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How to Retire Early: The Latte Factor

Lesson 5 of 18

The Latte Factor: How It Works

David Bach

How to Retire Early: The Latte Factor

David Bach

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Lesson Info

5. The Latte Factor: How It Works
What exactly is the latte factor and how can you find yours? In this class, David breaks down the latte factor math and shows you how to save money by cutting out small non essential living expenses and developing a daily mindset geared toward retirement. He also shares his pick of online resources and apps that aid in financial planning and investing.


Lesson Info

The Latte Factor: How It Works

Let's go through some lot if aftermath. In the book, Zoe learns that she's richer than she thinks. Zoe Daniels, in the book, is 27 years old. She lives in Brooklyn. She commutes to her office at the Freedom Tower, which replaced the World Trade Center. She's a travel editor. Only thing is, shouldn't travel. She just works like so many millennials. Zoe Daniels came to New York with a dream like so many people Cos cities like we're in Seattle today. Film. The Seattle is a city of dreamers. So is Portland, Oregon. So is San Francisco. So is L. A. So it's New York. So Chicago. There's always cities that people moved to for a dream. The guy who drove me here. He's in a rock band. He left California, has dreams to be a rock band, but he said, I can't make any money. This rock band else gonna make money as one driving this car. Um, she had a dream. She comes New York. Six years later, she's kept making more money, but she's spending more money, and she's not getting ahead. And so she takes th...

e subway to her office and she comes out in the Fulton Center, which is right next to the Freedom Tower. And she's She's totally depressed and she sees the sign that says, If you don't know where you're going, you might not like where you end up And she takes the escalator up above ground and she sees that I Love Memorial, which she's walked by for six years. She sits on the bench and she sees people sobbing. And then I love Memorial and chance yourself. What is she doing with her life? And she's not sure. Maybe some of you are sure. And then she goes into her office and she goes to lunch with her boss and she starts talking about Boston's What's wrong? She starts telling her about these things that she wants me. She's like, but I can't afford it, which is a very common thing that were raised with Mom. Dad, I want this. Nope, can't afford it. Super bad thing to say to your kids because it embeds them to believe that you'll never have money. Don't tell yourself you can't afford it. The question is, how could you afford it? But in her mind, she can't afford it, she says. you know, you go meet Henry at this coffee shop that she goes to. She's like Henry. Henry happens to be the barista at this coffee shop who becomes one of her mentors, and Henry walks her through this idea that, you know, if you can afford that. Lotte, you could actually afford this picture on a wall that represents her dreams. There's a picture of I want to give the whole story away, but there's this picture of this coffee shop of all these travels, and she wants to travel. She wants that picture because it represents the life that she writes about, but she doesn't have. He starts saying her. You know what? You could afford this. If you just cut out the coffee and he's like, You don't have to give up the coffee. It could be other stuff. And he walks her through the metaphor because that's what the law to factor is the metaphor. He walked her through it, and she goes home and says, He says, You're let me give you a Justin idea just for kicks. Go home and write down where you spend money and then added up and see if you cut things out of what will be worth. So she goes home that day. She reds down her morning LA updates for 50 her muffins to her juice cause she goes and gets a juice break. Truth be told, guys, I'm actually lowering these numbers because these air national numbers none of this is what it costs in New York, New York, you go juice. It's 10 bucks to 12 bucks. You can go get a lot A in Manhattan by her office, because I know because I live down there and it's 6 50 The muffins are 50 but I wanted to make national average numbers. She gets bottled water to buck 50. There's nowhere you're flying bottled water. Most places in Manhattan for dollar 50 right? She goes and she totals is up $29.75. And she goes okay, like just for kicks. If I take this dollar amount, what could it be worth? So she takes $30 a day. Times five, which is 1 50 a week times 32 weeks, $700 per year. She runs its real calculator. 40 years is worth $4,110, And you guys have read the book, right? She shows. She can't believe it. Actually, she's like, What? How could this be? Because she's not using her for one K plan. She hadn't saved any money in six years. How could this be? So? She's so She reruns number. She's like, What, 10%. But what if I can't get 10%? What if I could only get seven, so she runs him again. She is 7 $1,006, but I can't could. Seven. What could only get five 991,000. She closed her laptop and she's like, Have to figure this out. Maybe there's a way for me to do this now, By the way, in the story, when she runs these numbers, she's super motivated. What she does, she merely takes the information to her friend, and the friend does right call yucks on her young. She's all excited, and he started saying to her, Oh, that won't work. 41 k plans or just a scam. The fees are too high. You know you're going to be taxes lead or you'll never get a rate of return like that, right? They just he all these things. And so she goes from being super side super motivated, which happens all the time to like, Oh, I don't know if she loses her motivation when you get excited about something. And by the way she knew he would yuck on her young because she knew her friends Negative in the book, she says, like, was kind of negative, But we always do this right. We get excited about something and we take it to the person we know it's going to just pee all over the dream, right? Like, you know, it could be your parents, Your mother going to your data. Give your best friend. Don't take your excitement. The person that's not gonna support you Don't dial pain. Write that down. Don't dial pain. Okay, Dial love dial Goodness dial in Dreamers Don't take what you're learning today to somebody that you know was going to criticize him. Take it to somebody else is going to support you. I talked about earlier with this amazing group on our insider team. We could lock in factor dot com and you join us today and you get inside our Facebook page. Now we got 1600 dreamers, of which I got seven of you in the room supporting each other. Somebody went in on talk about how she's retiring early. You guys, you guys, Ken's. Anything in her name was and she lives in New Jersey and she's like because I did all the stuff. The David Bach said 14 years ago. I'm retiring in 59. Everybody came into the message board with Facebook was like Oh my God, that's amazing. Find people who will support your dreams. This is an actual picture inside the book of the lot. A factor have these old bugs, but this is just showing you the math, and I know that one's hard to read. So let me just show this to you another way. $5 a day. Start in your twenties by retirement at 10% in 19 $40,000 $10 a day by retirement 189,189. 7023.7 million. $30 day again, Back to that number Crazy, right? These are unreal number, so you just gotta pick here number and figure out where it's coming from So look, could be coffee. I'm a coffee drinker. I can start my day without coffee. We have another cup of coffee at our break today. I had two cups this morning, but I either drink it free cause it's free here today, huh? Or it's free at the office or it's 20 cents at home. I posted that video you guys saw me do on Facebook, where I'm like, I'm here to go the airport and you told me pour my coffee into my to go cup and I joke, I'm like So this cost me 20 cents. And now I'm all set now get in line at Starbucks at the airport. Maybe it's not coffee. May baseball water? Never has there been a bigger marketing gimmick in the world that ball water. Aside from the fact that the planet plastic is killing the planet and killing animals in the ocean to this day, water still free. When I started teaching in 1994 water was a $1 billion a year industry. It's now in the US over $15 billion. The bulk of ball water is coming out of a tap and then they're sticking it in a bottle under putting a label on it. You guys saw me do this only inside our team. I was with my son. We went to all to skiing. He I gave him the lunch money. I gave him 20 bucks so expensive. When you go skiing, Tiu and I had to take a call. And then I want to get my food and we got back to table. Basically the same time I went and got a cup at Alta Ski Resort sponsored by Coke because it was a Coke up and I got three water from the tap, so I got my big Coca Cola glass of water free. My son comes back with his bottle. Thank God. How much did you just pay for that bottle? Because I don't know. I go look at your receipt. He was $4. 30 cents. I go. That what you doing? I'm taking a picture, and I'm gonna put this on Facebook as an example. Stupidity. You know you're not mature. Yes, I am. And but we guzzle like that on Facebook. You can't have. You can't do this, Jack. It's not about the fact that your dad can afford to buy you bottled water. It's about the fact that is done. If I got bottled water and you got Bala, that's $10. It's free. There's cups over there. There's a water faucet. So I you know, every time we go out to a restaurant, I never say yes to ball water for the most part. But run with my kids. I want my kids by ball water unless unless for some where there absolutely bald wire. And we carry those things around to fill it up, even at the airport. Cigarettes I really wanted out packs cigarettes here, but this is they couldn't do it a career alive. I wanted like a table with them because people still smoke and a pack of cigarettes a day. Like I think in New York now packs $15 a day. People spend $500 a month on cigarettes. Forget the fact that cigarettes kill you and smell. If you took the money instead of buying cigarettes and you put it into Philip Morris, I love that you're laughing, but look, no one's millions of people are never gonna stop smoking, So if you could be smart enough to stop smoking, then by the Fillmore stock. I don't film or stock. I'm against it, but own. Or if you're not gonna stop smoking than part of the stock, right? Like if you're not going to stop going to Starbucks by the stock in the lobby factor, the mentor that your name is Henry. Take Zoe to Starbucks and starts to teacher these lessons and says, You know, Zoe when Starbucks went public, if you put $ in the stock, today would be worth over 1/4 $1,000,000. So if you don't want to stop doing something that make sure you own the company, could be alcohol could be eating out. Remember I told you my grandmother should brown bag lunch. Um, somebody posted inside our Facebook group mean that was such a great mean because they said, You know, you want to go on a dream trip and you can't afford to make your lunch at home for three months and you have enough money to go on a dream trip. And she did the mat somebody. But they took the mean basically showed save $10 a day, $3 a month and in three months. You've got the money for Dream trip. I thought. It's good example. Cars. I'm gonna show you a little bit here. Car slide. This is the number one place that people waste money. It's also it's not just little stuff. It's big stuff. This is bottled water numbers. Also in the book, I used a dollars an example, but just not having bottled water. 40 years could be 100 and $9000. Here's Here's a cigarettes pack a day, $7 dead and using New York numbers $7 a day and 30 years could be 1/2 a $1,000, for $4000. What if I can't grew 10%. Let's use $25 a day at 8%. 20 years is tour 94, 30 years, 745,000. 40 years. It's $1,745,000. I know the numbers are starting it. You could even be glazing over. The reason I'm doing him over and over again is to drill it in small amounts of money can change your life. What's happening out there is that you're hearing that you need some. There's another person I totally disagree with her, said You need $5 million today to retire like you. We have a lot of guns in this country. Why don't you just tell people to go kill themselves? Right? Like six out of 10 people don't have $ in savings, and you want to go on TV and tell people they need $5 million to retire. Just just have everybody go on, shoot themselves like that's not what you do not want to be thinking. You need $5 million Retire. What you want to be thinking is, what do we need to save the day? You'll be thinking in daily dollar amounts. Is it $5 a day? Is it $10 a day? Is it one hour day of your income? Because that's what will change your life, and over time it will really make a difference. I wanna help you find your lot a factor, so there's a form in the back of the book to track where your money goes. Use the form, track your expenses, run the mouth and get started. So the form looks like this, and all you do is track where your money is going for a day. What did it cost you? Did you waste anything? Take the dollar. Amount added up. Then go run a calculation lot if aftermath right down one day, one month, one year, one decade. Just run the math, then go out just like I'm showing you and run it in 10 years. 20 years, 30 years, 40 years. Here's the thing. The first decades number for a lot of you, it's not. You're not gonna get excited. Even when I was with Chase earlier day that first you're really gonna be 1st 10 years. It will be somewhere between 50 to 100 grand. It's down a $1,000,000 because you typically don't make a $1,000,000 by investing in a decade. It takes 2 to 3 decades. It takes decades to build wealth. Not days, I said earlier. Don't wish to critics. People will tell you there's so many critics in lot factor people like David Bach is taking away my copies is the only thing I have going for me in my life. People are blogging about. This person was on CNBC said, I'm glad I spend 20 grand on my coffee or last 10 years. Good for you. That's great. But you know what? If you invest his money, it could be worth a $1,000,000 in the deal. Yeah, but a $1,000,000 in 30 years won't be worth anything. It will be worth a whole lot more than zero. Which, if you're not saving, is what you're on track for. Yeah, but you'll have to pay taxes on it later if I put it in an IRA account. So what? I'd rather pay taxes. 10 2030 40 years from now. I'd rather have my money grow tax deferred or visit a Roth IRA tax free. Yeah, but you can't earn high rates of return anymore. Says who? The market's up 20% this year. It's on Lee May 1st, you've been in the market the last 10 years. You earned over 10% the whale for 10%. Actually, there was a whole list of mutual funds and barons last week that have earned over 14% for 10 years. Don't listen to critics to tell you can't make money in the markets. Just not true. Minimum wage is too low. It's not a living wage. Nope, it's not the government's facing a multi trillion dollar deficit. They're never gonna fix it. Nope, They're not rich. People are getting richer. Yes, they are. You only get to live so long you can spend these decades worrying. You can spend these decades whining. Or you can spend these decades working on a plan that will make you rich. And again, I showed you you're gonna work 90,000 hours or more. The question is, are you going to keep any money? If one thing comes from these 1st 2 hours together, I want you to become financially selfish. I know it's uncomfortable in this room right now because what I'm saying to you is real. You have got to save yourself first. That means pay yourself first. You need to become financially selfish. You must keep in our day of your income. I'm gonna go through when we come back. The retirement vehicles that will allow you to do this. You cannot listen to the critics, by the way. Typically, the critic is poor. I've never met a rich critic, quite frankly. So you need to get your tips from riel people who have become millionaires on an ordinary income Everything I've always taught is based on that philosophy. I want you to run the math yourself. I want to give you a calculator that you can use to run the math. This is the calculator that I use investor dot gov good investor rock of put in compound mouth calculator. This is at the very bottom of this page, and you can run calculations all day long and there's lots of different ways you can run them, and I will tell you you put in the initial investment monthly contribution length of time, estimated interest rate, how long and then you can decide you want a compound in daily, monthly or annually. Most compound interest charge have done monthly if you're investing monthly, but you can run either number annually will give you the lowest number. Monthly will give the second number, and daily will give you the highest number. Dailies. Unrealistic is most people don't invest daily. Most Filinvest Monthly. Um, here's another calculus on my website. Go to the locket factor dot com. There's that the lots of other Cal cares on there, and also there is, um, that tracking sheep. Here's a great app is my favorite app to track where your money goes is clarity, money. The moment this app basically launched, I liked what this at causes all phone based. I like what this app does you put in your credit card your bank account. He will show you in minutes where all your money is being spent all the time. And I'll remind you we're spending money. It will also show you what you're doing with subscriptions. So, subscriptions, anything you signed up for those monthly Netflix phone some box of goodies being shipped to you. It summarizes them. When you see it summarized, it will depress you because those are all people that you're paying first before you automatically and a lot of it you're not using the good news is because it's on your phone and we're all on our phones all day long and you can get reminders and you look at it. There's also little buttons where you go click and unsubscribe. Companies hate this, but it's the fastest way I know to reduce your expenses to cut all these Fix all these monthly little things you signed up for. I see people time. They have 23 $400 of days. This chart I called double octave actor. You start to look at your monthly expenses and you look at ways you could save them. Like here's a real example. Somebody who we went through expenses. She was paying $80 for cable. We got her cut to 40. She had premium cell phone plan. We took it from 70 to 30. Should gym Member None of these things do we end? Gym membership. dinners out. We cut on me time she ate entertainment. We cut that down just by making those changes, not giving anything up, she saved $540. So go check out clarity money dot com. Do you know reminds really going another website, mint dot com. I used to use Mitt Talk home and recommend mint dot com until clarity came out. Clarity. I became full disclosure an investor and clarity because I liked it so much and pretend Ambassador for them. Adviser. We did sell the company to Goldman Sachs, now owned by Marcus, which I'll show you a little later. There. Inside the APP, you can actually think put money right into a money market account which is one of highest paying money market accounts in America. It's like over two point was 2.2%. Right now you're being count. Zero. Marcus is 2.2%. Um, there are other companies that can help you cut your expenses. Here's a website called Ask trim dot com Again. It'll go through what you're paying for. I can show you ways to get better deals. Here is the website I just talked about for the high paying money market account. 2.25% on savings rates. A complete no brainer like you've got your money. Innovate, countering zero and you can put it with Goldman Sachs and get 2.25%. It's a no brainer. It's liquid. You can put small amounts of money in here, and they're not the only ones like I. I don't want to seem like I'm selling anything like there. There. There are tons of these, like here's Bankrate, um, and you go to Bankrate and you can compare rates. But, like has anybody here ever heard of BBV A. How many of you have heard of Goldman Sachs? So that's how I work, like do I know who these people are, so you don't necessarily have to have the highest rate. But there's a great website Bankrate Compare money market rates. This is my favorite way to investor change. Literally, you can do change round up. So, like you go spend 3 50 at Starbucks, you can set it up where the next dollar 50 gets rounded up and put into an automatic savings account you can invest is a dollar in a diversified portfolio on acorns. So a corns is an app. You download the app, and in minutes you can be investing small notes money. Now you tell your story because you invested in a corns. The last time I was here, I started to use it and round up those monies. I think I've rounded up over 1100 times, plus put $20 a month in there, and it's yielded over $1300. Give a run of laws. So that's probably 18 months ago I was here roughly, and that's a small thing, right? You did $20 a month and you have but you have more money now in that little account, then 60% of America, so don't believe like it doesn't make a difference because it does, even if you would like you to go put more in $20 a month and now, but, like at the rate you're going to have $10,000 in an account in a decade. So it is another company I love so much that when it launched, I became an angel investor in it, um, five million people have opened accounts now with a corns, and they just raised a whole bunch of money from CNBC. It's just a great company, super proud to be a part of it, and I highly recommend it, especially for millennial, especially for anybody saving small amounts of money. It's really the lot of actor made into a nap. And there's other tools. Here's one called Robin Hood, one of fast scrolling brokerage firms in America. Uh, there everything on their websites free. The A corns is free to. After you have $5000. It's a dollar a month until you have $5000 invested. Right now, Rahman's free. So you again I go back. Teoh, you don't have to be rich to sword investing. We're gonna go have lunch and hang out together. I'm going to sign all your books at lunchtime. We'll take pictures you could literally open. One is absent, and by the time we come back, you could have something set up. You're gonna Some of you flew here. I can't get over it. You can. You got on planes to come here. You're gonna go the airport. You're gonna have time in the airport. You could download one of these APs and be investing by the time you get home tomorrow. What did I say in the very beginning? I said, I'm here to be an activator for you because education without action entertainment

Class Description

Short on time? This class is available HERE as a Fast Class, exclusively for Creator Pass subscribers. 


  • Create financial freedom starting with as little as $5 a day
  • Learn how to earn 10% rates of return of your money
  • Understand the automatic millionaire habit that changes everything
  • Retire early or transition early to a life you dream of
  • Understand the FIRE movement and how to apply it to your financial future
  • Know how to become rich faster, as a freelancer or a small business owner
  • Use the Automatic Millionaire pyramid system to double your money in 10 years or less
  • Know which companies, apps and investments today are making managing your money easier and cheaper


What if you didn’t need to be rich to live rich? What if there were a way you could achieve financial independence and live your dreams now?

In less than five hours – The Latte Factor Class can help you take control over your money and your life. Whether you’re just starting out in business, an employee, or you’re in debt and you just want to live the life you’ve always dreamed of, “The Latte Factor” is a one day program that has inspired millions.

David Bach is the Author of The Latte Factor and the creator of The Latte Factor Method. He’s also a nine-time New York Times bestselling author of books including Start Late, Finish Rich and The Automatic Millionaire. In How to Retire Early: The Latte Factor, David Bach will teach you why you are richer than you think. He’ll help you see a future that puts you in control over your finances and back in the driver's seat of your dreams.

It’s never too late to start living your dreams; today is your starting point. Whether you are living paycheck to paycheck, or simply want to increase your net worth, this class is for you if you’re ready for a fresh outlook on life and money.


  • Anyone who wants to stop living paycheck to paycheck
  • Freelancers
  • Small business owners
  • People who want to live their dream life


David Bach is one of America’s favorite financial experts and bestselling financial authors of our time. He has taught millions to live and finish rich through his seminars, live events, courses and books. He’s the author of 9 New York Times best sellers, with over 7 million books in print in over 19 languages - including Smart Women Finish Rich, Smart Couples Finish Rich, and The Automatic Millionaire. He’s a media favorite having made thousands of appearances the past twenty years, including on Oprah six times and the Today Show over 100 times. David is the co-founder of AE Wealth Management and Director of Investor Education. His latest book is The Latte Factor: Why You Don’t Need To Be Rich To Live Rich. David presents seminars for and delivers keynote addresses to the world’s leading financial service firms, Fortune 500 companies, universities, and national conferences.


Ling Fan

Great class! Concise and powerful! Wish I knew this 10 years ago.

Kennie Johnson

Very helpful and inspiring

Carlos Figueiredo

I thoroughly enjoyed the course love it!