Post Restructuring Cash Flow Review - Expenses (Food)

Now that I did a review of the expected income, I now had to do a review of the expenses, fixed and variable so that I can see if there is a gap.

I had listed some fixed and variable expenses. 

Fixed:

• Mortgage 
•  Daycare/Preschool
• Gas/Utilities
• Taxes (property and income)
• Food
• Insurance

Variable:

• Credit Card bills for daily and other expenses such as clothes, dining out, services (TV), and entertainment
• Savings - retirement, college and other

There were some expenses that were not going to go away or change, such as the mortgage, but I knew that even if some expenses were essential, that I could possibly make some changes to lessen the expense.

Target: Food Expenses

One area that I targeted was food.  While food was an essential expense, it was an area where I felt I could control the extent of the expense.   I did a comparison of food expenses before I found out that I was affected to my run rate afterwards.  The results were quite eye-opening. 

 

	Before	After
Groceries	$580	$340
Eating out	$350	$100

I didn't realize that I was spending close to $1,000 per month on food!  The groceries came from a variety of stores depending on what we needed.  I shopped at Whole Foods for some basic organic items like fruits, vegetables and meat, Trader Joe's for some specialty items that we enjoy and can't find anywhere else, Safeway for some basic things, 99 Ranch for the ethnic items and the local farmer's market.  Since I worked full-time, I was so tired at the end of the day that it was hard to think about cooking, so I think we ate out instead.   While I tried to plan a menu each week, we ended up not eating a lot of the food that I bought and we wasted so much food.  I felt so guilty about this, but I always had good intentions.

To buy or not to buy organic

After the restructuring, while I had to take a hard look at expenses, I still felt that some areas were not worth the compromise.  Since we had small children, buying organic was a must, such as with milk and meat products.  I was willing to make do without or do with less if it meant buying organic milk, for instance.   The Environmental Working Group (EWG) puts out a list of the fruits and vegetables with the most pesticides (and should be bought organic) and those that are the lowest in pesticides.  I generally use this as a guide to figure out what I should buy organic.

One way to control food expenses

Some use the envelope method to allocate how much should be spent on food each month, but I chose to get a gift card that I could reload. That way, I could put down how much I wanted to spend per month at that particular store.  This was one way to control the expense and also keep track of my run rate for that particular store for the month.   It was too hard to keep track of the overall food expense when everything went on the credit card and I wasn't disciplined enough each month to do an analysis at the end of each month and break out and calculate all of the food expenses. 

Eating out costs went down

One other thing that I noticed was the amount spent eating out went down significantly.  This was not surprising.  I had more time now.  I had more energy now.  While some healthy meals could be found at restaurants, it's not the same as cooking at home.  I could control how much oil, salt and fat was put into the food.   Not only that, but cooking was always an enjoyable experience for me.  It was almost like therapy.   Cooking is a creative process from picking all of the elements, putting them all together so that it all tastes good.   

While we still ate out a bit, it wasn't a regular occurrence anymore.  My kids seemed to miss it a bit, but when we eat in, we have more time.  We now have time to go to the local park or go out for some treat like frozen yogurt.