Money Listens

Next to our home and cars, food is the biggest bite out of our budgets.  Since we’re always going to the grocery store, we’re always complaining about how much food costs.  Just how much is reasonable to spend on food anyway?  When in doubt, the IRS has the answer.  Yes, that Internal Revenue Service.

If you’re delinquent on your taxes and want to work out a payment plan, the IRS will allow you amounts to spend on various necessary items, then the rest you pay back to them. The IRS allows a family of 4 to spend $752 per month on food and another $74 on household supplies, which are laundry and cleaning products and paper goods. This is a whopping $826 per month.  This is for all food, including eating out.  (We hope if you’re  behind in your taxes that you hold down the restaurant visits).

Are the IRS numbers in line with what Americans really spend?  Fortunately for us, the U.S. Bureau of Labor Statistics stays on top of this stuff.  The “average” family income in 2006 was $43,799, after taxes.  For a family of 4 people, $552 per month was spent on at home food and household supplies.  This included laundry and cleaning products, but not pet food, shampoo or drugs.   If you have 2 dogs and 2 teenage girls and include dog food and “health and beauty aids” in your grocery budget, this number can go way up.  Believe me, I know.

Low income families, the bottom 20%, with $9,969 yearly income spent $331 per month for 4 people. That’s somewhere in the neighborhood of 20% of income on food.

The top 20%, with the highest income of $141,738 spent $1,097 per month.  Think raspberries in January and wild halibut.  Or imagine doing all your grocery shopping at Whole Foods.

The bottom line?  American families spend between $331 and $1,097 for food and household supplies.  The national average is 9.9% of income.

Your costs could vary.  A lot.

So, how much should we spend?  You have to decide that on your own.  If you’re into organic and natural foods you’re going to spend more.  If you buy a lot of convenience foods or have teenage boys, you’re going to spend much more.  If you shop around the store’s perimeter and buy mainly fresh fruits and vegetables in season and what’s on sale, you’ll be about average.  Or not.

See the statistics for yourself at these websites:

http://www.irs.gov/businesses/small/article/0,,id=104627,00.html

http://www.irs.gov/businesses/small/article/0,,id=104627,00.html

http://www.bls.gov/cex/2006/Standard/quintile.pdf

For all the cows you’ve loved before…

Friday, July 11, 2008 is Cow Appreciation Day.  Anyone who dresses like a cow gets a free Combo Meal.  Go for breakfast, lunch, or dinner.  Or all three.  Even if you’re not up for a full body costume, just wear a mask or spots and get a free sandwich.

It’s time to say thank you to all those cows who do so much for us all year long.  Where would breakfast cereal be without cows?  Today is their special day.  And it can be yours, too, with a little creativity. And did you know Chick-fil-A has some of the best cole slaw?  But the waffle fries are my favorite.

Visit Chick-fil-A’s website for tips on making your own cow costume.  And this could be you:

Americans are spending about as much money on eating out as they are on eating at home.

The ERS Food Expenditure data series indicated that spending on food away from home was 48.9 percent and spending for food at home was 51.1 percent in 2006.

We spend about 58 percent of our food-at-home dollars at traditional grocery stores. Non-grocery stores that sell food, such as Walgreens and Dollar Stores, have increased their share of grocery sales to 11 percent. The really big winners were supercenters and warehouse club stores, which accounted for 18 percent of food-at-home expenditures in 2006. No wonder those check-out lines are so long.

The chain restaurants are also competing with the grocery stores. Many of these restaurants, such as Outback Steakhouse and Carraba’s Italian Grill, have emphasized take-out orders by adding reserved parking spaces and special entrances. These chains’ take-out sales account for an estimated 10 percent of their total sales.

Grocery stores are countering with more ready-to-eat meals and salad bars. There’s less and less cooking and more and more heating and eating. It’s getting harder and harder to separate the “at home” spending from the “eating out” category. Does the lasagna dinner from Macaroni Grill that you eat at home still count in the “eating out” budget category? What about Central Market’s “Dinner for Two?” Preparing and cooking a meal at home, with ingredients purchased from a grocery store, still beats eating out. At least in the cost department. Since we’re willing to spend half our food dollars on eating out, it seems the cost department isn’t much of a priority.

The U.S. Dept. of Agriculture spends a lot of time on its publications. And a lot of my tax money. So, I like to see what my tax dollars are buying. Right up there with Real Simple and Sports Illustrated is Amber Waves. Get it? From the song–America, the Beautiful.

But my favorite is the every-other-month Vegetables and Melons Outlook. (I am not making this up.) Don’t you have a favorite section in a magazine you always turn to and read first? For me, it’s the “Commodity of the Month.” In the April, 2008 issue, potato chips were featured.

Even though it’s pretty much common sense, you like to know that the U.S.D.A. is confirming that retail prices for potato chips are considerably higher than other potato products (such as fresh potatoes or frozen french fries). Since 2000, retail prices for potato chips have averaged $3.41 per pound, while fresh and french fried potatoes have averaged $0.45 and $1.05 per pound. This is due to the high cost of the frying oil. Plus, a potato is roughly 80 percent water so it takes about 4 pounds of raw potatoes to manufacture 1 pound of potato chips.

Even with the higher cost, potato chip consumption in the United States has steadily increased over the past five decades from 11.4 pounds per person in 1960 to an estimated 19.3 pounds per person in 2007. An estimated 79 percent of potato chips are consumed at home.

So who’s eating all these chips? Conventional thought is lower income, less educated households are more likely to purchase potato chips. Not so. When breaking down income levels of chip consumers, 50 percent were middle income households (households with incomes between $30,000 and $69,999). Upper income ($70,000 and greater) and lower income (below $30,000) households each consumed 25 percent.

If you can figure out what any of this has to do with personal finance, leave me a comment. Maybe it’s something about how the federal government uses our tax dollars. But, personally, it’s very comforting to know that average Americans are staying at home eating lots of potato chips. It just seems so, — so American.

Nowadays people know the price of everything and the value of nothing. –Oscar Wilde

This morning I heard a radio commercial for a second-hand clothing store. The tag line at the end was “Value means paying less than you expected to pay.” I started yelling at the radio. No, it’s not. Paying less than you expected to pay is a bargain. Value is much more subjective. Value is paying what something is worth to you. What is a value to you is not necessarily a value to someone else. Don’t confuse price with value.

Tonight Baskin-Robbins® is having a 31 cent scoop night. On Wednesday, April 30th 2008, from 5pm to 10pm, stores will sell small scoops for 31 cents (plus tax). Here’s the reason why (from their website):

A donation of $100,000 will be made by Baskin-Robbins® to the
National Fallen Firefighters Foundation. At select local stores
throughout the country, you may also have a chance to donate to
your local fire station. We encourage you to learn more about the foundation by visiting www.firehero.org.

What’s this got to do with value? Isn’t paying 31 cents for an ice cream cone a good value? Maybe. It’s definitely a good price. But it’s only a value if it’s worth it to you to pay 31 cents for a scoop. Maybe you’re on an eating plan that doesn’t include ice cream. Maybe you’d have to drive several miles to get to a store. Maybe you don’t like ice cream. (I think sorbet is included in the deal). Maybe you’re indecisive and would spend an hour trying to make up your mind what flavor to choose. Just because you know it’s a good price doesn’t automatically make it a good value.

For me, it’s a good value. There’s a store about a mile away. Jamoca Almond Fudge, here I come.

I love O The Oprah Magazine. Sometimes I get in the longest line at the grocery store so I can have more time to peruse the latest edition. In March, 2008, an article warns about the danger of some microwave popcorns. The chemical diacetyl, which adds the buttery taste to many microwave popcorns, is the problem. When heated to high temperatures diacetyl vaporizes and becomes toxic. One man who loved to breath in the hot buttery steam directly from the freshly popped bag contracted a serious respiratory disease. But he had a two-bag-a-day habit for 10 years! Due to the possible health risk, some manufacturers have dropped diacetyl from their products. The article suggests waiting until the bag is cool and opening it under your stove’s exhaust fan. Yeah, right.

But the real danger of microwave popcorn is its cost. Did you know you can pop your own corn for a fraction of what Orville’s costs? Take a regular brown paper lunch bag, add 1/3 cup of popcorn kernels, fold down the top a few times, and stick it in your microwave. Cook it however long you cook the commercial bags. Voila, you have a low-calorie, low-cost snack. Eat it right out of the bag with no diacetyl mess. Do let the bag cool first. It heats up just like the commercial bags.

If you like the buttery taste, you can add your own real butter. And if you want to get carbon footprint friendly, dump your popcorn in a bowl and save the bag to reuse another time. Don’t forget the salt.

GROCERIES TAKING A BIGGER BITE was the headline in today’s newspaper. Not in the Metro or the Business section but right on the front page “above the flap.” “If it seems like you’ve been paying more at the supermarket, it’s because you have. And you may have to get used to it.” San Antonio Express-News Thursday, April 3, 2008. A gallon of milk has gone up 15% and eggs a whopping 24%. The culprit is the rising cost of energy. Everybody from the farmers to the truckers is paying more and that cost is getting passed along to you and me. At the same time, we’re trying to lower our food bill so we can pay off debt and save. Next to shelter and transportation, food is the biggest item in our budget. Can it be done? Yes, but there’s no one-size-fits-all way. I think you have to try lots of different ways that all add up to spending less. You’ve heard these all before, but now you and your money need to listen and select some to put into practice. Many of them are better for you physically as well as fiscally. These are in no particular order, just how they popped into my head.

1. Plan meals, including breakfast, lunch, and dinner.
   The shopping list I use has the meals on one side and grocery list on the other. I can plan out meals and have them when I shop , side by side with my list, so if something is on sale I can see how that fits with my plan.
2. Have something other than name-brand boxed cereals for breakfast. Oatmeal and homemade granola are far less expensive.
3. Fewer packaged snacks. Go for popcorn that you pop yourself on the stove or in the microwave (Not those microwave-ready bags with oil). Pretzels are often the least expensive snack.
4. Take cold hard cash money to the grocery store. And a calculator.
5. Fruit. It seems expensive, but get lots of what’s on sale. Even a full price melon has several servings and is much less than other snacks. A few expensive berries on oatmeal in the morning is much less than boxed cereal.
6. When boneless chicken breasts are on sale grill or bake about 24 (don’t overcook them!), then slice for sandwiches. Cheaper and tastier than deli meats. Freezes well and makes great paninis.
7. Beans and Rice.
8. Go to a store that has bulk bins and buy oats, rice, cous cous, and beans. Get all your spices, too. It’s usually much cheaper, but compare prices to make sure.
9. Learn to cook. Or at least to make meals.
10. Go shopping on a day when your family can help you “prep” that evening. Cut up fruit and veggies for lunches and the next few meals ahead of time.
11. Go to Mrs. Baird’s or another bakery outlet for bread. The savings are tremendous. Switch off with a friend or neighbor.
12. Have one meal a week that is the same. Pick something easy and inexpensive that everyone likes. Change about every 6-12 months. We had baked potatoes and broccoli every Thursday for about 2 years. Now we have Hamburger Vegetable soup every Thursday (yep, we’re having it tonight).
13. Enjoy the time you spend preparing meals. The variety of food we have is a great gift to us and can be one of the great joys in your life. Take pleasure in planning and doing as well as eating.

Please send me a comment with your favorite tip for saving money at the grocery store. Just click below on the word comments.