Calculate Your Cost Per Unit

Tip #34 - Calculate Your Cost Per Unit. When figuring out what things cost, it's important to look at the cost per unit (per pound, per ounce, etc.). Suppose you go to the grocery store and you see two boxes of cereal - Box A costs $3 and Box B costs $2. At first glance it would seem to make sense to grab the Box B since it's cheaper. It just has to be the better deal. Doesn't it? Not necessarily. Suppose Box A is 24 ounces and Box B is 12 ounces. That means for Box A costs only $1.50 for 12 ounces versus $2 for 12 ounces in Box B. Box A is actually the better deal.

When tryng to cut down on spending, it is important to look at cost breakdowns. If you can't do the math in your head, then bring a calculator along. It's important to be able to figure out the price per unit. It's simple math. Take the cost of the item and divide it by the number of units. For this example, we are using ounces. So if Box A is $3 and there are 24 ounces then we take $3 and divide it by 24. 3/24 is 12.5 or 12 1/2 cents per ounce. For box B, the math is 2/12 which is 16.7 or 16 2/3 cents per ounce. Clearly Box A is the better deal.

This is why buying in bulk is often, but not always, the better deal. The larger the package, the cost per unit unit usually goes down. BUT NOT ALWAYS. This is why you should carry a calculator or do the math in your head. Sometimes the smaller box is a better deal. This is often true when you have a coupon. Because the coupon value is a greater percentage of a lower-priced item, it may bring the cost per unit down on a smaller box versus a bigger box. Do the math. Figure out the cost per unit and in the long run, you will save money.

In Real Life (IRL) - I always calculate the cost per unit when I'm in the grocery store. Some of the grocery stores do it for me, which is nice. But some don't. Because I'm a numbers person, I don't have a calculator, but it's really not too hard to do. I will almost always buy the better deal as long as I can use the product before it expires. If it's something I will only use once and don't anticipating ever using again, then I will buy the smaller item for the greater cost per unit price. After all, it doesn't make sense to buy more than I need. But for things I use all the time, I go for the lower unit price all of the time. It just makes sense and saves me money in the long-term.

Give Thanks For What You Have

Tip #33 - Give Thanks For What You Have. During this holiday season, it is easy to overlook what we have and instead concentrate on what we don't have. We don't have a big-screen t.v. We don't have stainless steel appliances. We don't have a new car. We don't have designer clothes. Don't succomb to society's pressure to have the latest and greatest things. Be thankful for what you do have. So what if your television is only 27 inches. It's bigger than the one you had growing up, I'm sure. And your appliances are standard white? Be thankful they're not harvest gold or avocado. And your car has 100,000 miles on it? Be thankful that it works. And your clothes are last year's style or they came from a garage sale? Be thankful that they keep you warm.

At this time of year, it's easy to become greedy when you see what other people are getting or doing for the holidays. The new car. The cruise to the Caribbean. Instead turn it around and be thankful for what you do have - a loving family, a home that has beds in it, a car that works, and some money in your pocket. By being thankful for what you do have, you will not only appreciate your things more, but you will spend less. And you will forget about the things you don't have. By giving thanks for the things you do have, you will stick to your budget. And you will be very thankful at the end of the year when you do your financial check-up and you haven't gone over-budget.

In Real Life (IRL) - I truly try to appreciate what I have. I have a great family. I have a nice house. We take a vacation every year. And we have two cars to drive. It would be very easy for me to be ungrateful. My house is very modest - a 1950's ranch home. Our cars are 6 and 7 years old. One has over 100,000 miles on it. Our vacation is usually done by car within the country not to some exotic island. But really, I don't care. Because I have financial freedom. If my tooth breaks tomorrow, I have money to fix it. If I need to visit a family member I can afford to fly there if I have to. When my children go to college, I will be able to pay for it. By not looking at what I don't have, I am happy. I know that my choices are the right ones for me. By sticking to my budget and not buying the latest and greatest things, I have money in my pocket if I need it. And for that I am thankful. Happy Thanksgiving everyone!

Are You Ready For Retirement?

Tip #32 - Are you Ready for Retirement? If not, then get ready! Regardless of your age, you should be preparing for retirement. It's never too early. In your 40s? You should be preparing. 35? Not too early. You just turned 21? Perfect time to get started! The idea behind saving early for retirement is that the longer your money is in savings, the more time it has to grow. Also, if you work for 40 years of your life and save a little bit from each year, then you will be able to live on that savings when you're older and not working. If you wait to start saving, then you won't have enough or you will have to put away a lot each year. Start early and you can just put away a little each year. It's like spreading out the cost of retiring over your 40-year or so career.

I just received a brochure from my credit union, Navy Federal about how much I need to save for retirement. It was a real eye opener. I will share highlights of it with you so you can figure out approximately how much you need to retire and how much you should be saving each year. We'll go through an example. There were essentially five steps:

Step 1: Figure out how much income you need in retirement. If you live on $50,000 now, you figure out if you need to live on 75%, 85%, or 95% of your income in retirement. This depended mostly on where you expect to get your healthcare funds from in retirement. Of course these are only estimates. Let's assume 85%. That means you will need $42,500 each year in retirement ($50,000 *.85).

Step 2: Figure out what income you expect to receive in retirement. First calculate how much Social Security you will to get, based on how much you make. A person making $50,000 can expect to get $14,500 per year in retirement from Social Security. Yay, finally you get back some of that money you've been putting into the program all of your working years! You also figure out if you are getting a pension from your employer each year. We'll assume no for this example and whether you will have a part-time job in retirement. We'll assume no again. You can always change your mind on that one. Now we subtract the $14,500 from the $42,500 that we estimate we'll need in retirement. The result is $28,000. This is the amount we will need each year in retirement to live similarly as we do now.

Step 3: How much do we need to save now in order to get to this figure? The worksheet gave us different scenarios of when we expect to retire and how long we expect to live (as if we know!). The earlier you hope to retire and the longer you live means you will need to save more. The later you retire and the shorter you expect to live, the less you need. Let's err on the side of conservative. Better to have too much money than not enough. Let's assume we expect to retire at 65. If we are female and hope to live to the age of 92, we use a factor of 18.79 to calculate the savings we need. Take the $28,000 * 18.79 and we come up with $526,120. That is how much we need total for retirement.

Step 4: Figure out how much savings you have so far and how long you have until retirement. If you are 30 years old now, you have 35 years until retirement at 65. Using their chart you get a factor based on this number of years until retirement. In our example the factor is 2.4. Multipy 2.4 * the amount we have saved so far. Let's assume we haven't been too good about savings yet and we only have $20,000 saved for retirement so far. Multiply 2.4 * $20,000 and we get $48,000. We subtract this from our total needed for retirement in step 3. So we take $526,120 - $48,000 and come up with $478,120. This is our total savings goal. In other words, what we need for retirement.

Step 5: Figure out what our yearly savings should be from now on. We have 30 years until retirement. Using the factor they have in a chart, we multiply .020 * our total savings goal from the last step. So we take $478,120 * .020 and come up with $9,562.40. This is how much we should be saving each year for retirement.

I only gave bits and pieces of this retirement worksheet. But the source of it was the Choose To Save organization from the American Savings Education Council, a program of the Employee Benefit Research Institue Education and Research Fund. The full worksheet is at Choose To Save. Check it out and figure out how much you need to save for retirement.

So in this example we figured out that we need to save a bit over $9,500 per year for retirement. Sounds like a lot, doesn't it? It's essentially $800 per month. There are tax incentives to do this, though. You can save $5,000 per year in an IRA and you can put away the rest through a 401K at work if that's available to you. Regardless of how you save this money, you should keep this figure in mind when doing your budget. Retirement savings should always be a line item on your budget.

In Real Life (IRL) - I have been saving money for retirement since I turned 23. That was a year after I started my first real job out of college. My company offered a 401K plan and said the first 3% of my salary that I saved, they would match! So I saved 3% of my salary. At the time my salary was slightly less than $21,000. So I save about $600 and my company matched it. Altogether my first year of saving was about $1,200. A year or two after that, an older man at work advised me to put the maximum I could into my 401k. He said the money is taken out before you even see it so you don't miss it. So I took his advice and maxed out on my 401k which I believe was 13% of my salary. My company still matched dollar for dollar the first 3%. So essentially 16% of my salary was getting saved each year for retirement. I didn't see the money and I didn't miss it. Even though I was making under $30,000 in those first few years of my career, I was saving almost $3,000 for retirement annually. At some point in my 20's I started putting the maximum amount into an IRA, too.

When I met my husband, he too, had been putting money into his 401(k) at work. But he wasn't contributing to an IRA. I got him started on that and we've both been doing it faithfully since. I am now 41 years old so it is exactly 20 years since I started my first job. I haven't worked more than part-time in the last 7 years. Yet because I started early our retirement savings have accumulated about $300,000. We still expect to have 20 more years until retirement. Based on the worksheet, we still need to be putting away about $10,000 per year until retirement. That's okay. It's in our budget to do so. And retirement savings should be in your budget, too.

Saving Money During the Holidays

Tip #31- Saving Money During the Holidays. The holidays - Christmas, Hanukkah, Birthdays, Mother's Day, Anniversaries, etc. should not make you go broke. Let me repeat that. They should not make you go broke. First of all, there should be a line item in your budget for gifts. Figure out how much you would like to spend all year long on gifts including birthdays and Christmas and any extra special events that normally come up in the course of a year - new baby, wedding, anniversary celebration, graduations, etc. Then divide that number by 12 and that should be your monthly gift budget. If you only have $50 per month to spend on gifts then all gifts throughout the year should not total more than $600. Stick to it. I don't care if the neighbor down the street is getting a Coach Bag Mother's Day. If it will take half of your gifts' budget, then don't ask your husband for one.

To make it easier to see what you have, you can set up a "Gifts" enevelope in which you deposit your monthly gifts budget amount into. Then as a holiday approaches, you take the money you need out of the envelope. Make sure you leave enough in there for end-of-the-year holidays.

Speaking of end-of-the-year holidays, it is easy for gift-giving to get out of control that time of year. The advertisements are non-stop, the sales are great, and people are constantly asking what you want for Christmas. Try to cut down on the madness!

--Do a holiday exchange with family members by picking a name out of the hat so you are not buying a present for every person in your extended family.
--If you are a mom or a dad, cut down on the number of presents you buy. Buy one big one and a few little ones.
--Save things as you buy them throughout the year and give as gifts for the holidays or birthdays.
--Shop at yard sales and thrift stores. There are many unopened and unused things to be found at these places. Even some pre-owned toys are in good enough condition to give to your children. --Buy some practical things that you would have bought anyway. No child wants 5 pair of pajamas for Christmas. But a few toys along with necessary items such as cute pajamas or a hat work fine.
--Know how much you will spend in advance and stick to it. If you plan on spending $100 per child, then don't go beyond that limit.
--Keep a big box of things you've bought on clearance all year long. When holidays roll around, shop from that box.
--Make a gift - a box of homemade cookies are a treat for someone who doesn't have time to bake. Canned jams and jellies are unique and appreciated. If you can knit or crochet or paint, then use those skills to make gifts.

There is no reason that holidays should become a gift buying extravaganza. After all, the holidays are not about gifts. They are for celebrating the person, the religious event, or special lifecycle moments. Those are what make the holidays special.

In Real Life (IRL) - We have a budget of $100 per month for gifts. Which sounds like a lot. But it really isn't. We have 5 people in our family with 5 birthdays. We celebrate our anniversary, Valentine's Day, Mother's Day, and Father's Day, as well as Hanukkah and Passover. We also have aunts and uncles, cousins, and grandparents. The big gifts are for birthdays and Hanukkah. We spend about $100 per child for Hanukkah. For birthdays we spend about $25 for each of the children. For cousins, we give $25 each for birthdays and Hanukkah. That's $250 for both birthdays and Hanukkah. As a family we have agreed that adults don't exchange presents for birthdays and Hanukkah. So my sister and I don't exchange gifts, but we buy gifts for her children valued at $25 each. For holidays such as Valentine's Day, Mother's Day, or Father's day, we spend very little. I might find a book at a yard sale that my husband likes. So the cost may only be $1. I'm not a big fan of cut flowers so I tell my husband to forgo the flowers. He usually will buy me some chocolate instead. And since I like Hershey's over Godiva, his presents to me don't usually cost more than $5. For our anniversary, we don't usually exchange presents. We usually do a special dinner or evening out. That's part of our eating out or entertainment budget. So all told, we spend about $700 per year on regular holidays.

There are inevitably special holidays or events that crop up throughout the year such as new babies or special anniversaries. This past year we had my husband's mother's 80th birthday, my niece's graduation, and a friend's son Bar Mitzvah. The remaining $300 is for these types of events. My mother-in-law got a sterling silver bracelet with her grandchildren's birthstones on it for her birthday at a cost of about $50 plus a special dinner at a restaurant. My niece got money put into her account to the tune of $100 plus a special picture for college that I found at a thrift store. And the Bar Mitzvah boy got a gift of $118 plus a small present that we found inexpensively. So we were pretty close to the $300 that we budgeted. Of course happy events are sometimes hard to know in advance. And our budget is just a guide. We actually spent $80 for my daughter's birthday present this year, which was a keyboard for her to use for piano lessons. It was something we'd been wanting to buy anyway, so it was in our budget. For Hanukkah she wants an American Girl doll. I convinced her that she needed to get rid of some older toys that she doesn't play with anymore if she were to get it. We were lucky two-fold: the toy I sold for her got over $100 on ebay and I bought a Kit doll on Craigslist for $60. (They are $90 new). So overall, we have stuck pretty close to our gift budget this year.

It's amazing how quickly gifts throughout the year can add up, so it's very important to budget for these. And even more important to stick to the budget. Happy Holidays everyone!

Frugal Isn't Always Frugal

Tip #30 - Sometimes Being Frugal Isn't Frugal. We all know the saying "Better an ounce of prevention than a pound of cure." Well, that is true in the frugal world, too. Sometimes you have to pay money today to save money down the road. To relate to the original quote would be flu shots. They cost about $25 or so. Someone might think it's frugal to skip the shot and save $25. But if the shot saves you from having the flu down the road, you are saving the cost of a doctor's visit, the cost of medicine, the cost of being sick, out of work, etc. by putting out $25 at first. Now, I know not everyone believes in flu shots, this is just an example. It's not frugal if you will have further costs down the road.

Suppose you try to save money by not changing the oil in your car. You save $14.95 by not changing the oil. But then your car's engine breaks because it has been using old oil and you have to buy a new engine. Well there goes a couple of hundred dollars. Being frugal and saving $14.95 wasn't really frugal. So, the main point here is to think about what you are doing to be frugal and whether is will really be worth it in the long run. Sometimes it isn't.

In Real Life (IRL) - I bought some thank you cards for my daughter's birthday party at a thrift store. They were only 50 cents! I was excited because they matched the theme of the party and they cost very little. After the party, my daughter started writing them out. We try to do a few per day. She did three the first day and I mailed them out. The next day we got them back in the mail with a request for more postage. Apparently square envelopes cost more - 20 cents more! - to mail than regular envelopes. Since there are 10 girls we need to send notes to, that will cost us an extra $2.00! Not so frugal after all. Luckily since my daughter didn't finish writing them out, we are going to save them for notes that we don't have to mail and use different cards that we have. Here I was trying to be frugal. I think I know why they were at the thrift store!

Replicate Your Favorite Foods

Tip #29 - Replicate Your Favorite Foods. We've talked about how cooking from scratch is much cheaper than buying prepared food or eating out. It's also healthier. Something that will save a lot of money is to make foods that you love from scratch such as meals you buy from a restaurant or a snack food or treat that they sell at the mall. You can often closely replicate these foods at home for a fraction of the cost. So if you are suddenly trying to cut back on spending but you crave a certain appetizer from your favorite chain restaurant, try to recreate it. There are several websites that have "copycat" recipes that you can use. And the general recipe sites have them such as RecipeZaar among others. If you or a family member have a favorite food, google the name of it and see if you can find a recipe or try to create one yourself. Once it is perfected, you will save a bundle on eating out.

In Real Life (IRL) - I love soft pretzels. I have to; I am from Philadelphia. I also like Amish-style pretzels like they make at Auntie Anne's in the mall. You have to know that pretzels are cheap to make. They are basically made from flour, yeast, sugar, and water. All of those items are inexpensive. So one day I got the idea to make pretzels from scratch. I had always wanted to. I found a couple different recipes online and ended up combining a few to get my own. There is no boiling, no bread machine, no egg. Just flour, sugar, yeast, salt, water and oil. They are absolutely delicious. My daughters beg me to make them all of the time. One batch makes 10 large pretzels or 15 smaller ones. The cost per batch? $1.50 or 15 cents per large pretzel. The cost for one pretzel at the mall? $2.29! These are great to freeze and use as snacks in school lunchboxes. I will add the recipe shortly. Gotta go check the pretzels in the oven! We just made a double batch of these delicious pretzels!

Recipe:

4 1/2 teaspoons of active yeast (2 packets)

1 tsp. sugar

1 1/4 cups warm water

4 cups flour

1/2 cup sugar

1 1/2 tsp. salt

1 TBS vegetable oil

1 TBS baking soda

2 cups hot water

1/4 cup kosher salt

2-4 TBS butter

Cinnamon Sugar

--In small bowl, dissolve yeast, 1 t sugar and water. Let stand for 10 minutes until creamy.

--In large bowl, mix flour, 1/2 cup sugar, and salt.

--Make well in center of large bowl and add yeast mixture.

--Knead dough until smooth about 7-8 minutes.

--Lightly oil large bowl and place dough in it. Turn to coat with oil.

--Cover with towel and let rise in warm place until double in size - about 1 hour.

--Preheat overn to 400 degrees.

--In a bowl dissolve baking soda in hot water.

--When risen, turn dough out onto a lightly floured surface and divide into 10-15 pieces.

--Roll each piece into a rope and form pretzel shape

--Dip each pretzel into baking soda bath and place on greased baking sheet

--Sprinkle with kosher salt (omit this step if you are making cinnamon sugar pretzels)

--Bake for 8 minutes at 400 degrees

--Let cool for 1 minute and remove with spatula

--You can leave pretzels as they are or dip in butter or dip in butter and coat with cinnamon sugar

Frugal Fast Food

Tip #28 - Frugal Fast Food. Fast Food is generally not healthy and it's more expensive than eating at home. But there are sometimes when nothing else will do. You can't be the perfect planner all of the time. Sometimes you have few other choices, and fast food is the best option. Or perhaps as in our family, fast food is a treat - planned to be eaten occasionally when on long car trips.

Even fast food can be expensive if you order the "wrong" way. With three kids, you can order 3 happy meals and a meal for yourself and your husband and easily spend $20. Or you can order frugally and spend half that. Almost all of the fast food places have a value menu or dollar menu in place. These are pretty good deals. It's generally a hamburger, cheeseburger, and chicken option for $1 or a little more. A side of fries and a small drink are usually the same. A few places such as McDonald's and Wendy's often have double cheeseburgers on the value menu or on special for $1. If you find yourself in need of eating fast food, then order from the dollar menus. If someone wants a cheeseburger, get the double cheeseburger for the same price. For the sides, buy the largest size fries for everyone to split. Get water to drink or get the largest drink for everyone to split. Both McDonald's and Wendy's have small "courtesy" cups that the children can use to have a drink poured into. For a family of five, the entrees off the dollar menu should cost $5 (or $6 if your husband likes to eat 2 of them like mine does). The largest fries and largest drink would cost about $2 each. So for $10 the whole family can eat a fast food meal. Of course it's not the healthiest or the cheapest meal, but if you find yourself needing to eat at a fast food place, you do the best you can.

Stay away from happy meals. The fun from those toys lasts less than a day. And by buying individual drinks and fries for your kids you end up spending more than necessary. If you are frugal to begin with and health conscious in any way, eating fast food should be the treat, not the toy at the restaurant.

Restaurants generally prohibit bringing in outside food. But I find that they are lenient with children. Most people bring food for a baby such as baby food, milk or formula, and cheerios. I have brought small sides into fast food places with no one ever having a problem with it. We generally have string cheese or yogurt or grapes with us in our small cooler in our car. This makes meals more complete, health-wise and filling wise as well as cheaper.

So next time you find yourself in need of fast food, don't blow your budget just because you're eating out anyway. Order wisely. Figure out the best value for your money. And eating fast food can be frugal.

In Real Life (IRL). Fast food is a treat for my family. We do not eat it on a regular basis. It is not our everyday dinner or lunch ever. We save eating fast food for when we are on car trips. They are the perfect place to stop - there are relatively clean bathrooms, sometimes a play area for the kdis, and fairly cheap and fast food to eat.

We visit our parents a few times a year and do a car trip to Florida about every other year to visit family. And we go to the beach every summer for a week. This is when we eat fast food. It makes it a treat for our children and gives them somthing to look forward to on a long car ride. The only other time we eat it is if we visit my old place of employment which is about 30 minutes away from my home. About once or twice a year I visit my former co-workers and bring some of the kids. We often make an afternoon of it and go to a Burger King with a big play area near by. On average, I'd guess we eat fast food once per month at most based on how often we travel.

It is not usually a spur-of-the moment decision. And since we are usually eating it on long car rides, we often have other snacks including drinks in our car. Because of this, we don't usually order drinks in the restaurant. We stick to a main meal and fries.

This past weekend, we had to go to New Jersey for an event. We left on a Friday afternoon and knew that we'd be on the road for dinner. We stopped at a Wendy's to eat. Stressed out mommy forgot to pack drinks for the car (except for baby's bottle). I did have a yogurt for the baby to eat. We studied the menu. Hamburgers, cheeseburgers, and chicken nuggets were $1.29 each. A double cheeseburger was a special for 99 cents. My husband ordered two double cheeseburgers - one and 1/2 for him and 1/2 of one of our younger daughter. My older daughter got chicken nuggets. And I ordered a baked potato for $1.49. We bought the largest packet of fries for $1.99. (A small was $1.29) and we got the largest Frosty for $1.99. I asked for two courtesy cups. When we were almost finished, my girls wanted some more nuggets and my husband wanted another double cheeseburger since he gave some to the 15-month old. Baby and younger daughter also split the yogurt I brought. Overall, we spent about $11 for our dinner. Truthfully, that's not much more than we spend on some of our dinners at home. Plus, it's in our budget to eat out once a week. For the children it was fun even without a play area there. We got to all use the rest room and stretch our legs. After driving on I-95 on a dark, rainy heavily trafficed Friday evening, the meal was worth every penny!