Check Before You Buy Electronics From Costco

I’ve compared the prices on electronics many times. Costco quite often disappoints me. I really expect better pricing from Costco.

Here are some examples:
1. JVC GZ-MG155US HDD 30GB camcorder at my local Costco is selling for $489.99, but the cheapest price from the internet is $329. That is $170 price difference, or some 35% of the total.
2. Sony DCR-SR82 HDD 60GB camcorder at my local Costco is selling for $599.99, but the cheapest price from the internet is $295. That is about $300 price difference, or some 50% of the total.

This is not to mention all those SD memory cards, DVD-R/+R media which are constantly over-priced by a tremendous amount. It’s really hard to imagine who are buying those over-priced products, but I guess there are simply people with more money or less time to price-shop than I do.

Certainly Costco has a very good return policy. But for such a steep price difference, I really need to think twice. There is probably a very good reason why the stock price of Costco is near its all time high at $66.80. Don’t you think that it could be due to all the shoppers paying for Costco’s bottomline?

Most people probably expect a deal when walking into Costco. I’m afraid that maybe the reverse is true.

Easy Grocery Shopping at My Grocery Deals

I came across MyGroceryDeals.com, a website that helps you search through the weekly deals at your local supermarkets. No longer do you need to go thru every flyer from every grocery store, and look through them. If you know what you are looking for, it’s easy.

Here is the comment from the site owner:

Mygrocerydeals.com is a free service that allows consumers to go online, do their grocery pre shopping based on advertised grocery flyer specials, look at nutritional information, create their shopping list and then head out to their selected store(s) with list in hand. We have recently mapped 50,900 zip codes into our database and then lined up the grocery markets and local stores along 4,400 county lines to make a match. So members really do see the deals in stores in their neighborhood only. We are a free site and intend to continue it as a free site. Our goal is to make it easy for our members to compare the advertised flyer deals at their local stores so they can save time and money. We are continually updating our site in respect to products and stores…we are not perfect in having all the information that consumers want, but we are trying hard. We encourage members to ask their local grocery stores to contact us with their advertised specials so we can incorporate them into our database. We are also continually updating our nutritional information on listed products so members can check ingredient information before heading out to their favorite stores. “Compare flyer deals and plan healthy meals” is what we are striving to offer our members.

Check it out. My only complaint is that you need to create a free account by using an email address. I have made sure that I didn’t get any grocery-related spam emails for 2 months before writing this article, since I don’t want to introduce anything that will spam your email. The login is a bit of hassle, but once you’re in, it’s easy.

P.S. I’m not affliated with nor paid by MyGroceryDeals.com. Only thought that this may be a tool to make finding deals in grocery shopping easier.

My Wife’s Shopping Tips

Sometimes I am simply blown away by my wife’s creative saving tips when shopping. If you don’t know that merchandises at Costco are not cheap, then you are in the second league after her. My family don’t use the Costco executive card to get the 2% savings, because we cannot justify 2% with our low amount of purchase. To breakeven on the additional $55 that we need to pay (from $45 to $100 for the executive card), we need to spend at least $55 / 2% = $2750 a year. Even if we spend $2750, we need to save an average of 1.6% on the price to justify the $45 basic membership card.

Okay, here are the tips from the Frugal’s wife:

  1. Grocery shopping with coupons: When she buys grocery, she scan through ads first, and pick out the on-sale items that she wants. Then she matches the on-sale items with whatever coupons she has clipped. Also, the grocery stores (like Ralph) that have do double-coupons are the more preferred stores. This process takes some minutes at home. But we probably never walked out of grocery stores with at least 35% savings from the regular price.
  2. Stocking up: She stocks up on-sale items (with coupon savings) for the future (on a limited basis). She also pre-shopped for gifts throughout the low seasons in the year.
  3. Limit Costco’s purchases: When buying at Costco, you must understand that you are getting quality products at a reasonable price. Less quality products in general will cost less at other stores. And on-sale items at other stores can often beat Costco’s price. But the biggest saving that you can get by not buying at Costco is that you don’t end up buying more than you need. Either you throw away the additional quantities on what you cannot consume. or you stock them up and put away in no-man’s land such that you cannot find it when you need it again. However, Costco has regular saving coupons mailed out, and those are really good-priced items.
  4. Placement of the coupons: Leave the coupons in the car, and restaurant coupons in the wallets. Often you can’t find the coupons when you need them. Since you don’t go out without your car or your wallet, you won’t go out without the coupons this way either.
  5. Clearance: Pay attention to clearance items/clothing in department stores. They are often very inexpensive as in Walmart, Target, Mervin, or Old Navy. But the qualities are much better.
  6. Timing: Time your purchases throughout the seasons & holidays. If you are buying a new car and don’t mind getting the current year model, August is often the clearance time on current models. At the end of August, school clothes & supplies often go on-sale. October is the best month for pre-holiday shooping, or you can wait after Christmas and New Year, and stock up on all kinds of bargains. Also buying clothes off-season will save you some bucks too.

Oh, I have a shopping tip of my own too. For those husbands out there, when you buy stamps, DO NOT buy those beautiful Disney stamps. I repeat, DO NOT buy those disney stamps, because your wives will love them and won’t allow you to use them. Postage may increase to more than $1, and she still won’t let you use it. But DO use those stamps as a frugal, but romantic gesture.

By the way, I didn’t know a lot about #1 grocery shopping tip until I shopped grocery alone once. That day in the supermarket, I grabbed several items quickly and checked out. When I paid my grocery bill, I was a little shocked. I only bought some 6 or 7 items, and bill was more than $20. I was more used to walking out with 5 or more big bags, and paying maybe $50 or $60. So I rushed home and told my wife: “dear, the inflation is REALLY picking up. Look, this cauliflower cost almost $4. That is outrageous.” And then she told me that it was because they were not on-sale. Whew, I thought inflation was some 20% on food items, :)

The Importance Of Knowing How To Budget

How can you keep the money in your pocket, if you don’t know how it comes in and how it goes out? Granted, the most painful part about saving money is not to spend it. Deferring immediate gratification for the future takes some real discipline. Having a realistic financial goal in sight with a proper plan and budget will help one to succeed on this difficult saving path.

The most important things about making a good budget is that you must be truthful, realistic, and comprehensive. A budget is a detailed plan that you and your family can achieve, not some math exercises on additions and subtractions on paper. You can make up a balanced budget, with wrong or unrealistic numbers in them, or leaving out certain spending items. Or you can make a budget with some 5% to 10% head room on every item, plus a line for miscellaneous spending for general breathing room on the entire budget, or to account for little things that are not accounted for.

Budgeting is essentially the time to be honest with yourself and your family. Try not to persuade yourself either into believing that vacation or the morning StarBucks coffee is a one-time event that you don’t need to budget it for. Once you have a budget on paper, you should re-visit and refine your budgets every once in a while to check if all the numbers are realistic, and see if your budget still truly reflects on the ways that you spend your money. Go over your old utility and credit card bills, and see if your budget is correct. Also go over your bank statements to see if your projected savings have gone into your piggy bank accounts. If not, you should check and see why your budget plan has gone wrong. In fact, this self-discovery process can take a couple of years to get everything right. Quite often, you may over-spend your annual budget for Christmas gifts or vacation travels, and still don’t know how the money disappears.

In summary, making a good budget involves the following:

  1. Be comprehensive. Don’t leave out any items that are more than about 3% of your total spending. Budget monthly by dividing 12 for those annual one-time events.
  2. Be realistic and at ease. Don’t try to be 100% accurate on every item. You can either leave some room for every item or add a misc item for your total head room.
  3. Negotiate and compromise with you & your family member to make financial sacrifices for the long term well being.
  4. Verify the correctness of your budget, and make modifications if necessary.

My Budget Saving

I’m going to use a household wage income of $100K for tabulating this budget, since it’s an easy round number, and it’s also quite close to my salary. I’m estimating taxes that are due to the wage income, using my 2006 tax calculator.

item

amount

comment

Mortgage

1270

Homeowner due

165

Includes the insurance for the condo.

Electricity

45

Water

25

Trash

13

Gas

55

Local Phone

16

Cell Phone

7

I pay just $3.21 each for my two cell phone.

Long Distance Phone

20

Mostly it’s international calling cards.

Cable/Satellite

17

Most vanilla plan because I can’t get clear TV signals.

Medical Insurance

127

Covered thru my employer.

Car Insurance

45

Only pay about $540 a year for two old cars, liability only.

Gasoline

160

My round trip work commute is 15 miles. My car has about 20 miles/gallon.

Car Maintenance

40

Oil changes + prorate for changing brake + 30K/60K miles service.

Travel/Vacation

220

Annual of $2600, mainly for flying back home to visit parents.

Food

360

Include modest dining out (with two small kids, it’s hard.)

Baby(1) expense

100

milk powder/toy/etc.

Preschool

440

3 half-days of preschool + karate class.

Wife’s allowance

300

I don’t dare to comment here.

Cash Usage

80

God knows where I spent these dollars.

Charity

31

My baseline contribution as a Childreach sponsor.

Miscellaneous

100

Reserving $100 for anything else.

Federal Tax

363

Tax can increase very fast with additional income or without 401k/IRA contribution.

State tax

202

City tax

20

Social security tax

487

Annual salary cap at $94200 for 2006.

Medicare tax

121

Property tax

225

401k

1250

Annual limit is $15000.

Spousal IRA

333

Annual limit is $4000.

ESPP

1250

Employee stock purchase plan, maximum amount of $15000.

Since my monthly wage is about $8333, and the total sum of all items is $7887. My cashflow is only $446. However, my actual saving needs to include the green items above. My annual pre-tax savings are $15000+$4000 = $19000. My after-tax savings are $446 cashflow * 12 months + $15000 ESPP * ( 1 / 85%) = $23000. The 85% comes from 15% discount from the market price of my company stock. Including more than $3000 of principal paid down towards my mortgage balance, my after-tax saving is actually about $25000. Therefore, my total annual savings is roughly $19K + $25K = $45K. Both pre-tax and after-tax savings can vary, depending on other additional sources of income such as interest or capital gain. In the past couple of years, I have hit the phase out limit of spousal IRA, due to a higher adjusted gross income (AGI), and ends up having less pre-tax savings, but more after-tax savings.

Last note about my budget. I have been noticing my utilities have permanently gone up by some 15 to 20%. I’m not sure if it’s because there are 2 more kids in the house, or if it’s because of inflation. Also, my wife tends to spend more when I spend less time with her. She needs to make up the emotional happiness thru material happiness. It definitely PAYS (thru less spending) to make my wife happy, :) .