Posted by Canadian Dream on July 21, 2010
Our $25 food challenge has come to a close. The final spending numbers are as follows:
- Margarine $4
- 8 L of Milk $8
- 1lb Coffee $1.98
- Fruit (5 nectarines, 4 plums, 3 apples, 5 peaches) $5.82
- Fresh Tomatoes (5) $1.27
- TOTAL $21.07 (84% of budget)
So you can see we actually didn’t even hit the total budget during our 18 day experiment. In total we spent $0.29 per day per person. What surprised me about this challenge was how easy it was to pull off with a bit of planning and focusing in on what we had in the house to eat. To be honest I think the fact we had two packages of veggies from my farmer which made this so easy (which included green onions x 2, radishes x 2, small bag fresh greens (spinach etc) x 4, parsley). If you included the retail value of that food that would bring us up to $0.71 per person per day. Our diet was actually fairly normal for the entire couple of weeks and we ate fruit and veggies fairly regularly.
Actually my wife like the idea of cleaning out the pantry and freezer so much that she wants use to do something similar at least twice a year going forward to prevent food clutter from building up. By the way, I define food clutter as that stuff you buy to try something new and then forget about for two months before you use it again (like rice paper wraps). So overall the challenge can’t have been that difficult if she wants to repeat it.
Yet the challenge was useful for me to realize a few new lessons on how we approach our food:
- Forget Name Brand - It’s all about what is on sale, not the name on the package (especially for generic items like pasta) . If you follow that rule you can cut back a fair amount on some grocery bill. When in doubt look for the cost per unit mass/volume on the shelf tag to find out what is the cheapest, when you hit a sale load up the pantry.
- Junk Food is a Budget killer – I don’t think I really understand how much a bag a chips is until you realize how many potatoes or apples you can get instead. Cutting back on this will make a huge difference to your grocery bill and likely improve your health.
- Eat around what you have, not what you feel like – Most people know that dangers of impulse shopping what is interesting is we don’t consider how often we do impulse cooking which requires picking up something from the store. I was guilty of doing this a fair amount, but now I realize if you plan your meals around what you have you will make less waste and throw out less leftovers. Also you can then shop by the sale to restock your pantry, rather than paying full price for things that keep for a long time (can soup, oil, flour, etc).
- Plan Your Meals Weekly – This is likely the key to eating on the cheap and ties into #3 as well. By planning what to eat in advance you can make themes for a week. For example, I had some ham in the freezer so we planned chickpea ham salad, chef salad and carbonara for one week. Also you can plan to eat your leftovers. This can be a huge amount of savings in money and time since you don’t have to think about what to eat. You can walk in the door get your defrosted meat from the fridge and start cooking.
- Get Creative – Perhaps one of the more interesting dishes I made involved me looking at our pantry and trying to figure out what to do with a can of pork and beans and some pasta. Thanks to Google I managed to dig out a recipe a template and then just adjusted it to what I had in the house. It was surprisingly good to eat despite my concerns of trying it.
In the end, eating on the very cheap is entirely possible, especially for short periods of time. The trick is to do an inventory of what you have and plan around that. Also with a bit of work I think most people could cut their food bill in half just by shopping sales and eating what you have. So would you try something similar? If you have, what did you learn?
This post is now part of the Carnival of Personal Finance.
Posted by Canadian Dream on January 27, 2010
I made the comment the other day in regards to the fact that every early retirement story I’ve come across has some element of luck. The people in question either lucked on the stock market, did well on real estate or had their own business and got bought out. Yet that got me thinking: can you do it with no luck at all and be stuck in the middle for income? Is it even possible to retire under 50?
So let’s try out that theory, meet my crash test case of fictitious people called Bill and Jane. They earn between them $71,000 a year (the 2007 median salary in Canada for a two income household with kids). So let’s break up that pay by a 60/40 split of $42,600 for one and $28, 400 for the other. You can pick out their careers and who makes more if you want, for me I’m just assuming they get in dead end jobs and never move from this salary during their entire working career. In actually fact they may start lower and work up, but on an inflation adjusted basis I’m assuming they are a flat line all the way. So after tax, CPP and EI and no other deductions they clear $33,161 and $25,762 respectively, or in total $58,923 (in SK).
They are a frugal couple so they only spend $24,000/year on expenses (but not the mortgage). On top of that is a mortgage payment on a $250,000 home (I’m assuming they buy within their means and stick to a condo or a smaller older house in a ok location, but not a great one). Mortgage payment for a 25 year period at 5% average rate is $690.66 twice a month assuming they bought with 5% down when they turned 22 (combination of wedding gifts and saving). I’m assume they don’t accelerate a single payment and pay off the mortgage at 47. I’m also assuming they pick that $28,000 as their spending rate for retirement which includes some cash for travel and fun things since the mortgage will be gone when they leave work at 47.
I’m also going to assume that having a two kids eats up any spare money until they turn 28 when they start to get serious about early retirement. After that point, after expenses they can save at most $18,347.16 per year, but wait, who’s looking after the kids? Let’s take off another $12,000 a year for child care, but in reality you get a tax deduction for that so let’s assume after their tax return they pay $740/month net. So that leaves only about $789/month for saving until the kids get older, so let’s assume that lasts for 10 years.
So Bill and Jane start saving but are smart and put the money in an RRSP and reinvest the tax refund. So that boosts their savings to about $994/month while the kids are in care. So at 5% for 10 years that leaves them with $154,350. Then the kids leave care and they put the extra $740 a month into savings, but let’s assume outside the RRSP. So in total they can save $1734/month for nine more years, leaving them with $477, 741 at 47.
Now the draw that down from 47 till 65 when they get OAS and CPP at their $28,000 a year and they only get 3.5% return now. That leaves them with only $195, 577 at 65. So assuming a 4% safe withdrawal rate they have about $7823 from their nest egg a year, plus their CPP and OAS they should be fine in full retirement.
So in conclusion it can be done, but you have to do just everything right. Keep you costs way down and keep your shelter costs reasonable and it can happen. If you want to spend more than that you will need luck or hard work to make more money.
This post is now part of the 243rd edition of the Carnival of Personal Finance.
Posted by Canadian Dream on March 9, 2009
So when did you sell out on your childhood dreams? Noticed I asked ‘when’ and not ‘if’. Well that is because I’ve run into so very few people that are living their dreams. What happen to us that this is so common now?
I’ll offer myself up as an example I could have chosen another path that was better in line with my creative side, but no I was practical instead and took an engineering degree. I chose it because I knew it was a more sellable degree that offered a higher and consistent income. Ironically I have done very little true engineering work during my career, perhaps a third of my career so far, but that doesn’t matter it still got me a steady pay cheque.
Yet why did I do it? I think perhaps because in our society we value financial security over happiness. Happiness is a nice ideal, but people are typically more driven to pick the choice that offers financial security. Yet is that security an illusion. If you don’t believe me ask any one of the thousands of auto workers that have been laid off recently. I’m fairly sure a year ago they thought their jobs were secure.
So why do we sell out if the security isn’t there? I think we do it because we want to take the easy way out. We want the arrangement of show up and do your work and we send you a cheque every two weeks or twice a month. To do what truly makes us happy would entail a lot of self examination and likely hard work to make that dream come true. Then after all that you wouldn’t even be sure how much you would be making. It would be a questionable investment of time for an unknown rate of return. We would be living on what we produced and none of us is sure enough of our talent to make that bet. Our self doubts haunt us so we take the easy way instead.
Yet how many of us are really suited for this whole slave away at a job we don’t like for pay cheque? What would happen if more of us took a risk on happiness? Would the world change or would every look the same except for a lot of happier people? I don’t know.
So what’s your story? What did you sell out for or are you one of the rare ones who are living your dreams? If you feel like sharing, leave a comment.
