Is a Costco Membership Worth The Cost?
Last week, I had a chance to indulge my usually suppressed Consumer Instinct and buy a WHOLE BUNCH OF STUFF at Costco.
The nearest outlet of that chain is about 20 miles away from my house, in a mostly-sprawl area called Superior, Colorado. If you know Mr. Money Mustache at all, you know that I would never drive that far just for a shopping trip, so I always wait until I have other business in the towns nearby such as Boulder. As a result, I usually get to Costco about once every 3-6 months, and when I do, I acquire a hatchback-busting $400 load of groceries and any other necessities that happen to be available at unusually low prices at the time.
A Costco membership costs $50 per year. And expanding a nearby errand does still add some extra driving to my trip – which would not otherwise be necessary since I get all my other groceries using a bike trailer. Am I fooling myself with this membership, or is it actually a good investment of my time and money?
To find out, I have conducted a Top-Secret Multi-Store, Inter-City Investigation – just for you!! I walked through endless aisles, took candid photos on my telephone, jotted down notes on scraps of paper, and then spent countless minutes typing all of the results into a spreadsheet to figure out The Real Deal.
SO NOW.. let’s go line by line through my latest Costco receipt, and compare the cost for equivalent food from my local Safeway. You can see all of my purchases, judge for yourself whether or not they are practical or silly, and at the end we’ll see how much I saved or wasted on the trip.
| Item | Costco Cost | Safeway Cost | Costco Savings |
|---|---|---|---|
| TOTAL | 401.48 | 690.67 | 283.16 |
| Quaker Oats - 30 lbs in the form of 3 10lb boxes | 20.67 | 45.00 (and this happened to be during a major sale) | 24.33 |
| Toilet Paper (100% recycled) - 32 double rolls | 14.69 | 17.33 (but no recycled TP available) | 2.64 |
| Blackened Wild Salmon Filets - Frozen - 2.25lb | 15.99 | 29.97 | 13.98 |
| Organic espresso roast coffee - 4 bags totaling 9 lbs | 48.00 | 75.96 (that was the cheapest wholebean coffee in Safeway. For equivalent quality, more like $100+! | 27.96 |
| 18 organic eggs | 3.69 | 5.98 | 2.30 |
| 3 lb organic beef burger patties | 15.99 | 23.97 | 7.98 |
| 2 lb Kalamata Olives, fancy | 6.79 | 11.97 | 5.18 |
| 4lbs frozen mixed blueberries/raspberries | 10.99 | 19.20 | 8.21 |
| 2lb sliced various kinds of cheese (party style) | 8.99 | 12.00 | 3 |
| 8.5 lbs (4 x 2.1lb bags) Quaker Natural Granola | 15.98 | 21.80 | 5.83 |
| 300 generic-version-of-flintstone kid vitamins | 12.99 | 17.50 (happened to be 2-for-1, normal price is double this) | 4.51 |
| 32 oz pure maple syrup | 12.99 | 19.99 | 7 |
| 4 lb thick sliced smoked bacon | 14.99 | 19.96 | 4.97 |
| 2 lbs roma tomatoes | 3.99 | 3.99 | 0 |
| 16 dry erase whiteboard markers (for our little artist) | 9.99 | 16.00 (Staples price) | 6 |
| 3 lbs Boulder natural sausages | 7.19 | 18.83 | 11.63 |
| 6lbs Whey protein powder (for the weightlifters in the family, also supplements protein for fussy eating boy) | 39.99 | 59.99 | 20 |
| 3 lbs Coleman organic chicken breast | 18.45 | 23.97 | 5.52 |
| 2lbs colby jack marble cheese | 5.99 | 7.99 | 2 |
| 2.4lbs smokehouse roasted almonds | 8.99 | 19.18 | 10.19 |
| 9 lbs (!) raw unsalted almonds | 29.37 | 45.00 | 15.63 |
| 1.13 kg organic tortilla chips | 4.39 | 12.00 | 7.61 |
| 5 lbs shredded mozarella cheese for pizzas | 12.99 | 20 | 7 |
| 4 pack men’s merino wool hiking socks | 10.99 | 17.00 (target price) | 6.00 |
| 16oz pure vanilla extract | 6.89 | 19.98 | 13.09 |
| 3 lb Pico de gallo salsa, fresh | 5.49 | no yumminess equivalent, closest is Newman’s Own at 2.69/lb = 8.07 | 2.58 |
| 2 lbs smoked turkey slices, fancypants | 11.99 | 15.98 | 3.99 |
| 303 grams ground cinnamon | 2.65 | 9.00 (6 x 50g containers, on sale) | 6.35 |
| 3.5lbs dark bittersweet chocolate chips (70% cacao) | 9.79 | 13.95 | 4.16 |
| 2 lbs active dry yeast (for bread and pizza making) | 4.15 | 43.12 (5.39 for a 4-oz jar!? what the fuck, safeway?) | 38.97 |
| 32oz extra virgin olive oil | 5.44 | 15.99 | 10.55 |
I’m calculating this for the first time as I write the blog posting, so my first reaction is Holy Shit! My Costco habit is even more useful than I had been assuming!
Comparing the $401 Costco bill to a potential $690 Safeway bill means that I am saving 41% over the lowest prices I could find at Safeway – and this is over a huge swath of groceries. After subtracting the membership cost, I probably still save close to $1000 per year.
All of these things are food that we actually eat, and use up completely, so there is no need to factor in waste. I’ve been buying basically the same staples for years. The exact list varies slightly, as some of my staples hadn’t run out yet and thus do not appear on this list, and some of the things I bought this week will still be around and not need replenishing when I return in December.
Of course, Costco isn’t entirely comprised of great deals. You still have to watch yourself, and know how to spot good values and avoid poor ones. There are always a few traps laid around the store.
Some things are ridiculously overpriced (a 2-pack of 6 foot HDMI cables for your computer or TV for 38.99 – the correct value of a 6-foot HDMI cable is about $2.00, and there are dozens to choose from at Amazon. My computer monitor is getting the signal I’m seeing right now from one of those very cables – works perfectly).
Other products are fairly priced, but stupid, like a stainless steel electric Turkey Fryer with carbon filter and digital temperature controls for $138.99. (WTF?)
The hardware and tools section is very-well priced, although the selection is minimal. Last year I bought a FatMax rolling tool chest for my carpentry business – it costs $80 at Home Depot, but Costco had them at $30. I also noticed that the size of car battery that fits my car is available at Costco for $68. I just paid $102 for the same model at AutoZone. Damn!!
And still other products are tempting and well-priced, like a fancy digital weather station that measures wind and rain and connects to your computer and publishes your stats on the internet, for $80… but yet completely frivolous and unnecessary, because you can find out all the weather parameters you need by looking at the internet-reported values from your NEIGHBOR’s digital weather station.
Overall, the ultimate value of Costco from a Mustachian perspective is this: drastically lower prices on many high-quality grocery staples. You just can’t go wrong from a frugality sense, cooking your way through a 50-pound bag of rice that cost you only $18. Their prices are remarkably consistent around the country, so if you can get to a Costco, you can make grocery shopping in California almost as cheap as eating in Alabama. If you’re having trouble getting your own grocery costs equal to or lower than mine ($75/week for a family of 3, even with plenty of luxuries like coffee and organic meat and fish thrown in), you might want to compare your own food prices to those in this article.
A Credit Card with a $400 Signing Bonus… WTF?!
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totally agree and love Costco, also love that it is 4 miles from my house and I can get there more often than 3 – 6 months. Milk there is not sold in ridiculous sizes and is regularly $1-$1.50 per gallon cheaper than other stores.
I’ve noticed that I’m not a big fan of their produce. Any given week I can get a better price on grapes at a local grocery store (probably loss leader). Sometimes its fairly priced, but so gigantic I’d rather buy elsewhere. For example, apples may be 99c a lb but their almost a lb each. I’d rather get the 2in variety at the local grocer. Bananas are usually a deal.
Do you have an Aldi nearby? They’re a “discount” grocer, sell 95% generic branded merchandise but have generally very good prices for staples. No membership fee or bulk sizes required.
Ton nailed it, check out Aldi if you have one nearby. I did some similar comparison shopping as MMM, but with Aldi and Costco and Aldi typically beat them a little in price, the give and take being that all their products are generics.
Produce is not a good deal at Costco. Splurging on the fancy juice though is another story!
I also recommend Aldi for those things that wholesalers like Costco and Sam’s don’t stock. Their canned goods and produce are much less than the normal supermarket chains and and you don’t have to buy the huge #10 cans like you would at a wholesaler. When I do most of my shopping about ever 2-3 months, I get the 50lb sacks of rice, flour and cat litter and the 5lb bags of cheese from Sam’s then go to Aldi for the things like fish, milk, canned goods and any produce that I’m not currently growing. I usually have about half a chest freezer worth of flour, meats and milk products and that lasts until the next trip.
I agree – I will be all over this Aldi chain if they ever expand this far West!
Please don’t hate me or reject my comment for plugging my own website, but I recently wrote a nice post on how I actually use my poor mother’s love of Costco and the 2% Cash Back membership to get a free membership every year.
Sorry, I know I’m a bad son!
http://wewearkhakis.com/?p=269
Enlightening post! I was wondering about the value of a Costco membership just last week.
What’s your take on the regional supermarket King Soopers, though? We visit Colorado regularly (Louisville, actually – not far from you), and tend to shop there or Costco. Safeway…not so much.
King Soopers is a nice store, and I like the Denver vibe. Overall, they beat Safeway on certain products, especially organic produce. They lose on some other things like bread, cheese and milk.
I definitely prefer King Sooper’s over Safeway overall, but it is an extra mile or so further from my house, so I tend to use Safeway for high-speed stock-ups during the week.
Damn, I just bought a battery at AutoZone myself for $106! Good comparison though, I’m salivating at the 4 lbs of thick sliced bacon. We used to be Sam’s Club members, but I got so fed up waiting in lines it wasn’t worth my time (we didn’t usually buy as much as you). Is Costco any better?
Wow! That does add up to some significant savings. I wonder about those studies, though, that say that there is a psychological phenomenon with bulk buying… you use more and waste more. Your thoughts?
Indeed Costco can save you money if you’re careful.
My fiance and I figured that we would pay for the membership in coffee, spinach, and soy milk savings alone. We also buy many of the same things on your list, and agree that you have to be careful what you’re purchasing as some things are not that great of a deal.
We also use our Costco AMEX cards for just about everything we can, which pays 2% on most purchases, and 3% on gas. If you live close to a Costco gas is much cheaper and pays an additional 1%. The great thing about the rebate is that you can redeem it for cash!
My big debate is whether to buy a bike trailer to ride to Costco. Its around 8 miles from our house, and can be done entirely on bike paths (12 miles for this route). I figure it costs me about 2 bucks to drive there and back in gas, and a bike trailer from Nashbar is around $75. Of course, it would get other uses as well….
By the way MMM, we’re just down the road in Denver!
Oh, and almost forgot to mention that we get all our bread from an Orowheat bakery outlet. By far the cheapest bread you can find. I’m talking 7+ loafs for $4.
And why hasn’t anyone said anything about the samples! You can eat for free at Costco if you go there at the right time!!
Bike trailers are great! Even if you don’t have a kid, they let you do all groceries and semi-bulky errands without using your car.. or perhaps not even owning a car!
I have carried loads home from Home Depot, Target, and even transported full propane tanks home for the BBQ in my bike trailer.
Last week I saw a friend of mine transporting his ENTIRE GAS BARBECUE, one of the big ones with a cabinet pedestal and two side burners, down the street on his bike trailer – to bring it to a street party a few blocks away. I gave him the Most Mustachian Biker award for the day.
Good investigation. I have been curious about a possible Costco membership and if it would be worthwhile for my family. The big concern I have is we don’t have the room to buy alot of items in bulk. But it could be worthwhile for me to do my own comparison between our local Costco and WalMart where we do our grocery shopping. You had some great savings but really the savings depends on personal preferences and what you normally buy. Unless you plan on changing eating habits to eat items that will be saving you money, which is definately not a bad idea either.
I like Costco’s price on gas and socks. However, I find I can get much better deals on groceries at the grocery store with coupon. However, I have to be less picky and willing to try new products. Though that was a good deal on olive oil you posted – if it’s extra virgin.
Krunchers potato chips. .39
Sara Lee deli meat .99 10 ounces.
Franks Red Hot – Free
Pierogis .59
Sweet potato fries Free
Delmonte fruit .50
2 lb carrots .83
Cookie dough .94
Coconut milk .37
whole grain pasta .15
onions 3lb 1.49
fall squash .99 lb
cabbage .59 lb
napa cabbage .99
whole chicken .59 lb and I have a $1 coupon for it.
whole wheat bread .88
Ragu spaghetti sauce .73
Eggs 1.29 doz
Timely post. Our Costco membership expires next month. However, as we are recent empty nesters, $400 grocery trips are really unnecessary for us. Locally, their loss leader Propane, Roasted Chickens, etc. are attractive, but you cannot go near the store on weekends due to the line ups at the cash. Still undecided on the renewal…..
Oh man. Costco is truly my most unfavorite place to go. I find it overwhelming and full of people with large carts whipping around being pushy. But, we use a lot of staples, and a freezer, so I think we’ll continue to go. I have one close and on route to many places, but I still only go every 4-5 months because I hate it so much. I have been tagging along on my parents membership – taking them shopping and doing my own shopping, so I don’t even have to pay for the membership! Double win, I guess.
Jenny – I loathe going to Costco as well, probably for the same reasons you mentioned. This is why I let MMM do all the Costco shopping. It’s always exciting to see what he comes back with though!
That’s odd. Our Costco is easily my favourite place to shop.
The Costco nearest us, which we visit for our weekly shopping, never has any of these issues. Sure, the place is huge, but it’s spacious with lots of free samples of stuff, short lines and a lot of happy, helpful workers.
On the other hand, I don’t know any place I shop where I deal with other customers being pushy and the only place where workers have been jerks (as opposed to just cranky) has been Walmart.
Great! Maybe you can come do my shopping. Then again, maybe it’s because I hate all shopping in general. I also find the large carts hard to negotiate while pushing a stroller/wheelchair and pulling a cart at the same time. Even in the middle of the days, the lines are long and the people are kind of grouchy. I do wish, though that they would extend the hours a bit so I could go earlier or later, minus kids.
When we had a kid so little he couldn’t sit up, we just put his carrier inside the giant cart and piled the groceries around him and under the cart. Once each kid was big enough to get out of that, he could sit in the child seat in the cart or walk.
A wheelchair, however, would be awkward in any setting if you have to push that *and* a cart.
Maybe the Canadian Costco stores have a different mentality, but I’ve never had a problem with long lines, even on a weekend.
Well, just to see if I was crazy, I arranged to go on a weekday, midday, sans kiddos/wheelchairs/strollers, and you’re right it was better. That’s how I should arrange to do all my shopping. Still grouchy people whipping around, but it wasn’t packed at all so it was fine. I guess it was just enough negative associations to overcome it took a few trips!
Despite my love of Costco’s prices, I loathe the actual being there – but I find the trick to making it bearable is to NEVER go on the weekends. Those huge carts, the swarms of people…it makes me want to hyperventilate just thinking about it.
I too am mooching off my parent’s executive membership, so I don’t have to worry about the membership fee. But I’d probably still cough it up if they ever cut me off :) The savings really are fantastic – as long as you exercise impulse control!
I can see the store appealing to certain personality types rather than others. When I shop, I am all business, and I feel like it’s a war of Me vs. The Store. I want large quantities, concrete floors, and an efficient layout. I do not require shopping mall niceties like Boo-Tss-Boo-Tsss House Music in the background or halogen lights illuminating bamboo floors and tight-jeaned teenagers asking if I need any help.
But it is true, those Costcos can get crowded, which compromises the efficiency. I suspect the skill level of the branch manager will affect how well they are able to keep the store unclogged and the staff polite. Since I’m saving $280 for an hour of work, however, I’m willing to deal with whatever I have to.
Does anybody know how Costco grocery prices compare to Wal-Mart (not Sam’s)?
Stay Tuned! Looks like one of our readers has volunteered to do an investigation and guest posting on that in the near future. It will be quite fun.
Target blows Wal-Mart out of the water. Comparable prices but three times better shopping experience – and you can get 5% off all your Target purchases with the Target card.
I love Costco, but you do have to be careful about where Costco ISN’T the price winner. For example, pasta sauce, brown rice, hot sauce – cheaper at Target. Bread is by far cheaper at the bakery outlet. Olive oil, wine, and beer are (surprisingly) cheaper at Trader Joe’s – Two Buck Chuck and $3 six packs of Simpler Times – that’s what I’m talking about! And buy a year’s worth of Trader Joe’s gift cards in the first quarter of each year on your Chase Freedom card to get 5% off all of Trader Joe’s stuff too.
PS Costco is amazing just on the gas savings alone. They’re usually 20 cents a gallon cheaper and that is before the 3% cash back on the Costco Amex card (great card BTW). And a five pound frozen bag of good quality spinach for $5.50; six huge red bell peppers for $6, 14 huge apples for $8? Hell to the yes.
No one mentioned the pharmacy items at Costco. I take a 10mg generic Zyrtec pill every day. Costco sells a years supply (360 tablets) for $16.85 a bottle. My local CVS sells a months supply of their generic (30 tablets) for $19.95 a bottle. A years supply from CVS costs $240 vs. $17 from Costco. The savings on just that one purchase is equivalent to 5 years of membership fees. The only thing I really dislike about Costco are the receipt checkers at the exit door.
Great point Math Teacher. I have a high deductible HSA and needed a semipricey med prescription filled ($300). Not only were they cheaper than every other pharmacy I called (by $40!), when the pharmacist heard I was paying out of pocket, she told me about a special Costco pharmacy program for cash payers that got me another $15 off the cost. Awesome.
Incidentally this is also a big reason why our health care costs are so huge in this country. When paying by cash I’m incentivized to shop around. The fact that Costco discounts for people who specifically ask how much the price is (instead of just running it through their insurance in which case price is no object) points out the big efficiencies that could be gained by more high-deductible plans in this country. But that’s probably another MMM post :)
Hi Math Teacher – I hate that door check thing too, but once in a blue moon they do catch an error, occasionally even in my favor. I think I heard somewhere that one of the reasons they mark the receipt is to acknowledge that you have received everything you paid for. Say you paid for the movie ticket package but forgot to pick it up prior to leaving the store. Another reason is there are a tiny minority of folks who buy one, steal one and try to use the receipt to return the stolen one. Marking the receipt apparently discourages that behavior, saving money for every member. I can get behind both of those reasons, so have become much more patient with the receipt patrol.
I let my Costco membership expire this summer. Mostly, the things my local Costco was super-cheap for, I don’t use (gas, coffee, packaged foods), and the things I use a lot, it was either the same price as supermarket sales (canned tomatoes, good pasta, bacon, olive oil) or it didn’t carry (parboiled rice, big sacks of Legumes Of Faraway Lands). And a few of their items were crap (those glass-jar Krinos olives).
I do miss their cheap good parmesan reggiano, though… time to suck up to somebody at work with a card (and a car!).
Next time I’m in Toronto, I should try a comparison shop between Costco and the stunningly cheap big independent Asian supermarkets… I usually get out of there with as much as I can carry for about thirty bucks…
I am interested in seeing your staples list and what types of meals you make with it.
I do love Costco, and we save money even though we don’t buy much there at all anymore. We tend to shop farmer’s markets for produce and meats, and we’re lucky to live where we can (it is not cheaper to shop this way).
Costco is not cheapest on everything…but they are on a lot of things. I found myself shopping loss leaders and going to several stores to hit the sales, only to realize that doing this was only saving me a very small amount (pennies per lb) compared to Trader Joe’s or Costco. That’s when I decided the extra hour per week spent looking through fliers and stopping at different stores. You have to know your prices either way. My options are Costco, TJ’s, and 3 major grocery stores. We don’t have Sam’s, Walmart, or Target. (or Aldi)
I hate shopping at Costco on weekends too – awful. Luckily, spouse and I work a couple of blocks from Costco. And spouse likes to do that shopping trip. At lunch time, it’s not busy at all. We’ve been biking in 2x a week, so we have to choose the day correctly.
If I ever feel lazy and not like cooking, their processed foods are cheap – think veggie burgers, roasted chicken, hummus, salsa. Our regular purchases are a couple of types of cheese, yeast (though that lasts us 2 years), bread flour in 20-lb bags, quinoa, canned tomatoes, bread, butter.
You mentioned that you have other “Costco staples” that you buy but just didnt need this time. What are some of those?
MMM hits a homerun again! So cool. We just got a free 60 day membership at BJ’s and I ran similar – albeit less exact – calculations vs. our Trader Joes / Shaw’s. For us, it was a question of whether it warranted the rental of a Zipcar (it did).
So, one question stands out…you buy 2lbs of sliced cheese, 2lbs colby jack, 5lbs shredded mozz. Nine pounds of cheese, I’m guessing you freeze it? If not, how long does it last? The thought to buy cheese in bulk actually never occurred to me, I always assumed it was so perishable.
Good question about the nine pounds of cheese. First of all, all three MMM’ers in my house like to rock the cheese daily, so it goes fast. Secondly, the stuff lasts forever in your fridge before you open the package for the first time. The sliced cheese from the article is now all gone.. the Colby has a Use Before date of Dec. 27th, and the shredded (for lasagnas and pizzas, of course), has a date of November 27th. For the shredded stuff, I bust it into 3 bags – one for fridge, 2 for freezer.
I would also like to add that the quality of certain Costco items for me, increase the value of their purchase. Take for instance, their Yukon potatoes – a little bit more expensive than what I might find at the grocery store, but are huge, way more delicious, and seem to sprout less quickly. I’d rather pay a little extra for good quality, delicious potatoes that steam, bake, fry, and mash effortlessly. Did you know that Costco is one of the only places I can find tilapia filets not from Asia? (regarding food safety issues – their fresh ones are from Honduras)
Their sweet potatoes, bags of onions, feta cheese, almond butter, olive oil, bulk nuts, and coffee are the things I find to be most useful and the best buy for me. The feta cheese, almond butter, olive oil, and bulk nuts are a great way of upgrading the value of your meals too – adding these to salads, pasta, stir fries, soups, desserts, snacks makes me feel like a king for a relatively low price.They also fit in with my diet plan as well.
I like Costco, but I think you just have to be careful of what you buy there. Which most Mustachians are, but I just shake my head at what people purchase in the checkout sometimes.
You can get around paying the membership fee if you have someone purchase you giftcards. They allow you to enter costco with the gift cards, and you can pay the difference with another form of payment. My uncle buys his brother 10 $10 gift cards ($100 total) this allows for 10 free trips to costco where you can buy as much as you want each time (as long as you have the funds)
** Even greater savings!
No Costco for me. The closest one is in St. Catherines, Ontario, and I am not about to try crossing the border with all that stuff in the car.
I am sure it is just me, but these big box stores give me anxiety attacks. I keep looking around at the sheer volume of stuff, and thinking there is something like the entire gross national product of Bangladesh sitting in that store. I become uncomfortable, find it difficult to breathe, and have to leave. I prefer human-sized stores, so locally it’s Save-A-Lot and Aldi’s.
I love, love, love Costco, for all the reasons a frugal shopper should: to buy the things one uses regularly at the best price on a consistent basis. I don’t have to worry about clipping coupons and if I have to buy a product that I don’t buy often and don’t know the best price, I know I’m not going to get hosed. My mechanic wanted $35 for new windshield wiper blades that were $7 at Costco.
I hadn’t heard about the gift card “trick”, so I’m not sure it that’s valid. Costco is great at tracking their customers, so I’d guess after a number of these “visits”, a membership might be requested. Certain purchases may not require membership, like pharmacy and booze.
My favorite Costco trick is not of my own making: my sib works there, so I get a free Family Member card, which is connected to my Costco AMEX. One card for two purposes. It even pinch-hits as an ID on occasion, as it has a photo. And of course, there’s the rebate…
However, there are certain areas I avoid entirely, such as books. Danger Will Robinson! Even the free samples can be trouble: you may well find yourself buying things that are not on your list. Also sampling tends to happen at busier times, when I don’t want to be there.
MMM-
I like the side-by-side comparison. I’ve always wondered if it really saved you that much by shopping in bulk at Costco. I’m sold. I’ll be tweaking our shopping habits to include more Costco trips. I like the idea of buying staples in bulk and then buying more perishables locally. We get plenty of organic meats like Salmon, Caribou and Moose meat sent to us as gifts from our family in Alaska. I also hunt once a year with my father in law and we typically take 1 or 2 Caribou, couldn’t ask for better organic meat for spaghetti and burgers. To top it off, there’s a great satisfaction in responsibly harvesting your own meat. We get lots of fresh veggies from our garden and have a weekly farmer’s market just down the road. We’re fortunate on that end, living in California means having amazing fresh fruit and veggies nearby. Thanks for the shopping comparision MMM!
I like that Costco is stocking more and more organics – items like quinoa, pasta, and my personal favorite “Better than Bullion” in jars. Best soup base ever!
What is your opinion on buying bulk 1 year supplies of dried foods(10-30 year shelf life)? I’ve seen some at costco and sam’s club, but I’m not sure is such a thing would become necessary. However if there is an oil shortage in the future, food prices could get crazy fast.
Wow, interesting idea.
I suppose you could calculate the annual cost of holding that food supply (if it cost $1000 and you currently have a 4.5% mortgage, consider this to be a $45/year cost). Then estimate the amount you believe oil will go up over 10 years in various scenarios, and the percentage of this that goes into food prices. If oil doubled, food costs might multiply by 1.5. For me, this would increase food costs by $2000 per year.
Then suppose you believe the chance of oil doubling in ten years is 10%. So the actual expected cost of the oil scenario (cost multiplied by probability) is $200 per year. Since the food cost is only $45/year, in this hypothetical situation it is probably a good hedge. Of course, there’s also a chance of food prices going down, and various other complications as you adjust the equation in an attempt to make things more realistic.
Another option is to invest a certain percentage of your portfolio in oil companies. These already pay great dividends, and their share prices and dividends should increase in the event of an oil price increase. Meanwhile, they don’t take up space in your basement and they don’t go stale over time (oil company execs are already as stale and crusty as it is possible to be :-)).
I’ve done the analysis and we (my family) actually make our membership cost back just from purchasing our gasoline at Costco.
All other savings from shopping at Costco is gravy at that point.
Save your $50/year and get the Executive membership for $100 and the AmEx card. Treat the card like cash. At the end of the year, if your direct rebate from Costco does not come to $100, they will give you the difference. Ergo, $50/year or free for a year. The AmEx card has extra rebates in addition to the Costco rebate.
Best food items: 6 lb cans of Roma tomatoes for $3.50 or so and the big bags of dried fruit. Compare those to the grocery store prices, you’ll be amazed.
Fred, that’s not right. It’s $50 a year either way. The exec card gives you 2% cash back in a rebate on all front-of-store register purchases at the end of the year; if it doesn’t equal at least $50, they’ll refund [only if you ask for it!] the difference between your rebate and $50 (so the exec card doesn’t end up costing more than the regular membership).
Of course, if you buy more than $2,500 a year at the front registers, you’ll be ahead. And of course the Amex card comes with nice benefits like 1% cash back on all purchases including Costco itself (which is on top of the 2% exec membership bonus), 2% on dining and travel, and 3% on Costco gas. So there are benefits to the exec membership, if you get the Amex with it. But if you spend less than $2.5k/yr, it still costs you the same as the regular membership – it’s not zero and they don’t refund you past $50.
My only concern with Costco (as I did this math back in Canada a few years ago and came to a similar conclusion) is the cost of storing things, especially things which require a freezer/fridge.
Though the large sizes can be very convenient, actually storing them in your house is incurring a cost as well, and what is the cost in electricity required for that chest freezer, or possibly second fridge to hold the unbearably large containers. The other thing is in storage space physically in your home. Usually my family trips of 400-600$ supply runs at Costco are for large bulk items which require storage until the next trip, and am I really saving money by purchasing that far in advance and storing it in my house while taking the risk that something could happen to it (Like say a random pesky little visitor eating through a container).
It didn’t stop me from purchasing it as I could establish a cost value to my products (nor did I care enough at the time to look into it), but thinking back on it now while I’m out of the country there must have been some crazy long term costs associated with it.
Yeah, that’s an interesting point. I don’t have a chest freezer – I just throw everything into my existing standard large-ish fridge and freezer (26 cuft) and non-perishables in the pantry. A chest freezer would add about 600 kwh ($66) of electricity per year, which is about 1/6th of my entire house consumption. It would be worthwhile if it saves at least 120-200 miles per year of driving to grocery stores, which it would not, for me.
I wonder how Costco compares to the Real Canadian Superstore, which is where we currently do our “big shops”.
The other trouble with Costco is that you have to be very disciplined to only buy the things you went there for. “OMG a 6-pack of 42″ TVs for only $2199.99!”
The gas is cheapest at Costco compared to all else. And you can get a hotdog and soda for a buck and a half (I think it’s been this price for 20 years or more.)
Party planning beats Safeway hands-down. F’rinstance you can get a bucket of feta cheese less than Safeway charges for a handful; crackers, frozen hors douevres, etc…
I think your food budget is admirable, but it is a lot lower than it really ought to be.
I would normally not leave this comment on a primarily financially-oriented site, but you talk about living frugally for the health of the planet as well, so here goes…
All of the great cheap food that you enjoy at costco (and at 95+% of other grocery stores out there) is supported by an agricultural system which wastes incredible amounts of oil (in terms of both fuel and agricultural chemicals) and damages the environment. I know you get a lot of organic stuff too, and that helps, but even organic bananas have to be shipped thousands of miles to end up in Longmont, and that fuel makes for one “expensive” banana. And then there’s all the ethical concerns regarding the laborers who produced and/or harvested that food. Were they paid fair wages? And I don’t necessarily mean fair by American standards if they are living elsewhere, I mean fair for where they live, and the work they did. Is it a “living wage”?
In the end, all the savings you realize at costco are had thanks to a complex system of cost transfer involving government subsidy (transfer to everyone else via taxes), environmental damage (transfer to the future), and exploitation of people (transfer to those who don’t know better, or worse, those who are forced into slavery).
You talk a lot about how Americans complain about how expensive gas is, when in fact, it’s a lot cheaper than it should be. The big corporate food is very similar.
All of these cost transfers are minimized by buying locally produced and processed foods, but then you personally have to bear the actual cost of the food, and many people suffer sticker shock when that happens.
I’d love to see you bend your mind towards the problem of “true” food costs taking these factors into account, and see how the math works out. I hope even more that seeing those numbers, and what they imply, would inspire you to do more exploration of your local food system. Perhaps that former’s market won’t seem so expensive after all. If it is, perhaps there are other outlets that are more Mustachian, I know there are where I live.
Qhartman, local food often takes even more gas and involves more pollution that centrally grown, corporate organized food. Further, one of the worse things you can do for the good of humanity is ignore the market clearing prices of goods. As Steven Landsburg points out (http://www.thebigquestions.com/2010/08/23/loco-vores/), no unit of information better encapsulates the benefits and costs to society of a good than price. Just because something is local does not mean it is better for the environment.
Agreed we need to cut all the subsidies, so the price even better reflects the true pros and cons of the good’s production. But if you truly care about humanity, you shouldn’t be spending your time and energy on only buying bananas that were harvested using a “fair” wage, since such efforts generally mean that you’re wasting valuable money on a company that knows you’ll pay more than you need to for goods and services (i.e. they’ll capture more profit from you than really benefits the worker).
I’ll go one further and say that buying locally is kind of a form of geographical racism. You’re saying that you’d rather pay a local farmer at local standards of living wages rather than the poor guy in Ecuador starving, happy to have a banana harvesting job at the market clearing price. Why are the people that happen to be within an arbitrary distance of you more deserving than those located further away?
Agreed! I know that buying organic bananas is ensuring more sustainable farms in Ecuador, and I know that the fuel used for shipping is probably almost equal for organic vs. non-organic bananas. If we can reduce subsidies further, I’ll be able to judge the true cost of my food even better.
Just as an example, when I go to the farmer’s market, I see farmers who drove in 30 miles from the country in a F-350 Dualie just to sell a few hundred pounds of peaches at 2 bucks a pound. At 10MPG for 300 pounds, these peaches are burning more fuel than the large organic peach farm in California that loaded several hundred tons of them into a railcar that took them to Colorado, even after accounting for the tractor trailer (20+ ton capacity, 5MPG) to make the local delivery.
Agreed with MMM. And I’ll take it even further. If you have fifty cents to spend on a fancy organic “fair trade” banana because you want to help humanity, you’re probably better off buying the nineteen cent, cheapest banana you can find, and give the $0.31 diff to an organization like Oxfam or CARE International. The suffering among the people these organizations help (people dying for lack of one dollar antimalarial drugs) are far greater than the Ecuadorian banana harvester who doesn’t make what you think is a fair wage.
OK! Rather than totally derail the discussion here, I’ve posted my responses over my blog:
http://www.feedingthemachine.com/2011/11/what-is-the-true-cost-of-food/
I’d appreciate reading more of your thoughts. It’s kinda lengthy though, this is a complex topic we’re venturing into!
Thanks Quentin! I read your article and I like what you’re doing.
I actually agree more than you might think with the local food movement, although for different reasons: I am more excited about people knowing the people they do business with, because it tends to spark unusual benefits in the happiness of a community.
As more of an economics and capitalism-minded person, I still believe that the highest efficiency is attained with international trade, which overall leads to the highest level of material wealth. If continued material expansion were our goal, and we had the political will to fix the current environmental and labor exploitation side effects, this would be the “richest” situation even after we made it 100% sustainable.
BUT – we passed the level of having enough wealth long ago. So we can afford to make some trade-offs for happiness, which means hanging around and telling jokes with people who live near you. This leads me directly into your camp of going to a simpler and more local lifestyle, including food.
But I have a challenge for you. To make your argument and even convince your capitalism-and-trade-minded adversaries, you need to understand things from their perspective. That means you must understand why “market price” is indeed a good estimate of the social cost of something as long as the environmental and labor rules are fair. And since they are not currently fair, you need to use your imagination to see the good that is mixed in with the bad.
For example: my old high-tech company moved some of its manufacturing to Mexico because their labor costs were 75% lower than what they were paying in Texas. Is this exploitation? I had the chance to go and visit the actual factory and work with my compadres for a week in the new manufacturing plant. They were universally excited about their new jobs, they were earning more than they ever had before in Guadalajara, and using the money to get their kids off to a good start in life, live in a safe place, eat healthier food, etc. These manufacturing plants were a transforming force for Guadalajara and they fed new skills into the city and led to Mexican engineers starting their own companies nearby to both partner with and compete with the US-based firms.
That is what international trade feels like to MOST of its participants. As I said, your assignment is to read more about it and learn why the argument about “But American jobs are then LOST in the long run!!” is false. There are definitely problems that crop up, but these are caused by occasional corruption rather than a flaw in the idea itself. So you can work on reducing the corruption on large-scale trade, which isn’t going away, AND you can enjoy doing more local business, which allows you to weed out corruption with your own eyes. Both approaches work and I think we should do both.
It looks like you edited your response quite a bit compared to the version I got in my email, so I’ll not post my response here as it not only is pretty offtopic, but it sounds like your views on local foods are more balanced than the impression I initially got led me to believe, making the whole thing look a bit like “preaching to the converted”. In any case, if you would like to see it anyway:
http://www.feedingthemachine.com/2011/11/more-on-the-real-cost-of-food/
I have heard that you can shop at Costco if you have a Costco gift card to spend. So if you don’t go there often, you could get a friend with a membership to buy you a few $20 gift cards, and use one each time you go.
Also you can go to Costco without a membership to buy prescriptions, This is a federal law. And Costco has a list of prescription that they sell for a low price.
So there’s two ways to shop at Costco without paying for a membership.
I’m still catching up on early posts, but have to note: I laughed out loud when I got to the yeast comparison!
I have two Costcos less than ten miles from me, but live alone. While I have freezer space and could appreciate the gas savings, do you still think that it is worth the $50 cost over local places like Trader Joe’s and Target (no Aldi here)?