Cutting Food Costs

by Mr. Cheap

I’m trying to “put my money where my mouth is” (or maybe change the money going into my mouth) and pull back on my food spending a bit. I packed my lunch for the first time yesterday and brought two tuna and mustard sandwiches (mustard as a healthier alternative to mayo), a bag of carrots, an apple, chickpea salad and coucous. It took about 5-10 minutes to make the night before and cost around $3.50.

If I could cut *ALL* my food spending in half, that’d be an extra $4000 per year (after taxes). In addition to being extra money to save/invest, that’d reduct my annual spending to $24,228.85, which (assuming the 4% retirement figure) would allow me to retire on $605,721.25 (instead of $705,721.25). Very significant savings from packing a lunch and eating out a little less often.

It’d be interesting to prepare an Excel chart looking at my savings rate and retirement target and calculating how much “time to retirement” cutting back on certain expenses would provide (the double-whammy of lower expenses and increased savings would be powerful I think). Might definitely help “cut-to-the-bone” if you saw that cutting something out would let you retire 3 years earlier.

I still don’t quite get how Derek Foster is able to support a family of 4 on $400k, but I’ll keep thinking about it. I suspect that once you factor in CPP and whatnot it can reduce how much you need for retirement.

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{ 7 comments… read them below or add one }

1

To answer you last question I recall reading a comment from Derek on either a blog or a forum which he basically states you can retire on a lot less if you can manage a few stocks with a yeild of 9% in your portfolio. Hence I suspect his isn’t using a 4% yeild, but something closer to 6 or 8% to generate his income.

CD

2

Things have been going well cutting back on food expenses. I’ve managed to bring my lunch for the past three days (I figured they’ve costed ~$3.50) and eat at home for the past three nights. I’m a little worried that I might start gobbling up all the food my girlfriend buys, and just turning my food spending into an unfair externality, but I’ve told her if it seems like this is happening, tell me right away (and I’m focusing on buying at least my fair share of groceries).

I can already see my average spending per day (at least for food) dropping.

3

CD: Ahh, I imagine you’re right… I’d get nervous with any stocks with yields that high… How could it possibly be sustainable?

4

Mr. Cheap,

Actually I think Derek got a few of them when they were extremely undervalued which results in the higher yield. The company is fine, but he got the stock on a fire sale.

CD

5

CD: Well, if he got them when they were undervalued, and their price has gone up, so would his “retirement savings” right? So he’d then have more then $400K (or is the $400K figure at the instant of retirement?).

I actually really don’t like personal yield as a measure. It seems to be a way of fooling yourself that you’re getting phenomenal passive income when its really just a mixture of dividend and capital gains.

I need to do a post on it… 🙂

6

Food costs. Lunches made at home. And remember not to stop at Tim Horton’s or Starbucks, even if you own the stock, and then, yes try raising 4 kids on 100K, annual salary- that 400K retirment fund sounds like luxury to me

7

But I love Tim’s!!! 🙂 You’re tough but fair Joan. 😉

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