Your Food Budget What methods can we use to stretch our food budget? As with all cost containment areas the key is planning. While making a shopping list is important more is required to maximize your food budget. One good idea is to match what you need for the fridge and pantry weekly with items that are on “special”. Another is to stock up on items that you use every week when they are at reduced prices (it’s like investing). If there are outlet stores in your town they can be a great source for everyday items at substantial savings. The key with these stores is to buy several of the high use items when available as they probably will not be in stock the next time you visit. Finally, meal planning can avoid wasted product. Prepare what can be assumed at the meal or prepare a double portion and refrigerate or freeze the balance for a future meal. Accurate planning will avoid waste and save $$. One final tip is to partner with a friend on certain items. Often large packs are offered at substantial discount but you may not have the freezer space to store the pack (extra beyond the initial meal). An example of this is the Boston Pork Roast Twin pack that sometimes is on sale for around a dollar a pound. The entire pack may weigh around 12 pounds, but if you and a friend split the purchase it provides each of you with a more manageable size.

–         What we eat matters; everything we ingest is a drug. That may sound a bit strange, but it is a fact that everything you ingest has an impact on health. Excessive consumption of carbohydrates is like a drug that creates body fat & has long term negative consequences. One myth concerns fat. Your body needs a limited amount of fat & consumption of fat does not create fat.  While protein creates muscle (but only with exercise) over consumption will create health issues. The key is to consume, in balance, the amount of calories needed to maintain good health. Over consumption will result in weight gain & most likely involve primarily carbohydrates which creates fat.  Typically we only need 2,300 calories a day to maintain good health, especially with a good balance of Carbs, Protein & Fat. Unfortunately most Americans consume over 3,000 calories daily & most of the over consumption is in Carbs. Almost 35% of our population is obese & that trend has continued upward for the past 20 years or more. Fancy diets are not necessary or effective, reduced consumption is the key.

–         Healthy alternatives without the high cost: We have been bombarded with advertising & public information imploring us to eat healthy. I really think that most of us understand what we should do, then why don’t we? One factor is the high cost of fresh & healthy alternatives. While these ingredients are usually less expensive than eating out, the prices do put off most of us with moderate incomes. There are several, what I call, secondary “health food” items, that help stretch the food budget. While the purist may disagree there are items that are better both in terms of health benefit & cost. Among these are dried beans (all varieties), brown rice, fresh potatoes, canned or frozen green beans, canned or frozen spinach, other canned or frozen greens, tomatoes (canned or fresh), etc. I encourage fresh over canned or frozen when the market and price permits. When it comes to protein in today’s market chicken & pork are great values.  Locally 10 lb. bags chicken of leg/thighs have been “on special” at $.39 a lb & certain cuts of pork have been on “special” at $.79 a lb.

–         Are there less expensive alternatives to “fast food” when time is at a premium? Absolutely, but here again planning is the key. One great time saver is a crock pot. Low end pots work just fine and a decent one can be acquired for less than $20. You simply throw in meat & several vegetables in the pot in the morning on the low setting and dinner will be ready when you return in the afternoon.  I often make enough for two meals and then refrigerate half of the pot for another dinner later in the week. By varying the assortment of meat, vegetables and spices you can easily come up with a half dozen combinations that will provide a variety of taste sensations. Using this method 2 or 3 times a week will be a real time & money saver as well as help you avoid the unhealthy fast food habit.

–         How much of your budget allows for eating out? Eating out can be fun, but also expensive & often dangerous to your health. If your income permits, I would encourage you to establish a monthly budget specifically for that purpose & stick to it. Eating out will cost a minimum of 3 times & as much 6 times the amount compared to eating at home. For most of us eating out should be considered a luxury. For health reasons you are encouraged to avoid fast food establishments unless you intend to eat salad. Many fast food meals contain in excess of 1,000 calories without adding a desert. If you must have a ¼ lb burger & fries it can be prepared at home for less than $1.50 a serving.

More on Transportation (Electrics vs Hybrids) 

In my last post I rambled on about transportation cost. What I failed to address was the increasing impact on this area via electric & hybrid vehicles. I think this area deserves examination.

At this time full electrics are relatively expensive and range limited. They are extremely effective for in city trips and short commutes. That said battery life is continually improving and so is the range. Over time the prices will become more reasonable. The major hurdle is the recharge time and that issue will always be significant for single car owners.

Hybrids are only slightly more expensive that their fuel only counterparts and they offer superior fuel economy. All most hybrids are actually battery assist with relatively small battery packs and small electric motors. The batteries are recharged while in fuel only mode and operate intermittently, usually for no more than a minute, with a couple of minutes to recharge. The most efficient hybrids will have larger electric systems, but smaller combustion engines which reduces performance. Hybrids offer the advantage of superior range. My 2015 Hyundai Sonata has a range of 650 + miles (of highway driving).

Plug in Hybrids are a relatively recent development. This approach combines the in-city economy of a full-on electric with the improved range of a hybrid. The trade off at this time is a higher initial cost, limited range and reduced performance. I expect to see improvements with all of these issues as more competition enters the market.

One additional electric powered alternative is the Hydrogen powered Fuel Cell. This vehicle is only available in a few markets. While there are several issues with this concept (not the least of which is the required infrastructure [hydrogen fuel stations]) it is potentially the “greenest” alternative. Hydrogen is the most abundant element in our local universe and the output of the reaction is water! Currently most of production is dominated by Honda, Toyota & Hyundai. I expect sufficient improvements in this technology that this alternative will become a significant factor within the next 15 – 20 years.

• Transportation (usually the next largest item after housing)

–         Is it better to lease vs purchase a vehicle? There are advantages to both leasing and purchasing. My recommendation if you are buying is to not buy new. Typically, a vehicle will depreciate to 50% of its initial value (value being wholesale not retail price) in 3 ½ to 4 years. When purchasing I recommend a vehicle 4 -5 years old. This would mean a vehicle with an initial “value” of $20,000 could be purchased in the $7 – 9,000 range. Assuming a 36 month bank loan and a “good” credit score the monthly payment would be approximately $240. I recommend leasing only for new cars and only for a person that has achieved an “excellent” credit score and only if you will be using the vehicle for 12,000 miles or fewer. Also, I only recommend a lease when the implied interest factor being offered is less than 2%. Near the end of a model year these lease deals are readily available. Often you can lease a $20,000 value vehicle for zero down and less than $250 per month. Keep in mind that you will probably be restricted to no more than 12,000 miles per year and will be charged at turn in for any damages (inside and out) in excess of minor wear and tear. An added advantage of leasing is that the vehicle will be covered by the manufacturer warranty for the full term of a 36 month lease.

–         Is it more cost effective to purchase new or used? As mentioned on the above topic, I rarely find a deal that justifies a new auto purchase. When it comes to using a new vehicle I prefer to lease and when purchasing prefer to target a lower mileage 4 – 5 year old vehicle. The only exception to this rule would occur when a new car is heavily discounted and in addition the manufacturer is offering a 0% loan for 72 months. I recently took advantage of 2015 vehicle in April (of 2015) that was heavily discounted from a retail of $27,000 down to $19,000. The 0%, 72 month loan put the monthly payment at under $265. The lease rate factor was at 1% which put that payment at under $230, so I still opted for the lease. However, the purchase option was a great deal.

–         Additional cost factors: Insurance (how to shop it), fuel, personal property tax, license, routine maintenance, repairs, etc. Outside of financing the next largest cost element will be insurance. There is more variance in auto insurance premiums that most people realize. Attempt to ignore all of the auto insurance ads that dominate the airways. One solid place to get a decent free quote is via Esurance.  They tend to be near the bottom cost for equivalent coverage. I’m not suggesting that you sign up with this firm, but merely that you use their quote as a benchmark against which to evaluate the quotes you receive from others. Initially I recommend that you get 3 – 4 quotes and also that you requote at least every three years. There can be as much as a 100% variance in premium quotes for identical coverage! In some cases the company will provide a “teaser rate” for the first year. If this occurs, be sure to shop again before renewing.

–         What factors should be considered in choosing a vehicle? The simple answer is cost. Regardless of the type or price range the cost to operate needs to be at the top of the criteria list. Quality is important, but also tends to be somewhat objective. As long as you stick with the top manufacturers it is hard to make a bad choice. Ford consistently ranks highest in quality in regards to USA firms, but the top Japanese and Korean manufacturers are worth considering. I encourage folks to shop for a model with certain specifications and not by brand. When you do this it opens up a lot more options to take advantage of special promotions, which gets us back to cost. After the cost of financing and depreciation the next largest factor is fuel economy. When you open up to several brand options it allows you to factor in this item.

–         What can we do to minimize fuel costs? Once you acquire your vehicle the single largest incremental cost is for fuel. The two variables here are the price you pay for fuel and driving habits.  Of the two, the latter (driving habit) is the most consequential. Research shows that gas mileage can vary as much as 20% depending on just a few factors. These are: 1. slow steady acceleration from a standing start, 2. slow steady stops from to a stop, 3. only pass when you have time to accelerate without having to gear down & 4. Keep you maximum speed at no more than 65 MPH. The price you pay for fuel of equivalent value can vary by as much as 5% or more in the same general location. In that regard I recommend the smart phone App “Gas Buddy”.  It allows you to identify the station close to you with the best price and also will provide precise directions. This is particularly useful when travelling, especially if you are unfamiliar with an area. There seems to be much concern about fuel that contains 10% ethanol. Ethanol provides about 15% fewer MPGs so fuel without the 10% ethanol will achieved about 1.5% fewer MPGs than unblended fuel. It is good to factor this in when making a fuel purchase. It may make sense to pay $.04 or $.05 a gallon more for unblended fuel.

see more on this topic next week