Getting More Than You Bargain For

We all like to get our money's worth. Sometimes we get even more and it's not always all good. One area that this idea stands out is with food.

Over the years, my wife and I became very accustomed to eating out and using convenience foods. "Time is more valuable than money", as I used to convince myself. We would pay "small" premiums so as to save time spent cooking and cleaning up after meals. "Who has time to make a sandwich when I'm working so many hours?" The excuses start to catch up to you.

As we are trying to make a dollar last longer, we have looked more critically at the choices we make. Now we are eating out very infrequently and coming up with cheaper, healthier, more enjoyable alternatives.

On one business trip, I was sitting in a chain restaurant deciding what to have for dinner. As I was watching what I eat, I was thrilled to see a heart icon next to several dishes. Wonderful! A "heart-healthy" meal! I narrow down my choices to one great sounding dish, then look at the dietary details. To my horror I read the following: "Sodium - 1200mg". Just great. So I won't have high cholesterol, but I will die the death of a slug on the sidewalk.

I once was prescribed a treatment by a doctor that had me taking in 900mg of sodium. At least that had a skull and crossbones and a very clear warning that if I didn't drink a whole bathtub of water I would surely perish.

I read the details of every dish. I'm convinced they were trying to shorten their waiting list by killing off their customers. They must have had a commission deal with the funeral home next door.

Since then, I have become fanatical on reading labels at restaurants, when available, and on processed food packaging. Read enough of this stuff and you find one common thread. The food service industry, generally does not care about your health, as long as they can produce a food product that has a look, feel, taste and smell that will sell more product than their competitors, at less of a cost.

Let's say it again - most food purveyors are not ultimately concerned about your health.

To add insult to injury, I'm paying a premium for all this convenience??

Let's end this with a couple of quick comparisons:

- A meal out for my family of four, will cost between $40 and $120. For $40, I could buy four 1-1/2" filet mignon steaks, salad, fresh vegetable and a decent bottle of wine. Hmmm - that sticky table at T.G.I. Fridays or home?

- Coldcuts/sandwich meats at every supermarket or deli by us are going for $9-$10 a pound. For around $2 a pound we can buy fresh turkey breast, or roast beef, cook it and slice it, then freeze small portions for sandwiches over the coming weeks. For years, we were paying 5 times the cost, so that we could get the extra benefits of convenience, extra sodium, preservatives, artificial flavorings, artificial colorings and texture enhancers??

Nobody is going to be your advocate except you. Take the time to realize what you are buying. Make healthier, more cost effective decisions. Your life, and how you live it, are riding on it. An additional benefit to all of this is that we are teaching our children to live better, healthier lives, with less.

Are You Paying for Your Neighbors Groceries?

We all have different tolerances to, or thresholds for, accepting pain. Financially, this presents itself in different ways. One way you might see evidence of this is in gas prices. Gas prices go up and one individual will drive across town to save a few cents per gallon, while another will decide it's time to buy a new Hummer. Marketers are well aware of this and design their pricing strategies towards getting the most from each type of customer.

A company will develop their product's marketing plan with the expectation that some people will buy the product at full price, while others will buy the product only once discounted or on sale. Marketers use incentives such as rebate programs and coupons to entice these prospective customers to buy. These incentives are an easy way for a product manufacturer to get the higher profit from full price sales without losing sales to those who feel the product is too expensive. This strategy is used with every product from Cheerios to Chevy's.

It's wonderful if you can afford the luxury of paying full price, but why would you? If I asked you to pay more for the groceries in your cart so that the person behind you could pay less for the same products, would you do it? If you are not using available coupons for any given product, that's exactly what you are doing. You are subsidizing someone else's weekly groceries. If that’s your intention, kudos to you – very noble.

By using coupons you will minimize this subsidy. Of course you are probably weighing the benefit of saving a few dollars with the time spent "couponing". We typically spend about 20 minutes a week collecting coupons and planning our purchases to take advantage of the available manufacturer and store coupons. That 20 minutes of effort produces a savings of around $20.

Let's do the math:

• $20 divided by 20 minutes equals $1 per minute. That would also equal $60 per hour.

• To have $60 per hour to spend, we would need to earn around $80 per hour, before taxes.

• This indicates that the benefit of couponing, by our estimates equals earning roughly $80 an hour.

So for those of you who are making more than $80 an hour, stop reading, throw out your coupon wallet and get back to work instead. For the rest of us, this could be pretty sweet. Watch your newspaper for your local supermarkets' circulars. Search coupon websites online. Once you get in the routine of couponing, you'll wonder why you had been paying full price all along.

Below is a list of resources for finding coupons online.

• Use the Coupon Search Engine, at left - Enter the name of a product you use to find online coupons for that product

Some of the sites below require free registration:

• CouponMom.com – Grocery and dining coupons, sample and free trial offers and e-mail alerts for products you use

• WowCoupons.com – Grocery, dining and travel coupons, as well as rebates

• CoolSavings.com – Grocery and retail coupons

• RetailMeNot.com – Retail store coupons and online discount codes

• Coupons.com – Grocery and retail coupons

This is not intended to be an exhaustive list. There are thousands of sites available. Likewise, this is not an endorsement of any of these particular sites. Please use the above resources as a starting point to see which services are most beneficial to you.


Happy couponing!

Savings Auto-Pilot

Imagine it's Payday. We're feeling momentarily rich. It's time for the little things that we have held off on all week. A Starbucks Carmel Macciato at lunch. Friday or Saturday spent doing dinner out and a movie. That quick run to the mall for those shoes you wanted all week.

STOP!!! – So far you have paid Starbucks shareholders, the restaurant owner and his wait staff, Ben Affleck and Steve Madden. Have you paid yourself? Have you put money aside for your rainy day or your future? Ahhh – just as I thought! It's just too tempting with Friday's check making you feel financially invulnerable. It's time to make some simple changes.

Much of the savings that we need to do can be put on auto-pilot. We live in the age of automatic wire transfers or ACH debit/credit transfers. Everything from general savings/investments, to retirement savings, children's education savings and savings for medical needs can be put aside automatically on a schedule you set.

If you have a standing order set up with your financial institution, they will transfer money from your main account – let's say your checking – to other accounts. Let's say that your weekly paycheck is for $500. You deposit that in your checking account and have orders set up to move $75 to your retirement account (maybe a Roth IRA), $50 to your savings account, $50 to your kids' education (possibly a Section 529 Plan) and another $25 to a Health Savings Account. At the end of the year, you would have $3,900 in retirement, $2,600 in savings towards your next car, $2,600 for education and another $1,300 for medical needs. You never once had to decide if this was a good week to save. It's automatic.

The best part is that by knowing that you really only have $300 to spend ($500 paycheck less $200 in forced savings), you will spend less. You won't fool yourself into feeling richer than you are and making purchases that you probably shouldn't.

If that isn't enough, many people forget one thing: good decisions (or bad ones) can have cumulative effects. Above we described a scenario with a person saving a total of $10,400 from $26,000 in take-home pay. What is the impact in five years if we keep that up? $52,000. It adds up quick.

If you are your own worst enemy when it comes to your finances, take the decisions out of your hands and put your savings on auto-pilot! Talk to your bank or investment brokerage to see what options they have available.

These ideas just scratch the surface of automating your savings. If you have a question, there is probably another reader/subscriber wondering the same thing. Please post your question using the comments section, below this post. I will be happy to go into greater detail in any area that seems to be of interest to all.

The Budget

The value of planning has been seen as an elusive truth over time:

• "By failing to prepare, you are preparing to fail." - Benjamin Franklin
• "People often complain about lack of time when the lack of direction is the real problem." - Zig Ziglar

Taking the time to budget is a necessary step in assuring our financial health. But what do we really mean when we say "budget"? There are several steps involved. First we need to understand how we are spending our money currently. Secondly, we need to lay out a list of our monies coming in and monies going out. This is not complicated stuff, but it is very difficult for most of us.

If you are not already doing so, it's time to figure out how we are currently spending our money. Programs like Quicken can help - Intuit even has a free online version of its Quicken software: http://quicken.intuit.com/. Some people find a spreadsheet like Excel can be useful, with free online expense and budget templates available. There are those who are comfortable with a pad and pencil. The method is not important.

Take your checkbook and other available records or receipts and list what is being spent. Have columns that show who the payments are made to, the amount and the categories of expenses, such as "Food", "Gas", "Clothing", "Rent", etc. Some of our expenses will be very routine, occurring every month for the same amount, like "Rent". Others will be more sporadic, like "Medical Expenses". We should look at a couple of months at least. The longer the time frame that we look at, the more we recall those expenses that happen infrequently.

At this point we have an idea as to where our money is currently going. Time to begin laying out a plan. You can plan the whole year, but for those who are totally new to this, let's just start with planning out the next month.

List and total the income you expect to receive in the next month. Now, using the expense categories we discussed earlier, make a list of the types of expenses that you expect to have to pay in the next month and the amount you would guess you will need. This does not have to be exact. Getting started is the key here. A good plan today beats a perfect plan tomorrow.

• "Plans are worthless. Planning is essential." - Dwight D. Eisenhower

Include in this list of expenses money for savings. By paying yourself first, you are developing a pool of money to fall back on in the event of some unforeseen hardship, like a lay-off, medical surprises, or unexpected home or car repairs. 10% of your gross pay (before taxes) is usually a good start.

Total your expenses. Do you have enough to cover all of your expenses and some savings? Wonderful news! Any excess can be used to cover additional savings for that vacation you wanted or to develop your nest egg more quickly. I can see that more than a few of you are scratching your head because it seams that your money didn't last as long as your month.

This too is actually a good thing in that we are discovering, in advance, what many people don't discover until their debt cup runneth over. Time to sharpen the pencil!

Working with your family, go through your expense categories and ask yourselves:

• Do I need the half-caff soy double latte each day at $3 a cup or can a $.50 a pot cup of coffee at home do the trick? You'll live?? Good News - you just saved close to $1,000 a year
• Instead of eating out twice a week, maybe cutting back to once a week or twice a month can be sufficient. This move alone could save thousands each year.

"Got it Chris - but we've already cut out that kind of fat from our expenses!" OK! Let's dig a little deeper! Here are some of the areas that I find can be deceptively harmful:

• Fast food: Picking up McDonald's for a family of four once a week because we are too busy/tired to cook: This could easily cost close to $25. For that kind of money you could easily prepare a healthier, more nutritious meal at home and still bank an extra $500 a year. This doesn't include the reduction of future medical costs. If this doesn't convince you rent the DVD "Supersize Me".
• Rent? I mean go to your library and borrow the DVD. Many public libraries today have great, current DVD collections. Two movies a week from "Blockbuster" or "On-Demand" will run close to $500.

These are just some simple, easy targets. Many more lie within the details of your budget.

How hungry for change are you? In the words of Dave Ramsey, author of The Total Money Makeover, we should be telling our money where to go, instead of asking where it went. Taking control of our money is not rocket science, but it is work.

As with the most difficult tasks in life, it starts with one foot forward. Start now! You have it within you to take control of your life. No one can do it for you. It's up to you!

It's a great day!!

"Beware of little expenses; a small leak will sink a great ship" Benjamin Franklin

How did we get here?

It's getting tougher all the time. Do you find that you often have more month left over than money? It's easy to get there. But how?

First we have the "gottahaveitnow" camp:
We decide that what we want, or "need", should be satisfied immediately. That new car or TV, or that bigger house, is so mission-critical for us that lack of money should not stand in our way. We find our selves out "just looking", which quickly evolves into "we can't pass up this deal".

"Things" become our identity and our barometer of success, to ourselves, as well as to those we seek to impress: family, friends, neighbors, co-workers and clients.

Then there are those who succumb to emergencies:
Unexpected and under-insured medical expenses, broken down cars and appliances, or necessary home repairs to name but a few. In the recent past, medical expenses were the most common reason for personal bankruptcy.

The cost of responding to these needs, whether real or imagined, are made decidedly worse by the fact that we often use credit to pay for them. Credit cards, mortgage and equity loans, payday loans and rent-to-own arrangements are all part of the mix. "We can get you in the car you deserve!" or "No payments for the next 6 months!" or worse yet, short term loans that equal interest rates of over 100% per year.

Budgeting, planning, saving for a rainy day: these are the tools of the rich. They don't get caught paying substantially more for something, because they didn't plan for that purchase or that unfortunate event.

In the coming days, we'll talk about some of the basic tools you should have in your arsenal. Instead of asking yourself how you got here, you'll be deciding where you will be one month, one year and five years from now.