Sunday, 21 February 2016

Where To Start

I've spoke just a bit about how the local economy has been affected by the drop in the price of oil. It's not about whether oil is good or bad--my focus is just on what is happening to families that have had job losses with no warning or severance. Other families have seen their income dwindle as a result of their normal customers moving away/losing their jobs. What about the families now on unemployment? Their income has been cut in half. I will not sit in judgement and say that people should have been preparing...I consider myself "frugal" and a "saver" and I realize now that we are not actually prepared if my Husband is out of work for a significant length of time. I thought I would put together a few links and some "where to start" strategies for a generation of people that have really never had to, nor been taught to, limit their spending.

If you're new to this blog, I am not a financial expert. I am a stay at home mom that doesn't like to feel stressed about money. I want to retire and travel with my Husband. I feel that by living simply now we will benefit in the long-term. It does not bother me to delay gratification by saving for what we want. Sometimes we find we didn't really want that "thing" that we thought would make us so happy. A few years ago we almost spent several thousand dollars finishing the ceiling in our basement. Our thought was "it will be a pain to do the ceiling in a few years when the basement is full of furniture". But guess what? It was going to be over $6000 and I said no. Let's not spend that money. We don't notice that the ceiling is unfinished. We also don't have baseboards down there. And we are still alive. Our family is healthy. The world has continued to turn. We will probably never finish the ceiling and that is okay, we are hardly ever down there and we can live on that money instead. You don't always need all the things that you think you do! If you are interested in how we have become more motivated to save and reduce our spending, here are some past posts that might inspire you:

Below is a column that I wrote recently. Some of it is repeats what I have written before. Much of it I have read and been inspired by on other blogs and in books. I am writing primarily for people that have not saved much, had the belief that they had job and income security, and are now unsure what to do and don't know where to start. I've given 5 places to start, and yes, Pru, if you're reading this--I was thinking of your blog when I wrote #2!

Get Control of Your Household Spending

Has your income been affected by the drop in oil prices? Are you suddenly on a fixed/reduced income and were you used to spending your money however you wanted when times were good? You are not alone. Perhaps you have begun to reduce your monthly spending; if so, congratulations on taking action. If you do not know where to start, then I hope the strategies in this bi-weekly column will help you take control of your situation and give you some peace of mind. None of these ideas are new—writers like Gail Vaz-Oxlade and David Chilton (The Wealthy Barber) have been teaching most of them for years. But reality is setting in and for many of us it is time to learn to budget and get control of our household finances.

1.       Become A Conscious Spender: Know Where Your Money Goes

Recording every single cent that you spend in a month is essential to you understanding where your money goes. Every trip through a drive through, every scheduled bill payment, every $5 bill sent to school with a child should be recorded and, at the end of the month, documented in some sort of a file.  It can be as simple as keeping a scrap paper to record cash transactions and going through all your bank/credit cards at the end of the month. You might make a spreadsheet or do an online budget (try Gail Vaz-Oxlade’s Interactive Budget Worksheet found on her website www.gailvazoxlade.com). Whatever you do, get your spouse/partner/family on board with this assignment. You cannot tighten your budget until you know exactly where the money is going. This exercise alone will make you more aware of your spending.

2.       Become a Prudent Spender: If It Isn’t Essential, Don’t Buy It

 Once you have established where your money goes every month, you should be able to see where cuts can be made. What are your essential family needs, and what can you cut or delay spending on? Being prudent means being very choosy about where you spend. The question to ask yourself is: am I paying someone to do the things that I could be doing for myself? Can I find this item used or wait for a sale? Can I eliminate/cut back spending on treats and luxuries?

3.       Have “No Spend Days”

Begin by having one or two days a week where you spend no money. Pack a drink and a snack to resist the drive-thru. Make coffee at home. Use what you have—use it up, wear it out, make it do or do without! Avoid going to the places where you might spend money (that includes online shopping). Invite friends over rather than going out. Eat and drink what you have on hand. Chances are that you have things at the back of the cupboard or freezer. Use them up! Take advantage of the “free” events and facilities in the community. Enjoy the mild weather by walking, catch the public skating at one of the rinks, play shinny in your driveway, take your children or yourself to the library or borrow some movies from a friend. Get used to having fun that doesn’t cost you anything. Check your local paper or town website for free local activities.

4.       Shop Around for Insurance

It is a no-brainer that shopping around can save you hundreds of dollars; insurance is no different. Talk to your current provider about how your needs might be changing. Can you get by with one vehicle nowadays and reduce the coverage on your second vehicle? Do you still need the package policy? By no means should you ever allow your insurance to lapse. But there might be a better deal out there. That said, I also think it is important to reward the small businesses that have worked hard to protect you in the past. If it is possible to support a locally owned business, please do so.

5.       Examine Fees, Charges, Plans and Packages

How much are you spending on bank and credit card fees? Have you tried to reduce them? Have a look at your “plans” and “packages”. Can you reduce your cell phone bill? Ditch the house phone altogether? Are you still paying for cable or satellite TV even though you are finding it hard to make ends meet? Have you thought about reducing to Netflix or a similar type service instead? Are you aware that “pick and pay” satellite TV starts March 1st? Although your provider is not likely to advertise it, you will now be able to select the channels you want without paying for bundles and channels that you don’t watch. Make some calls and see how you can save.


I will be writing similar columns in the future--I'd love some feedback on what your advice would be to young families facing a loss of employment. Can you offer ideas or share what you have done to cut back spending?
Image from Pinterest


8 comments:

  1. Good post!!! I'm going to have come back and re-read this one again and check out the links. If I were to honestly give someone some minimal advice it would be the following 5 things:
    1) Write every penny you spend down for a month or longer. Yes this is tedious but it is about knowing exactly what you spend and when you see it written down on paper or in a spreadsheet it can be shocking. I think people should do this forever or at least over a one-year period to look for patterns.
    2) Following on #1, know (truly know) what is a need and what is a want for you and your family. Having wants isn't bad but don't pretend they are needs.
    3) Following on #2, create your bare bones budget. This is the "lost the job" budget. What are you going to do, what will immediately be given up, etc. This is a budget that should be implemented IMMEDIATELY once a bad situation has occurred. No wait and see but immediately because too many people wait too long and then they've spent so much money that could be used to pay essentials. As part of this #3, you need to figure out substitutions. Having access to internet may actually be a need if you live far from town. But if you are like me and in a town and can walk to a library which offers wifi or free internet, you could give it up in an emergency situation.
    4) Determine your priorities and your values (for yourself and/or family). Decide to spend according to those values/priorities. Travel important? Then don't spend on clothes etc.
    5) Go back to #s 1-3, determine at least one thing that can be cut or substituted with something else to save some money. Direct that money to a savings account and start building an emergency fund (knowing your bare bones budget helps determine how much to save). Rinse and repeat for the items that you determined were important in #4. (You can save for travel or whatever and other stuff at the same time.)

    And I'll add a #6 as well. If you are in a partnership (married/dating/living together), ask yourself if it is a TRUE partnership. When it comes to money/spending you have to all be on board or you'll likely sink together. Make sure communication happens. If it doesn't, make sure you are okay with it.

    Jill - loving your blog so much! You have a wonderful way with words :-)

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    1. Wow, Pru. Thank you so much. That really means a lot :) and thank you for your ideas and all the inspiration. I was just thinking about a "bare bones" budget today too. Always good to know how much it costs to meet your basic needs, and be ready to revert to that when necessary. Thanks Pru!

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    2. For the bare bones budget exercise, it is also a good idea to determine where and what the help lines are in your community as well as government resources. Churches, food pantries, soup kitchens, utility programs etc. And also know if there are specific rules to be eligible vs. just showing up. This will depend on your situation but for those who have no savings, and may be losing income, this is a priority.

      And don't assume you don't qualify. Find out what the requirements/income limits are. A lot of this can be done online and it will bring a lot of peace of mind just having the knowledge.

      Final thought (promise!) is that food is many things but ultimately it is just sustenance. If you have a job and you are working on the bare bones budget, find meals that are very bare bones but that you and your family will eat. Incorporate them into your meal plan now. This will save money on the weekly grocery shop and if you are in a bad situation and on the bare bones budget, at least the food part won't feel so painful.

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    3. I'm working on a column regarding menu planning tonight and you nailed my thoughts exactly. Get used to very frugal meals now and use what money is saved for more urgent things. Or save it for future meals. My brother aptly called it eating for survival, not enjoyment. But there are so many tasty frugal meals that it doesn't have to be that bad--just a change that must be gotten used to!

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  2. this is fantastic, Jill!! Well done! I realize the rest of us are happy that oil prices have dropped...we don't really consider the ripple effect that has on folk reliant on the oil industry for their income. I'm sure your articles will be incredibly helpful for families feeling the crunch...indeed, for all of us, because we never know when the wheels will fall off. xo

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    1. You're right Mel, one never knows what might happen. Best to have a plan! Thanks for reading :)

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  3. Okay - I'm back! Reread this and it really is very good :-) So here are a few more thoughts that I would say:

    1) Whatever has happened, whatever might happen, use this as an opportunity for growth (or to grow together if part of a couple). It may not be easy but you can get through it - especially if you work as a team.
    2) Don't put your head in the sand. (You'll quickly reach the point where you can't breathe.)
    3) Know thyself. (I think really frugal people are successful because they don't try to be anyone else or to buy into a lifestyle that isn't true to them.) Facing a bad situation or potential one is precisely the time that people need to answer the really tough questions (to themselves or as a couple or as a family). This is also the time to be honest - stop lying to yourself and/or your partner. There is no need for it.
    4) Use history to instruct the future but not to play the blame game. Don't beat yourself up (or your partner) but also don't fall into the same traps. This is about being honest with #3 above and being a responsible adult.
    5) You mentioned some above in your article but essentially everyone should go for the "easy wins." I think that will vary per person but really look at your expenses and determine what can quickly be cut. It might be car insurance or it might be something like not buying books and using the library. Easy wins make you feel successful and keep you motivated to deal with the harder stuff.
    6) Practice saying "no" - to yourself, to your kids, to your partner. There are a lot of ways to say it (I yell at myself - silently of course - and that works for me not necessarily for others) and it does not have to be unkind. But practice saying "I/We don't need that right now" or "We are saving for xyz so we won't buy that right now." On this note, be very careful not to always say "we don't have the money" even if it is true and especially to kids. This phrase has a scarcity mindset attached to it. Depending on their age, that can freak littles out thinking they are about to lose the house. (Not saying don't lie to them but remember on this journey you are making CHOICES regardless of whether or not you actually have the dollars in the bank.)
    7) Own those choices you are making. They are nothing to be ashamed of and in time will empower you towards a better more secure life.
    8) For those who are still working and not facing a dire situation, ease into it. Start saving where you can and doing substitutions and no spend days and free activities etc. to discover what works for you.
    9) Determine how much you earn per hour. (Roughly for those earning an annual salary, drop the '000s and divide by 2 - e.g. for $25,000 you take $25 and divide by 2 to get $12.50 an hour.) Now when you want to buy something determine how many hours of work it will take you to pay for it. And then ask yourself if you still want to purchase that item.

    Sorry so long (my last comment on this post!).

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    1. This is great, Pru--thank you so much. You've given me much to think about and many fresh ideas. Thank you for taking the time to think about this and comment--your ideas have helped me and others too. So great, thank you!

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