Out of Control Grocery Budgets

The good part about the lockdown is that I’ve been cooking a ton. I cook dinners 4-5 times a week, using the leftovers for lunches or dinner the next night, and then we supplement some quick stuff for the other meals – usually because I can’t decide what to make. And I mean, I’m mentally incapable of making a decision. That’s when we turn to the microwave the wife cooks.

The bad part about the lockdown is that I’ve been cooking a ton. At work, I had access to a fully-stocked kitchen and pantry to cook with, and a chef who would cook lunches two times per week, plus a warm breakfast on Mondays. Yes, I know how insane that sounds. But it definitely saved me a ton of money and cooking. Now that I’m working from home for the foreseeable future, I gotta take care of all my meals again. Yes, I know this is a very first world problem.

This has the side effect of much higher grocery bills. Our bills before we went into lockdown were still much higher than we’d like (and more than two people should spend, especially given our entertainment spending. We each trade off who does the shopping (and paying), and we each budget $300 a month. That’s $150 per week in groceries, which seems high to me. Since lockdown, I’ve destroyed that budget….

BudgetedActual% Off

March is clearly the worst, but it’s at least somewhat explainable. When it became clear that we would need to essentially shelter-in-place for the time being, and with no sense of when things would feel safe again, I definitely did some panic buying. Canned goods, stuff to stock the freezer, stuff like that. I definitely over purchased by a ton; I’ve still got stuff in the freezer I haven’t touched! And since we’re not going out to eat, I’ve been cooking better date night dinners. That’s contributed quite a bit here.

It’s also not just what we’re buying, but how. We’ve been relying pretty heavily on Instacart for our shopping trips. The items are usually marked up, there are delivery fees (and alcohol surcharges, since it apparently costs $10 to check an ID on delivery), and since the shopper is taking on the risk we’ve been tipping a good amount. A $100 trip suddenly becomes $150 or so. It adds up throughout the month. At least we’ve been sticking to once a week, but that’s also led to panic if we forget something…we don’t want to place another order for like a couple of things.

I used to love grocery shopping. I’d have a list, but I’d get to pick my own produce and meats and stuff. I’d walk around and get inspired by something I find and create a menu around it. The few times we’ve gone to the actual store, you gotta have a gameplan, you can’t really backtrack, and it’s overall a pretty stressful thing. So, we end up leaning on Instacart and paying a ton.

We really need to get this under control. Our positive case counts have skyrocketed and our reopening plan has been paused, and likely will be rolled back. That means we’re likely looking at a few more months of this, so it’s time to get our grocery spending back to a reasonable level. This month wasn’t too bad, hopefully it’s a harbinger of things to come.

How have you kept your grocery budget in check?

My Budget vs. Dave Ramsey

Every time I get close to some financial milestone, or my finances change in some way (bonus, raise, etc.), I go to my copy of YouNeedABudget (my favorite budget tool) and see how I’m doing. Sure, I look at it way more often that that. Every day, actually, because I am constantly putting in my purchases and expenses to track how I’m doing against my budgeted amounts. I’ll leave my budgeting philosophy to another post; here, I want to see how I’m doing against a guru of personal finance, Dave Ramsey. Dave is a great guy who has helped a lot of people; this is NOT a criticism of him or his approach to personal finance.

Dave adheres to the percentage-based budgeting philosophy, which basically states that you should budget according to certain percentages in a given category. For example, Dave’s budget says healthcare costs should be 7% of your monthly salary, while housing should be 25%. You can see his percentage-based budget, complete with examples based on your monthly salary, here. I was curious, having read a bit about this method, to see how I stacked up against the experts. Am I saving an appropriate amount of my salary? Are my housing costs out of wack? Am I destined to live destitute, selling blood just to survive? Let’s take a look

Dave Ramsey Comparison Budget

OK, so not quite the same! But sometimes there’s more than just general categories at play. Let’s take a look in depth at each category to see where the difference is..

    Charity – This one is easy; I don’t contribute to charity per se. I do random acts of kindness and I participate in different charitable activities that my company sponsors, but I do not regularly contribute to a charity.
    Savings – Here is where I think my definition of savings is perhaps different from Mr. Ramsey’s. My Savings category includes the following: emergency fund (up to six months of expenses), short-term needs (clothes, household stuff, etc.), medium-term wants (vacations, semi-large purchases such as a new computer or camera), non-401k retirement (Roth IRA), and long-term savings (car replacement). I’m not sure what Dave has in his savings categories; I suspect many people who follow his program can’t even think about these things. Or, maybe he accounts for them in his Other category. Regardless, I have four separate savings categories in my budget.
    Housing – This one is pretty close. It really depends on whether you rent or pay a mortgage. I’m a renter for several reasons, not the least important being I don’t know how long I’ll be in my current location, and buying is not a good idea when you’re in that position. If I were to own property, my housing expenses would include mortgage, homeowners insurance, property taxes, any homeowners association fees and a general maintenance fund. I would keep the maintenance fund as a housing cost, not in savings, because if I didn’t have a mortgage I wouldn’t need to save for those expenses. It exists purely because you pay a mortgage; therefore, it’s a housing expense.
    Utilities – I’m a bit more that what Dave suggests. My utilities include cable/internet and cell phone. My girlfriend pays the electric bill (usually very close to the cable/internet bill), and my apartment complex does not charge extra for trash, water, or gas. In Memphis, MLGW is the entity that provides electricity, gas and water, so it’s all one bill. Easy enough. BUT! While I pay the cell phone bill, I actually split it three ways, with my mom and my sister also on my plan. I pay the bill, they send me their third of the bill. I don’t account for what they send to me and consider the bill fully mine. I classify what they send me as extra income for the month, and put it into savings. Maybe not the most honest approach, but if they couldn’t pay me, I would still need to come up with that money, so I put the burden fully into my budget.
    Medical – I am lucky in that my employer offers a very good health and dental plan, and I don’t have to pay much out of pocket usually. I still put 5.5% of my salary into a budget line to account for any and all out of pocket expenses I may incur, up to the point where my deductible is fully paid for. This gives me peace of mind, just in case something crazy happens and I have higher than expected expenses. I’m still within Dave’s parameters, though. As I age, I’m sure I’ll want to contribute more to this, but for now it seems to work. It accounts for what I spend, while building up a balance just in case.
    Other – Not sure what Dave accounts for here. He has this portion as 33% of the budget, while mine is at 23%. But, unlike Dave, I have specific uses for this money. My “Other” category includes my gym, groceries, entertainment funds, personal care (hair cuts, shampoo, etc.) and some spending money. I also include my student loan payments, which combine for 10.6% of my monthly salary. I believe any debt would fall under this category in Dave’s budget as well, with his recommendation to use what remains in your Other category to pay it off. I’m focusing on building up savings at the moment, but I’ll begin to move a portion of what’s in my Savings category over here to pay that debt down faster.

So there you have it. In a general sense, Dave’s percentage-based budget is pretty close to what I have, with just a few differences of opinion or definition. It’s a really common-sense approach, as well, because it can scale up based your current income. But, one criticism I do have of it is that the scaling factor doesn’t work as your income rises. Instead, any raise you get should be metered out to your Other or Savings category. If your monthly salary goes from $3k to $5k a month, does that mean you should spend $500 a month MORE on housing? I would argue, not necessarily. If your housing situation is not good based on your current income, and you get a raise or a higher salary, then it may be prudent to spend the extra money. Otherwise, I think it’s a good approach to budgeting in the immediate term.

What do y’all think of his budgeting approach?