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Beat Inflation,Buy This In Bulk
By JD Bluefield | March 20, 2008
Warehouses/Buying in Bulk
My first suggestion to anyone trying to save money is to join a warehouse membership retailer. My favorite is Costco and it is one of the keys to my saving strategies. Costco always stock high quality products, the prices are very competitive, its located very close to my house and they have a gas-station that’s typically 5-15 cents cheaper than anywhere else (regular and premium). The also circulate monthly and quarterly coupon books which offers very big savings on certain items. After becoming a member, I rarely shop or fill gas anywhere else. Using their dual purpose membership/credit card almost exclusively also simplifies my wallet and the cash back feature further compounds the savings. (Disclaimer: Although it may sound like it, I currently do no own stock or have any vested interest in Costco. Although due to their every effective and efficient business model I would be inclined to do so if the price comes down to reasonable levels.)
Strategic Stockpiling
If you already have a warehouse membership, that’s great, but buying those new LCD displays at 10% off or 3 boxes of cereal is not what I’m leading you towards. I’m talking about buying economical non-perishable necessity items in bulk and hoarding them like the tooth-fairy hoards molars. There are many are items you can buy in bulk that don’t spoil, you will always need and the price of which generally rises over a long period of time. It’s very easy to stop by any warehouse retailer to stock up on large quantities of items at a discount, put it in a closet and grab a little when needed. Stockpiling also reduces the frequency of trips to the store, as a result it reduces incidental cost involved like time and gas (read: money). Stockpiling/hoarding ahead of time also allows you avoid the panic, long lines and price gouging that ensues when an impending disaster is afoot. Here are some quick examples of non-perishable necessity items:
- Soap (body soap, laundry detergent, dish-washing liquid)
- Shampoo/conditioner
- Tooth paste, toothbrush, mouthwash
- Contact solution and eye drops
- Shaving cream, razors, aftershave
- Paper goods (paper towels, napkins, paper plates)
- Toilet paper
- Tissue Paper
- Deodorant
- Feminine products (There’ll also be no reason to immasculate you man by sending him to get them)
- Engine Oil (Back when oil was at $40/barrel, I bought a several 6-qt cases of oil at around 1/4 the current price. By my projections, I have an almost free oil change for the next 2-3 years.)
- Canned Goods (fight inflation and stockpile for emergency purposes)
You may be instantly thinking of stockpiling gasoline, but storage of a flammable liquid becomes hazardous and you may or may not be very surprised to find that many of the above items are much more expensive per gallon than gasoline. A quick example is eye drops. I have a 0.7oz dropper that I guarantee cost more than $1, but we’ll round down for argument’s sake.
$1/0.7 fl oz = $1.42857 /fl oz
128 fl oz /gal
$1.42857 /fl oz x 128 fl oz /gal = $182.85 / gal
Of course the quantity of eye drops and gasoline you utilize are vastly different, but just food for thought.
Hedging
Now that you have all of this stockpiled, what was the point and what was I doing? Basically you’re trying to minimize the effects of inflation as much as possible by hedging your bets. In business, hedging is locking in the price of a raw good or product to insure future price/availability fluctuations will not negatively disrupt everyday business. For example, airlines lock-in jet-fuel prices, construction companies sign contracts for steel deliveries and even the U.S. Government stockpiles Strategic Petroleum Reserves. You can easily use the same methods to keep price fluctuations from throwing off your budget.
Coupons
I usually don’t bother with the Sunday Coupons. The majority of items are for costlier new products (5-blade razors, NEW moisturizing-fill-in-the-blanks, make-up, etc.). The same can also be true for the Costco coupons, so it takes a discerning eye to determine if they are being led to the high price money makers or if this is truly the companies “loss leader”.
Topics: Engineered Living, Personal Finance |
2 Responses to “Beat Inflation,Buy This In Bulk”
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March 23rd, 2008 at 3:45 am
[…] the increasing fuel costs as a reason for failing. Airlines hedge fuel cost, which I explained in Beat Inflation, but I’m positive they never planned on battling the $40/barrel increase of 2007. With oil […]
March 26th, 2008 at 10:30 am
[…] With a recession on our hands and a looming housing foreclosures, I’m looking to reduce my monthly expenses to save money and increase my cash on hand to pick up stocks or properties at depressed values. Below is a table showing a close sample of my monthly expenses in increasing amounts. Before I get into how I plan to reduce my monthly expenses, I’ll explain some of the blank spots and missing expenses. Water, sewer and TV are not free, but are included in my Townhouse Association Maintenance fee. My truck is paid off, although it is typically a heavy expense. Also, I don’t factor in daily necessities like soap, toothpaste, paper-towels, etc. because I’ve already engineered that monthly expense as best I can by Buying In Bulk. […]