photo credit: Robyn Gallagher

Over the last few weeks I’ve reviewed some of my favorite personal finance books that helped me establish personal finance goals for 2008. The Automatic Millionaire by David Bach is such a book that provided the incentive to look at my personal spending habits and see if I had any expenses that could be cut out and help achieve retirement more quickly. I created an entire article without realizing that I was describing the latte factor. The latte factor is the act of spending money or throwing away money on a daily basis that could be going towards your savings or retirement instead. In my case, I was spending $9.40 a day on Starbucks coffee and pastries. This equated to $2,350 over a year and could have been put into an IRA or savings account. The best part about giving up my Starbuck’s addiction was that I don’t even miss it now. In fact, I purchase Costco coffee and brew it at home. It tastes great and costs just pennies for each cup. Also, I’m not eating as many pastries and instead have a bowl of cereal or fruit. Did you find that you had a latte factor in your personal expenses for 2008? You might not be addicted to Starbucks, but what about all those Red Bulls or Rock Star drinks?

The Latte Factor was not just an expense, but it was about changing how I thought about spending money. What does a Starbucks latte represent and do I really need it now. Can I delay my enjoyment or gratification for an expensive beverage and instead retire earlier or save for something else. Spending $2,350 on something that doesn’t have value or provide lasting entertainment was a huge eye opener for me. In fact, the Starbucks drink was actually only providing a few hours of calories and you could probably argue that they are not that healthy either. The Automatic Millionaire sounds like a fancy word or term, but it’s about changing the way you look at everyday expenses and whether they are helpful towards your savings goal.

Here’s what I used when examining my own latte factor expenses:

1. Does the expense have intrinsic value or entertainment value? Does a cup of coffee provide lasting value?

2. Do I need it? Sounds easy, but many mornings I was just in a routine and didn’t need the Starbucks latte.

3. Can I afford it? Spending $9.40 a day at Starbucks wasn’t putting me in debt, but it wasn’t helping my savings goal. In fact, I didn’t have a defined savings goal and retirement established yet. This was dangerous to just spend frivolously. If I continued spending $2,350 for the next 30 years at Starbuck’s that would be $70,500.

4. What am I teaching my children? Spending money at Starbucks occasionally for a treat is one thing, but $9.40 a day was clearly not healthy for my budget or my body. I found that a blueberry scone had 400 calories and the Americano with half and half had nearly 300. 700 calories for breakfast was not helping me stay healthy for my children. Also, do I want to have my children asking for Starbucks before school or after school each day? Nope.

Did you find that latte factor in your 2008 budget? What was it, and how did it impact your overall financial goal? Have you established a 2009 family budget yet?

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photo credit: jslander

You might not have over a dozen children at home like the Jeub family, but you are looking to stretch your dollar at the grocery store and buy quality food for the month. Were you successful making your supermarket money last longer or did you struggle each month? Do you have a plan for 2009 that will make your grocery money stretch even further? Will you eat out less or maybe eat leftovers more often?

Here are some supermarket money saving tips that I’ve tried in the past and my thoughts for new food saving money advice for 2009.

1. Set a grocery budget. What did you spend each month is 2008 on groceries? Do you include eating out and entertainment in your grocery budget? Are you wondering what a food budget for a family of four should be each month? I would as well. We have friends that are very frugal food shoppers and have a family of 5 eat for under $400 a month. I don’t know how this is done, but they make it happen. They say that they buy a lot of pasta and chicken and stay away from name brand items.

2. Make a list. Sounds easy, but I never do it. My wife is great at creating lists and will offer to create one for me when I do the grocery shopping. I tend to be an impulse food shopper and buy food at the worst possible time when I’m hungry. Usually I’m tempted to buy a deli sandwich if I shop at lunch time or a pizza or cooked chicken at dinner time. A list helps me organize my food items needed for the week and keeps me focused. I also tend to waste a lot more time when I’m just wandering from isle to isle trying to put items together for a meal. Also, I tend to buy more cookies and chips if I don’t have a list.

3. Whole Food or Food Maxx? We have friends that shop exclusively at both and you can imagine how the food budget would be vastly different. Yes, the argument can be made that vegetables and some organic food cannot be found at Food Maxx, but some of the staples like cereal and pasta are basically the same. I know someone will disagree, but you can always try Trader Joe’s that seems to beat Whole Foods in many categories. Maybe if you shopped Whole Foods in 2008 and are looking to trim your food budget in 2009, Trader Joe’s might be a good option. If you shopped Safeway, Kroger’s, or another national supermarket in 2008, you might consider trying a discounter like Walmart or Food Maxx. Do you buy groceries at Costco in bulk? Do you wonder if you are saving money? Me too.

4. Use a calculator. If you are not sure if the 12 pack of Doll peaches is a good price at Costco, pull out your calculator. They usually have the price per ounce listed on the price tag. You might need to look closely as they make it very fine print. You might be surprised that you are paying over $1.00 a can when you might be able to buy the same item at your local supermarket cheaper. Same idea goes for toothpaste, napkins, juice, soda, or any bulk food item at Costco. I’ve noticed the big savings occur when we purchase contact solution and Costco coffee. I can’t find the items cheaper anywhere else, including Walmart or Target.

5. Costco Food Coop? I had an interesting idea go through my head the last time I was shopping at Costco. I was in line waiting over 20 minutes to pick up our family Christmas picture and was looking in other carts and thought many of the items looked amazing. I’ve never tried many of the meats, pastries, pies, cookies, fruit and vegetables at Costco because we are only a family of four. I still am amazed how Costco seems to cater to restaurants or people with multiple children. Take the 12 pack of muffins as an example. I love the chocolate Costco muffins and have had them probably 5 times in my life. We always buy them, eat the chocolate and then put the rest in the freezer. We either forget to eat them or need the space for meat or another frozen food item. How do people eat 12 huge Costco muffins in a week? What about the fresh Cosco fruit? I love mango, but a flat of 10 to 12 mango’s? I guess you could cut them up and freeze them. My thought was a Costco food coop that would arrange to share items with multiple families. Several families could split the cost and also enjoy trying new foods for the first time. Buying Costco meat can be substantially cheaper if purchase in bulk bags. One summer I found Costco Tri tip bbq for $3.00 a pound if purchased in a bag of 10. My freezer doesn’t hold 10 of anything. Well, actually is can hold 10 Otter Pops, but not 10 tri tip roasts. Creating a coop with a friend and splitting the 10 pack would save everyone money.

What are your food saving tips for 2009?

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In 2000 my wife and I budgeted for new glasses, contacts, some minor dental work and medicine and thought we had all expenses covered. Well, we did and had not factored in the discount eye glasses and contacts from VSP or Vision Service Plan. Our FSA or Flexible Spending Account was left with approximately $250 and we had to spend it within a few days. An FSA, if used correctly can be a tremendous asset for your family finances. You can set aside pretax money for use for medical items like medication, medical procedures, dental visits, and more. Unfortunately, the Health Savings Account did not allow non prescription, over the counter items like contact solution or aspirin. We would have just gone to Target or Walmart and stocked up on contact solution. Another reason I wish Costco took Visa or Mastercard, this year our FSA uses a Mastercard for all purchases. Very handy, but not at Costco where they only accept American Express. Losing $250 because we didn’t budget correctly was a terrible feeling. At least if we went out and at at the finest restaurant and spent $250 on steak and lobster, we would have had something to show for it. Instead the lesson was learned to budget and spend to our FSA limit.

It’s interesting that we want to be frugal and make wise decisions with our personal budget, but if I feel that we will lose any of it to FSA, I say spend it quickly. Yesterday we checked our FSA account balance and found that we have about $80 left for the year. That gives me one day to spend $80. A quick trip to Target and we should be stocked with contact solution for all of 2009. I might even splurge and buy Alcon instead of the the generic Target contact solution.

Do you have an FSA or Health Savings Account as part of your budget? Have you lost money by not spending it all? Many FSA or HSA offer Mastercard or Visa cards and are very efficient and convenient. The hard part is to remember and use the card when purchasing medication that can be reimbursed with the FSA card. Contact solution and many other over the counter medicines qualify now for reimbursement. Make sure you don’t donate any funds to your FSA or Health Savings account company. Check your companies FSA rules for eligible purchases.

Finding new sources of passive income, residual income, or even extra income can be offset if you don’t spend all of your FSA money. Be sure to spend that FSA account money that you worked so hard to earn in 2008. If you happen to forget, be sure to keep that Visa or Mastercard as your first credit card in your wallet. Mine is red and I often wish it could be used for non medical procedures like Costco pizza. For 2009 we are increasing our FSA budget as my wife wants to have Lasik eye surgery. The benefits can be tremendous as she will not have to wear contacts and can wake up in the middle of the night and see the clock clearly. I can’t imagine what that would be like. Instead, I think I’ll wear contacts for a few more years.

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photo credit: skye820
Last year a large percentage of our household budget went towards food and groceries. I jotted down a list of frugal food ideas that can help our family control food expenses in 2009. If you have an idea that has worked for your family, please let me know and leave a comment.

1. Stop throwing out food and wasting money. In 2008, I seemed to throw a lot of food away that had spoiled or the kids just didn’t like to eat. I would try a new yogurt or cracker and if the kids didn’t like them, it would just sit in the cupboard until it got tossed. I threw out a lot of pasta as well. I would make a lot of pasta for lunch and try and reheat for dinner or lunch the next day. The kids hate reheated pasta and it never worked to try and get them to eat it for leftovers. At least pasta is cheap.

2. Homemade pizza. We make a great homemade pizza using dough purchased from Trader Joe’s for under $2.00 and use fresh vegetables or pepperoni and cheese for a few extra dollars. It sure tastes better than a Dominoes pizza or Round Table Pizza and is a lot less greasy.

3. Crockpot chili. I’m not a fan of the crockpot and have only enjoyed one recipe which is homemade chili. I love it spicy, or sweet, or mild. Any kind of chili with cornbread is heaven. Chili is not a favorite of our kids, but a pot will last my wife and I for a week.

4. Brew your own coffee. In 2008, I would guess I spent less than $25 on Starbucks for the entire year. It beats my previous year by over $2,000. Making coffee at home is a frugal food idea that can really help your family budget. I would love to get an espresso machine in 2009, but our counter space is filling up.

5. Homemade Ice Cream. My wife bought me an ice cream machine for my birthday and I was a bit skeptical about the quality of homemade ice cream. I remember eating it as a kid and it didn’t taste as good as Dreyers or Baskin Robbins ice cream. Well, it could have been the ingredients, but my wife made a coffee ice cream that could put Dreyers out of business. It uses cream, milk, sugar, Ghirardelli chocolate powder, and decaf Folgers crystals. Yep, Folgers crystals taste great in ice cream. Ice cream tastes great all year long and can be a wonderful frugal food treat.

What were your favorite frugal food ideas in 2008? Do you have any money saving food ideas for 2009?

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photo credit: turtlemom4bacon

We only have a few days left in 2008 and I have been busy collecting some items around the house that we can donate to Goodwill and the Salvation Army. Kids clothes, sports equipment, books, and some unused toys will be given to charity this year. Does your family donate unused items and take advantage of the tax write off for 2008? Some other ideas to help those less fortunate or struggling to make ends meet this holiday season can take a little more creativity. If cash is tight in your household, as it is for many this holiday season, what else can you do? If you are like me, you might have a few thousand mileage points from an airline that you are not using. Did you know that you can donate those miles to charity? Yes, many families could benefit from donating air miles as they can be used for Make a Wish Foundation or The Red Cross and hundreds of other charities. If you have unused United Airlines miles, Delta miles, or Southwest miles, you could donate and help families across the country.

Maybe you were one of the select few who had positive returns on your stocks in 2008. You can donate stock and pass the gains to a charity of your choice. You get the tax write off and the charity gets the stock.

Do you have any creative ideas for donations in 2008? Does your family, especially your children get involved in donating used toys or clothing?

Some helpful links for more info on tax write offs and donations for 2008
IRS.gov
Salvation Army
Goodwill

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