A wood burning car?

With rising gas prices ($6 in Florida tourist areas) the following story was too good to pass up. Pascal Prokop of Switzerland converted his Volvo to burn wood for fuel and got an operating permit from the Swiss technical inspection authority.

Bottom Line

There are alternatives to fuel (and not just electric which costs money to charge up). The owner of a local restaurant runs his car on used cooking oil. He says the car always smells like french fries.

Gas Tanks Are Draining Family Budgets

"Finland has produced so many brilliant distance runners because back home it costs $2.50 a gallon for gas."
~Esa Tikkannen, 1979
[when $2.50 was expensive!]

From Gas Tanks Are Draining Family Budgets:

“Households spent an average of $369 on gas last month. In April 2009, they spent just $201. Families now spend more filling up than they spend on cars, clothes or recreation. Last year, they spent less on gasoline than each of those things. . . . Only twice before have Americans spent this much of their income on gas. In 1981, after the last oil crisis, Americans spent 8.8 percent of household income on gas. In July 2008, when oil price spiked, they spent 10.2 percent. Average hourly earnings, meanwhile, have risen just 1.9 percent in the past year. That’s only just enough to keep up with inflation.” And only if the measure of “inflation” doesn’t include gas prices.

Bottom Line

I never considered that the cost of the gas could exceed the cost of the car itself. But then I never imagined spending $40-50 every week to commute to work.

What's your gas mileage?

Everywhere is walking distance if you have the time.
~Steven Wright

Do you find gas mileage difficult to calculate? Have you ever wondered if your mileage is worse in the summer with the A/C on? Then try out http://www.fuelly.com/.

You'll need to create an account and confirm your email address. Once that is established, log-in and begin tracking mileage. In my case I chose to use the odometer setting (in miles) and gas (in gallons). When I fill up I'll write the odometer setting on the pump receipt and enter the information when I get home. According to the site I should get 30 mpg on the highway. I wonder if I do?

Bottom Line

Gas is expensive and getting worse. Do you know what your gas mileage is? Is it time to get a newer car?

9 Ways to Save Money on Food

“I went back to work because someone had to pay for the groceries.”
-Bette Davis (actress)

Back in February I blogged about rising food prices. Nearly every day now I see stories on this topic. For example, a site named FrugalDad.com offers 9 Ways to Prepare for Food Inflation. Here's my comments on his suggestions.

1. Only shop every other week instead of weekly
Every visit to the grocery is a chance to be tempted into buying something you don't really need.

2. Buy in-season produce
Maybe. Everyone seems to think that produce from foreign countries will be more expensive than local produce. But shipping by sea or air freight is VERY cheap. I read of a company who flew their chickens to China to be hand cut and flown back - AND this was cheaper then cutting them in the US. For many items the production cost is far greater than the shipping cost.

So, take advantage of specials when produce is in season. But my advice is don't worry if the season is local or on the other side of the equator.

3. Eat Less
Our parent's lesson of eating everything on our plate is making us fat when plate size and portion size has grown tremendously. Pay attention to portion sizes on packages. Some of the frozen meals I bring to work serve 2. So I'm learning to cook it half-way, cut it in half, put half in Tupperware for the next day and continue cooking the remaining half. Note cooking time may be less when you do this since smaller portions cook faster.

4. Grow your own vegetables
My wife keeps trying but little luck so far.

5.  Compare unit costs and keep a price history
Don't be fooled by special deals that are not so special after all. The Frugal Dad writes, " I recently stocked up on a few items included in a 10/$10 sale and the next week the store returned the item to their normal price…$0.88."

6. Eat less meat and more eggs, beans, and vegetables
Omelettes are great for dinner. So is meatless chili. We find summer squash and mushrooms can substitute for meat in some dishes. But again keep an eye out for the unit price per pound. My wife has been buying chicken this past week at $0.49/lb while zucchini was selling for 10 times a much at $4 per pound. Shop the specials.

7. Avoid the Junk Food aisle
There's nothing there you really want to eat is there? Next time look at the cost per pound for your favorite junk food.

8. Eat leftovers
This was a no-brainer when I grew up but we have a friend whose husband refuses to eat leftovers. He insists that every night she prepare a fresh meal from scratch.
I love leftovers - these become future lunches for the office.

9. Freeze the extras
Freeze leftovers - they'll be more fun when you're forgotten the first time around. Take advantage of store specials and freeze what you can not use within a few days. Buy bulk, break it into smaller/family-sized packages and freeze those.

Bottom Line

You may have noticed that none of the items above address food inflation directly. It looks like Frugal Dad was using a hot topic headline to repost common-sense ideas. Let's re-examine the advice with inflation in mind:

Food prices naturally fluctuate over the course of a year. Just like the stock market you want to buy low so you can enjoy owning the goods when prices are high. "Buying in season" and shopping the specials and freezing the extras are all ways to take advantage of low price swings.

For true inflation you either need to stock up now or opt out.  Eating smaller portions, avoiding junk food, eating less meat, and growing your own are ways to opt out. You can also use the food you have more efficiently by using leftovers and freezing. My family is learning to use leftover bones. A ham bone gives great flavor when added to a pot of beans or rice. A chick carcass can make a stock for soup.  A famous chef said he kept vegetable scraps over many days then used them to make a vegetable broth stock.

When certain food items become too expensive, look for alternatives. In my lifetime I have observed the "good" fish (like salmon) become over harvested and expensive so grocers started selling "trash" fish that were never considered food fifty years ago. These include Talapia and Chilean Sea Bass. Personally I like these cheap white fish but think back on how the contents of the fish counter has changed over thirty years. Be open to discovering new foods.

Inflation

Up, up and away [in my] my beautiful, my beautiful balloon
-lyrics by the Fifth Dimension

In recent years the U.S went through an odd economic period where some price indexes actually fell (deflation). Last year inflation was officially just 1.6%. But the times they are a'changing. Inflation is on the rise around the globe and may soon hit our shores. See Can the U.S. Sidestep Growing Global Inflation?,

"Inflation in Britain hits 4%, double the official government target. China reports prices accelerating at 4.9% in January. And Spain says its inflation measure shot up 3% last month. ... the inflation scourge [is] now sweeping countries as far away as Brazil, India and the U.K."

From Forbes.com, America, poised for a hyperinflationary event?

At Instapundit.com, "I'm going to wish I'd listened to Glenn Beck and bought a lot of gold."

To which an Instapundit reader responded, "You’re going to wish you had some food storage first before you wish you had gold. In Weimar Germany there were people in the cities that starved because they had no food. [Could not afford to buy it with hyperinflation] Sure you can buy food with gold, but gold denominations (even the 1/10 oz American Gold Eagle) are not practical for buying groceries or a sack of potatoes."

The same point is made at SurvivalBlog.com, "What would a full ounce of gold buy?  That Corvette that we saw advertised?  A half a dozen cows?  Maybe.  It certainly wouldn't do much good for someone trying to buy day-to-day necessities. "

Bottom Line

For protection against simple inflation, build a food storage now. To learn more about hyper-inflation see this post I wrote in 2009: HyperInflation

My post, Five unusual items for your emergency supplies, talks about stocking items for trade or barter in your food storage. Alcohol and cigarettes are valuable during difficult time but not something I would personally stockpile.  Consider items like diapers, aspirin & medical supplies, and nails which can be better than gold under the right circumstances.

Food Prices Rising

Grocery prices "have risen significantly over the past year or so."
Sarah Palin, Sunday, November 7th, 2010

When Sarah Palin made the statement above last November, she was derided by an economics blogger at the Wall Street Journal who said she was clearly wrong because governement statistics for 2010 showed little change in the consumer price index. She countered with "That's odd, because just last Thursday, November 4, I read an article in Mr. Reddy's own Wall Street Journal titled 'Food Sellers Grit Teeth, Raise Prices: Packagers and Supermarkets Pressured to Pass Along Rising Costs, Even as Consumers Pinch Pennies.'"  Blogger Reddy countered with yet more government statistics. For a detailed account see Politifact.com which credits both sides and gives Palin a "Barely True" rating since "risen significantly" was more perceptual than factual last November.

What a difference a few months make. Every few days I see stories of rising food prices and dangers of global food shortages. If Palin had simply said, "Prices are begining to rise," she would have been spot on. Saddly the media is way too eager to examine every word Palin says with a microscope to find mistakes instead of looking at the intent behind the words. The quote above was part of a speech urging the Treasury Department NOT to encourage inflation. Inflation is good for national debt as it decreases the value of the debt. But inflation is not good for families and Palin was pointing to rising food prices as an example. Was this a good example? Not really. The price of some food was impacted by the price of oil and by crop shortages, but not by inflation. This is what an intelligent and thinking media should have pointed out instead of using the CPI to claim prices were not rising at all.

Can we trust the government's Consumer Price Index? The answer may be no in the UK (Official statistics hide true increase in cost of living). The US CPI may be equally misleading. U.S. Economy: Consumer Prices Rise More Than Forecast.  Just look at recent headlines.

"Kraft says more price increases ahead, Kraft's 4Q price increases weren't enough"
 Kraft is feeling the pinch from higher costs for wheat, corn, sugar and other commodities.

World Bank: Food prices at "dangerous levels"
Global food prices have hit "dangerous levels" that could contribute to political instability, push millions of people into poverty and raise the cost of groceries, according to a new report from the World Bank.

U.N. Food Agency Issues Warning on China Drought
A severe drought was threatening the wheat crop in China, the world’s largest wheat producer.

AP Video on rising food prices: http://www.woh.rr.com/video/1784460599

Bottom Line

I expect food prices to continue to rise. Just about everything affects the price of food - bad weather, rising oil prices, government monetary policy, national debt, global population growth, etc. It would be wonderful to have a 2nd green revolution where science saves the day and creates cheaper food but don't count on it. Modern advances with genetically modified food are called "Frakenfood" and shunned by the public.

Stock up on affordable items and take advantage of sales and discounts. Food storage is a hedge against inflation. 

Global Food Shortage?

O beautiful for spacious skies,
For amber waves of grain,
For purple mountain majesties
Above the fruited plain!
- lyrics to America the Beautiful

Lately I've been seeing a lot of stories about inflationary food prices and possible food shortages globally. World production is not much greater than demand so if there is bad weather, fungus, insects, or anything destroying crops on a large scale, it tips the world balance to shortage.

For a look at big picture check out the Food Prices page at the Financial Time (FT.com). The site does require registration but there is a free option if you scroll the screen all the way to the right when registering. Sadly FREE is limited to 10 stories a month.

Here's a summary from one of the lead stories.

The world has moved a step closer to a food price shock after the US government surprised traders by cutting forecasts for key crops, sending corn and soybean prices to their highest level in 30 months. The price jump comes after the UN’s Food and Agriculture Organisation warned last week that the world could see repetition of the 2008 food crisis if prices rose further. The trend is becoming a major concern in developing countries.

And this gloomy forecast is actually optimistic!!! The US projection of expected World harvests does not account for future weather problems. “There’s just no room for error any more. With any kind of weather problem in the upcoming growing season we will make new all-time highs in corn and soy, and to a lesser degree wheat futures.”

See also Dinner Without Onions In India?

Bottom Line

This looks like a good time to stock up on rice and grains before prices rise further.

Inflation?

“The price of anything is the amount of life you exchange for it.” - Henry David Thoreau

The economy is in a funny state. Officially the inflation rate is very low. The Bureau of Labor Statistics (BLS) says that consumer prices in August grew at an annual rate of just 1.1%. This consumer price index tracks the price for a basket of products from ...

• FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
• HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
• APPAREL (men's shirts and sweaters, women's dresses, jewelry)
• TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
• MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
• RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);
• EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
• OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).

However while the overall consumer basket is price stable, some individual components, like food, are skyrocketing in price.

Bottom Line

While you can get great bargains on discretionary items like electronics and clothing, the essential items like food and gas are shooting up in price. Be prepared to pay more over the next year for the basics.

"On average, our basic food costs have increased by an incredible 48% over the last year (measured by wheat, corn, oats, and canola prices). From the price at the pump to heating your stove, energy costs are up 23% on average (heating oil, gasoline, natural gas). A little protein at dinner is now 39% higher (beef and pork), and your morning cup of coffee with a little sugar has risen by 36% since last October."  - the Casey Report

Update
http://online.wsj.com/article/SB10001424052748704506404575592313664715360.html?mod=WSJ_hp_mostpop_read
Food prices are rising faster than overall inflation. ...The U.S. Agricultural Department is predicting overall food inflation of about 2% to 3% next year.

Expensive Colleges

“A university is what a college becomes when the faculty loses interest in students.” - John Ciardi

I thought college was expensive nearly 30 years ago when I attended. I also learned then that there is an “education inflation rate” that is always higher than national inflation rate. Back in the 80’s the rate of educational inflation was 10%. So it should come as no surprise that rates today are outrageous. With tuition hikes outpacing the growth of household incomes year after year. student borrowing has doubled in the past decade.

Here are the most expensive colleges by total cost for the 2009-2010 school year from CampusGrotto.com

Total Cost = Tuition + Room and Board
1. Sarah Lawrence College, $54,410
2. New York University, $51,991
3. The George Washington University, $51,730
4. Bates College, $51,300
5. Skidmore College, $51,196
6. Johns Hopkins University, $51,190
7. Georgetown University, $51,122
8. Connecticut College, $51,115
9. Harvey Mudd College, $51,037
10. Vassar College, $50,875

The lowest total cost in the top 100 most expensive schools was $46,860 for just a single year of study.

Bottom Line

See The Rising Cost of Education for more information and what to do.

See also my post on Student Loans