How Much Is this $hit Costing Me: Part 1

What’s the full financial impact of your coffee habit? This is the explainer for Part 1 of our video series: “How Much is this $hit Costing Me?”

Let’s say you’re a fresh college grad with a mild macchiato addiction. Of course this could alternately be replaced by a weakness for lattes, mochas  or any of a number of delicious coffee concoctions. We’ll assume the habit remains more-or-less consistent over the course of your life.

Now, to the numbers…

Three macchiatos per week, that’s $15. Over the course of one’s life (3,536 weeks * $15), that’s $53,040. Assuming 3% inflation, you’re looking at $115,054. Ouch.

costs

By brewing at home, however, and purchasing one macchiato per week  you could save about $500/yr. What if that $500 was invested in a moderate risk, tax-deferred account? Let’s use OnTrajectory to see the full financial impact.

OnTrajectory takes your unique mix of Income, Expenses, Investments and maps a path into your financial future each are discussed below.

macchiatt_income

Income:  It looks like our college grad landed a pretty decent job – probably an entry-level computer programmer or something sexy like that. This example assumes an average 5% raise per year until the age of 40 (as shown in the ‘Growth Override’ column). Thereafter, the salary merely keeps up with inflation.

macchiatt_expense

Expenses: This example includes “grouped” expenses (indicated by the orange ‘G’) defined in three unique age ranges: 22-29 includes rent, 30-67 includes the purchase of a home, and 68-90 shows basic expenses dropping during retirement years.

In addition, we see a boat purchase at 45, and a semi-extravagant vacation later in life. Finally, we see the coffee expense broken out separately at $780/year.

macchiatt_accounts

Accounts & Taxes: Not much to see here, just a Deposit Account with effective tax-rates based on income level. There doesn’t seem to be any tax-deferred/retirement account or any other types of investments defined.

Subsequently, the financial Trajectory looks like this (in tomorrow’s dollars):

before

We can clearly see various rates of saving based on income and expenses. The steep increase at 60 is a result of the mortgage being paid-off  but as you can see it wasn’t quite enough, and this individual runs out of cash at the age of 88 and is $139,713 in hole by age 90.

Let’s reduce the coffee expense to $280/year and invest the savings into an account with an average rate of return of 5.04% How did we come up with 5.04%? We took a handful of highly-rated moderate-risk mutual funds (entirely at random) and averaged their 20-year returns. It may not be scientific, but it’s fairly reflective of how a lot of folks invest.

Here’s the result:

after

Notice that not only do you stay financially afloat throughout life, there’s  a tidy $320k surplus at the end (again, in tomorrow’s dollars).

math

It’s MATH, and it’s power stuff. The truth is, small lifestyle changes CAN have half-million dollar impacts over the course of one’s life. OnTrajectory helps you identify and visualize those impacts. So don’t wait any longer, get OnTrajectory today.

 


 

DISCLAIMER: Please be aware that no information contained in this communication should not be considered investing advice. All financial information is solely for educational purposes. Please see your own professional for personal investment advice.

 

Beware the Easy-to-Find Tools

Type “Retirement Calculator” into Google and look at the top 5 results – you’ll see tools from:

  • CNN Money
  • BankRate.com
  • Charles Schwab
  • Bloomberg Business
  • Vanguard

They all look something like this:

Retirement_Calculator_Bankrate

And here’s what they all have in common:

  1. You must forecast saving the exact same every year until you retire.
    Can you factor in a few lean years – like when the kids are off at college?Or can you just plan on taking a big vacation one year? Absolutely not.
  2. You have to spend the exact same amount each year after you retire.
    Can you factor in things like paying off your mortgage or planning for a Wedding? Nope, forget it.
  3. All savings/investments earn the same growth.
    But we all have multiple accounts, right? Can we at least split out tax-deferred from taxable investments? Not with these tools.
  4. What if we want to “partially” retire during our early 50s and then fully retire a bit later on?
    Can we see the effects on my overall financial plan? No way.
  5. How about saving your data?
    Can you save the current situation and come back later to see how your’re doing against your assumptions? Nope, not even close.

So what are these tools good for? We would argue, nothing – and they might even be worse than nothing in the sense they tease you with the promise of knowledge, but end up making you feeling nervous and vulnerable.

Which brings me to one more feature they nearly all have in common – they exist to be funnels for connecting you to money professionals or brokerage accounts.

forex-trader1

Therefore, the feeling of vulnerability is no accident. These are not tools to answer your questions, but rather to spur you into action – and we find it somewhat defeating that these are the top search results.

Of course, there are other, far better tools for planning your financial future. We think OnTrajectory is the best of them, of course – and we hope you’ll find our combination of ease-of-use and power to be just the right mix to get to usable answers regarding your path to a financially secure future.

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Press Release: Financial Technology Startup OnTrajectory Launches

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PRESS RELEASE

Contact: Founder & CEO, Tyson Koska

410-530-3646 – Questions@OnTrajectory.com

Financial Technology Startup OnTrajectory Launches

 

By Carl Potak – New York – OnTrajectory.com is a financial technology startup offering an easy-to-use, high-fidelity financial planner that maps users’ income, investments, and expenses in an interactive graphical display.  Users can easily aggregate their financial data to visualize a simulation of their financial future.  The free option is suitable for most users, however, the Power Plan offers users the ability to define their plan more ‘granularly’ and is also free until July 1, 2016.

Sign-up is easy and requires users to answer only four quick questions to get started.  From there, users can continue entering monthly and yearly data.  The more data they enter, the more accurate their future trajectory will be.  

Most investment and retirement calculators are standalone and  focus on a specific data point, however OnTrajectory allows dozens of different data points to be calculated together for a more inclusive view of how these aspects can affect your finances.  For example, OnTrajectory can help people with college payment calculations, retirement planning, or mortgage planning, and see how they affect their overall financial standing.  Of OnTrajectory’s largest competitors that are focused on multiple data points, a large proportion of them are complex to use,  don’t offer a free option, and/or require time-consuming signup processes. OnTrajectory differentiates itself from these competitors and addressed those key issues by providing an easy-to-use, high-fidelity, free option with a quick and simple signup process.

The software is friendly to folks with families and allows for the additions of spouses and/or dependents to their trajectory. Additional features allow people to create savings plans, goals for future purchases, designate unexpected emergency funds, and run different financial simulations for any “what if” financial questions they think of. For more advanced simulations, OnTrajectory also has Monte Carlo and Historical analyses.

OnTrajectory encourages people to become financially knowledgeable and successful so they can retire on time or even have an early retirement.  This is promoted through their blog Money Matters by OnTrajectory.

Since launching in November 2015, OnTrajectory has grown to over 1,100 users and is catching on quickly.  In fact, OnTrajectory was just featured in a February 9th 2016 article called “These Are The Best Retirement Calculators” in Time.com’s Money Magazine.

OnTrajectory‘s team currently consists six people. Of the six, CEO Tyson Koska and two other technical co-founders from the financial industry are the software engineers working behind-the-scenes.  The team also has a serial entrepreneur, Director of Marketing Carl Potak, Director of Community Relations Daniel Kahn, and Video Producer Christopher Yeiser.

Financial journalist Darrow Kirkpatrick from CanIRetireYet.com had this to say: “The initial setup was simple. The user interface is very attractive and intuitive. It feels like they’ve achieved a low barrier to entry… OnTrajectory is in the sweet spot that appeals to me. The site has a slick look and many nice touches.”  Barbara Friedberg, another financial journalist, is the founder of Barbara Friedberg Personal Finance and author of “Invest and Beat the Pros.” She endorsed OnTrajectory saying: “[It’s a] very consumer friendly and useful tool… Concept is great… I like that it’s not necessarily just a retirement tool… graphs, charts easy to interpret.”

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