Back in February I challenged myself to spend some of my newfound unemployed-time trying to lower the food budget for my partner and myself down to $10 dollars a day each, or a cost-per-meal of $3.33. While I know there are many frugal wizards who far exceed this, ten bucks a day felt like a reasonable first step to take given our current setup and habits. So how did we do in our first concerted attempt to move from intuitively not-spendy (as is our natural wont) to intentionally not-spendy (as tracked in a spreadsheet and measured against goals)?
Answer: We made it!* Barely, but we did. We reduced our spending notably compared to January as well as compared to our averages from 2014.
While giving ourselves a little pat on the back, there are a few details worth explaining. Last month was a bit of a snowpocalypse where I live, and while you might think that would increase our consumption of take-out, it actually resulted in my partner and myself having more time home together to cook and eat delicious, low-cost food, and less time out buying drinks and lunches. This month (I fervently hope!) there won’t be quite so many snow days. On the other hand, on Feb 24th I went out and bought a ton of bulk goods that we’ve barely touched yet, so we’re swimming in lentils, nuts, beans, and diced tomatoes. That bodes well for lowering our CPM even further next month.
Let’s take a quick look at how this month compared to the past, and talk about why I’m pretty excited about landing this first step in our newly frugal food-budget gymnastics.
Back in 2014…
We began tracking our finances in Quicken in 2014. The numbers aren’t quite precise – we weren’t splitting or categorizing particularly intensely back then – and a more careful eye is being kept on 2015 numbers. While I want to keep our exact numbers slightly obscured, this should serve us as a rough baseline. Numbers are given as a percentage of total food cost.
- Groceries purchased: 56%
- Restaurants (includes work-lunches): 29%
- Coffeeshops: 13%
- Alcohol: 2%
- Total Cost: 100% (our baseline)
We were already reasonably frugal, but what stands out to me is that while our net groceries cost was actually pretty solid, it was much too small a percentage of our overall total – our restaurants and coffeeshop numbers take up far too much space. Alcohol was almost negligible at about 2%, which was actually a little surprising.
Based on this, it makes sense that the first place we’d be able to work on is reducing the restaurant/coffeeshop numbers without inflating the grocery bill by much. A large portion of those categories are nefarious work-related expenses that creep up (lunches, coffees) that we were already beginning to think about attacking during the end of the year.
In January… (percentages relative to 2014 averages)
- Groceries purchased: 144%
- Restaurants (includes work-lunches): 68%
- Coffeeshops: 57%
- Alcohol: 159%
- Total Cost: 111%
In January, before I received the ol’ pink slip and was just beginning to track more carefully, there were conflicting trends. Our grocery and alcohol bill shot way up, while at the same time our restaurants and coffeeshops numbers both dropped way down. This is a classic good news/bad news reading, and our overall costs were 11% higher. However, we had the enjoyable experience of hosting a New Year’s party, which accounts for a large portion of those increases (and probably belonged in December anyway). We also subscribe to a weekly CSA-type program, and because January had five Fridays, we got the bill five times this month. A few home items may not have been split out early in the month too.
If you took out these “non-standard” extras, we’d knock about 17% off our expenses for this month, and we’d duck below our 2014 averages. Considering the gains in the target categories, all in all this month was not too bad – it seems clear strides were being made.
In February… (percentages relative to 2014 averages)
- Groceries purchased: 104%
- Restaurants (includes work-lunches): 39%
- Coffeeshops: 44%
- Alcohol: 87%
- Other: Annualized cost of wholesaler membership, my best guess for cash I spent on pizza – the occasional $2 slice is my guilty lunch pleasure (these add up to <2% of total budget, but still including in total now)
- Total Cost: 78%
In February, I issued my $10/day challenge. As I began to track more carefully I included a few misc items for the first time. However, the big news is groceries dropped all the way back down to just a hair above the 2014 numbers, while restaurants/coffeeshops dipped for the second straight month and are now both well under 50% of what we were doing in 2014! The only alcohol this month was celebration/consolation wine my lovely partner bought me the day of my layoff, which means it probably technically belonged in January, and also reminds me of just how little I drink these days.
How it Happened
I’ve already talked a bit about some of the reasons, but the major factor was committing to making a higher percentage of our food/drink in-house. My previous work was remote and I carved an office out of coffeeshops, but in February I reduced the number of times and cost of drinks I bought out, and entirely gave up the delicious egg/cheese sandwiches I’d been occasionally indulging for breakfast. Thanks to the availability of home-cooked food my partner has also reduced lunches out. I was committed to making this possible, culminating in the first times in my life I have ever woken up at 7am to make not breakfast, but lunch. We also baked three batches of cookies this month, reducing our external dessert budget to almost nil. I give the new integration of bulk shopping credit for this resulting in only the smallest of increases from our typical 2014 groceries spending.
What it Means
Our target categories are down in a big way and groceries are level – this is just what the doctor ordered. There’s a trick the famed Mr. Money Mustaches sometimes uses to make financial points, which is to calculate how much any given small-seeming sum would be if you compounded it out for a while. After 10 years at 7% interest, this food bill reduction alone would yield 3% of what we’d need to retire. My FIRE timeline is longer than that, so we can give compound interest even more time to work – at 20 years it’d bump up to 8% of our total, or at 25 years 13%. Double those numbers for what we’d need for just one of us to stay home. Not too shabby for something that primarily makes our life more delicious.
We also bought a new car early in January (of course we would do this the same month I was laid off, right? Life is not predictable), and another way to think about this is that it covers the vast majority of our payment. Hmm, eating well and an almost-free car?** Sounds like a good deal to me.
I am very excited by these gains – merely sustaining them would make a huge impact on our previous budget. However, I want to push further. I think I’ve only begun to tap into the savings in smarter grocery shopping and that I can get the number down further, maybe a lot further. With restaurants and coffeeshops already down considerably, the script now flips, and the most efficient goal is likely to keep those constant while reducing our grocery line. As cooking begins to feel steadily more routine and normal, restaurants will hopefully continue to fall anyway.
I’ve come up with a pair of targets to give me guidelines for the next 11 months.
In the Reasonably Ambitious Plan, I intend to reduce the ceiling for our food bill by 3% each month. This can be accomplished if we chop that restaurants number in half, and take 25% off the groceries line.
In the More Ambitious Plan, I intend to reduce the ceiling for our food bill by 5% each month. For this to work, the groceries line needs to end up getting cut fully in half as well. Harder to envision that happening from this vantage point, but I know it can be done.
A potential wrinkle in all this is that I plan to get a job sometime in the not-too-distant future, reducing the time I have to commit to all this. But in no way does that deter me from the goal of getting as good at this as I possibly can in the meantime. Not only will that mean increased short-term gains, but hopefully long-term gains will be internalized as a lifestyle change that I’ll adhere to from here on out, if I become used to it. When it can pay for my car and then shave years off my retirement date, it’s a lifestyle change that I definitely want to stick.
*Ok, I have to be honest, we didn’t quiiite make it, but if you include some small items (like some non-perishable food I intend to return) or other mitigating factors mentioned above then we do hit it. Even if I can’t return the goods, etc, I’m happy to call this progress a real success.
**Of course, I know there’s still insurance/gas/maintenance to think of even after the payment… but who knows, maybe this will eventually get us all the way there!