August 6, 2013

Do You Waste 40% of Your Food?

Do you waste 40% of the food you buy?    I sure don't.  I hope you don't either.   Yet theres a report claiming that Americans waste 40% of our food.   The National Resources Defense Council (NRDC) issued the report that New Report: America Trashes Forty Percent of Food Supply
 Wasting food is pretty ... well... wasteful.   Its always bad financial sense to buy stuff then throw it in the trash.    If you're actually wasting 40% of our food then thats a good 40% of our food budget we shouldn't have to spend.

They claim :
"Americans trash 40 percent of our food supply every year, valued at about $165 billion;"
and
"The average American family of four ends up throwing away an equivalent of up to $2,275 annually in food;"

I'm not sure how they figure the $2,275 per family figure.   Theres about 123 million households in the country so if we waste $165B in food a year thats about $1,341 per household.     If you take the $165B and figure it per capita then 4 people would waste about $2,149 total.  Maybe thats what they're doing?

However looking at their full report on the topic its clear that the 40% of waste is not simply left overs thrown in the trash in American homes.   The 40% waste includes all stages of food production, distribution and consumption. 

In the full report they say :

"American families throw out approximately 25 percent of  the food and beverages they buy.69  The cost estimate for the average family of four is $1,365 to $2,275 annually.70"

So first of all its not $2,275 that we waste but instead its $1,365 to $2,275.    I don't know but that seems like an extremely imprecise estimate that makes me doubt how accurate it is.   More so the $2,275 figure is just the high end of their estimate but thats all they say with an "up to" in front of it.

Now note that there are footnote numbers in that quote for footnotes 69 and 70.   Lets read those:

"69 Bloom, American Wasteland, 187. The author reports a 15 percent  loss in homes, with potentially an additional 10 percent loss in liquid products.
70 Bloom, American Wasteland, 187
"

Their source is the book American Wasteland from Jonathan Bloom.  I'm a little puzzled how that footnote translates into 25% waste in homes.    The footnote says 15% loss with potentially 10% more in liquid products.      Well that reads to me as if the waste is 15% in general but up to 25% for liquid products.   That doesn't equate to 25% of waste in total, but instead something between 15% and 25%.

I went looking for more references to get an idea what Bloom's book actually says.   I found an article from Nourishing the Planet that says : "Bloom estimates that as much as 25 percent of all the food Americans bring into their homes goes to waste."    You'll note the "as much as" bit in front of the 25% figure.    So its not 25% its some value under 25%.

Is it 40% or 25% or 15%?   Is it $1,365 or $2,275?

I think it makes more sense that the total food production chain might waste a larger amount of food like 40%.   If you look at each step of the system it seems realistic.  If there is 10% waste at the farm, then 5% waste in transport, then 10% waste at the grocery store and then people waste 15%  then that all adds up to 35% total loss.     But when the article says we waste 40% of our food it sounds like they mean that an American family throws 40% of their groceries in the trash.   

I do agree that we waste too much food and its certainly a problem that we should all work to fix.

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August 4, 2013

1 in 5 chance You'll Lose Money in the Stock Market in a 5 Year Period

With savings accounts generating less than 1% in interest nowadays it gets tempting for people to look elsewhere to find higher return on their savings.   Some folks then decide to invest their savings in stocks.   Now putting money in stocks is great for the long run and I still feel its going to net you the best return over 10 years or longer.   However if you have a need for money in a shorter term then putting it in the stock market can be quite risky. 

I pulled the historical return data of the S&P 500 from Yahoo Finance.  They have numbers going back to 1950, so thats over 60 years worth.

Lets just look at a 5 year period.   I'm looking at returns over 60 month periods starting on any given month.   So if you start from July 1950 and go to July 1955 or October 1983 to October 1988.  

Here's how frequently you would have gotten returns in different annual rates:



So just shy of 1 in 5 times you would have lost money in the market over a 5 year period.   About 1/3 of the time you would have averaged 10% or better, which is quite good.   In the middle you get 0% to 5% returns about 1 in 5 times and a little over 1 in 4 times you'd get between 5% and 10%. 

(side note:  The title of this article is written as a prediction but its based on the assumption that the future of the stock market will act the same as the previous 60 years and there is no guarantee that will happen moving forward, but I think it sounds better the way written and I personally think the market will more or less act similarly in the future)

The worst return for a 5 year period was -8.5%  annually and the best return was 26.2% annually.  

The odds are still in your favor that you'd have done well in any given 5 year period.     However the point here is that there is still a significant risk that you could lose money.   Theres still that roughly 1 in 5 times that people would have LOST money in the market.    Keep in mind that this doesn't account for inflation.     And it doesn't compare to simply making 1% or so in a CD or getting a safer 0-5% return in low risk bond funds.   Stock market investment is not for the short term.    If you can't stand to lose money then I wouldn't put money in the stock market for less than 5 years. 


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August 2, 2013

Best of Blogs for Week of August 2nd

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

MyMoneyBlog shares Auto Insurance Quote Comparison Results: State Farm vs. GEICO vs. Allstate vs. Progressive vs. Liberty Mutual

TheSimpleDollar created The Ultimate Guide to Amazon Coupons and Discounts

DQYDJ asks Should You Major In Photography?

The Big Picture gives us Historical Returns by Holding Period

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August 1, 2013

Gas Costs Versus Median Income by State

Some friends on Facebook were talking about the higher cost of gasoline where they live and I concluded that yes their gas is higher but their wages are higher too so it evens out.   Then I wondered if the local cost of gas might be at least somewhat proportional to the local wage level.  

The data below is from the sources : Average gasoline prices by state from AAA site and household median income for 2010-2011 from the Census.    I estimated annual gasoline costs based on a typical 12,000 annual miles driven and 25 MPG.    Then I figured the % of median income that this annual gas spending represents.   Of course I assume that annual miles driving and MPG vary some by location as well but I'm ignoring that for simplicity.

Here are all the numbers :



Gas  Median income  Annual gas gas / income
Alabama  $3.37 $44,191 $1,619 3.7%
Alaska  $4.07 $65,720 $1,955 3.0%
Arizona  $3.55 $48,484 $1,705 3.5%
Arkansas  $3.43 $39,832 $1,645 4.1%
California  $3.99 $59,209 $1,913 3.2%
Colorado  $3.55 $61,154 $1,704 2.8%
Connecticut  $4.01 $67,784 $1,923 2.8%
Delaware  $3.66 $53,805 $1,755 3.3%
District of Columbia  $3.88 $56,895 $1,860 3.3%
Florida  $3.59 $47,353 $1,724 3.6%
Georgia  $3.49 $46,867 $1,675 3.6%
Hawaii  $4.37 $61,308 $2,097 3.4%
Idaho  $3.82 $49,293 $1,833 3.7%
Illinois  $3.84 $55,534 $1,841 3.3%
Indiana  $3.62 $47,526 $1,737 3.7%
Iowa  $3.61 $52,781 $1,732 3.3%
Kansas  $3.58 $48,451 $1,717 3.5%
Kentucky  $3.57 $43,860 $1,714 3.9%
Louisiana  $3.48 $44,484 $1,671 3.8%
Maine  $3.76 $49,572 $1,807 3.6%
Maryland  $3.67 $66,928 $1,760 2.6%
Massachusetts  $3.73 $62,634 $1,792 2.9%
Michigan  $3.68 $50,118 $1,764 3.5%
Minnesota  $3.58 $58,094 $1,720 3.0%
Mississippi  $3.39 $37,427 $1,628 4.3%
Missouri  $3.47 $49,615 $1,665 3.4%
Montana  $3.71 $43,607 $1,778 4.1%
Nebraska  $3.64 $52,498 $1,746 3.3%
Nevada  $3.72 $55,559 $1,783 3.2%
New Hampshire  $3.68 $68,187 $1,766 2.6%
New Jersey  $3.58 $68,071 $1,718 2.5%
New Mexico  $3.56 $44,819 $1,707 3.8%
New York  $3.92 $52,683 $1,880 3.6%
North Carolina  $3.52 $44,393 $1,690 3.8%
North Dakota  $3.70 $52,176 $1,776 3.4%
Ohio  $3.54 $48,567 $1,698 3.5%
Oklahoma  $3.50 $48,137 $1,681 3.5%
Oregon  $3.87 $52,758 $1,859 3.5%
Pennsylvania  $3.66 $52,103 $1,756 3.4%
Rhode Island  $3.80 $54,879 $1,825 3.3%
South Carolina  $3.30 $43,566 $1,586 3.6%
South Dakota  $3.70 $50,977 $1,777 3.5%
Tennessee  $3.41 $41,979 $1,635 3.9%
Texas  $3.51 $49,172 $1,683 3.4%
Utah  $3.74 $63,329 $1,794 2.8%
Vermont  $3.75 $53,914 $1,800 3.3%
Virginia  $3.46 $64,095 $1,662 2.6%
Washington  $3.93 $61,241 $1,884 3.1%
West Virginia  $3.63 $41,073 $1,741 4.2%
Wisconsin  $3.66 $53,605 $1,756 3.3%
Wyoming  $3.67 $55,367 $1,760 3.2%

Overall I don't see all that much of a correlation between gas prices and incomes at the state level.

Here are the states listed with their respective ranks as far as gas costs and incomes and then the delta between the gas cost and income rankings :



gas income delta
Alabama  50 44 -6
Alaska  2 5 3
Arizona  37 35 -2
Arkansas  47 50 3
California  4 12 8
Colorado  38 11 -27
Connecticut  3 3 0
Delaware  26 20 -6
District of Columbia  7 14 7
Florida  31 39 8
Georgia  43 40 -3
Hawaii  1 9 8
Idaho  10 32 22
Illinois  9 16 7
Indiana  29 38 9
Iowa  30 22 -8
Kansas  34 36 2
Kentucky  35 45 10
Louisiana  44 42 -2
Maine  12 31 19
Maryland  22 4 -18
Massachusetts  15 8 -7
Michigan  21 29 8
Minnesota  32 13 -19
Mississippi  49 51 2
Missouri  45 30 -15
Montana  17 46 29
Nebraska  27 25 -2
Nevada  16 15 -1
New Hampshire  20 1 -19
New Jersey  33 2 -31
New Mexico  36 41 5
New York  6 24 18
North Carolina  40 43 3
North Dakota  19 26 7
Ohio  39 34 -5
Oklahoma  42 37 -5
Oregon  8 23 15
Pennsylvania  25 27 2
Rhode Island  11 18 7
South Carolina  51 47 -4
South Dakota  18 28 10
Tennessee  48 48 0
Texas  41 33 -8
Utah  14 7 -7
Vermont  13 19 6
Virginia  46 6 -40
Washington  5 10 5
West Virginia  28 49 21
Wisconsin  24 21 -3
Wyoming  23 17 -6

Again I don't see much consistent correlation between gas cost and income.   Sometimes its pretty close with 19 states having ranks within 5 places.   However theres 15 states where the ranks are 10 or more apart.   Connecticut and Tennessee are exactly the same ranks.   Virginia has the widest difference with the 46th cheapest gas and 6th highest income.

Clearly you can't just assume that gas prices are proportional to incomes.

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