The link above is to an Investopeida article (via Yahoo) that compares the cost of items on the dollar menu at some major fast food chains with average retail cost of the food itself. I just wanted to bring your attention to the second item on their list because it was one that I mentioned in my earlier comments.

No.2 McDonald’s: Budgets Are Lovin’ It

The iconic Mcdonald’s dollar menu has been around since 2002, and although it offers only a handful of items, they seem like a steal. A dollar-menu staple, something you could actually call “lunch”, is the McDouble: two hamburger patties, one slice of cheese, condiments and a bun.

Per-Burger Cost at McDonalds: $1
Per-Burger Cost at Home:
-Meat: 49 cents
-Cheese: 20 cents
-Bun: 25 cents
-Total: 94 cents + condiments and the time it takes to cook it

Bottom Line: Assuming the cost of the condiments adds a few more cents, you can see that the McDouble is a tantalizingly good value.

Joe again: Consequently, even 1) ignoring the cost of condiments, 2) ignoring the cost of the gas to cook it, 3) ignoring the cost of the gas to go and get it from the store, 4) ignoring the cost of refrigerating and packaging it, and 5) treating your time as having zero value, then you are saving all of 6 cents by making the burger at home.

Consequently, if you are eating out on dollar menu items, you are probably eating out about as cheaply as you can cook from home. Thus, instead of putting a whole lot of time and effort into cooking from home for not a lot of payoff, you will get a lot further dropping your cable or doing some of the other things that Brian suggests. Also, don’t feel bad if you don’t want to waste your time and effort cooking at home – just eat from the dollar menu and you will save the same money.

The whole point of this article is to show people how they can identify some areas of excessive spending they may not have thought about before. It is meant to be interactive and I ask people to make their own calculations and conclusions.

I THINK you are mistaking the examples I use as being something more than what they are. The examples exist to illustrate the exercise, not to serve as some sort of guarantee of savings.

Have you done the exercise? Did you identify any areas where you can save some money? If so, congratulations!

However, I did a search for the average cost of bringing a lunch from home and was able to find some information in the educational context. The sites below put the average cost of a lunch from home at about $3.50.
http://www.rainier.k12.or.us/m.....ry;op=show
http://www.pierce.k12.ga.us/?L.....mp;TabNo=1
http://www.fcps.edu/fs/food/fo.....whybuy.htm

I figure that it is going to be hard to beat a school’s cost because they have so much volume and often use cheap bulk materials. Reviewing the calculation that I made before with regard to cost savings for lunch, using the average school figure vs. $8/day eating out results in a yearly savings of $1170/year – still not real close to $2000. Also, if you do the comparison between the $3.50 average cost and the cost that I pay for McDonalds next door ($3.78), you end up with a yearly savings of 0.28 * 5 * 52 = $72.80. No where close to 2K.

Also, here’s a great calculator resource with regard to finding the savings when bringing your lunch from home.
http://www.bankrate.com/calcul.....lator.aspx

Also, please note that the cost of food varies widely from one geographic area to another. I went to undergrad at a place where a gallon of milk could often be found for around $1.50 and a year later lived in another city in America where a gallon of milk was $5.

Please don’t get me wrong, I applaud the efforts that you and Brian are making to save money and live frugally and I really think that everyone could learn something. However, instead of being persuasive, presenting the facts and accounting in a slanted rather than an accurate way hurts your credibility and can really lead to resentment if someone follows your advice and fails to achieve the savings that you say they will. Maybe it’s my midwestern honesty, but I would rather see numbers that are as accurate as possible, rather than numbers that are slanted in a way to encourage me to do one thing or another – even if it is “for my own good.”

Average Joe

[...] Learn the Financial Impact of Your Everyday Purchases – The stuff we buy daily usually happens without much more than a passing thought. A coffee, grabbing a quick lunch, picking up dry cleaning, and so on. These daily purchases can really impact your finances over time. [...]

Just about every day for lunch I eat a ham sandwich that I estimate costs less than a dollar to make including ingredients, time, gas to store, auto wear and tear, auto insurance, electricity to light the kitchen (on dark days only) and cool the ham, cost of trash removal, prorated square footage value of the space in the pantry to store the bread, and any other possible variables I’m missing. Whatever the “real” cost of that sandwich, I’ll continue to eat it every day because it is what I enjoy and I KNOW it costs less than eating out. To many I might seem like a cheapskate — but to me that ham sandwich is priceless!

I’m still working on my first billion, so I left that part out until I can write about it from experience…

I would think most people who read this blog are aware of the “latte effect.” If you think about any expense x1,000 it’s going to be a lot.

I’m glad though Brian didn’t start going off about how if you put the money you saved in an index fund and it made “just” 8% annually etc etc…you’d have a billion extra $s

Brian, you make a good point, I just think it’s an unoriginal played-out one. Please take as constructive crticisism.

@MP — Those little purchases really do add up over time don’t they? If I had a dime for every dime I wasted… LOL

@Clair — It always amazes me how some people have a handle on one type of expense or the other, but often not both. I suppose that is the trick isn’t it — to be able to control both the frequent AND large expenses?

@Average Joe — Guilty as charged — I also didn’t take into account vacations, sick days, etc! I was trying to keep the math rather simple so as not to take away from the larger point that those small, recurring expenses we often don’t give much thought to really can and do add up over time. Any savings at all, whether $1000, $780 or whatever number you want to come up with, could be potentially significant to someone with financial difficulties.