Today's post is just a few ways that I am trying to cut back a little at Christmas this year. I am one of those people that goes overboard when it comes to giving (or shopping in general) at Christmas time. I will go shopping and come back with a tonne more stuff than I planned to get.
This year will hopefully be a little different, and I'll show you how. The main problem that I get into is that I will go into a store with a goal of what I want to buy for someone, and then come back with that gift, along with other small gifts for other people. I will still buy for those people a major gift, but the small gifts really add up. It is what has made stores like WalMart extremely successful over the years!
This year I will try to make a lot of my purchases online. The advantage of this is that it is more difficult for me to get distracted and make additional purchases. When I have to make a direct purchase, I will just bring cash with me. I have been saving up $20 per paycheque to put towards Christmas all year, so when my cash runs out my spending runs out as well.
You can make a budget for what you want to spend on each person. I know that budgets aren't sexy, but they are effective. If you announce to your family, "lets spend $100 per person this year", no one will be offended. Some people really go overboard and try to be the person who gives the best gifts, so by doing this we all have a limit to be set to.
Finally, I make a list of what I want to purchase. Rather than going to the store and saying "I have $50 that I want to spend on Billy" and then scrambling around to find him something, plan it out beforehand so you can shop around a bit. Shopping with lists makes it more difficult to make some of these small purchases which really add up. Also, planning your shopping in advance rather than waiting to the last minute gives you a chance to check prices as time goes on, rather than paying whatever the store wants you to pay the week before Christmas.
Showing posts with label frugal. Show all posts
Showing posts with label frugal. Show all posts
Tuesday, November 17, 2009
Sunday, August 2, 2009
Two Good Links From The Toronto Star and more!
My girlfriend was reading the Toronto Star online and found these excellent articles that she thought that I'd love (and I do). Here they are:
Teenagers Lacking Education On The Financial Facts of Life - A good article discussing how there is no formal financial education in the Ontario curriculum. As a math teacher, I totally agree and would love to teach a course like this. As mentioned in previous posts, I try to do this as much as possible already, but a formal course on finance would be great! As the article says, there is a formal Grade 10 course in Careers and Civics, you could throw a financial course in there as well and it would be great!
Frugal or cheap - This article discusses when even frugal people put a limit on the quality of the things that they purchase. My favourite quotes are "The distinction between frugality and a tightwad is that, for a tightwad, it hurts to spend" (my girlfriend thinks this makes me a tightwad, but it only hurts me to write cheques) and that a spendthrift is "...unable to feel distress even when financial situations take a turn for the worse".
A third good link (although not from the Toronto Star) is Million Dollar Journey's Paying Off Debt: Lowest Balance or Highest Interest First? where the consensus is that it is better to pay off debt in the way that motivates the individual the most. I couldn't agree more.
All articles are great reads, so take a look!
Teenagers Lacking Education On The Financial Facts of Life - A good article discussing how there is no formal financial education in the Ontario curriculum. As a math teacher, I totally agree and would love to teach a course like this. As mentioned in previous posts, I try to do this as much as possible already, but a formal course on finance would be great! As the article says, there is a formal Grade 10 course in Careers and Civics, you could throw a financial course in there as well and it would be great!
Frugal or cheap - This article discusses when even frugal people put a limit on the quality of the things that they purchase. My favourite quotes are "The distinction between frugality and a tightwad is that, for a tightwad, it hurts to spend" (my girlfriend thinks this makes me a tightwad, but it only hurts me to write cheques) and that a spendthrift is "...unable to feel distress even when financial situations take a turn for the worse".
A third good link (although not from the Toronto Star) is Million Dollar Journey's Paying Off Debt: Lowest Balance or Highest Interest First? where the consensus is that it is better to pay off debt in the way that motivates the individual the most. I couldn't agree more.
All articles are great reads, so take a look!
Thursday, July 16, 2009
How to keep your spending down...
There are two ways to increase your cash flow in a month: either get more money in, or spend less money. I try to tend to do both. To get more money in, I teach summer school, rent out rooms in my condo, and tutor on the side. This post will be about things that I try to do to limit my spending in a month:
Pay for things in cash: This was discussed in a previous post, but by spending cash rather than on credit you tend to spend less. Additionally, by only hanging onto large bills you will be less willing to break them. As well, I save my change and put it in a big container on my front table.
Leave your wallet at home: For me, I tend to be a spender, unless I don't have my wallet with me. I know that if I am going for a walk and will be going by WalMart I will go in there and pick something up (or the video game store or the beer store or wherever). This goes doubly so at work: I never bring my wallet, and then there is no temptation to spend.
Pack your own lunch/coffee: This relates to above, but you can spend a horrendous amount in a day/week/month on this stuff. In math class, I always give my class a question that says instead of spending $3 per day at Tim Horton's, Billy saves this money in an account that earns 5% compounded daily over the next 30 years. How much will he have? I will spare you the math here, but the answer is $76,238. If you change the number to 8%, it is $137,153. If you change the number to 10%, it is $208,896.
Cut back your cable/internet:I did this when my girlfriend moved in and saved almost $50 per month!
Go to one car (or less!): I do not have a car, and walk everywhere I go. I bought my house so that it is a 20-30 minute walk from my school. Because of this, I am able to not spend a huge amount of my monthly money on gas, insurance, and the payments for the car initially
Cell Phones: As well, I do not own a cell phone. If you have to have a cell phone, please get the pre-paid option, so that you will not end up with large bills at the end of the month.
Shop Around: Finally, I try to shop around. That is, I buy things when they are on sale. Not that I will walk into a store when it says "Sale", but when I decide to buy something I shop around for a few weeks until I buy it. If you are looking for a hardwood floor, there is nothing wrong with putting a few weeks planning into the purchase, and then finally picking the best price for the best product.
Eat At Home:Although my girlfriend wants me to point out that I took her out for lunch today (it's true), we generally eat at home. The savings here are enormous (as compared to before where we would probably eat out once or twice a week). Two meals and a drink each and you are looking probably at $40-50 for the evening.
I hope this helps some people out (or at least gives them some ideas). If you have any agreements (or suggestions or contentions), please feel free to leave me know by leaving a comment!
Pay for things in cash: This was discussed in a previous post, but by spending cash rather than on credit you tend to spend less. Additionally, by only hanging onto large bills you will be less willing to break them. As well, I save my change and put it in a big container on my front table.
Leave your wallet at home: For me, I tend to be a spender, unless I don't have my wallet with me. I know that if I am going for a walk and will be going by WalMart I will go in there and pick something up (or the video game store or the beer store or wherever). This goes doubly so at work: I never bring my wallet, and then there is no temptation to spend.
Pack your own lunch/coffee: This relates to above, but you can spend a horrendous amount in a day/week/month on this stuff. In math class, I always give my class a question that says instead of spending $3 per day at Tim Horton's, Billy saves this money in an account that earns 5% compounded daily over the next 30 years. How much will he have? I will spare you the math here, but the answer is $76,238. If you change the number to 8%, it is $137,153. If you change the number to 10%, it is $208,896.
Cut back your cable/internet:I did this when my girlfriend moved in and saved almost $50 per month!
Go to one car (or less!): I do not have a car, and walk everywhere I go. I bought my house so that it is a 20-30 minute walk from my school. Because of this, I am able to not spend a huge amount of my monthly money on gas, insurance, and the payments for the car initially
Cell Phones: As well, I do not own a cell phone. If you have to have a cell phone, please get the pre-paid option, so that you will not end up with large bills at the end of the month.
Shop Around: Finally, I try to shop around. That is, I buy things when they are on sale. Not that I will walk into a store when it says "Sale", but when I decide to buy something I shop around for a few weeks until I buy it. If you are looking for a hardwood floor, there is nothing wrong with putting a few weeks planning into the purchase, and then finally picking the best price for the best product.
Eat At Home:Although my girlfriend wants me to point out that I took her out for lunch today (it's true), we generally eat at home. The savings here are enormous (as compared to before where we would probably eat out once or twice a week). Two meals and a drink each and you are looking probably at $40-50 for the evening.
I hope this helps some people out (or at least gives them some ideas). If you have any agreements (or suggestions or contentions), please feel free to leave me know by leaving a comment!
Wednesday, July 15, 2009
Disposable Income (aka the Bucket Method)
In this post I will discuss how I deal with my disposable income. I try to limit myself so that I can control my spending, with the extra money left over goes towards extra debt repayment.
The idea is simply that you live on cash for your paycheques. This method is used in the show Till Debt Do Us Part, where the host of the show Gail Vaz-Oxlade comes into a person's life and rearranges their monthly spending forcing them to live on cash. It seems outrageous at first, but to live on cash, and then when you run out of money you stop spending makes a lot of sense.
I decided to do this beginning in 2009 and it has worked wonders. My goals involve me dropping my liabilities, and since I have limits on my spending, there is never a paycheque when I fall short and have to dip into savings. Here are the splits:
Groceries $100:My girlfriend and I share groceries and I budget $100 every two weeks. This is my share, so we will alternate grocery weeks and try to stay under $100 for the two of us. Our health related goals are to lose weight, so we have vowed (and stuck to it) to not eat anything out of a box (basically pre-made). We try to eat lots of vegetables, but although they can be expensive if you change your meals until the vegetables are in season you can eat reasonably.
Spending Money $80:That's right, I give myself $80 to spend on whatever I want every two weeks. I realize that most people who read financial blogs consider themselves to be frugal, so me spending $80 every two weeks in whatever way I want may seem extravagant to some, but to me it is a fair amount. I don't stop for coffee, and bring my own lunches. Another goal of my girlfriend and I is to not go out for supper anymore (before she moved in we probably went out for at least one breakfast and one supper per week). I now do the cooking (which she loves) and I am financially healthier for it. I have also given up pop and junk food, which used to help rid myself of my spare change.
The rest of my buckets are collecting money for long term expenditures. In this way, I will never have to make purchases for large amounts and then hurt myself financially. Some people will say that I should put this money in a savings account rather than under my bed (the buckets are actually on my night table), but if the money is in my account I can easily access it, but when it is in a bucket, I have to reach into it, thus "stealing" from myself.
Home Repairs $20:Every paycheque I deposit $20 into a bucket for home repairs. Then when I need paint, or a new faucet, or what have you, rather than taking it out of an emergency fund, I can just grab cash and pay for it. I live in a condo, so very expensive repairs are done by the condo board.
Gifts $20:Every Christmas I tend to go into the hole spending on Christmas. By depositing $20 every other week, that will give me $520 at Christmas to spend. Doubtless I will spend more than that, but not that much.
Clothes $20:Everytime someone says, "buy a new jacket", or "buy some new jeans", or "buy some new winter boots", I used to cringe and say "I don't have enough money". Now, by putting a little aside, its actually possible to go shopping for clothes and actually being able to look to buy.
School $20:This is to pay for extra courses that I will take. Each year, I take a course in the summer that costs $899, and then teach summer school so that I can afford it. In this way, I can get most of my course saved up for.
Video Games $20:Yes, I am 31 years old and play video games. But like everything else on this list, if you save up $80 over two months to purchase the new Guitar Hero, you feel less bad about it (at least I do).
So the questions for you are: does this make sense? Can you see yourself doing something similar? Finally, when I get a raise in September, should I adjust by buckets? I was thinking of making another bucket for "miscellaneous debt repayment", so that it is not a forced repayment, but when I get $100 I put it against one of my loans. Otherwise it could be a "vacation" bucket, or I could just ignore the extra bucket idea and put it in the "pay off your debt"!
The idea is simply that you live on cash for your paycheques. This method is used in the show Till Debt Do Us Part, where the host of the show Gail Vaz-Oxlade comes into a person's life and rearranges their monthly spending forcing them to live on cash. It seems outrageous at first, but to live on cash, and then when you run out of money you stop spending makes a lot of sense.
I decided to do this beginning in 2009 and it has worked wonders. My goals involve me dropping my liabilities, and since I have limits on my spending, there is never a paycheque when I fall short and have to dip into savings. Here are the splits:
Groceries $100:My girlfriend and I share groceries and I budget $100 every two weeks. This is my share, so we will alternate grocery weeks and try to stay under $100 for the two of us. Our health related goals are to lose weight, so we have vowed (and stuck to it) to not eat anything out of a box (basically pre-made). We try to eat lots of vegetables, but although they can be expensive if you change your meals until the vegetables are in season you can eat reasonably.
Spending Money $80:That's right, I give myself $80 to spend on whatever I want every two weeks. I realize that most people who read financial blogs consider themselves to be frugal, so me spending $80 every two weeks in whatever way I want may seem extravagant to some, but to me it is a fair amount. I don't stop for coffee, and bring my own lunches. Another goal of my girlfriend and I is to not go out for supper anymore (before she moved in we probably went out for at least one breakfast and one supper per week). I now do the cooking (which she loves) and I am financially healthier for it. I have also given up pop and junk food, which used to help rid myself of my spare change.
The rest of my buckets are collecting money for long term expenditures. In this way, I will never have to make purchases for large amounts and then hurt myself financially. Some people will say that I should put this money in a savings account rather than under my bed (the buckets are actually on my night table), but if the money is in my account I can easily access it, but when it is in a bucket, I have to reach into it, thus "stealing" from myself.
Home Repairs $20:Every paycheque I deposit $20 into a bucket for home repairs. Then when I need paint, or a new faucet, or what have you, rather than taking it out of an emergency fund, I can just grab cash and pay for it. I live in a condo, so very expensive repairs are done by the condo board.
Gifts $20:Every Christmas I tend to go into the hole spending on Christmas. By depositing $20 every other week, that will give me $520 at Christmas to spend. Doubtless I will spend more than that, but not that much.
Clothes $20:Everytime someone says, "buy a new jacket", or "buy some new jeans", or "buy some new winter boots", I used to cringe and say "I don't have enough money". Now, by putting a little aside, its actually possible to go shopping for clothes and actually being able to look to buy.
School $20:This is to pay for extra courses that I will take. Each year, I take a course in the summer that costs $899, and then teach summer school so that I can afford it. In this way, I can get most of my course saved up for.
Video Games $20:Yes, I am 31 years old and play video games. But like everything else on this list, if you save up $80 over two months to purchase the new Guitar Hero, you feel less bad about it (at least I do).
So the questions for you are: does this make sense? Can you see yourself doing something similar? Finally, when I get a raise in September, should I adjust by buckets? I was thinking of making another bucket for "miscellaneous debt repayment", so that it is not a forced repayment, but when I get $100 I put it against one of my loans. Otherwise it could be a "vacation" bucket, or I could just ignore the extra bucket idea and put it in the "pay off your debt"!
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