Shopping at Warehouse Clubs: Frugal or Not?

Over the weekend we visited a nearby Sam’s Club, something we haven’t done in many months. My wife and I agreed it is something we should consider doing on a regular basis (maybe monthly) to stock up on a number of staple food items and paper products.

Naturally, we both wondered if shopping like this was really saving us money, or just saving us from more trips to the grocery store, which in turn would likely save us money.

The problem, for me, with shopping at places like Sam’s Club is that there are so many shiny things to distract you. If you manage to steer clear of the electronics section, bypass the rows of discounted books and outdoor equipment, you will eventually make your way to the food, where the occasional deal may be found.

We like to stock up on things like ground beef, which comes reasonably priced in big “family pack” packaging. Once home, we separate the ground beef into roughly 1 pound portions and freeze them for future use in various recipes and regular dishes (tacos, spaghetti, homemade burgers, etc).

We also typically like to stock up on certain non-food items – paper towels, toilet paper, kitchen trash bags, over-the-counter medicines and vitamins, etc. The bulk pricing is not always a deal here, and I’ve occasionally found that I can often save more by coupling a store sale with a manufacturer’s coupon.

Still, the idea of stocking up on paper products for the next month or two, and not having to contend with those items in your weekly grocery store trips is appealing.

Shopping at a warehouse club like Costco or Sam’s can drive down your unit costs for items you regularly use, but there is one thing to consider: storage space. I would not suggest shopping at a warehouse club if you are short on space, including plenty of freezer space.

For storing paper products, consider a closet shelf in an guest bedroom, or under-cabinet storage in a guest bath. Naturally, places like basements and garages make great storage locations, but consider fumes, humidity and temperature and only store items that may be safely exposed to those elements.

On the Way Out: Top Off the Tank

Before leaving Sam’s Club we typically top off our gas tank, as the cost of fuel is a good $0.05 per gallon cheaper than it is in our town. Obviously gas pricing is regional, and you may or may not experience similar results in your area. However, we have found the gas prices at warehouse clubs consistently beat those of surrounding stations.

Consider the Costs: Membership Fees

Though warehouse clubs do occasionally allow non-members to shop on special days, it does cost money to shop. Do a simple break-even analysis to make sure you aren’t giving away all of your savings in membership fees each year. Divide your annual membership costs by 12, and then estimate how much you are saving each visit over shopping at your local grocery store with coupons.

If the cost of the membership is more than the amount you are saving each monthly visit, then it probably doesn’t make sense to sign up. Remember, bulk shopping is not always cheaper shopping.

Toying with the World (Infographic)

Of course it’s important to treat kids occasionally with the newest toy or the latest game. But as the economy sinks and money gets tighter, it seems to me these types of purchases are also some of the first to cut back on. So I’m extremely surprised that even as families would reduce spending on groceries and school supplies, our toy budgets swell: Americans reduced average supermarket spending by about .5% from 2009 to 2010 while in the same period, toy industry sales grew by 2%.

I’m familiar with the temptation to overspend on kid’s toys. And I know the problem with buying for your kids is that usually the most popular game or specific remote controlled car is just the only thing that’ll do. It’s hard to keep your consumer sense in the midst of the trends that keep our kids and tweens primarily wanting all the same things.

My latest graphic on U.S. toy spending should remind you to check loose spending on that latest video game or too-frequently updating kids’ collections of non-necessities. Check out the surprising cost of our kids’ whims:

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Toys

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A Shift in Perspective: Micro-Budgeting to Big-Picture Finances

One of my New Year’s resolutions was to simplify the way I budget. Over the years I have grown consistently obsessive over every aspect of my finances. It was beginning to become a problem.

So after many months in a row of daily updates, fretting over the categorization of expenses (should paper towels purchased at the grocery store go under Household, or Food, or should I create a new Paper Products category – ugh!), I have decided on a new approach.

Using Two Checking Accounts to Manage Big-Picture Household Finances

From now on, I will simply have my paycheck split into two checking accounts. The majority of the money will go to a “Bills and Savings” account, where I will have regular expenses and savings contributions (Roth IRA, DRIP stocks, etc.) automatically deducted.

Things like the mortgage, utilities and any subscriptions of services we pay for on a monthly basis will come from this Bills and Savings account. What’s left in the primary checking account will be ours to spend – our “What’s Left” account. That’s it; that’s all there is to it.

Don’t worry too much over the “split” either. It doesn’t have to be exact because you can theoretically move money from one account to the other.

Add up all of your regular bills, plus your monthly savings contributions, and have roughly that amount taken out of your paycheck and moved to your Bills and Savings checking account. And when estimating for this account, round up just to be safe. 

For most people, that split might look like a 70/30 split between your “Bill and Savings” account and your “What’s Left” account. So if your take-home pay is $2,000 a paycheck, have 70%, or $1,400, transferred to your “Bills and Savings” account.

Then make it a goal to live off the remaining $600 left in your primary checking account. Things like gas and food and entertainment expenses are deducted here. If you run out of money in the “What’s Left” account, you better start searching the pantry for food and giving up on entertainment until your next paycheck replenishes the account.

Tracking the “What’s Left” Expenditures

I am no longer tracking every penny I spend on food, or gas, or paper towels, or books and movies. I will still try to spend as little as possible on those things, and have vowed to renew my interest in using coupons where possible. However, I am not going to invest my time in tracking all of our expenses to an infinite detail, because quite honestly, looking back I can’t see what we’ve gained from that exercise.

With several months of detailed tracking available at Mint.com, and in our household ledger, I can see that we spend more money on gas than we did a couple years ago. Duh, that’s because gas prices have gone up.

I can also see that we pay a little more each time at the grocery store, and that thanks to new fees, our cable provider has increased our services. But what can I do with this information?

Focus on “Big-Picture Finances”

More important to me is the fact that we have spent less than we’ve earned. We’ve increased savings. We’ve paid off our debts. We are saving for retirement, and college, and we are funding a few sinking funds to cover those once-or-twice-a-year expenses like car tags and vacations.

We are winning over the long term. We are winning the big picture. That’s what really matters – not how much I’m spending on dog food or fast food from one month to the next (no, it is not a coincidence those examples were found in the same sentence).

Now, I don’t mean to completely knock the process of tracking expenses. It can be a very important exercise, particularly if done on a short-term basis (for 30 days, for instance), to get a handle on where your money is going. However, it isn’t something I would spend a lot of time on every single month, or in my own previously obsessive example, every single day!

Life is short. You can spend it meticulously going through receipts to split costs from your last grocery store visit between paper products, baby food, and the Redbox rental you grabbed on the way home, or you can look back at the end of the month and reflect on your increase in savings, your reduction (or avoidance) of debt, and your time spent doing things other than updating your elaborate budgeting program.

America’s Pawn Empire (Infographic)

It’s hard for me to shake my prejudices against pawnshops. I can’t help but alternately associate them with George Lucas’ Watto and those Frontline episodes labeling pawnshops as your neighborhood drug money repository. Still, recession-era shifts in consumer attitudes are reinvigorating America’s formerly underground pawn economy and it’s worthwhile to take note of the swelling pawn empire: who’s borrowing, who’s buying and why?

We all know that charging high interest rates on brokered loans allow pawnshops to cut great deals on just about anything, from high quality jewelry and sports equipment to consumer electronics. And just this year, stores here in Denver reported holiday sales spikes of 40% and the 3 publicly traded U.S. pawnshops reported net incomes up at least 25%. It makes sense that those of us looking for ways to save have found ourselves checking the pawnshops for our kids’ band instruments or anniversary gifts.

As always, I’d recommend staying aware of predatory lending whether it’s a bank or a pawnbroker. But check out my latest consumer infographic on the trend you might be missing out on:

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Pawn Shop Infographic

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The Anatomy of A Cupcake (Infographic)

When this gourmet cupcake boom took off a couple of years ago, I couldn’t believe it. The cupcakes I’m used to are home-baked, hastily frosted and pocked with thumbprints. And before my family discovered a local cupcake café, the idea of shelling $4 dollar for a lavender lemon verbena cupcake would have made all of us laugh. Now, we do occasionally find each other lingering on the Food Network’s “Cupcake Wars” (now into it’s 4th season). And I’ve only softened somewhat to the idea of cupcakes-for-purchase, but I’m definitely done holding my breathe for the cupcake bubble to burst.

It’s the ingenious image of the sweet and simple cupcake that propelled the treats into a $6 billion industry. We’ve all made cupcakes a thousand times. The ingredients are familiar, pronounceable items we always have on hand. Their authenticity helps us feel better about buying our kids and ourselves a $4 cupcake over a lot of other fast food snacks. But really, like most anything we eat nowadays, the cupcake represents global effort of laborers and products from places we don’t tend to think about. Check out this new graphic weighing the ingredients of this trendy personal treat:

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Food Infographic

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