McKee Financial

5-11-2020 Newsletter: Does buying in bulk really save you money?

I would venture to say that buying in bulk has increased over the past few months.  Some things are better values than others when buying in bulk and the article below will hopefully help us all make better choices. 

 

Does Buying in Bulk Really Save You Money?

 

Does buying in bulk really save you money? There’s only one way to find out: Swing by your neighborhood warehouse store, eat the samples, and load up that shopping cart! Okay, we’re kidding. (But we are serious about eating the samples).

Buying in bulk can seem pretty intimidating—especially when you’re trying to stick to your budget. You need a game plan before you even walk through the door of the store. And we’ve got one ready for you! Here’s what you need to know:

 

How to Buy in Bulk

 

While it might be tempting to grab that 80-ounce jar of mustard, ask yourself, Am I really going to eat that? You don’t want to buy in bulk just to end up with the “bulk” of it in the trash. Stick to buying things you know you or your family will eat.

Comparing prices is always the right idea—but that’s even more true when it comes to buying in bulk. Cost per unit is super important here. But what the heck does “cost per unit” even mean? Don’t worry, there’s only a tiny bit of math involved. All you need to do is figure out how much you’re paying per item. You can do the math like this:

Total item price ÷ unit weight or number = price per unit(Example: $1.79 ÷ 12 eggs = $0.15 per egg)

It’s pretty quick and painless to figure out on your phone (even when you’re standing under all that fluorescent lighting in the store).

 

Where Can I Buy in Bulk?

 

There are two heavy hitters in the wholesale world: Costco and Sam’s Club. Both stores are pretty similar when it comes down to what they sell. If you want to buy a 10-pound bag of cubed cheese, this is where you’ll find it! But you can also buy in bulk at other stores like BJ’s Wholesale Club and even online outlets like Boxed and Amazon.

 

What Should I Buy in Bulk?

 

It might not always shake out this way, but in general, there are some items you can count on to be a better bargain when bought in bulk. Still, try to resist the temptation to stock up on things to avoid making a return trip, or the (not real) pressure to do all of your grocery shopping at the warehouse store so you “get your money’s worth” out of your membership. Watch out for overspending!

Here are some items you should buy in bulk:  

  • Toiletries
  • Dental care items (electric toothbrush heads and dental floss)
  • Paper products (toilet paper and paper towels)
  • Batteries
  • Gum
  • Cereal
  • Canned goods
  • Rice
  • Dry beans

 

What Should I Not Buy in Bulk?

 

This goes without saying, but you don’t need to buy everything in bulk. Some things just won’t make sense for your household or your budget.

And yes, we’re going to keep saying this: Don’t buy anything in bulk you won’t actually use—especially if it’s perishable. Buying perishable items like produce in bulk is always a huge gamble. The odds are ever in your favor that it’s going to spoil before you can eat all of it. Yeah, 20 avocados for $3.99 is a steal. But if they all go bad before you can eat them, what’s the point?

Go ahead and save yourself the heartbreak of having to toss food in the trash, and just avoid buying things like:

  • Fruits
  • Vegetables
  • Dairy
  • Perishable items (aka food that goes bad quickly)
  • Condiments
  • Spices (they can outlive their shelf life and flavor)

 

What About Buying Meat in Bulk?

 

If you’re serious about buying meat in bulk—and we’re talking “live off it for the rest of the year” serious—there are a couple of options you can look into.

You can buy meat at many warehouse stores, through online farm-to-table suppliers like Crowd Cow, or straight from a local farmer in your area (use a website like Eat Wild or Local Harvest to find a farm near you).

Let’s just cut to the chase here: If your grocery budget is tight, dropping $75 on a big pack of meat in one month won’t be the right thing for you. But if you can eat off that 40 pounds of chicken for the next six months (and you already have a deep freezer, vacuum sealer and a massive number of zip-close bags on hand), then $75 might be a worthwhile investment for you.

 

Cost Comparison of Buying in Bulk

 

We went out and compared 15 items you might find on your family’s Kroger grocery list against their bigger cousins at Costco (tax not included). Keep in mind, these prices are based on our local area of Franklin, Tennessee, so prices may be different where you live.

Here’s our grocery store vs. buying in bulk breakdown:

Grocery Store Item

Grocery Store (price per unit)

Bulk (price per unit)

Quaker Old-Fashioned Oats

$4.49 ÷ 2.6 lbs. = $1.73

$7.99 ÷ 10 lbs. = $0.80

Sabra Classic Hummus

$3.99 ÷ 10 oz. = $0.40

$7.99 ÷ 32 oz. = $0.25

Trash Bags (store brand)

$4.99 ÷ 80 ct. = $0.06

$16.99 ÷ 200 ct. = $0.08

Folgers Classic Roast Coffee

$7.99 ÷ 30.5 oz. = $0.26

$9.99 ÷ 51 oz. = $0.20

Honey Bunches of Oats Cereal

$3.89 ÷ 18 oz. = $0.22

$7.19 ÷ 48 oz. = $0.15

Clif Bars

$1.25 (per bar)

$21.99 ÷ 24 bars = $0.92

Whole Milk (store brand)

$2.99 (one gallon)

$3.59 (one gallon)

Chobani Yogurt

$1.25 (each)

$16.79 ÷ 20 ct. = $0.84

Eggs (store brand, cage-free)

$2.57 ÷ 12 eggs = $0.21

$4.09 ÷ 24 eggs = $0.17

Cheez-It Crackers

$4.99 ÷ 21 oz. = $0.24

$8.99 ÷ 48 oz. = $0.19

Prego Pasta Sauce

$5.19 ÷ 67 oz. = $0.08

$10.19 ÷ 96 oz. = $0.11

Late July Tortilla Chips

$2.99 ÷ 6 oz. = $0.50

$8.19 ÷ 28 oz. = $0.29

Mott’s Applesauce

$3.47 ÷ 46 oz. = $0.08

$8.89 ÷ 138 oz. = $0.06

Kraft Macaroni & Cheese

$1 (per box)

$16.79 ÷ 18 boxes = $0.93

Charmin Toilet Paper

$18.99 ÷ 18 ct. = $1.06

$24.49 ÷ 30 ct. = $0.82

 

So Does Buying in Bulk Really Save You Money?

The short answer is yes. But it all depends on what you’re buying.

Looking at our list, you can see some winners right away. If you’re eating oatmeal every day, it makes more sense to buy 10 pounds of it for $7.99. To get 10 pounds at the grocery store, you’d have to buy four boxes of oats. That would set you back almost $18! And to equal the amount of chips you get in bulk, you’d have to buy five 6-ounce bags. That would cost $15 instead of $8.19—nearly a $7 difference!

You might think savings like that won’t add up to very much. We hear you. So let’s break down what your yearly savings can look like if you switch it up and start buying in bulk for just three things:

Let’s say you and your spouse drink a combined four cups of life-giving coffee a day. If you buy your coffee in bulk, that’s a $16 savings each year. And if both of you grab yogurt to snack on at work each day, buying that in bulk would save you a whopping $214 over the course of the year. On top of that, tossing Clif Bars into your kids’ lunch boxes every day while going the bulk-buy route would save you right around $178 each year. Now bust out your calculator and get excited—that adds up to more than $400 in yearly savings! That’s your Christmas fund right there!

Item

Grocery Yearly Cost

Bulk Yearly Cost

Annual Savings

Folgers Classic Roast Coffee

$56

$40

$16

Chobani Yogurt

$650

$436

$214

Clif Bars

$650

$478

$178

 

 

Things to Consider Before You Buy in Bulk

 

We know, filling up your shopping cart to the brim with bulk items can feel thrilling, but remember to ask yourself these questions before you get too carried away:

  • Will this go bad before I can eat all of it?
  • Do I have enough freezer or pantry space to store all of it?
  • What is the price per unit (or ounce)?
  • Do I really need so much of this item?
  • Have I budgeted for it?

And don’t forget that these warehouse stores require you to become a member to get all the perks of their club pricing. That’s an annual fee of $45 to $60 for basic membership, depending on the store. And if you have to drive an hour out of your way to get to the nearest store, what you save might not cover the gas it costs to get you there.

 

Stick to Your Budget When Buying in Bulk

 

Is buying in bulk the most budget-friendly thing to do? Not always. It really depends on your needs. Like everything else in your budget, think through whether or not it works for you and your specific situation. If it does fit your lifestyle and budget, grab a few staple items in bulk and see how much you can save!

It’s sad, but true—sometimes you won’t see that much of a difference in savings. For example, buying eggs in bulk will save you a whopping 4 cents! That’s not much to write home about. That’s why you have to crunch the numbers and find out what’s worth it (to you) and what’s not.

Don’t feel the pressure to buy in bulk if the up-front cost doesn’t make sense for your budget. And watch out for how easy it is to buy things in bulk that you weren’t intending to purchase. Even though it might seem like a pretty good deal, if it’s going to derail your budget—it’s not worth it, folks. Don’t get sucked into buying stuff you don’t need.

And whether you’re buying in bulk or not, make sure you plan out your grocery budget long before you ever set foot in the store. It’s easy with our free budgeting app, EveryDollar. You can set up your first budget in as little as 10 minutes and then move right along to your grocery shopping list. There’s no excuse not to do it!

 

Source: https://www.daveramsey.com/blog/buying-in-bulk

 

Interesting Economic Facts

 

SHORTFALL - The Congressional Budget Office (CBO) forecasted on 4/24/20 that our nation’s fiscal year 2020 budget deficit, i.e., the 12 months ending 9/30/20, will be a record $3.7 trillion, equal to 18.1% of our economy.  That would be our largest “deficit-to-GDP” percentage since the USA hit 21.0% in 1945 (source: CBO).

 

HELP FOR BORROWERS - Pandemic-impacted homeowners who have mortgages that are owned by Fannie Mae have access to a “forbearance plan” that allows them to reduce or suspend their monthly mortgage payment for up to 12 months.  Homeowners are allowed to establish a repayment plan to catch up gradually or modify the entire loan but are not required to make a lump-sum payment at the end of 12 months.  Homeowners need to contact their mortgage servicer to determine if they qualify (source: Fannie Mae).

 

DISMANTLED AND IN STORAGE - The number of operating oil rigs in the United States (both on land and offshore) as of last Friday 5/08/20 was 374, down 54%from 805 operating rigs as of 12/31/19 and down 65%from 1,083 operating rigs as of 12/31/18 (source: Baker Hughes).

 

SO MANY WITHOUT WORK - As of the end of April 2020, the state of California was paying $1 billion a day in unemployment benefits (source: California Labor Secretary Julie Su).

 

WOW - As of 2/29/20, the USA had a jobless rate of 3.5% with 5.8 million out-of-work Americans.  As of 4/30/20, our jobless rate was 14.7% with 23.1 million out-of-work Americans (source: Department of Labor).

 

LESS NEEDED - 26% of 305 chief financial officers surveyed in late April 2020anticipate their firms will “reduce their real estate footprint” when work life resumes some level of normalcy (source: PricewaterhouseCoopers).

 

BRAD PITT - Dr. Anthony Fauci has been the Director of the National Institute of Allergy and Infectious Diseases since 1984.  Fauci, 79 years old, has served 6 Presidents–Reagan, Bush 41, Clinton, Bush 43, Obama, Trump –and has managed the USA’s efforts to prevent, diagnose and treat HIV/AIDS, Ebola, Zika, SARS and COVID-19.  His agency’s budget in the current 2020 fiscal year is $5.9 billion (source: NIAID).

 

JUST HERE FOR THE DAY - 48% of hospital revenue in 2018 came from outpatient procedures (source: Deloitte Center for Health Solutions).

 

HOW IRONIC - The US economy fell 4.8% in the first quarter, i.e., quarter-over-quarter change expressed as an annualized total.  47% of the 4.8% decline was from the nation’s “health care” sector, partially due to the requirement that hospitals temporarily stop all non-emergency surgeries (source: Commerce Department).

 

WHERE THE VIRUS HAS HIT - As of 5/04/20, 52% of the 3,142 counties in the United States (1,630 counties) had not recorded a single COVID-19 death.  As of 5/04/20, 80% of the 3,142 counties in the United States (2,520 counties) had recorded 5 or less COVID-19 deaths (source: The COVID Tracking Project).    

 

NEVER THIS CHEAP - The average interest rate on a 30-year fixed rate mortgage was 3.23% as of 4/30/20, a record low for a statistic that has been tracked since 1991 (source: Freddie Mac).

 

EXPENSIVE EDUCATION - Outstanding student loan debt in the USA was $1.54 trillion as of 3/31/20, up +103% from $760 billion as of 3/31/10 (source: Federal Reserve Bank of New York).

 

TAX PLANNING - Grantor retained annuity trusts (GRATs) are used to transfer appreciating assets to heirs.  GRATs become more effective as interest rates drop because any appreciation in excess of the Section 7520 interest rate passes to heirs free of gift tax.  A $10 million GRAT established in May 2019earning 6% when the Section 7520 rate was 2.8%could pay $1 million per year to the grantor for 10 years, $4.7 million to the heirs after 10 years with only a $1.4 million taxable gift.  A $10 million GRAT established in May 2020earning 6% when the Section 7520 rate is 0.8%could pay $1 million per year to the grantor for 10 years, $4.7 million to the heirs after 10 years with only a $426,000 taxable gift.  Please consult a tax expert for details  (source: Journal of Accountancy).

 

CAN WE CHANGE OUR MIND? - The PGA announced a 9year media agreement (2022-2030) with CBS, NBC and ESPN on Monday 3/09/20worth an estimated $700 million per year, just 4 days before President Trump declared on Friday 3/13/20a national emergency due to the COVID-19 pandemic (source: PGA, White House).

 

...and for the History Lovers... This Week in History

 

May 11, 1857

Minnesota is admitted as the 32nd U.S. state.

 

May 12, 1935

Alcoholics Anonymous is founded in Akron, Ohio by “Bill W.,” a stockbroker, and “Dr. Bob S.,” a heart surgeon.

 

May 13, 1913

Igor Sikorsky flies the first four-engine aircraft.

 

May 14, 1796

English physician Edward Jenner gives the first successful smallpox vaccination.

 

May 15, 1916

United States Marines land in Santo Domingo to quell civil disorder.

 

May 16, 1963

After 22 Earth orbits, Gordon Cooper returns to Earth, ending the last mission of Project Mercury.

 

May 17, 1875

The first Kentucky Derby is run in Louisville.

 

Sources:  website: Historynet.com 

 

The McKee Financial Resources LLC Website

 

Our website is packed with useful information.  This week I’m going to share with you a glimpse into our research section.  We have entire sections of articles on Estates & Trusts, Investing, Cash Management, Risk Management, Retirement & Tax Planning.  This week we’re going to highlight the Estate & Trust section. 

 

Estates & Trusts

 

  • Estate Planning

Wills and trusts allow you to spell out how you would like your property distributed, but they also go beyond that.

 

  • Living Trusts

A living trust can help control the distribution of your estate upon death.

  •  

 

  • Avoiding Probate

The probate process can be lengthy and complex.There are strategies you can use to help avoid the probate process.

 

  • Charitable Giving

To retain the tax advantages associated with charitable giving, your gift must be made to a qualified organization.

  • Preserving my Estate

Life insurance can be used to help preserve your estate’s value for your heirs.

 

  • Controlling the Distribution

If you haven’t taken steps already, consider planning now for the distribution of your estate’s assets.

 

  • Paying Estate Taxes

If you believe your estate will be subject to estate taxes, consider how your heirs will pay the bill.

 

  • Benefits of A-B Trusts

An A-B trust can be an effective way to help reduce estate taxes and preserve family assets for heirs.

 

  • Gifting Strategies

Compare the advantages and disadvantages of different gifting strategies available for planned giving.

 

  • Charitable Lead Trusts

Charitable lead trusts are designed for people who would like to benefit a charity now rather than later.

 

  • Charitable Remainder Trusts

A designated income beneficiary could receive payment of a specified amount from a charitable remainder trust.

 

  • Wealth Replacement Trusts

A wealth replacement trust could be used to gift appreciated assets to a charity as well as provide for heirs.

 

  • Family Limited Partnership

One estate planning strategy that families with closely held businesses could consider is the family limited partnership.

 

  • Property Ownership

Sole ownership, joint tenancy, tenancy in common, and community property have special benefits for property owners.

 

  • History of the Federal Estate Tax

Careful estate planning is still one of the most important ways to manage and protect your assets for your heirs.

 

 

 Source: http://www.mckeefinancialresources.com/learning_center/research/

 

 

McKee Financial Resources Inc.

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Email:  brian@MckeeFinancialResources.com

 

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McKee Financial Resources Inc.

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Greenwood, IN 46143

 

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