Monday, August 13, 2012

Money Monday: August 13, 2012

So, we have a big ugly drought going on, ripping through our corn and soybean crops like a hot knife through butter. And we have begun to hear the rumblings from various sources that we may start to see higher food prices – not just on corn and soybean products, but on everything.

The Experts™ are coming up with all kinds of predictions, dire and otherwise, about the eventual percent-rise of said costs.
Those predictions do not matter at all.

Let me say that again: What ‘everybody’ is saying about how much food costs are about to rise do not matter one little bit when it comes to the question of what you, personally should or should not do in response to this impending train wreck.
So, let’s take a deep, calming breath, and a big step back from the whole mess, and attempt to apply some logical thinking to the problem, shall we?

Now, what we can know for sure is this: Yes. Prices on a wide variety of things are going to go up. They are already starting those first tiny hiccups, as goods and services that are closely linked, in the here-and-now, to those various products (mostly but not only corn) that are suffering the most – the biggest part of the show is probably between four and ten months out, which is when the manufacturers who are currently using up the corn syrup and so forth from last year’s crops will start having to actually pay through the nose for this year’s scrawny, sorry example of a so-called harvest, phooey on it.
Does this automatically mean that you need to do something drastic?

Eh, maybe…maybe not.
The first thing to do is to stop and ask yourself what All This really means for you.

I’ve been hearing a lot of chatter lately about buying a super-sized freezer and packing it with all kinds of meat ‘to save money during the crisis.’ To which I say, whoa up, there, pardner.
Freezers cost money. They cost money to buy, even if you’re getting a really good deal off Craig’s list or something. And they cost money to operate, too – anywhere from $100 to $200 a year, depending on waaaay too many factors to try to list out here but including things like how old the unit is, how well you pack and maintain it, how hot the garage where it is probably kept gets, and so forth.

So let’s say you get a $200 freezer from Craig’s list and it costs you $150 a year to operate – if you use it for just one year, you need to save around $29 a month to make it work out for you.
Let’s further say you’re currently buying $10 in beef each week, and your goal in buying the freezer is to avoid paying more for it. If the cost of beef goes up by 4% (which is one of the many predictions), that $10 will become $10.40 – an additional $1.60 a month. If it goes up by 10% (which is the highest prediction I’ve seen, and which came with all kinds of…rather intense…political commentary soooooo, BIG grain of salt), you’re looking at $1 more a week, or $4 a month.

If you’re only going to do this while the crisis is on, you need another $25 a month in savings to make it worth your while.
Which is really my point: Don’t rush into very large lifestyle changes because of one event.

I tell you what: It feels weird to warn people off rushing to bulk buy. Personally I’ve found it to be a tremendous budget-booster, and it has actually sheltered me from the worst of the recent inflations that have hit others pretty hard. The price of my raw materials has barely budged, really…and even things that have gone up a lot by percentage haven’t moved much by dollars paid.
But if you want to really make this pay for you, it’s not just a reaction to this one crop failure; it’s not something you’re going to do now, then toss aside in eighteen to twenty-four months when the prices have settled back down.

To make it really pay off, it’s a lifestyle. And I really wouldn’t recommend rushing into it whole-hog (whole hog! freezer! ha!), either. Because those savings don’t come free, my friends, they come by way of work, and plenty of it.  You don’t get to just come home, unload the groceries and call it a day – oh no. At the very least, you can add “repackaging for freezer” to your to-do list before you can call yourself done. You have to make sure you maintain good rotation in the freezer, too – otherwise, you end up with The Forgotten Roast surfacing ‘at some point long after it should have been used.’ Yet another thing you have to do when on the whole you’d really rather be doing anything else.
Each step you take down the path adds more and more chores to your list. Having grains in bins means inspecting the bins from time to time, to make sure no moths or mold or other harmful things have gotten in there. (And they do, no matter how careful you are – eventually, you will pop a lid off one of those buckets and get hit in the face by escaping moths.)

And of course, buying raw ingredients in bulk means more cooking from scratch – which means more time in the kitchen, which means again less time on your backside. And it always sounds ‘easy’ and ‘no big deal’ when you’re talking yourself into it (with hints of ‘nostalgia’ and ‘domestic bliss’) – but then, well, it’s Wednesday night and work was a killer and @*^&@, I forgot to defrost anything, um, well, we could have nope out of that how about ugh, bugs got in it! OK, how about see: forgot to defrost anything, above well…I guess I’ll do the old “defrost ground beef in the skillet by scraping bits of it off the block as it thaws” trick…
Nights like that will kind of take the shine off the whole thing – and if you don’t actually want to be doing All This but are only in it because there was this corn-thing a couple years ago? So, you bought all this meat, which is still in the freezer?

There is no shine to it. It’s just painful, pure and simple. And a few such painful experiences later, that freezer is just sitting out there in the garage running and running and running, and all you ever do is glare at it resentfully as you pass by.
At which point, you’re losing money in the long run.

Now, if I were to place bets today on where the pain is most likely to be felt hardest by most people? It wouldn’t really be in meat. It would be in things like crackers and canned chili – those ubiquitous boxes and cans everybody has in their pantry, which we’re accustomed to popping open and serving up alongside whatever is “for dinner.”
The prices of those are going to go up, too; it won’t be commented upon like increases in milk and dairy will be (because those things are tracked and reported upon by Da Gummint), but given that corn syrup is in everything these days…I’d expect a $2.99 box of crackers to be $3.49 pretty quickly. And quietly. We might not even notice – even if we do, we might fuss for a little bit, the first couple weeks, but then we quickly adjust to the higher price and no longer even notice. $3.49 is the new ‘regular’ price, and we toss them into our basket without a second thought.

If you want to win the ‘I didn’t get my backside handed to me during The Great Corn Crop Failure Crisis of 2012™’ game – I’d say think that second time. Look at what you’re buying, pay attention to how much you pay per ounce or serving, consider how many servings you really get from a box that says it has ‘12 servings’ in it.
Don’t let them ‘sneak’ a 20% price increase in on you, either by raising the price or putting fewer ounces of product in the same-sized box. And don’t feel like you “have” to pay it, either. There are always alternatives. Some are as easy as switching to a generic brand; some are as challenging as ditching ‘everything that comes in a box’ for home-made alternatives or just deciding not to eat whatever-it-is anymore.

But above all else, don’t rush to stock up just because you’re afraid of rising grocery prices. It’s been my personal experience that doing that kind of thing only because of a one-time event really doesn’t pay – it’s only if you’re making a long-term commitment to a bulk-bought lifestyle that you really come out ahead on that deal.
Simply being aware of what you buy, and why you buy it, and what your other choices might be goes a lot further toward sheltering you from higher prices, good times or bad, than buying up a freezer you don’t really need and filling it up with meat you won’t actually eat.


Jeanne said...

Stocking up can be tough. I live in the Northeast and try to have enough canned goods and water on hand to last a couple of weeks in case of major snowstorms resulting in power outages. Lots of perishables aren't at the top of my list. My favorite story is from a friend who has a year (a year!) of dehydrated foods stored. I got a blank stare when I asked where she was storing the water to rehydrate it (apparently she hadn't thought that far ahead!)

Tola said...

another reason why i totally look up to you. thank you for this post.

Michael Irwin said...

iousdGood post (as always!). I liked the bit about "The Forgotten Roast" - I have a rabbit in the freezer. I got it back in 2008, and it's moved from PA to NJ to NJ to SC to NJ with me. It must be the most well-travelled dead rabbit on the planet, and it doesn't even twitch (thank God, as it's frozen stiff and hasn't a nose). It's still good, so one day we'll eat it.

Taking up using a freezer does represent a lifestyle-change (like hoarding water for the dried foods!). Something one has to look long and hard at.