4 Ways to Spend Less on Groceries Each Month

Are you familiar with the USDA food plans?  These plans state how much food should cost a family each month based on four categories:  thrifty, low-cost, moderate and liberal.  The plans are updated each month to accommodate food price increases.  You determine how much your family should spend by choosing one of the four plans, and choosing the ages and members of your family.

For instance, according to the most recent USDA food plan, my family of five (2 adults and 3 kids ages 4 to 10), we should be spending approximately $176.60 a week on the thrifty plan up to $348.90 on the liberal plan.  (Am I the only one saying “WOW!” to the liberal plan?)

Recently, I voluntarily decided to cut back on my freelance workload so that I could spend more time homeschooling my kids.  We decided to tighten our belt and live off my husband’s income alone while banking the money I’m making.

We’ve been thrilled to spend under the USDA thrifty plan every week, usually by $40 or $50 a week, even though we cannot have gluten, dairy or corn.  Here’s how we’ve been doing it:

Spend Less on GroceriesStock up when things are on sale.  I now try to only buy fruits and veggies that are loss leaders in the weekly ads.  When I see things at rock bottom prices, I stock up.  Recently, oranges were on sale for 4 pounds for $1.  I bought a case, which was 40 pounds.  That case only cost me $10, and we’ve had fresh oranges for the last 5 weeks.  We have one more week left before we run out.  (Keep in mind that some stores will give you a discount when you buy a case, so you can save even more.)

I also found organic potatoes 5 pounds for $2, so I bought 40 pounds.  Same for cabbage at 33 cents a pound.  I bought 6 heads.

Inevitably, there are weeks where there are no good sales, so we eat from the pantry.  This week is one of those weeks, so we will be eating a lot of meals with cabbage and potatoes.

Make your menu plan based on the items that are on sale.  I’ve always made a menu plan.  (If you don’t, start now!  It’s such a money saver.)  However, I made my menu plan first and then went shopping.  Now, I do the opposite.  I find out what is on sale, and I make my menu plan based on those items.

Make freezer meals based on low cost items.  When I have extra time or extra groceries, I make freezer meals.  Then, if there’s a week where we’ve run out of grocery money or there’s nothing good on sale, I have at least a week’s worth of meals in the freezer.

Be disciplined when going to big box stores.  I love shopping at Costco, but I’m very careful to only buy what is on my list.  I can get organic carrots 10 pounds for $6.99.  I can buy a 2 pound bag of organic greens for less than $5.  These prices can’t be beat!  However, if I stray from my list and spend on impulse buys, I’m not saving any money.

What USDA plan is your weekly grocery spending closest to?  What other tips do you have to save money on groceries?

Achieving True Diversification in Your Portfolio

“Don’t put all of your eggs in one basket.” I’m sure you’ve heard that expression before. Most people at least understand the idea of diversification. The idea is to prevent you from losing all of your investments if something bad were to happen.

The idea is simple, but many investors fail to achieve true diversification in their portfolio. I can’t tell you how many times I have heard someone talk about their diversified portfolio that consists of 10 stocks. Ten stocks isn’t anywhere close to diversified. This false sense of diversification is a very popular financial weakness that many adhere to. To have a truly diverse portfolio that mitigates risk, you need dozens or even hundreds of investments across different industries, currencies, geographic regions and asset classes.

The Value of Mutual Funds

The same group that calls their 10-stock portfolio diversified is the same group that scoffs at mutual funds. They say something like, “why would I pay a fund manager to pick my investments when I can do it myself just fine?” Even giving them the benefit of the doubt that they have the same expertise as a fund manager who’s full time job is to evaluate investments, how can one individual keep up with dozens or hundreds of investments necessary to be truly diversified? What kind of capital does it take to hold that many positions?

Natalie Cooper of BankingSense.com says, “Put simply, a mutual fund gives investors the ability to invest in cash, bonds, stocks and other securities while never requiring investors to make separate trades or purchases. To build a portfolio that has a similar level of diversification, an investor would need $100,000 or more. A mutual fund provides the same level of diversification for far less money. An individual investor can obtain great diversification with about $1,000.”

It’s true that there is a cost to investing in mutual funds. Depending on the fund type, there may be an up-front fee with smaller annual management fees or the fund may be no-load, but carry a higher annual fee. Regardless, the fees on most funds are nominal and the benefits easily outweigh the costs.

Avoiding False Diversification

Even if your portfolio consists entirely of mutual funds, you need to take care to avoid overlap. Kent Thune of About.com says, “This [investing strategy] has great potential for overlap, which occurs when an investor owns two or more mutual funds that hold similar securities.” He goes on to provide an example of two funds, the Vanguard S&P 500 Index (VFINX) and Vanguard Growth Equity (VGEQX), who’s portfolios consist of 97% of the same investments.

Buying a number of highly rated mutual funds isn’t enough to make sure you are truly diversified. You need to review the portfolios of each to make sure there isn’t any overlap. Your investments should also cover multiple asset classes. Laura Dogu of Forbes.com recommends a simple strategy to achieve this, “The three funds you should own now are the Vanguard Total Stock Market Index fund, Vanguard Total International Stock Market Index fund, and the Vanguard Total Bond Market fund…With only these three funds, investors can create a low cost, broadly diversified portfolio that is very easy to manage and rebalance.”

Achieving Balance

A good portfolio provides opportunity for growth while mitigating risk. Your level of risk aversion combined with the amount of time that you have to invest will dictate your proper portfolio mix. You can even include single stocks in your portfolio, but they should be a small part of your overall investments.

It’s easy to get blinded by the potential for high returns. A bond with a 5% coupon doesn’t look very enticing when compared with an emerging market that’s seeing 20% or 30% growth; however, high return investments cannot be separated from their risk. You need a balanced portfolio that’s truly diversified. You need to provide opportunity for your money to grow, but you need to make sure that it will still be there when you need it most.

Living on What You Earn Can Make You Feel Broke, and That’s a Good Thing!

Living on what you earn can be a difficult thing.  For many, it seems like a little like a foreign language; difficult to learn to do, and backwards.  But, if you can learn it, and transform your life into one where you’re living on what you earn, it can make a whole lot of difference.  You’ve got to start somewhere, though.  I, like you, haven’t always lived on what I earned.

Almost all of my life, I’ve owed someone something.  When I was 19, I needed a car.  My parents, tired of having me call them late at night after my old, beater car had broken down—AGAIN!—, decided I should buy a new car.

I didn’t qualify for a loan yet, so my grandpa lent me the money, and I paid him back with a small amount of interest, which was less than I’d pay borrowing from the bank and more than he’d make in a safe investment.

Soon after, I went away to college and took out student loans and started running a balance on my credit cards.

By the time I finally paid off my student loans a few years ago, my husband had his own loans that we had to pay.

Can you see me, just like the proverbial hamster running on the hamster wheel?

Living on What you EarnI owe, I owe, it’s off to work I go.

Until one day, I said, “Enough!”

No more.

Time to live on what we make.

Time to stop borrowing.

Time to start saving.

And that’s when the real challenge began.

Our society is built on borrowing.  Borrow for school, borrow for a car, borrow for a house, rent to own, pay in 10 easy installment plans.

I’m done living that lifestyle, but in turn, I’ve picked a much more challenging lifestyle—living on what we earn.

Cutting Until There’s No Room Left to Cut

The first thing I did was develop a frugal, written budget.  That meant taming our grocery budget from $700 to $1,000 a month to $500 a month to feed our family of 5 with gluten, dairy and corn intolerances.  It isn’t easy, but we’re doing it.

The next step was to keep a record of everything we spend.  Honestly, I hate keeping this record, so that alone is incentive to spend less.

I spend an hour or so every week, reconciling the budget and making sure we’re on track.

I also started regularly saving for irregular expenses.  Every other week, I put $120 in an account earmarked for utilities.  In the winter, our utilities fall far below that, but I still keep saving the money for the expensive summer months.  This way our utility costs are the same all year long.

Handling Unexpected Expenses

While the new budget can feel somewhat restrictive, what I find most difficult are the unexpected expenses.  Just recently, I found that two of my kids have cavities (quite a few!), and the price for fixing them is around $400.  I have money set aside in a medical fund, but filling the cavities will just about wipe that money out.

The problem is that we have many other medical expenses–$188 for my son to get new glasses and an eye exam and a pending $3,300 expense for him to get braces.  I could put his braces on an interest free payment plan, but we don’t do payment plans anymore, interest free or not.

Instead, we had to make hard decisions like canceling our trip to see family this summer.

Living on cash is definitely not easy, but I know once we get through the next couple of years, as our income increases, it will get easier.

We are, as Dave Ramsey says, “Living like no one else so later we can LIVE like no one else.”

Do you eschew debts and payment plans, or do you use them in moderation to meet your goals?