Monday, July 7, 2008

To Eat or Heat

Gas and oil prices are high. This is not news. What is news though, at least on PEI, is that people are complaining about how prices of home heating oil are so high that they can't afford to buy food. Say what?

Granted food prices are increasing as well, but what annoys me is that people are clamouring for government to help them out rather than looking at their own spending. The people that are complaining would likely be up in arms at the mere suggestion that they don't need cable television, a 3000 square foot home, or 3 vehicles.

"But we work hard and deserve those things" the masses might say. Listen up folks: beyond the needs of food, shelter, and clothing, anything else is a luxury item. You might not like to hear that, but that does not make it any less true. Thus, do not look to government to bail you out, but rather see what you can do to help yourself. Let's see if we can get an extra tank of oil per year by trimming some spending from the average household's expenditures. For the purposes of this calculation, I am using the average household size from the 2006 Census of 2.5 persons per household.

From this page, we'll assume the average tank of oil holds 300 gallons or 1137 L. Based on current home heating oil prices in PEI of 125.5 cents per litre, a tank of oil will cost $1427.

According to the 2006 Census, the average expenditures per 2.5 person household includes $1714 for tobacco products and alcoholic beverages. Hey! Look at that! There's our tank of oil right there!

Well, a lot of household might not have smokers and/or drinkers so what can the more health conscious household do?

Cut your cable. Chances are that on PEI, it is through Eastlink whose prices range from $24.72 to $54.95 for basic and full-tier cable respectively. What to go digital? Try $57.95-$85.85 per month. Eliminate this bill and save $296.64-$1030.20 per year.

Switch your lightbulbs to CFLs. Trent from The Simple Dollar shows that you can save about $100 per year by changing over to these more efficient bulbs. Due to the recent increase in energy prices in PEI, the savings would be about $138 per year based on $0.14/kWh.

What else could you do?
Stop eating out and make your meals at home. I spent upwards of $100 on dining out a few months ago and am now making most meals at home. As well, there is only about a $10 difference in grocery bills plus I am eating healthier. Yes, eating at home saves that much money. The Defense of Food sites that half of American spending on food is for dining out, but just using myself as an example, if you spend $100 on eating out and change to cooking at home, the net savings each month would be $60 since you spend an additional $10 each week on groceries. Annual savings: $720.

Avoid the coffee shop. Rather than spending $1.50 each morning on the way to work, why not drink some water and perform a few light aerobic exercises to get the same wake-up effect. Annual savings: $390.

Tallying these savings up we get an annual savings between $1544.64-$2278.20, more than enough for a tank of oil. These are only some of the options available to you to save money for heating oil. Here are some others:

- install a programable thermostat
- drive less, using gas savings for oil
- energy seal your home
- move to a smaller home, which would cost less to heat
- sell a vehicle if you have more than 1
- get a roomate to share energy bills
- make more money
- move into an apartment that pays for the heat

In closing, I think the assumptions made in this article are reasonable for the typical PEI household. I expect, there would be more challenges for people with very low or fixed incomes, but many of these strategies can be applied there as well.

Moral of the story: Suck it up and be personally responsible for your situation. Stop whining to the government for help when you can easily make small adjustments to your lifestyle in order to get the result you want.


doug said...

Bravo on taking down government hand-outs. I'm with you on that one.

I'm actually considering the move into an apartment route if my house doesn't sell come winter time. I expect heating alone to cost ~600/mth this winter for my house.

Scholarly Warrior said...

I applaud this post John. I much prefer it to net worth updates. I agree with the points you made, specifically that what most people consider to be necessities are actually luxuries and the many ways to save money. I like how at the end one of your bullets is to "make more money". Is it just me or is that one the black sheep?

Doug, don't let your pipes freeze.

/glasses is glasses

Anonymous said...

Great post, but absolutely incredible that people actually have to be shown how to cut back. It's a sign of the times, huh?

Making more money would have been first on my personal list, I couldn't stand to be that tight on money.