2012 Financial Goals

Every year I list out some financial goals that I hope to achieve. Many times I don't reach those goals, but that's often because life takes me in a direction that I didn't plan for. Still, when I compare where I am at after 12 months, I am usually in a better place. I think it's fun to list the goals out and then compare at the end of the year.

2012's motto is: Don't waste a single penny! Yes, we are going on another "financial challenge" and this time we plan to be far more aggressive than ever before. This might actually mean more cost cutting... considering we live rather minimally, I can't believe we are still able to find more ways to save even more. Every single penny for one year will be allocated towards our goal of a vacation, a move or put towards a financial investment. Every.single.penny.

My husband jokes and says he feels like he is going to jail for one year. He's the one who has to give up more than I do because he goes out for dinner once a week and he has some other routine indulgences that he's willing to give up for one year. I'm glad he's on board.

While we live leaner than most, we still have some room for improvement. When we went on our "minimum wage challenge", we cut out a lot. When the challenge was over we allowed some treats to come back into our lives - those will be cut out again.

• We are going to clean up our diet and buy less meat and dairy (expensive) which should help our health over all. 
• I am going to give up coffee (my husband already gave up coffee years ago) including coffee made at home because I need to cut out the cream and sugar that I normally use. Tea it is!
• We are going to give up wine and beer entirely for a year (unless friends bring it over!)
• We are going to make use of investment tools to help us save.
• We are going to make use of points systems to pay for Christmas next year. 
• We are going to save/invest every single cent we can find. (We used to apply this to debt)
• We might consider extra or new jobs (eek!)
• We are going to have a yard sale! We don't expect this to be a money-maker, but we sure have many things kicking around that we just don't use. 
• I will do more meal planning and cooking/prepping ahead for the week. No going out, no running to the expensive grocery store or convenience store when we forgot something.
• We will spend less time with screens (computer, TV, IPhone) and more time on fun, free activities or activities that will help us save or earn more money. (Even without cable we manage to spend hours a day in front of a screen.)

Overall, our main goal is that we hope to become a little healthier this year. Funny though, we aren't focusing on the fitness or nutrition aspect of improving our physical health, we are focusing on the financial aspect of it (i.e. meat and dairy is expensive, cream and sugar in coffee costs money, water is free). Maybe that's a little more motivating for us?

I'd love to hear of some of your financial related goals for 2012!! To the left here you can find my Facebook page if it's easier for you to chat there than here!

We saved (and saved), then changed our minds and gave

Earlier I posted about the fact that I don't currently own a computer even though we could easily put one on a credit card; we decided to save for a computer instead. We were very close to having exactly enough for the Mac we wanted. Note the past tense - we were close.

Now that it is the holiday season, we are thinking of others and not ourselves. Had we bought the computer with a credit card months ago then we would be committed to the full payment. It would have been a done deal and we would have credit card payments to make about now.

Instead, we have been saving and had a healthy sum available. So what did we do? Well, we just essentially gave our new computer away.

We had the opportunity to make the decision on whether we would rather do something wonderful for someone deserving, or have a new computer. We made the choice to do something wonderful for someone else. A computer can wait.

Had we bought a computer on credit, we wouldn't be able to "reverse" the decision like we just did. We would have been committed to a big purchase (plus interest) and we wouldn't be able to do what wonderful thing we just did for someone else. It feels so amazing to do what we just did. It so much feels better to do that than get a new computer. This loaner computer is working for us and that's good enough for now.

It might sound odd to say it feels good to not get what we wanted. I love the fact that we were able to make the choice and have power over the decision.

Just sharing an example of the good things that can happen when you wait, save and don't act on impulse (i.e. impulse because you have credit available).

I repeat... DO something with your savings!

Today I went for a walk with my little one. As luck would have it, we found $10.20 on that walk.

I deposited that $10.20 into my little one's registered education savings fund (RESP). In Canada, where I am, the government will match 20% of what you contribute to an RESP. So technically, we found $12.24 today.

It would have been so easy for me to spend that $10.20 today on something like a coffee for me and a hot chocolate for the little one. It's so much more enjoyable to see the balance of her education slowly inch up. She's only 4 years old and so it's possible that the $12.24 will double by the time she's ready to use it. So possibly, we found $24.48 today.

And that is exactly how we approached paying our debt off... every time we saved money, or found money, or was gifted money... we did something with it. And I still continue to do something today!

It really does cost less to eat healthy

Over and over I hear people say that it's less expensive to eat junk food than it is to buy healthy food. I don't buy this excuse. I just don't. And I don't buy junk food either.

Each time I go to a grocery store I am disgusted by what manufacturers are trying to get us to believe is "food". Really, no wonder there is such an obesity problem in North America, it's all crap being served and disguised as "convenience" and "time saving" and even falsely stating that it's "healthy". Plain and simple, it's junk and it's costing us - financially, environmentally and health wise. People will argue with me on this one, but a fact is a fact and if they choose to be worse off financially and health wise then that's their choice.

When I go out and about, I continuously observe people. I can't help it. And my mental calculator is always ticking away. My conclusion - junk food is simply more expensive.

The main reason I say this is because junk food is a 100% waste of money. 100%. It is a cost you don't ever ever ever "need" to spend. Ever. Think of the billions that are spent on soda alone. Billions! What if North Americans applied their soda money to debt instead? Billions of dollars!

Another reason why I say this is because even if you buy junk food, you still have to eat healthy food to survive and too feel good. So you are actually buying and consuming even more food than you need to. Yes chips are cheap, but they are not a meal. So your grocery bill slowly creeps up and up and up. And your health and wallet don't benefit.

And then there are the health, weight and emotional implications of junk food. These implications can be large-scale like the costs to manage preventable health problems like Type-2 Diabetes or they can be subtle like a mom in a busy mall with a screaming/crying/flailing four year old who just had a soda at the Food Court. This mom thing is so scary to me, because many don't connect the behaviour and emotional problems that can be avoided by being more careful about what we feed our kids.

Then... honestly, the stuff doesn't even taste that good! A store bought cookie vs. home baked from scratch? No contest! 

It's a fact that living on the path of junk food use is just setting people up for issues and even more scary is that the solution for many health and behaviour problems isn't to correct the diet, it's to provide a pill.

Yesterday evening my little one had karate class. After class, we see the parents and children head out to either the restaurant next door, the coffee shop next door to get a "snack" before dinner. The average spend on a "snack" is $5.00 minimum per person for usually a cookie and a hot chocolate. No nutrition. Kids are likely to be wired for hours and then crash and hey likely won't want their dinner (which leads to food waste). And, they are completely negating the exercise the kid just had in karate class!!!

We have a tradition of getting a "snack" too. After karate class we go next door to the grocery store and we get a banana. Usually $0.33. Then we walk to the library, play some games, choose some books and a movie and then head home. Equal amounts of "convenience", equal amounts of "time" together yet we actually spend substantially less money and get more nutrition. We also won't have arguments about eating dinner later and we won't have hyperactivity issues. If dinner is shunned, at least I know that healthy food was consumed so I can let it pass.

None of this would be a concern to me if people really knew what "moderation" is. They don't. They hide behind this word as a means to justify their spending. "Oh, we don't do this all the time" - I call BS.  You may not go to that particular place, but you go somewhere else. If it's not a cookie, it's a muffin, it's a donut, it's a candy bar, it's fast food, it's something else. I grew up with blood sugar issues and my Dr. told me about "moderation". Do you know how often moderation should be? One sweet treat a week. That's not one cookie and a hot chocolate a week - that's either or. Could you imagine the amount of money people could save if they lived by this more real definition of "moderation"?

I almost was in tears the other day when I over heard a woman tell her kid that they "couldn't afford" blueberries. He was begging for blueberries ($2.99). The kid was screaming for healthy yummy food. (Now granted, I don't know their situation or if he'd actually eat the blueberries.) But in her cart she had two cases of diet soda, a pack of individual pudding snacks, candy bars, paper towels, cookies, crackers among other things. Really? You "can't afford" blueberries? You can't use a towel instead of paper towels? You can't drink water instead of diet soda? Again, I don't know the situation, but as an onlooker - WOW!

This is typical of the shopping carts I see though. Junk junk junk fills the cart before people get to the produce section and then the total is already high so a few dollars for fruit is just "too much". I wonder what would happen if people started their shopping in the produce section instead?

100% complete waste of money. 100% complete waste of health. 100% complete waste.

The baby-steps I took to becoming debt free

A few years ago the recession hit and I was saying good-bye to colleagues who were let go and I was wondering if/when it was my turn to be let go. I was a spender, heavily in consumer debt and had no emergency savings. Like many, I was not remotely prepared for a job loss. Fear prompted me into action.

I had to ask myself some serious questions and do some hard work to find the answers.


Question #1: How much do we really need to live off of?

I had no idea. We were doing okay and so I never thought about it. I had the mentality that credit cards paid for emergencies. I had to force myself to do the math. I made a list of all our fixed monthly bills and estimates on what we spent on variable expenses.


Question #2: How wrong is my list?

It was very wrong. I forgot about the expenses that we have to pay annually like car and home insurance and property taxes. I forgot about a lot of things including debt repayment. Ugh. I had to re-do the math to come up with an actual monthly amount.


Question #3: Where is all the money going?

According to my list, there should have been money left over every month... and there never ever was. It would be easy to simply blame debt repayment, but stupid spending was the cause. Even still, there was money slipping away at a fast rate than what it was coming in and we needed to face the facts. We were spending more per month than what we made with the mentality that we would "pay it back later". If we could live off of less than what we could make, then why were we spending more than what we made? Our justification at the time was "you have to live life". We needed to re-think that concept.


Question #4: What could you live without if you had to?

Here's where the cutting started. The easy things were cable (substituted for Netflix, watching TV the day after online and rentals from the library), cell phone features (I never actually used voicemail anyway - I'd always call the person back before ever hearing what they said), land line telephone (google phone, skype and we had our cell phones)... those were fairly obvious. In order to really cut things down, I had to imagine what I would think about the things we had if I was jobless. Can we cut back enough to survive? The answer was yes. The cutting began.

Question #5: Can you cut out even more?

Yes! The variable expenses were obvious, but what about our fixed expenses like our mortgage? Yes, that too could be shaved back if ever faced with an emergency. This is when we re-evaluated some of our "needs" and the items that we considered to be essential, but really aren't (yep, a family can survive without toilet paper!). Then followed more cutting, more cutting, more cutting.

Question #6: If you could get so low during an emergency - why not do it now?

We knew we had the ability to get costs down to an absolute "bare bones" level. I think everyone knows (thinks) that if they really needed to costs down, they could. Not many people really have the motivation to figure out what their bare bones number is, or to try it before they really have to - even if they are heavily in debt. It's also tough when living in a partnership and one person is on board, but the other person doesn't have the right attitude.

Question #7: Do you want to try it now? How low and how long can you go? 

This is about when we decided to try what we dubbed the "Minimum Wage Challenge". Thinking of it in terms of a challenge rather than a "budget" really gave us incentive. Budgets seem onerous. Not having money to do the things you want seems depressing. Giving things up might hurt or just plain suck. But a challenge - well, that's aiming for a goal, that's setting a fixed time period, that's a test. It's also not embarrassing to talk about. "Sorry, I can't do that - we are on a "Minimum Wage Challenge" is easier to say than "I can't afford it."

We set our time frame at six months. We implemented all of the things we would do if we needed to in an emergency. It was tough at first, but as we became accustomed to our new lifestyle it became easier and easier. We started adopting new habits, making substitutions and learning more about what we can do on less.
 
Question #8 - How to apply these savings to debt?

I was worried about the "right" way to pay debt. I've heard of paying high interest first, I've heard of paying smallest debt first and many other techniques. For me - I took the approach of getting rid of what would go away. Maybe there is a term for this. I don't know. Credit cards and line of credits can be paid off and then racked up again. I tackled the cars first because I knew that once they were paid - they would be gone forever. Because we were living bare bones, there was no more use of credit cards and line of credit and so we paid the minimum. But all extra money went to what would go away. Adios! Next was line of credit and credit cards.

I'm not sure if there is a 'right' way to apply the savings to debt. What's crucial is that the money does go to debt. Don't waste your efforts. Hold strong and get excited about the grand total at the end of the time period. All the little savings will add up. The key is to not cave. You can't go out to dinner to celebrate that you found crackers on sale. Just like when you are dieting, you shouldn't "treat yourself" to ice cream just because you went to the gym that day.


Question #9 - Why didn't we do this sooner?


I'm summarizing a couple years worth here in these questions. It took a long time to readjust our thinking, but now that we are looking back on things we really are kicking ourselves for not starting sooner. We are also questioning why we were never taught about money properly as we were growing up. We are questioning a lot.

As a result of this, we are taking extra efforts to teach our 4 year old about money, waste and the relationship between the two. She will remind us "You are spending money on lights" and that's a good attitude to have in our opinion.

Question #10 - Why not keep at it?

Our goal was six months and by the end of the six months we had a fair chunk of debt paid off. It felt rewarding. We still had a lot of debt remaining, so why would we just go back to our old lifestyle? What did we find we really missed at the end of the six months? Only a few things. We added back in a couple of little things so that we didn't feel so deprived, but have kept on the path of being debt free. We stopped talking about our "Minimum Wage Challenge" because our family and friends and colleagues too had become used to our new approach to life and money. How they interacted with us changed - for the better. We started having girls' night in instead of meeting out for drinks, we started having pot luck parties instead of going out for dinner, we started heading to sample sales and thrift shops together... and the list goes on.

Here we are now... a few years later and we have eliminated all that consumer debt. Yet, we are still maintaining the same frugal lifestyle. Because we were out of debt we have now shifted gears to savings and investing which helps us feel more secure.

During this time though, my fear of a job loss never came to be and so we were lucky to apply all of our "savings" to debt. But the threat of a job loss still looms, even a few years later. I'd say every month there is a new "crisis" at work or a new threat made by the bosses. I still don't feel stable. It's getting stressful. Even now there is chatter at work that there will be a "big announcement" in the next few weeks about job cuts. We'll know for sure in the new year. At least I know that we are prepared this time.

It really doesn't matter if you are trying to cut back out of necessity, out of desire to become debt free or to start on the path of savings and investment... the basic concept of living below what you bring in will always apply - for us, the missing ingredients were the motivation and having the right attitude.

What are you waiting for? Are you going to check out your credit card balance, complain and then go out for coffee - or are you going to pass on going out and pay a couple of dollars toward your debt today?

Holiday Shopping - It's Just Not Necessary!

Before the holidays are even here, I am already starting to hear my friends and family complain about the expense of the holidays. I just have to wonder why people do it if they don't really want to do it. I don't go to any great expense and we don't miss out on a fantastic holiday. I actually would argue that we enjoy it more because we are at home baking instead of being at a mall cursing about not being able to find parking and then being overwhelmed by the crowds.

Every day this week we have been partaking in many of the free family activities that are happening in my community. There are also many low-cost activities too. So the getting out and enjoying the spirit of the holidays can be done at little to no cost... just remember to bring some snacks.

Back when the recession hit, my side of the family had a nice, honest talk about holiday shopping. We all recognized that we shopped primarily out of obligation. We all were stressed about the fact that we spend money we don't have, on things that the recipient likely doesn't want. We knew this to be a reality, yet, we had done it every year! Instead, we decided to put an end to the waste and stick with just a fixed amount of gift cards for the adults. We still keep the spirit alive for the children. But keeping the spirit alive doesn't require excess.

As an example, last month my little one just had a birthday. She had 10 little friends come over, so she had 10 presents. The party was lovely and the kids all had an amazing time. The party in itself was the highlight of the night, but after all of that there were gifts... they were opened one by one and then the big after-party crash happened. We cleaned up as she slept. I then decided to experiment... I hid half the toys. They are still hidden and no one has noticed. It wasn't the presents that mattered, it was the friends all coming together.

It's amazing how dreaded Christmas shopping is. Not many people enjoy it. Does anyone? Even grocery shopping is a nightmare from now until after the big day. We may just eat out of our pantry and our freezer until it's really necessary. There are far more fun things to do this time of year than stand in extra long lines.

Last Christmas, I noticed that every toy in our household was broken, damaged, or had pieces missing within two days. What a waste. Family could have easily have wrapped up used items and my little one would have been just as happy. Less waste. Less money. It's the spirit that matters. Yes, there's excitement with gifts, but it often doesn't matter what the gift is and for the young ones - they don't even keep track of who the gift is from and who did or didn't buy a gift. They just don't - until we teach them to.

So why do we do it? Why do we feel so obligated? Can't we all just be honest and calm things down?

It's not as if we are fooling anyone. We all complain about bills and debt all year, so it's not as if friends and family think that all of a sudden it's okay to spend on them. I feel gut-wrenched when I receive a gift from someone that I know is having a hard time - and it's not because I'm ungrateful, it's just that I'd rather they be okay with their money. I know I'm going to hear them complain again for another year about debt.

I have what I need. I have friends who come over nearly every day and I have the love of a strong family. What I need isn't more stuff.

The holidays can be done with joy, excitement, entertainment and love without all the stuff. We have a low-cost holiday every year and we have a fantastic time with friends, family, pot luck, homemade baked goods and getting out there to enjoy all the wonderful things in the community.

Cutting back on Electricity?

If we all approached cutting back on expenses the way we approach cutting back on electricty we would all be debt free.

I for one am guilty at harping at my family members for leaving lights on. But really, what does that save me in the end? 10 cents?

We should be just as, or more, focussed on is putting that same vigor and energy into the items that save us even more money than what we save in electricity. I get that we all want to save money on our "bills"... what I am saying is that we need to do the same with all our expenses. 

How is it excusable to complain about a light being on (2 cents worth of cost) with a Starbucks drink ($4.00) in your hand?

Before Shopping of Any Kind - EAT!

It's time for me to share one of the most valuable lessons I have learned about shopping - you always spend more than planned when hungry!

This doesn't just apply to grocery shopping, it's all shopping! Food Court anyone?

Eat well before heading out and it will save you. Make sure you are well hydrated too!

In addition from sparing you some unexpected take-out expenses, it will also help your mood substantially - I've noticed that I am less likely to make impulse buys if I'm not cranky from low blood sugar. Normally these types of purchases are made just so I can "get it over with" and get something to eat - fast!!!

How I discovered "The $42,000 List"

Our savings adventures started a few years ago. We have slowly eliminated things in our life. It wasn't a decision that was made over night, it was a slow process. After a couple of years, I sat down with an Excel spreadsheet and I made a list of things that we used to buy (or things that we almost had to buy) and calculated the cost. It was fine enough to see a couple of dollars in savings for the small items, but I was curious about how it would add up over the course of a year. I multiplied the savings by the times per year I would save and the tiny numbers grew. I had a lovely grand total that was huge, but then I realized that those were "after tax" dollars - the dollars that I had available to spend. So, I added back the income tax to get a gross amount - $42,000! That is how much money we would have to make in salary to pay for all the things we gave up. No wonder we were in debt by tens of thousands of dollars before!

I Don't Own a Computer

The one thing I have had the hardest time with is the waiting that is involved with any kind of financial transaction. Things like waiting for pay day, waiting for something to sell, waiting for my savings to grow, waiting for the bill payments to show up on the account, waiting for the bills to be paid so I can see what’s left, waiting to see what the bills even are… and the list goes on. Sometimes I feel like one minute can feel like hours when I’m waiting to see the results of my efforts

Here’s the wait I’m grappling with at this particular moment in time… the wait to save for something I really want instead of putting it on a credit card. 

My computer completely broke a few months ago despite efforts to fix it and buy replacement parts. It wasn’t even that old, it was under 4 years old – I suppose that’s a dinosaur according to some. So anyway, it’s no longer and we have been using a borrowed computer for a few months now. Borrowing a computer is the alternative I chose instead of going into debt.

It would be so very easy for us to use any one of our credit cards and buy a new computer. But I refuse to add new debt. Debt is no longer an option in our household.

What if you can’t pay it back later?

The most crucial part of being able to get out of debt, or save, or even learn to live within your means is to make sure that no new debt is accumulated. Not one cent. The “I’ll pay it back later” mentality is what got a lot of people (including myself) in financial trouble in the first place. 

I started my financial changes because the recession made me realize that I wasn’t prepared for a job loss – it never dawned on me before that there might not be a “later” available to me. If I had a drastic change in my financial situation, my priority would be to provide the basics for my family – food, our home, and what we need to get by. The last thing I would want to do, or be able to do, is pay the bills for some useless junk. I’ll chat more about this “revelation” some other time – the recession really did save me.

Today, I don’t own a computer. I keep thinking about how I would feel if I bought the computer on a credit card and then lost my job shortly after. I often try to imagine what a jobless me would think about every purchase I previously made - how would I feel about a month’s worth of Starbucks purchases on credit if I lost my job and was looking at the bill afterward? I’d feel pretty sick about my decisions. 

We are saving some money here and there for a computer. It has taken a long time because we are focusing now on things that are more of a priority – things that should have been more of a priority all along.