Tag Archives: spending

Will joining a grocery co-op bust my food budget?

I love the idea of a grocery store co-op. Cooperatively owned by community members, these stores sell local produce that is organic and free of pesticides. Not only does shopping there support local growers, but it reduces your carbon footprint by reducing the emissions created by the huge semis that transport produce to grocery stores from distant locations.

I used to shop at the local co-op occasionally when I was in college, but I never became a member. The produce was fresher, tastier, and better quality overall. But it was quite a bit more expensive.

While they do sell packaged organic and specialty foods, those items are way overpriced, so we only plan to shop at the co-op for produce. But we’re trying to reduce our grocery costs, and even with the discounts, I’m afraid that we’ll pay a lot more for our produce.

I think this is a really important cause, healthy produce is important to me, and I understand that local farmers can’t compete with the prices of larger distributors. So I’m willing to pay a slightly higher price for the quality and the cause, but we can’t afford to completely bust our food budget to shop there.

The membership dues are $30 a year. That fee entitles us to the member discounts, including select items at 25% off every day. They also send additional discount coupons in the monthly newletter and periodically offer member appreciation days for a 10% discount.

We’d also have the opportunity to volunteer a few hours per month to receive additional 12% discount days, and we’d receive an annual patronage refund dependent upon how much we spend. I can’t find any hard numbers on the co-op’s website or through my research on what kind of refund we could expect, so I’m assuming it’s not much.

We’ve decided to go there this weekend, check out the prices, and ask some questions about the discounts and the patronage refund. This is something we’d like to do, but not if it’s going to drastically increase our grocery bill.

We’ve shopped at the local farmer’s market before, and I’ve considered that as an alternative. I like the produce, and I think the experience is fun overall, but I don’t think it’s practical for us on a weekly basis. It’s kind of far out of our way, so I feel like our additional fuel consumption is offsetting some of the benefits of shopping there. It also forces us to get up and dressed on Saturday mornings earlier than we’d like, and the vendors there only take cash (which I find inconvenient because I generally don’t carry cash).

In addition to the costs, I’m also concerned that we might be joining a little late in the season. We live in a warm climate with a long growing season, so we can probably expect to see local summer fruits and vegetables at the co-op for at least another month or two. But what about the fall and winter? I would hate to pay our dues now and then have to wait through the fall and winter to start buying produce there.

Do any of you shop at a co-op or belong to one? What are your thoughts?

Subscribe

Our first zero-based budget

We’re trying a zero-based budget this month for the first time. In the past, we’ve tried setting arbitrary limits on our spending (which didn’t really work). Other than that, we didn’t really track our spending beyond trying not to buy unnecessary things.

That philosophy has kept us from blowing our money, but we haven’t tracked our spending in a measurable way or designated a certain amount to a savings account until now.

A zero-based budget is a plan for your money that accounts for every single dollar of your income. After budgeting for fixed expenses and assigning limits for other expenditures like groceries and entertainment, you also assign a purpose to “extra” money by budgeting it toward savings, investing, or debt repayment.

I like the idea of a zero-based budget because it forces us to do something with the little bit of “extra” money we have after covering expenses and paying down debt. In the past, we’ve kept all of our money in our checking account. Anything we didn’t spend at the end of the month stayed in the checking account where it collected almost no interest. We were more likely to spend it – if not that month, then the next month or the month after that.

Our new plan is to keep only a cushion amount in our checking account to avoid catastrophe in the event of a spending mistake. We’ve cleared the rest of our money into savings. To avoid spending more than we make, we’re considering the cushion amount to be “zero.”

For the first time, we’re tracking exactly how much of our monthly income is left at the end of the month (if any) and putting it toward savings or debt (in ADDITION to the money we’ve already budgeted for savings and debt). If there’s nothing left or we spend more than our income, we’ll adjust our spending habits to ensure that we’re not spending more than we’re making.

I’m looking forward to having a solid number for our monthly expenses. It will give us more control over our spending and saving habits and help us determine how much we need for an emergency fund.

Rather than setting our budget in stone or setting arbitrary spending limits, we’re creating a flexible budget by tracking our expenses with Mint. New expenses spring up every month and some months our income may be higher than others, so our budget will be different each month.

We’ll sit down at the end of every month and set the next months’ budget based on what we spent last month, what we need to spend this month, and what we expect to make. Every dollar of income will be assigned somewhere. We’re challenging ourselves to spend below the budgeted amount where we can so we’ll have money left over at the end of the month.

We set our first zero-based budget at the end of last month, and we’re on track so far. More updates will follow as I’m sure the closer we get to the end of the month the harder it will become to stay within our budget.

A cash budget just doesn’t work for me

Since I started reading books and blogs about personal finance, there’s been one tactic that has jumped out at me that I don’t plan to ever use: the cash budget.

I understand that the point is to really pay attention to what you’re spending and to view money as a tangible, finite thing. It makes sense if you view cash that way. Unfortunately, my perspective on cash is much different.

For as long as I’ve been budgeting my money and paying my own bills (about 5 years now), I’ve used a debit card. In the beginning, I balanced a checkbook to track my purchases. Then online banking became so advanced that my purchases showed up on the site instantly.

I got into the habit of checking my online bank account balance daily. This is obviously risky if your balance is low (I almost overdrew my account a few times in college because I cut it so close). Now that I’m not living paycheck to paycheck, though, I always have a safe amount of money in my account. It’s just easier for me to use a debit card.

Now with sites like Mint, you can track your spending AND your budget. I used to watch my mom crunching the numbers and paining over receipts for hours every Saturday when she balanced her checkbook. The digital age has automated the process for us. Why not save some time and let my online banking and Mint do it for me?

Maybe I’m in the minority, but having cash doesn’t make me think harder about my purchases. Somehow after years of tracking my funds electronically, the way I view cash has been distorted.

I’ve come to think of the balance in my bank account at any given moment as the amount of “real” money to my name. Once it leaves my bank account and becomes cash in my hands, it’s no longer part of that bank balance, so I feel like I’ve spent it already. I’m more likely to spend it on something stupid.

On the other hand, when I swipe my debit card, I think of my bank balance – my “real money” – dwindling, and I’m more likely to think twice about my spending.

Subscribe


Does a tax holiday really equal savings?

Now that the weekend is over and I’m safely distanced from North Carolina’s “tax holiday,” I can put my thoughts into perspective.

The first weekend in August every year, North Carolina suspends its sales tax on school-related items including computers, clothing, and school supplies.

This week marks our first anniversary as North Carolina residents. We weren’t here yet during last year’s tax holiday, and I was bummed that we missed it by a few days. But this year I was determined to stay away from the stores to avoid the urge to spend.

It’s easy to give in to the urge to spend when the marketing machine convinces you that you MUST. (I know, I work in marketing.) But it’s important to remember the old adage: you’re not really saving money if you don’t really need it.

It was still hard for me to stay home and avoid buying new clothes that I don’t need, even after all of the progress I’ve made this year. The little voice in my head was saying, “It’s tax-free! That’s 6.75% off! What a great deal!”

Then I reminded myself that I seldom pay full price, especially for clothes. I often only shop when I have coupons for 10% or 20% off. Even then I usually shop the clearance racks and extreme sale prices. I also know that stores were unlikely to have great sale prices because they’d be counting on the tax holiday to drive sales, so I ultimately wouldn’t have saved that much anyway.

So why did I have to fight the urge to rush out and spend just to get a lousy 6.75% discount when I know it’s not going to save me money anyway? The answer is simple: if it’s sold at a discount, no matter how impractical or minute the discount may be, we’re more likely to believe it’s worth buying.

There’s a reason why my neighbors rushed out to the stores this week. It’s the same reason stores slash prices every year the day after Thanksgiving. When it comes to shopping, our culture has created a mob mentality that’s obsessed with savings. It’s dangerous because in a mob we seldom stop to consider the practicality of our actions. When you’re blinded by sales tags, it’s hard to stop and ask yourself, “Do I really need this? Really?”

I can’t tell you how many times I’ve bought an item from the clearance rack because of the low price only to bring it home and never wear it. I’d rather allocate my money to fewer items that I know I’ll use instead of a closet full of sale items that I never wear.

Even if I did need new clothes right now, I would prefer to wait until my head is clear. If I had headed into the stores this weekend drunk on the idea of a tax holiday surrounded by other shoppers who feel the urgent need to BUY NOW BEFORE THE SALES TAX IS REINSTATED, I probably would have gotten caught up in the savings euphoria and spent more than I should. At that point, instead of saving 6.75%, I’d be spending twice what I’d planned on things I didn’t really need or even want.
Subscribe


Cutting down on food costs

Thanks to some great advice from other personal finance bloggers, I’ve decided that a good place to start cutting back is on the grocery bill. It makes sense; with so many options, it’s easy to take control of what you spend on food.

Grocery spending has always been a financial Achilles heel for us. We have no problem giving up meals out. I tend to think of them as a waste of money unless it’s a special occasion. It’s fun to celebrate with a meal out, but when you’re eating out three times a week it’s no longer a fun novelty; it becomes a burden on your finances and your waistline. Besides, we love to cook healthy meals.

Unfortunately, when it comes to meals at home, we have somewhat extravagant tastes. We’re environmentally and health-conscious, so we often choose to buy organic products despite higher prices. We’re currently spending about $85 a week on groceries. For just the two of us. Obviously, we need to start cutting back.

Because this is the one realm of our finances where my husband has shown a little stubbornness, I want to see how much we can save by putting in a little extra work rather than drastically changing our shopping habits. (The drastic changes will come next.)

We’ve always shopped the sales, tried to plan our meals around them, and avoided excessive amounts of packaged foods and unnecessary snack foods. Avoiding those foods allows us to eat healthier anyway.

However, we have been shopping exclusively at a high-end grocer. I’ve always known we were overpaying, but since my husband is the household chef and he had strong feelings about his grocer of choice, I convinced myself that we were still spending less by eating at home. As long as we were making an effort by planning meals and buying sale items, I considered that a fair compromise.

This weekend, we decided to try shopping at two stores. We did the bulk of our shopping at a lower-priced chain, and bought only sale items at the high-end chain.

I’m using a price book to track prices. My “price book” is a 3×5 card file with a separate card for each item. I’m using dividers to keep the cards in alphabetical order. I considered using a notebook, but ultimately I wanted control over how it’s organized, and I want to easily add additional items and keep them alphabetized. I’ve only used it one week, but it seems pretty easy so far.


My husband actually liked the cheaper store. He liked the way it was organized, and he agreed that the prices were lower. Even though he gets a 5% student discount at the high-end grocery store, I still think we spent less without the discount. It’ll take a few weeks of price book entries before we can be sure, though. To account for the discount at the high-end store, I’m entering items that we buy there at the discounted rate.

We only spent about $12 under our average ($73) by splitting our shopping into two trips, but I expect to lower that gradually as we get the hang of using our price book and planning our meals around two sales instead of one. I’m hoping to get the bill down to $50-$60 a week eventually. I think that should allow us to continue eating some of the organic foods we enjoy without overspending excessively.

Back on track after a minor derailment

I have to admit, when I finally found a full-time job two months ago, my husband and I temporarily lost sight of our goals. It started with a celebratory dinner, which we had been planning since I started the job search process. But then we found our financial plans quickly derailed by several dinners out per month, some out of control shopping trips, and a general spending craze.

For the first time in a year, we were making enough money to cover our expenses with a little left over, so we succumbed to the urge to spend more. That was exactly what I wanted to avoid, but it’s a tough temptation to resist. It was easy to spend less when we had no money to spend; it’s a little harder to make the right choices when you do have extra money.

I also partly blame a “honeymoon mentality” that extended beyond our actual honeymoon. We agreed that we could afford a little extravagance on our honeymoon because we’d worked hard to save and we’d chosen a frugal destination (Washington D.C.) for our trip. We were only gone for a week, but I was hired at my job the week after we returned, and the extra income paired with the temporary lapse in frugality was enough to bump us off track.

Now I’m looking at our finances and realizing that even a full-time salary doesn’t go as far as you’d like without proper budgeting and goals.

With a new income, new budget, and new goals, I feel like I’m starting all over again. For the past year, the goal has been to keep from financially drowning without feeling financially deprived. Now we’ve got the opportunity to make real choices with our money, and I’m feeling a little overwhelmed.

I’ve updated our budget to include additional debt repayment and savings that we couldn’t afford before, but now it’s balanced with nothing left over. I need to find a way to magically find additional money to put toward debt and savings if we want to reach our goals, so my first step is finding ways to cut back on spending we can control.
Subscribe