WalletPop

Sneaky restaurant tricks: Ten to watch out for

Carol Vinzant — 2008-05-15T08:00:00+00:00

Filed under: Budgets, Entrepreneurship, Food

Restaurants are feeling the pinch in two directions. With money tight, consumers are cutting back on how often they dine out. Meantime, food costs more. Way more.

Egg prices have doubled in the last six months. Dairy, chicken, beer and bread crumb prices are all climbing higher. Even when the core commodity escapes the trend, packaged ingredients and other restaurant supplies are more expensive as the costs of transportation climb due to higher fuel prices.

When people do go out, they are ordering less. "Appetizer sales are down. Dessert sales can almost disappear," says Dan Simons, principal at Vucurevich Simons Advisory Group, a restaurant consulting firm. "And the most expensive items on the menu aren't sold as much."

Restaurants know there's a limit to how much they can raise prices without driving off already broke customers. So for now, many are looking for ways to raise prices and cut costs that won't be too obvious.

The next time you go out -- if you can afford to go out at all -- see if you can find your favorite restaurant working any of these old gimmicks. Read on and you may even learn some tricks you can use to stretch a buck in your kitchen at home:

Cut back on portions:

Restaurants normally spend between 25% and 40% of their budgets on food, according to Barry Brown, president of Profit Strategies Solutions, which sells software for restaurants to manage inventory and profitability.

So if they can make a smaller hamburger and still sell it for the same price, their profits go up. Milk shakes at family diners that could once be split three-ways may now truly be single serve. There are reports of some restaurants buying smaller plates so customers won't notice they have reduced portions and chefs won't be tempted to heap on food to make dishes look appealing.

Eric Arthur, president of Marketplace Management Group, a restaurant procurement company in Collierville, Tenn., expects to see more junior-sized portions offered on menus. "You might have a shot-glass-sized dessert. It gives the customer the opportunity to say 'I can still have some dessert' and it gives the owner the opportunity to still add a dollar to the bill," says Arthur.

"Americans have been kind of spoiled. We have supersized everything," Arthur says. "That's not necessarily the way it is in the rest of the world."

Cut back on the most expensive ingredients:

Maybe the recipe calls for five sticks of butter. In good times, the baker adds six because she thinks it tastes better. But in tough times, she'll stick to five (or worse, substitute a stick or two of margarine in the recipe). The chef may prefer to load up on shrimp when preparing his signature gumbo, but he knows his job depends on restricting the number to four or five per serving.

Brown recommends restaurateurs get very strict about standardizing portions at times like these. They might tell their cooks, for example, to use 10% less chicken in entrées or chop off less of the strawberry when they make shortcake. "Usually, either they switch to a scale or offer additional training," says Brown.

Managers may shift to dishes that call for less expensive ingredients -- for example, from beef to chicken or from chicken to pasta. Consumers may want these lower priced alternatives, and restaurants like them because they can often make a higher profit margin on them.

"If you see a resurgence of liver and onions, don't be surprised," says Simons. "It's an old school comfort dish for a lot of people and the cost is low."

Maybe the chef used to get the highest quality beef available. Those generous days may be coming to a close. If you see a menu item for some kind of marinated steak, it may be a flank steak, a cheap, tough cut that has been marinated and pounded to submission, said one chef at a private club who asked not to be identified. You may see more items with ground chuck, otherwise known as hamburger.

One chef who works with VSAG says that he makes up for the everyday image of hamburger meat by insisting on only the freshest beef from his vendors. "I know it's not super fancy, but if prepared well it is heavenly," says the chef. "It is all about the age of the chuck: the fresher the better! 'No age please,' that is what I insist to my vendors when ordering chuck."

Cut back on freshness:

Food distributors are charging restaurants fuel surcharges these days because of high gas prices. So, restaurants are trying to cut back on the number of deliveries they get. Instead of getting fresh produce every day, they get bigger quantities less frequently.

Other kitchens may switch to frozen for items that they rarely use but want to keep on hand, such as avocados.

Use everything (even if that means recycling items):

Here's a simple example: The chef may prefer to discard tomatoes that aren't the ripest red. But, these days, to make use of every last tomato ordered, you might see a few green slices make their way onto your hamburger.

Restaurants also need to be extra-efficient about using everything they buy. In order to be prepared for a dinner rush, they need to have lots of extras on hand -- rolls, desserts, side dishes, cuts of meat for entrées. But if they have a slow night, they don't just throw the extras out.

An efficient manager knows how to use every last piece of food. That new special soup? Could be just an excuse to use some meat and vegetables they got for another dish but didn't sell. A salad bar can be the serving site of last resort for cheese or vegetables that are about to turn. See lots of chili? It may be a disguise for leftover hamburger. Bread pudding? That's yesterday's Danish. Homemade croutons? A great use of stale bread. Potato skins? A terrific way to use the leftover baked potatoes (which have to be baked in advance because they take so long.) Potato soup? More rerun potatoes.

You get the message.

Pour weaker drinks:

Your favorite bartender is probably not stingy with portions. Bartenders have a way of pouring generous drinks and maybe even offering one on the house. But now his boss may be breathing down his neck to ensure he is not so glad-handed.

The biggest wasted item at restaurants that Brown sees is liquor. "It isn't necessarily theft, just over-usage of the item," Brown says. "It's not even that they're sloppy or generous. It's just not being a machine." Now the price of beer is rising, putting owners on high alert.

Bartenders can easily over-pour a drink without even trying (of course, the potential for a good tip doesn't exactly disincentivize them). In the United Kingdom pubs must sell liquor in 25 ml or 35 ml servings and have bar gadgets that pour exactly that amount. Maybe they'll start becoming a common sight in the U.S., too.

Switch to a cheaper brand of certain ingredients:

Restaurant owners have become compulsive shoppers. That's quite a change. Eric Arthur says restaurant owners normally stick with the same supplier year after year, almost like baseball players stick with lucky socks. Now they're trying many suppliers and many brands.

For restaurant owners who are less fastidious on quality, a switch to a cheaper supplier can mean lower quality. If your favorite grilled cheese doesn't taste quite as good as it used to, a change in supplier could well be the reason.

Don's Dock in Des Plaines, Ill., is one of the most popular seafood restaurants in the Chicago suburbs. Owner Andrew Johnson, whose family has been in seafood for 70 years, is determined not to skimp on the fish and shrimp. "With our seafood, we're not going to sacrifice the quality," Johnson says. "We just shop around more."

The huge hike in grain prices means that a bag of breadcrumbs went from $19 a bag to $37 over the last year. Instead of shifting to a lower quality, Johnson spends more time comparing prices. "For breadcrumbs there used to be one or two suppliers. Now we have six or eight purveyors," Johnson says.

Switch to cheaper toilet paper, take-out containers and bags:

"Paper and disposables, oh my gracious, that's the very first place I start," says Arthur. "There are big bucks, I mean, big, big bucks in that." Sometimes owners can get the same items for less if they just spend more time shopping. Or, they may decide that food quality is sacrosanct but napkin quality is not.

Arthur asks restaurant owners what they pay for cups and trash bags and is often surprised by the answer. "Someone may be paying $80 a case for trash bags that they could be buying for $20," he says. "Do you know how many extra sandwiches they'd have to sell to make up that $60?"

Push the highest profit margin items, not the best-tasting ones:

"Most restaurants want to sell the best thing on the menu," says Arthur. "They're not thinking, 'What's the thing I'm going to make the most money on?'" That changes once they figure out their food costs.

Often the signature dish may not be all that profitable. But a pasta dish can offer a low cost for the eater and a drastically lower food cost for the restaurant. Arthur recommends restaurants look to add low cost, high margin dishes. In other words, it's better for them to make $2 off a $12 entrée than to make $2 off a $25 dish -- even though making the $25 dish may be more fun.

Another technique: A restaurant that uses a professional menu designer will steer eaters to the high margin items. Big chains are already well-practiced in this mystical art; now smaller restaurants are seeing what a boost it can give their bottom line, says Michael Kristoff, president and creative director of Kristoff Creative, a Nashville, Tenn., design firm.

"There's a psychology to it, an engineering the placement of things," says Kristoff. "The third item in a list is generally the most selected item. So that's where you would put your highest margin item." Profitable items may also get stars or boxes around them. You may see prices de-emphasized. Kristoff steers restaurants away from the typical diner menu where all the prices line up in a column.

"That's the last thing you ever want to do -- the number one biggest mistake," Kristoff says. "People easily see the prices and start shopping by price. Price should be the last consideration. People on budget are going to do that anyway but you don't want to force it on them."

Slowly raise prices so it's not as noticeable:

Restaurants normally raise price only once or twice a year. Now you'll see many more increases along the way. That's because prices are moving as much in a month as they used to in a year.

Andrew Johnson has had to raise prices four times in the last two months at his seafood restaurant. He now prints only 500 menus at a time instead of 5,000. He used to check his ingredient prices every couple months; now he makes sure to look every week.

Eric Arthur says restaurant owners are always reluctant to raise prices, fearing they'll drive off customers. But he's worked to convince his restaurant clients that in this downturn, the only restaurants that survive will be the ones that raise their prices regularly to keep up with costs.

Beg for sympathy from your customers:

You may start seeing signs about higher commodity prices. Or news articles pinned to the window. Or hear desperate justification of the higher prices in a conversation with the owner. They want to make sure you know they're not just being greedy.

Most restaurateurs are passionate about keeping their food quality up and won't compromise on their signature dishes. But with customers cutting back on dining out and food prices soaring, they have little choice but to find creative new ways to trim costs.

Carol Vinzant is a freelance writer in New York.

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Taco Bell: Recession cuisine?

Bruce Watson — 2008-05-14T15:00:00+00:00

Filed under: Budgets, Food, Saving

Things have been tough for Taco Bell lately. First there was the whole E. coli scare in 2006, which people are still talking about. Then there was the chain's new grills, which it claimed were "green" because they used less water and electricity than traditional steam tables. One of Taco Bell's execs even went so far as to state that "Whether you take shorter showers, turn off the water while brushing your teeth or purchase a Grill-to-Order menu item at Taco Bell, you can save water and impact the environment without even thinking about it." In point of fact, as CNN pointed out, Taco Bell's heavy reliance on beef makes it far from green. Finally, who can forget about Taco Bell's famous rat infestation video, which featured dozens of the furry little critters taking over a New York restaurant.

Still, even with its bacteriological and environmental shortcomings, Taco Bell is my go-to restaurant when it comes to fast food, for the simple reason that it consistently offers relatively healthy (compared to a Big Mac), surprisingly flavorful food for a very low price. My loyalty to the place dates back to when I was a poor starving college student. There was one semester in which I was particularly broke and could only spend about $50 on food. Throwing variety to the wind, I subsisted on plate after plate of hummus, lentils, tuna macaroni salad, and ramen. Whenever I could, I'd find some change in my couch and wander off to Taco Bell, where I could get a burrito for 59¢. It became a lifesaver. Many were the nights when I'd grab a table, pick up a burrito, load it with hot sauce, and savor the joy of something other than my regular fare. When I had an extra couple of cents to splurge, I'd pick up a bottomless cup of soda and revel in my wealth.

Over time, of course, Taco Bell phased out the super value menu. By that point, I had a little more money, so it didn't hit me too hard, although I remember feeling a pang when I discovered that my favorites were now a little more expensive. However, in addition to its push for green cred, Taco Bell seems to be returning to its roots. On May 15, it is rolling out its new "Why Pay More" menu, featuring items that cost 79¢, 89¢, and 99¢. Given that many customers are currently concerned about their ability to pay for gas, the super-cheap menu is coming out at the perfect time. And, to be honest, I will probably be taking advantage of the new offerings.

And I'll remain a Taco Bell regular as long as the rats remain among the patrons, not the ingredients!

Bruce Watson is a freelance writer, blogger, and all-around cheapskate. A recovering fast food junkie, he still dreams about Wendy's "Big Dave's Deluxe" burger.

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Beat the postage increase: Print out your own stamps!

Bruce Watson — 2008-05-13T17:30:00+00:00

Filed under: Bargains, Budgets, Entrepreneurship, Home, Technology

Well, it's happened: postage has, once again, gone up. If you're like me, you probably send a letter through the mail once or twice a month, which means that the postage rate increase is now burning a massive 2¢ hole in your pocket. On the bright side, I generally pick up any pennies that I see on the sidewalk, so I should be able to make up the difference with about a half mile of walking.

I'm joking about this, but there was a time when the postage change would really have upset me. For a while, I used to sell a lot of items on eBay. One of the ways that I set myself apart from my competitors was by offering a standard fee for shipping and handling. If my buyer lived in the next town over, I made a fair bit of money; if he lived in Montana, I ended up losing dough. When the Postal Service used to up its rates, I had to up my rates, which made my flat rate fee seem a little less like a deal.

My fellow Walletpoppers have suggested some solid ways of undermining the postage increase. For example, Tom Barlow noted that, currently, "Forever" stamps are outperforming numerous stocks, and that buying large amounts of them is a nifty way to save a lot of postage money. However, as Tracy Coenen noted, it really doesn't make that much of a difference for "casual postage users" such as myself. Moreover, as my daughter has a tendency to affix stickers to the cat whenever she gets a chance, I prefer to minimize the number of stamps that I have laying around the house.

Another solution that neither involves a long-term stamp commitment nor a postage-laden kitty is electronic postage. Basically, you open an account with a company that is licensed to sell electronic postage; among others, this includes Stamps.com and Pitney Bowes. You buy the company's proprietary machinery and begin printing out your own stamps. Although electronic postage carries a startup cost, it certainly pays dividends in terms of time and effort, particularly when you consider how long the average post office visit takes (in my neighborhood, it's about an hour).

The postal service is also working to sweeten the deal. Express Mail users who print their own postage save 3% off the price of sending a package, while Priority Mail users will save 8.2%. Beyond that, even regular stamp users will save money by minimizing postage overpayment. Obviously, electronic postage isn't for everyone, but if you send out a lot of mail, it could help you save a lot of money.

Bruce Watson is a freelance writer, blogger, and all-around cheapskate. His favorite stamp was the one for National Proctological Awareness Month. He bought a couple hundred and used them to mail all his bills.

How much cash should you carry, Part 2

Tom Barlow — 2008-05-13T09:00:00+00:00

Filed under: Budgets, Cards

Yesterday I blogged about an economist's answer to the question of how much cash one should carry, which was a surprisingly large amount; almost $500. His conclusions factored in the time required to visit an ATM, the interest lost by withdrawing cash, and the potential loss by theft.

However, I doubt that anyone I know carries even a small fraction of this amount. I rarely have more than $40 in my wallet. Reading various posts about this topic, one message showed up time and time again, that carrying more money would tempt one to spend more money.

I'm very skeptical about this conclusion, however. I believe that we are much more likely to overspend with credit cards than cash, which is why retailers are so anxious for us to use plastic rather than greenbacks. I know that, for me, paying with cash makes the transaction much more tangible. Every time I pull out a $20 bill, I think to myself just how much work I'd done to earn it. This never happens with a credit card.

So while I would be uncomfortable carrying $500 around all the time, I would be well served if I used cash more often. I know it would cause me to think twice about ordering that steak, novel or CD.

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And you think YOUR kids are expensive?

Tracy Coenen — 2008-05-10T11:30:00+00:00

Filed under: Budgets

If you think raising a family is expensive, you should try being the Duggar Family. Michelle Duggar, 41, is pregnant with the family's 18th child. Michelle and Jim Bob have 10 boys and 7 girls ranging from the ages of 20, down to 9 months old. There are two sets of twins in the mix, making this Michelle's 16th pregnancy.

The family lives in Arkansas in a 7,000 square foot home that they built themselves, and was showcased on cable show for Discovery. The household definitely runs based upon a huge group effort, as the older children are assigned to looking after the younger ones and everyone helps out with assigned chores that they call "jurisdictions."

The Discovery channel has done several features about the family, and even has a web page for them with a game called "Name That Duggar" and a trivia section. (Did you know that Michelle has been pregnant for 135 months?)

So if you think it's expensive to feed a few kids in your home, imagine what it must be like when the Duggar family goes grocery shopping. The Duggars say that they're going to accept all the blessings God wants to give them, meaning they might not stop having kids any time soon. I have no idea how they feed all those children. If you have any insights, let me know!

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Never bounce a check again

Brandon Barker — 2008-05-09T15:00:00+00:00

Filed under: Banks, Budgets

According to Bankrate, "Legislation has virtually eliminated the grace period for bill payers." That means most check writers, especially the ones whose bill-paying schedules depend on payday schedules, are going to need to buy some "check floating" time to avoid bouncing checks and earning late fees.

Bankrate (via this handy AOL Money & Finance slideshow) is offering up six ways to buy that time. Some of them are pretty simple (Sign up for direct deposit), some are somewhat technical (Sign up for account alerts), while others are downright OCD (Customize your due dates). Color coding might help, as well.

If you ask me, No. Five is the way to go: Use online banking. You'll never bounce another check. The computer just won't let you.

B. Brandon Barker also writes for Political Machine.

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Where's my economic stimulus check?

Julie Tilsner — 2008-05-09T14:00:00+00:00

Filed under: Borrowing, Budgets, Debt, Shopping, Tax, Relationships

I hate sitting by the phone, so to speak, but my mail carrier came and went today and there is no sign of my economic stimulus check.

I was a loud and bitchy critic of the economic stimulus plan from the start. It always seemed more politics than fiscal responsibility (but then when was this Republican administration ever about smaller government and fiscal prudence?). What's $600 going to do for the average debt-burdened consumer? Buy a month of groceries? Notch down one credit card? Yeah, I rolled my eyes and ranted and raved.

And then I figured out that I would be getting $1,800. That's $1,200 for being married and filing jointly, and $300 for each kid. My husband and I looked at each other sheepishly. Then we launched into the Happy Happy, Joy Joy dance.

According to the IRS, I should be receiving this windfall no later than today, May 9. This, I gleaned from the site, because of the last two digits of my Social Security number, the fact that I filed electronically in March and had my return direct deposited into my account.

And so we waited. "You'll probably see it earlier," my husband told me. "There were news reports that the first wave of people got theirs earlier in the week than expected." He then optimistically did his part for the economy by spending his half on a new laptop, since his old one had just died.

"President Bush thanks you for being a good American" I sneered. Then I went out last weekend and let myself get carried away at the mall, spending $160 on clothes I wouldn't otherwise have spent, all because I knew my economic stimulus check was coming the next week to cover me.

But where is the money? As a freelance writer, I'm used to the proverbial "check is in the mail" waiting game. But I also know that radio silence is cause for suspicion. So this morning I went back to the IRS site, and clicked on its tool, "Where's my stimulus payment?" I plugged in my information.

I don't expect much when it comes to forthcoming government information. But hope springs eternal. Alas, up pops this message: Not any information on this taxpayer."

Then I notice this cryptic note, "If filing or preparation fees were deducted from your 2007 refund, or you received a rapid refund, you will be receiving a check instead of a direct deposit."

So...the $30 electronic filing fee I paid Turbo Tax means I won't be getting my money today? That's the first I'd heard of that stipulation. I check the paper check payment schedule.

June 20.

I feel a little like a jilted date. He said he'd call and he didn't. Really, I should know better by now. Monies promised should never be anticipated or waited on. And I'm feeling a little foolish because hey, I thought this was a bad idea to begin with. That didn't stop me from quickly spending more than was in my budget though. I guess that makes me a "better" American than I thought I was.

So have you gotten your stimulus money yet? What are you doing with it. Really...

Ideas for spending your stimulus check:

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Stimulus check sales

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Recession watch: No zoo visits this year

Sarah Gilbert — 2008-05-04T09:00:00+00:00

Filed under: Budgets, Extracurriculars, Food, Kids and Money

This post is part of a series about real-life signs we're in a recession.

I was pregnant with my first son, Everett, when my family bought a membership to the Oregon Zoo. Here in Portland, obstetricians actually suggest eager moms-to-be walk up and down the hills at the zoo when they're trying to stimulate contractions.

It didn't work much, but it started a family connection to the zoo (and hilariously, a baby mountain goat was born the same day as Everett), and now that we have three children, we've upgraded to the most serious membership of all. My husband's favorite thing to do with the children is to get on the bus (we've given up our family car) and take the boys to see animals. With the $100 annual membership, all our visits are free but for snacks.

Ahem. But for snacks. Visits have been few and far between lately, because the snacks at the zoo now seem so expensive. Even though the baby doesn't ask for elephant ears, buying even one treat for every family member with a full set of teeth can set us back $20 -- more than our typical family grocery budget for a day (and we haven't had a zip of nutrition, in all likelihood). I don't mind packing snacks for the boys to go on an afternoon excursion (especially if that leaves me home alone in peace), but have you ever taken a five-year-old and three-year-old to the zoo and refused to buy them the treats offered at every turn? Umm-hmmm. Avoiding the "gimmes" when we truly can't afford to satisfy them is the reason we now spend a lot more of our entertainment time enjoying the wildlife in our own backyard.

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Are you lying to yourself about money?

Tracy Coenen — 2008-05-03T14:00:00+00:00

Filed under: Budgets

We all lie to ourselves sometimes when it comes to money. We justify purchasing things we don't need because it's a "good deal." But that lime green shirt isn't such a good deal if you're never going to wear it because you hate the color. We think we "need" things that we really don't. If you want it, just admit that you want it. Don't pretend that you need it, when you don't. We decide that we deserve to "treat" ourselves to something nice. Don't create a reward system for yourself when you decide you want to buy something, just admit that you want it.

We justify a purchase by figuring out how much our credit card payment will go up each month. You might be able to afford "only" an extra $100 a month now, but what if you lose your job or have an unexpected illness? We rationalize buying something because we'll "pay it off" when we get that bonus or raise we're expecting. And what happens when that money never materializes?

Part of becoming a better money manager is being honest with yourself about your spending. It's not wrong to buy things you want, so long as you do it responsibly and do it after your other bills are paid. Quit lying to yourself about why you're spending money. By being honest with yourself, you can start on the road to financial recovery.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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Sleep more to spend less!

Tracy Coenen — 2008-05-03T10:00:00+00:00

Filed under: Budgets

Blogger "The Happy Rock" did an interesting post on how sleep is an integral part of being more responsible with your money. I had never really thought about this, but his ideas make sense! The gist of his article is that when you're tired, you're more likely to spend extra money on "convenience" items or you might not think through money decisions.

One of the key money matters that he suggests is affected by sleep is food cost, and I tend to agree. When you're tired, you're more likely to go for convenience over economy or nutrition. It's much easier to buy some fast food than it is to plan ahead for lunch and pack yourself a nutritious (and comparatively inexpensive) salad. And when I'm tired, I know that I'm more inclined to go for what seems easy.

Tired people are also more likely to get sick or be involved in accidents, which both cause money stress. We might also have lower self-control when we're sleepy, and may be more likely to give in to impulse purchases.

All in all, I tend to agree with the idea that those who sleep more will do a better job with their finances. (Unless of course, they're sleeping instead of working!) I know that when I feel well-rested, I feel healthier and more energized to be a better money-manager.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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Budget by the year for better results

Josh Smith — 2008-05-02T19:00:00+00:00

Filed under: Budgets

The Journal of Consumer Research recently released a study which looked into the accuracy of budgeting for different periods of time. They found that consumers budget better when tasked with planning for a year rather than on a monthly schedule. For the study they used college students and had them predict their spending over a month or year and then tracked the real world results. The study showed that long term budgeters were more accurate in estimating expenditures, almost 25% better on average. This accuracy was attributed to the subjects taking unknowns into account better when dealing with a longer period of time.

These findings weren't too surprising to me, I have tried to budget before on a monthly basis and usually fall off the wagon around the third month when a random expense turns up. The last time I did a real month to month budget I didn't have an emergency fund of any kind which can really do a number on your monthly plans. My guess is that the college students who took part in this study also didn't have an emergency fund, well an emergency fund that wasn't tied to six packs and Doritos anyway.

Given that the inaccuracy of monthly budgeting is often attributed to unforeseen expenses the usefulness of a monthly budget may hang on whether or not you have an emergency fund. My wife and I need to start a budget pretty soon and I am planning on doing a best of both world's approach. I want to institute a monthly budget and a budget for the year. In order to accomplish this I hope to include a portion to go towards our emergency fund and other savings, rather than allotting the leftover to video games and scrap booking.

Readers, have you had better luck with either short or long term budgeting? What are your favorite budget tips or methods of staying on track?

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Jails are on budgets too!

Tracy Coenen — 2008-05-02T18:00:00+00:00

Filed under: Budgets, Food

I recently read about a jail in Maryland cutting back on supplies for prisoners. The ideas included limiting inmates to three rolls of toilet paper and two bars of soap per week. I've been trying to figure out how much toilet paper and soap I use each week, and those limits sound like more than enough to me.

Now jails in Wisconsin are cutting costs by removing items from the menu. Peanut butter and jelly sandwiches no longer have the jelly. The Milwaukee County Jail is likely going to cut dessert out of its daily menus. Some of the hot meals will now become (cheaper) cold meals.

Milwaukee County Sheriff David Clarke makes a good point: "As long as the taxpayers have to struggle with rising food costs and eat more Hamburger Helper, as long as they have to adjust their living and eating habits, why should they have to pay increased costs for people who have disregarded society's rules?"

Jails around Wisconsin admit they're doing things like cutting back on meat and limiting the amount of bread prisoners are allowed to have. And I think this policy is fine, as long as the prisoners are getting adequate nutrition each day. Sorry, but jail and prison are not fine dining establishments. Prisoners deserve adequate amounts of food and proper nutrition, no more and no less.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Health care too expensive? Fly to Singapore!

Bruce Watson — 2008-05-01T14:00:00+00:00

Filed under: Budgets, Debt, Health, Travel

As I've mentioned before, I used to teach college. Although I still gripe from time to time about the downsides of teaching -- the poor pay, the administration, the poor pay, the push for political correctness, the poor pay -- I have to admit that there were a few bright aspects. I loved working with students, I enjoyed having a big office, and I really, really appreciated the health care.

Working for a state-supported university in Virginia, my health care was very cheap. In return for a premium of less than $100 a month, my wife, daughter, and I all received medical and dental benefits that, in retrospect, were pretty outstanding. To give you an idea, my daughter's birth cost my wife and I less than $300; taking into account all the prenatal visits and whatnot, I think it still came out to under $500.

Recently, I've been having some dental work done. Now that I am no longer employed by the state, I have come to realize just how great my deal was. As a further lesson, my sister has been in and out of the hospital for the past few months with a chronic liver problem that she has had since she was a baby. As an artist, she makes very little money, but, luckily, Pennsylvania's Medicaid is outstanding, as are the programs at the Geisinger Clinic, the hospital that is treating her. Otherwise, she would probably be in debt for the rest of her life.

When I first heard about "Medical Tourism," I thought that it was a cute idea. However, now that I'm seeing some of the harsh realities of the U.S. healthcare system, I'm realizing that it's a magnificent solution to one of the biggest problems currently facing America.

For a while now, many people have been traveling abroad to have elective surgery, dental work, fertility treatments, and other operations done. Given that the savings on these procedures can be 80% or more, it seems logical that uninsured individuals would choose to pursue this option.

To add to the high cost of health care, even people who are insured may find themselves being denied treatment for a variety of questionable reasons. For example, some patients have recently been denied places on the liver transplant list because they used medically-prescribed marijuana. According to the medical establishment, marijuana (unlike alcohol) has no direct effect on the liver; moreover, these patients were using marijuana under a doctor's supervision. However, in an increasingly overburdened health-care situation, many insurers, medical boards, and even hospitals are latching on to any excuse to drop patients.

Some people reject the idea of medical tourism because they worry about the quality of the hospitals or the training of the doctors in other countries. Ironically, however, very few of my sister's doctors were native-born Americans. Her primary surgeon was Indian, as was one of her endoscopic surgeons. Her interventional radiologist was from Germany, and another of her endoscopic surgeons was from England. Actually, of all her doctors, my sister's only native-born one was her gastroenterologist, and he spent his winter vacation with his wife's family in Germany! Moreover, while I can't speak to the cleanliness of India and Singapore's hospitals, many of the reviews that I've read have been complimentary. While we're on the topic, I've been to some pretty filthy hospitals in the U.S. In fact, my wife and I elected to have my daughter born at a hospital located an hour from our home because the one in my town was infested with flies.

One interesting development in the Medical Tourism front is Hannaford's recent adoption of overseas surgery. A supermarket chain, Hannaford Brothers has begun offering employees the option of having hip replacements performed at a hospital in Singapore. This particular operation runs between $40,000 and $60,000 in the U.S., but costs about 75% less in Singapore, even accounting for the cost of airfare for two, hotel charges, and room and board for a traveling companion. Looking at the savings, it's hardly surprising that 150,000 Americans elected to have medical procedures performed in other countries last year, nor is it shocking that Hannaford has started outsourcing some of its medical care. I wonder how long it will be before other companies follow suit.

Bruce Watson is a freelance writer, blogger, and all-around cheapskate. He's thinking about going to Indonesia to have some Komodo dragon venom injected into the wrinkles on his forehead.

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Ask the Dolans: Should we take out a home equity loan to pay off debt?

Ken and Daria Dolan — 2008-05-01T10:00:00+00:00

Filed under: Banks, Budgets, Cards, Debt, Home, The Dolans

Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

My husband and I have $7,000 in credit card debt. Should we take out a home equity loan?

Lyndajoy

Ken and Daria Dolan offer advice on all of your debt concerns at their Credit Resource Center.

Click here to ask Ken and Daria your question.

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Budget fashion: save money on hair salon visits

Michele Turk — 2008-04-30T13:00:00+00:00

Filed under: Bargains, Budgets, Shopping

I didn't become a salon junkie until two years ago, just after I published my first book. I would schedule an appointment to get my hair colored pretty much every time I had a book signing. Since I didn't want to be photographed wearing the same outfit at every event, buying new clothes also became a necessity. After this became a pattern, my husband pointed out that I was spending more money on my hair and clothes than I made selling books.

To commemorate National Hairstylists' Day, I'll share the many ways I've tried to save money on my salon bill since then--something I suspect many other women have done to cut back on spending in recent months. First let me share a brief haircutting history:

Two decades ago, I moved to California and worked as a counselor in a homeless shelter as part of a full-time volunteer program for recent college grads. My $65 stipend couldn't cover my monthly salon bills now. Anyway, I got my hair cut at the Vidal Sassoon Salon in Santa Monica, where student hairstylists gave free cuts.

When I moved to New York City, I worked at a magazine called American Health. Most of the young staffers went to the salon at Barney's New York, where once a week after work student hairstylists cut hair, again at little or no cost (it's been so long I can't remember, but I think it might have been $10, plus tip). A senior stylist supervised and fixed any mistakes, and by the time it was done, it could take up to two hours but it was worth the wait. I spent the next chunk of time in Washington, DC, where I could get a haircut at a nice Georgetown salon for $50 or so. That was a decade ago and I understand that prices there have skyrocketed as they have elsewhere. My neighbor, a British hairstylist, also occasionally cut my hair after work. For $20, I got a haircut and a beer in her backyard.

Once I hit 40, I could no longer pluck the gray hair or I'd end up with some serious bald spots so I began to color my hair. In the past few years, I have paid upwards of $200 for a cut and color in New York and suburban Connecticut where I now live. If I actually went to the salon every four to six weeks like they recommend, I could drop thousands a year. Let me point out that I have plain old brown hair and my goal is to simply keep it that way--no highlights, lowlights or fancy foil. Actually, the goal is to make it look like it did when I was 16, true brown with that nice glossy sheen.

The most obvious way to save money is to extend the length of time between cut and color, but as the gray slowly muscles out the brown, it's difficult to stretch it out. I have tried boxes to cover the gray in between salon visits, and for $8 it can hold me over. I always use Clairol's Natural Instincts because I'm too chicken to use permanent color at home. But it doesn't really cover the gray entirely, and I end up with a rainbow on my head, ranging from dark brown and gray at the roots, to what the haircolorist calls "brassy" on the ends (I call it red).

My latest approach is switching to permanent color - I did this at an Aveda Salon last month since they claim the products are more natural with less harsh chemicals. With permanent color, the color won't fade with multiple shampoos or get funky from the summer sun. I have heard that the root touch-up products sold in pharmacies everywhere work pretty well at extending the life of color but I have a week or so to go before I need to do that.

I do have one other strategy: my sister-in-law Cherie is a hairstylist who used to work in an Elizabeth Arden Salon, but since she had a baby, she just cuts hair for friends and family members from home. When my other sister-in-law gets her cut there, she pays $20. The problem? Cherie lives three hours away in New Jersey, and there's the ever-rising gas bill to consider. But if I can just schedule my hair appointments around other family visits, I could save a bundle.

Michele Turk is a journalist and author whose first book, Blood, Sweat and Tears: An Oral History of the American Red Cross, was published in 2006. She recently founded e street press, a self-publishing company.

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It costs what?! More families request financial aid for summer camp

Julie Tilsner — 2008-04-29T18:00:00+00:00

Filed under: Budgets, Extracurriculars, Kids and Money, Simplification

Kids may well count the days until summer vacation, but their parents are dreading it.

That's because when school's out, camps are in. And we've got to find a way to pay for it somehow.

Time was, summer meant three months of running free, finding ways to kill hot summer afternoons at the community pool or with friends or in your backyard campsite. Those days are over.

Now the culture dictates that kids have to be stimulated 24/7. The kids expect to be entertained, and the grown-ups need for them to be elsewhere while they work. The result: Summer camp. Science camp, art camp, ocean adventures camp, cooking camp, horse camp, Spanish camp, overnight camp...etc. etc. ad nauseum.

The folks who run these summer camps know they've got us over a barrel. The costs of camps range from the painful to the improbable. The cost of one week of Lego camp at a community center near me is $170 a week. Times two (for both kids). And there's a $75 registration fee. That's $415 for one week of activity that will keep the little nits out of my hair for three hours a day while I work.

I'd better be productive then. By my estimation, there are 11 weeks to fill.

According to the L.A. Times, more parents are putting off signing up for summer camps (March and April is when you typically have to sign up your charges, lest the camps fill up without you). And more of them are requesting financial aid in order to do so.

This doesn't surprise me at all. Camps are a huge financial burden for middle-class parents. Lower-cost options like Girl Scout/Boy Scout camps and YMCA camps fill up the quickest. The costs just go up from there.

Allow me to make a modest proposal. What happens if we all agree that this has to stop? Keep kids home from camp in lieu of a good old fashioned, boring summer experience. Get a neighborhood group together and establish a sort of summer co-op, by which the parents who are at home supervise the kids (kids in a group of friends will play for hours without bothering you, it's been established.). Let them run free, play ball, swim in the pool, bury each other at the beach. Working parents can offer their services one evening a week or on the weekends.

I know, I know. This is how it *used* to work, back when kids had nothing else to do in the summer but be kids and ride their bikes through the neighborhood all day. And smaller children require more supervision than grade school kids. Still, the idea of a long, hot, boring summer is an idea whose time has come around again. Why can't it happen?

Maybe not so easy. But much easier on the pocketbook.

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Food prices are higher, but how much higher?

Geoff Williams — 2008-04-28T18:00:00+00:00

Filed under: Budgets, Food

It's no secret that food prices are rising, but if you're curious as to how much the prices are climbing, the Department of Labor recently released its Consumer Price Index Survey, which tells you how much things have changed in the last month.

You can look it up at the Department of Labor, but so you don't have to, here's how things break down:

Cereal and bakery products: prices increased 1.3% in March for baked goods from the month before; bread increased 2.1%. That may not sound too terrible, but bread is 14.7% more costly than it was a year ago.

Dairy products: Good news on milk prices: they fell 2.2% from February. Yeah! But the cloud in the silver lining is that dairy products are still 13.3% higher than they were in March 2007.

Meat, poultry, fish and eggs: Virtually unchanged since February. That's as a group. Beef and chicken did go up (the Consumer Price Index doesn't say how much), while pork, fish and other seafood went down. So check out those fish sticks, if you're looking for a bargain.

Nonalcoholic beverages and for other food at home: There was an increase of 0.3% and 0.1%.

Food away from home: an increase of .3%

If all this depresses the heck out of you and want to drown your sorrows in a stiff drink...hey, you're in luck. Prices for alcoholic beverages declined by .1%.

Geoff Williams is a business journalist and the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).

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Travel insurance would have paid off: A cautionary tale

Tracy Coenen — 2008-04-28T17:30:00+00:00

Filed under: Budgets, Travel

Over the weekend, Consumerist posted a story about a family that got "kicked off" a Royal Caribbean cruise ship. It cost the Cortes family $3,000 to get home afterward. Shame on the ship, right? Wrong.

The ship did the right thing, and some of the details are here. The situation was simple: Zoie Cortes, seven months old, got sick on the ship and was vomiting and had diarrhea. The family took her to the ship's doctor, who said she was dehydrated and should receive treatment at a hospital.

The ship was leaving port in 10 minutes, so they had to move quickly to get their things and get off the ship to go to the hospital. The Cortes family went to a hospital in Nassau, and the staff diagnosed the baby with a cold. Not serious at all. The family was then in a position where they had to get themselves to the next port to meet the ship or go home. Had they purchased travel insurance, those costs would have been covered. They did not purchase travel insurance, so the cost is their own.

The Cortes family (and apparently the media too) think that Royal Caribbean should pay the family's costs. I disagree. The ship personnel did exactly the right thing. There was a baby with potentially serious symptoms, and they recommended she go to the hospital to see if it was indeed a serious illness.

Could you imagine the nightmare if the ship's doctor had instead said something like this: "Well, we're not sure what's wrong with your baby, but we're leaving port in 10 minutes so you better not go to the hospital. You should stay on the ship." Then imagine the baby being very, very sick. Now what? You wanna bet that the family is going to hold the ship responsible? Of course.

Sending the baby to the hospital was the prudent thing to do in this litigious society. Unfortunately, her symptoms were the type that can be part of either a very minor illness or a very serious one, and the ship's doctor had no way of knowing.

Times in and out of ports aren't exactly negotiable, and all cruise ships have a well-publicized policy that they adhere to their schedules with very few exceptions. So when the family did the right thing and took the baby to the hospital, the ship left port, as planned.

I feel badly that the family's vacation was ruined, but this is the chance you take with small children. Further, they might consider travel insurance in the future. The sickness and the costs are unfortunate, but they're not Royal Caribbean's responsibility. The ship's staff did the right thing, and I applaud them.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Consumers changing spending habits: No big deal

Tracy Coenen — 2008-04-28T16:00:00+00:00

Filed under: Budgets, Food, Home

An article in the New York Times this weekend detailed some of the changes consumers are making in their spending habits in light of tighter economic times. But I'm not feeling sorry for Americans. We are one of the richest countries in the world, and even our "poor" have luxuries beyond what could be imagined in many countries.

There is really no hardship when consumers are "forced" to eat at home instead of restaurants or to buy generic foods instead of name brands. It's not a big deal when they have to cut back on expensive meat, in favor of more "fillers" in their meals like pasta or inexpensive vegetables. We're not malnourished, and buying name brands is not our God-given right.

I'm not saying that rising food costs are a good thing. Of course no one wants to pay more, and certain staples are getting ridiculously expensive. But I am saying that a little more strategic budgeting and cost-saving isn't a hardship. Eating in more and going for economical choices over convenient ones is not a bad thing either.

As consumers, we've been spoiled for a long time. Low prices on many goods allowed us to be a bit careless with our money. Now many are in a position in which they have to be more selective and thrifty. Sure, it's more fun to spend without looking at the price tag. But as consumers, we'll weather this storm just fine and find new habits to replace the old in an ever-changing economy.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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How much does an hour of fun cost you?

Tom Barlow — 2008-04-28T14:00:00+00:00

Filed under: Budgets, Extracurriculars

Tracy's blog entry yesterday about the cost of dining out caused me to reflect on the costs of entertainment, because that's what dining out is for me; a social occasion. As such, how does it stack up with other forms of amusement, on a fun/hour basis?

My entertainments roll like this:

Dining out: The carte for my wife and I usually hovers around $25-28 when we meet friends at a restaurant. Add 10 miles of driving cost to reach $30. We might be there as long as an hour and a half, if the waiter is patient and the place uncrowded, so our fun per hour is $30(.5)/1.5, or $10.00 per hour.

Reading. I recently finished The Assassin's Wife by Margaret Atwood (great book), which I bought at Half-price Books for $4.98-- plus tax, $5.35. Add a buck for the trip to the store, $6.35. It took me around 15 hours to read, so my f/h = $0.42 per hour. I could have shaved this to almost nothing via the library, but they don't like it when I write in the margins.

We watch a lot of TV, perhaps 90 hours a month (mostly baseball for me) and have about a billion channels on our cable package. Our monthly bill is around $90. The big-ass televsion set us back around $600, and should last four years, I hope, or $10.50. This puts our television f/h at $1.14 per hour.

We do go to the movies occasionally, a 10 mile round trip ($5 for each of us). Add an $8 ticket for a two hour flick, and our movie excursions f/h is $6.50 per hour.

I enjoy flatwater kayaking, and will sometimes strike out for an afternoon's paddle, 3-4 hours. Travel is a killer, though; 60 miles round trip is a good average. I paid around $800 for my outfit, and expect it to last six years minimum, with 15-20 trips per year, or $6.67 per trip. $30+$6.67/4= fun/hour cost of $19.67 per hour. Ouch!

On the other hand, I live next to a bike path. My favorite bike is 10 years old and cost $400. Add in another $200 for clothing and maintenance to $600. Divide this by perhaps 1000 hours of riding, and the f/h turns out a thrifty $0.60 per hour.

I used to golf a lot, and if I were still addicted, my costs might look something like this: $30 per round times 25 rounds a year, a $100 new club, $250 for golf balls, and 30 miles round trip drive to each round, for a total of $1,425. Divided by 100 hours total playing ing (4 hours/round) ,golf's f/h = $14.25 per hour.

As you look over you budget for money holes, you might consider the entertainment cost/hour of your favored pasttimes. You might be in for a shock.

Anybody want to buy a kayak?

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