2010-03-31

Amortization and Utilities

You may be unfamiliar with the term amortization.  Its root means death, and the word refers to killing the cost of something on a balance sheet gradually over time instead of all at once at the time of purchase.  Amortization is relevant to our game when calculating true costs of meals.  So far, I have only included the costs of food in my write-ups, and this is typical of reports of the costs of meals.

Electricity and gas costs for cooking are not amortized.  They would be recorded in full at the time of cooking.  Unfortunately, you would have to know how much gas and electricity you use during cooking, and how much you pay per unit.  Electricity prices change according to time of day and your peak use, depending on your supplier.  I think I pay about $0.05 on average to run my microwave for 15 minutes.  You may also find out about how much water, heating, and soap cost you for washing dishes, since those costs are also related to your meals.

Electricity costs for refrigeration should be distributed.  Fridges use a lot of juice.  If you are really motivated, you can keep track of everything you refrigerate and figure out exactly what proportion of your fridge electricity cost can be attributed to each food, but that is a lot of work.  Maybe estimate the monthly cost of running your fridge and flatly divide by the number of meals you make that use refrigerated items, then add that amount to the cost of each meal.  A quick search suggests that a typical fridge costs $8-12 to run per month.  That adds about $0.10-0.30 to each meal.

Cookware!  Quality cookware, the stuff that turns food out properly, can cost piles of money, but lasts generations if you take care of it.  Non-stick cookware generally needs to be replaced every few years (or not used).  Investing in durable equipment that you will use more can result in lower per-use costs.  Suppose you drop $100 on a sweet stainless steel pot with an aluminum core.  That's a lot of money, but it makes nicer meals than a $20 pot (there is a significant difference).  If you use it once a week for 20 years, that's about $0.10 per use, which can be a fraction of that per meal.  Good, maintained cookware should last a lifetime.

Appliances are also investments.  A Sunbeam blender may only cost $15, but when it breaks after a few uses and has to be replaced, you'll realize you would have been better off with a $60 Oster.  A $20 slow-cooker may do bad things to your food that a $100 slow-cooker with a timer and higher-quality construction would not.  Whatever your decision, think about the amortized cost over the lifetime of an appliance.  Maybe you can look back on your buying behavior and realize that you have a tendency to buy things that you end up not using much.  In the store you think "I'll use this so often!" but things sit on your shelves while you eat frozen dinners and fast food.  Know yourself, be conservative, and think about how much you're spending on a per-meal basis.

You can see that the variance is very high among amortized and utility costs for your meals depending on what equipment you buy and how you use it.  Based on the numbers I threw together for this post, I estimate that these costs add an average of $0.50 each time I cook, which is about $0.10 per meal over all.  Seemingly trivial, but it can add up, and wise, big one-time equipment purchases can be daunting to someone with few financial resources, confusing the value of saving up for a purchase.

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