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Saturday, September 6, 2008

My Pantry: Commodities Trading with Andrew Tobias

My Pantry: Commodities Trading with Andrew Tobias

Whenever I look in my pantry, with its strange assortment of items—20 boxes of curried carrot soup, 14 cans of cranberry sauce, 11 cans of coconut milk, to name just a few—I think of my very first adult lesson in frugality, from the great Andrew Tobias, author of The Only Investment Guide You’ll Ever Need.

Amazingly to me, this was 30 years ago, in the Bloomington IN Public Library, in the company of my first frugal friend, Diane. Though we were both graduate students, our financial situations were very different. Diane was married to a former professor of hers, 20 years her senior, who earned almost $20,000 a year. I was a single student living on my pay for teaching English composition: $3,000 plus a fee waiver.

Diane and I went to the library to see if we could find any information on whether or not she could afford a house, given that her husband had been through a costly divorce. There we found Tobias’s book. And even though I didn’t exactly have money to manage, I was thrilled to discover that there were books on managing money.

Tobias was a lucky find, for in an early chapter he outlines what he facetiously calls commodities trading. He points out that saving money on things you have to buy anyway—like canned tuna—can yield a good return that is tax-free (you don’t pay taxes on money you save). So, if you save 20% on tuna, you have a 20% tax-free return, magnified, I suppose, by the fact that you might eat your tuna in a month. He described stocking up on other commodities and storing them under the bed.

This was financial advice with immediate application. Not only was I able to do this on my tiny income, but I made so little that saving amounts that others would find trivial made a big difference.

And I still do it. Hence the carrot soup ($1 for 32 oz); the cranberries (33 cents a can), the coconut milk (80 cents a can). Years later, I came upon this idea once again in The Tightwad Gazette, where it is called “The Pantry Principle” and in the Grocery Game (the subscription grocery “listmakers”), where it is called “stockpiling.”

And what of Diane? Well, she and her husband did buy a house. It was near the “Opportunity Shop.” And then she taught me how to shop at thrift stores, another valuable skill I learned during graduate student days.

1 comment:

Funny about Money said...

Interesting post.

SDXB, the Semi-Demi-Exboyfriend, calls this "buying food futures." He's done it as long as I've known him. I used to call his food collection, which contained stuff neither of us would ever eat, "Klingon food."

But...Klingon or no, he eats very, very cheaply. And he eats well, for a guy who gets by on $12,000 a year.