans, using this formula:
M= P(1 + i)N
M= Your total investment, plus interest
i= Interest rate
We went to the math problem and figured the “latte factor” of each coffee option:
$.399 x 365= $145.64 for home-brewed coffee for one year
$1.69 x 365= $616.85 for coffee-shop-coffee for one year
Then plugged it into our equation:
M= $145.64(1 + .068)10 = $281.19 actual cost for brewed at home coffee
M= $616.85(1 + .068)10 = $1,190.95 actual cost for coffe-shop-coffee
We were all shocked!
My students and I figured this assuming that we made these purchases freshman year. Imagine if this kind of spending continued through college!
And for my adult audience, imagine what a pack of cigarettes a day or two bottles of wine each week can cost… on credit… making minimum payments!
If you would like to do calculating of your own, your scientific calculator should have a button that looks like this ^ or xy. No scientific calculator? The calculator on my Windows computer worked for demonstrating to my students.
My students are adding to their graduation gift lists now: French press coffee makers (dorm-room acceptable), reusable mugs, and hot pots are now hot items.