Maintaining Focus
June 18th, 2008
The past couple weeks have been incredibly busy for me with the closing of our new house and the existing one coming close together there has been a lot of extra activities added to my plate. I’ve tried maintaining everything with a bit of grace and perseverance. I’ve found that whenever there’s a large project or many projects you simply have to break them down into smaller parts and take it a small part at a time.
Being that I’ve worked in project management for a while breaking down a project into manageable parts is necessary and it translates pretty much to every aspect of our lives. For example if you’re $40,000 in debt paying the whole thing off at once might seem like a huge undertaking. That by itself is enough to scare people into inactivity. But taking that same large number and breaking it down over say 3 years means its only $13,333 per year (or a little over $1,100 per month) which is still pretty daunting. Understanding this we can stretch the project over a longer period to make it more manageable, say within 5 years (about $667 per month).
Breaking down our goals and projects can make them more achievable but in my opinion it adds something additional that’s important, it adds focus. Each of the small pieces by themselves might not seem like a grand achievement but when you start adding them up they can very quickly make a huge difference. This is exactly what I’ve been doing preparing everything for the impending move and its been working wonders in helping me keep focused which we all know can be tough from time to time.
Posted in Commentary, Productivity | 1 Comment
How I Shop Around
June 10th, 2008
Last week I posed about the pros and cons of shopping around. Today I wanted to post about how I shop around. The reality is that over the years I’ve come up with a bit of a process for shopping around and it follows a fairly basic series of steps:
- Do I need to shop around?
- Check online
- Call ahead
- Batch when physically shopping around
- Ask for specials
Do I need to shop around?
The reality is most of the time the answer to this question is no. I’ve decided that my time is valuable to me, so for me to spend hours of my time and effort to get the best price on an item it really needs to be significant. For example I was more than happy to drive around and make an effort when I was looking for a new car. On the flip side there have been times when I have simply ignored the fact that I’m paying a premium on a purchase because it wasn’t worth it to shop around. I’ve needed to replace the ink in my printer a few times and I simply went to the nearest store to buy it because the $5 I’m going to save isn’t worth the time to get it. For me the item needs to be expensive before I start shopping around and the potential savings significant. I know that this might not be the most frugal but I don’t get a thrill from spending 2 hours to save $2.
Check Online
Once I’ve determined that I need to make a purchase that’s significant enough for me to shop around then I’ll start by looking online. Most retail outlets now have their prices online. This really cuts down on the amount of time I spend on shopping around. At the very least this is a great place to find resources for what I’m looking for. Car insurance for example might be hard to shop around for online since prices are quoted (though some places do offer online quotes) but you can get a listing online which makes the next step quicker.
Call Ahead
If you’re looking for a specific item, say a washer and dryer, you want to know that the stores you’re going to actually have the item in stock. It’s great to find yourself an amazing deal but when that deal vanishes because they don’t have any items left it becomes really frustrating (and can be costly).Picking up the phone and making a call can save you a lot of time and effort.
Batching
This item in the process doesn’t always apply but if I’m looking for an item I’ll try to make sure I’m not going too far out of my way for just a single item. The goal here is to make the most of my time. This item also really applies when there’s no rush in making the purchase. When I we were considering a new TV I only went into stores that had TVs when they were in close proximity to where I was. The purchase wasn’t urgent, we had a working TV and even if we didn’t, TV really isn’t that important.
Ask for Specials
The TV is a perfect example when it comes to this part of the process because we found a decent deal on a TV but it became a better deal when we bought a model that came from an opened box. Someone had returned the TV but there was nothing wrong with it. The best part was that it came with the same warranty as a sealed box. A simply question saved me 10% on the purchase and at $500 for the TV the 10 second investment saved me $50. It never hurts to ask if there are any specials on the item you’re buying. If you happen to be calling and shopping around asking this question might be make your decision for you. Some stores don’t advertise that they offer perks and bonuses with purchases (The tire place that gives you a free alignment is a perfect example I’ve found).
Overall personally I’m not big on shopping around though I know there is a very distinct benefit to it. For myself I’ve found the balance of time and effort in return to require a significant benefit. I know that I can save myself some money if I were to shop around more but the reality is I’ve significantly cut back on my purchases and most of the time I spend money on items that are day to day items.
Posted in Saving Ideas, Commentary | 3 Comments
5 Reasons I Admire Successful People
June 3rd, 2008
Successful people are an inspiration to many and a source of jealousy to many more. For every success story that we hear we often forget that there are countless others that didn’t accomplish anything. Most of us know who Bill Gates, Stephen Spielberg, and Warren Buffet are based on their immense success not the tens of thousands that failed or worse never tried. I admire these people for 5 main reasons:
- They prove it can be done
- They show perseverance
- They show ingenuity
- They make great case studies
- They overcome adversity
They prove it can be done.
For me the most important of the 5 points I mention is the fact that these incredibly successful people prove beyond a shadow of a doubt that it can be done. Whatever our goals maybe we can reach them. On the days that my finances and projects frustrate me I need to stop and think about a successful person. There are a lot of successful people out there and they all show that my goals can be achieved as well. Regardless of what they themselves accomplished by sticking with it I too can achieve my goals, whatever they may be. They also show me that I don’t need to dream small – I can aim as high as I want. Knowing that people before you have achieved great things can be incredibly inspiring when you’re starting your own journey.
They show perseverance.
The very first step in tackling a goal is starting; unfortunately it’s only the first step after which we realize just how many steps there are to accomplish our goal. Successful people don’t let the size of a project daunt them. They simply keep going. Do you think that we’d be hearing about Warren Buffet today if he decided to take it easy when he made 1 million or even 100 million? I seriously doubt it. These people have a complete and utter devotion to their passions. This perseverance also shows me that although I might not have a burning passion for something the way they do but that type of passion does exist in our world and I’ll find mine. Finally their perseverance reminds me just how much can be accomplished if you pour your heart, brains and effort into something.
They show ingenuity.
Another great point about incredibly successful people is that they don’t stop. This isn’t just their passion for whatever tasks they have but the fact that they don’t let problems or setbacks stop them. Thomas Edison tried thousands of times before he made the light bulb work. He tried different combinations many of which probably seemed very odd to people. Successful people aren’t afraid to try new things and go around the conventional wisdom to get to their goals. They use ingenuity to solve the problems that they encounter on route to their goals.
They make great case studies.
Before you laugh this isn’t a plug for a school assignment or anything of the sort. I personally learn by trying and doing, but before I attempt something I like to see what others before me have done so I can learn from their efforts (and often their mistakes). Highly successful people make a lot of mistakes before they finally get to their goals and again most people don’t hear about these stories only their successes. When Edison succeeded in making the light bulb, the one that worked got all the praise and the thousands before simply fell away as unimportant. Learning from others mistakes can help guide us down the routes to our own success even if we learn how to avoid a potential problem.
They overcome adversity.
Adversity is all around us each and every day of our lives. For the most part these are small problems that we don’t remember an hour later and we learn to handle these problems. When the adversity becomes larger most of us simply follow down the path of least resistance and never challenge the adversity. Successful people decide that adversity is something to be challenged and they adapt themselves to the situation. A perfect example of this is the story of Apple. We all know this company for their iPods and computers, but the reality is that this company was struggling before Steve Jobs brought the company back and now their products are common in most North American households.
Successful people inspire me; they show me the bright light when things are not looking as good as I would like them. I’ve used examples of incredibly successful people in this post but it’s not meant for only them. All successful people show these traits even if they’re not necessarily financial in nature.
Posted in Uncategorized, Commentary | No Comments
Cash or Debit?
May 28th, 2008
Do you carry around cash for the week or do you use your debit card for all of your purchases? In the past if I had a wallet full of money it would vanish in the blink of an eye and I wouldn’t know what happened to it. I’m no longer that bad with carrying cash but I still find it difficult to use cash for a week’s worth of spending. One of the commenters, Zeromoney, from my last post suggested taking out money for the week and using that for all of your spending. I have tried that in the past with limited success and I thought that I would write this post as a comparison between the two and how I tend to use them.
Cash
As the saying goes cash is king. The nice thing about paying for everything with cash is that there won’t be any fees or hidden costs associated with it. I just can’t see a store clerk saying: “Oh you’re using a $20 bill today, I’m going to have to charge you an extra 50 cents… is that ok?”. The drawback that I find is that it makes tracking all of your spending a little bit more difficult. You have to rely on remembering to ask for a receipt or to take note of each purchase.
Debit
Most stores and restaurants now allow you to pay for your purchases with debit (at least where I live). This is nice since it means you can have a nice empty wallet and access to your bank account. I find I prefer to use debit for my day to day spending because I’ve got a good handle on what money is in my bank account. On top of getting a reciept the bank keeps a record of every time I used the card. Now using debit does carry some drawbacks, first off not everyone accepts debit and if they do there might be an additional charge for the service. Not to mention the bank will charge you fees if you use it a lot. The bank fees are annoying but they typically don’t amount to very much and having the ability to track my spending is nice.
In conclusion I’ve been using a combination of both so far though with my weekly budgeting it might be interesting to try pulling out spending money for the week and seeing if I’m able to stay within that amount. You can never go wrong with having cash in your wallet other than spending it too quickly.
What experiences have you had with Cash vs Debit?
Posted in Budgeting and Planning, Commentary | 5 Comments
Convenience VS Price
May 20th, 2008
The eternal question: Save money or time? The price of convenience can be costly but it can also be a very reasonable trade off. If you’re trying to save as much money as possible you will definitely inconvenience yourself a little for the sake of your goal. But on the other hand if you’re trying to maximize your time spending a few extra dollars simply makes sense.
The dilemma is a trade off between getting what you want in a more convenient fashion even if you spend a little more for it rather than trying to save a couple bucks and going out of your way. Most of the time this dilemma is on the smaller scale; for example I shop at a more expensive grocery store because its across the street and it saves me lots of time and effort. Would I save more money by going to the cheaper store? Of course I would but not enough for me to spend the extra 20 or so minutes to reap a $5 savings. If I was going to save $50 then it would be a big difference and if I was saving $500 there would be no question, I would inconvenience myself. The trade off is personal and it depends on what our needs are at any given moment.
When it comes down to convenience versus price the choice is personal an unique. Each and every one of us has a unique situation and needs. For some of us the time is more valuable where for others that extra dollar or two means more. I think most of us would trade a bit of money for the convenience of having things done faster and easier.
If the economy were to get worse and a deep recession set in I believe that more and more people would start opting for saving money versus the convenience factor. I would be interested to see just how this would play out (even at a personal level for myself). We all have our limits and a poor economy would (and has) change that for many people.
Posted in Commentary | No Comments
How Liquid are your Assets
May 16th, 2008
Liquid assets are assets that can be converted into cold hard cash quickly and without any significant penalty. By this it means that if you were to take your mutual funds and convert them to cash it would take a day or two tops and you might face a small fee but overall it would mean you get most of the money from them. A house on the other hand might be a very significant asset but one that would take a while to sell and reap any potential cash from.
The reason for this post is I’m currently broke waiting for a bunch of money to clear whatever holds that are placed on it. It made me question the term liquid assets because I am dealing with items that are already considered cash yet I can’t access any of this money until everything clears. Its a frustrating situation to be in because I have virtually no money on hand and a significant amount just sitting in some banks accounts waiting for some magic approval to be placed into mine.
I am currently cash shy but I’m also not in a dire need to have the money right away. If I had an emergency on the other hand I would be in some serious trouble. My liquid assets are not nearly as liquid as I would like them to be. What baffles me the most is why it takes a full 5 days for a check to clear letting me access the funds. Whenever I write a check its out of my bank account within a matter of a day or two - not 5! Its a frustrating situation and its making me question why banks and financial institutions can hold money for so long.
Have any of you encountered situations where your money was held when there was no reason for it?
Posted in Commentary, Financial Situation | 1 Comment
Frustration with my Finances
May 13th, 2008
When I first started writing this blog I was in a pretty rough financial situation but things didn’t look all that bad because I was making a pretty good salary at $75K per year. A few months after that I took a 33% pay cut to take a great opportunity which meant I was down to making $50K per year. I have to say that as a result of this the year was a difficult one but I was able to cut down on my expenses and slowly, very slowly, cut down my debt. Since I was let go from that job in February I started my own business and I took a full time contract where I’m responsible for a greater aspect of my money (such as taxes). The good thing in this setup is that I have more flexibility and the potential to pay less in taxes. The unfortunate item is that I’m making less still (Now I’m at $30K plus a great commission structure).
My frustration with my finances extends greatly to myself in that I’ve been making job moves and adjustments based solely on the position at hand and how it would help me. This current position/contract is one that I really like because it exposed me a great deal more to sales from the ground up. I’ve only been doing it for 3 months so my exposure has been limited but I am really starting to get frustrated with never having money for anything and paying my debt very slowly.
The net result is that although I’m still making ends meet I don’t know if I can continue to do this for an extended period of time. Any form of emergency will send me scrambling to find a way to come up with money which isn’t a way to live. I have a microscopic emergency fund which again is something I would like to grow.
I have learned a great deal about personal finance since I started this site and read a great deal about the topic and it boils down to being able to improve your financial situation by two means. The first way to do it is to cut down on expenses and to live as frugally as possible. I have tried this and had some measure of success. I know it’s possible for me to spend even less but the reality is that I don’t want to eat Kraft Dinner 5 days a week or give up having a bottle of wine here and there. I don’t spend nearly as much on food, going out or drinking as I did even a year ago but there is a point where cutting back means completely altering your lifestyle. I would rather not go in this direction if I don’t have to.
Which leads me to the second means of improving your financial situation and that is making more money. Unfortunately I haven’t been doing a very good job of this. My salaries and income have actually been going down over the past couple years and I’ve tried to supplement it a few ways here and there with minimal success (the $3/month that Adsense ads make on this site simply don’t make enough). My side projects are have been slow in getting done because of life and the need for some downtime. I believe that I am now at a point where I need to shift gears from saving even more money to making more money. I have an opportunity to take a salaried job that would bring me back in line with what I should be making but that’s still just an opportunity.
I’m just frustrated with having no money and juggling to save and make ends meet. It’s time to make more money, the opportunities to do this are there (even if we’re in an economic downturn). Ok my rant is now done – thanks for listening and keep reading I’ll start disclosing a bit more about my spending and earnings and how I’m trying to make more money. I’m done with the frustration and trying to get things done by only cutting back.
Posted in Commentary, Financial Situation | 2 Comments
How to Save on your Gas Costs
May 9th, 2008
Since the price of crude oil and gasoline have been going up drastically the topic of saving on your gas costs has been common on many blogs. We love our cars and the bigger they come the better regardless of how much gas they guzzle. I wanted to jump into this general conversation with my tip to save on gas.
If the price of gas has gone up just don’t buy as much of it. Simply use less of it! I know the tip is very simplistic but I think it would be ideally exemplified with an analogy. We all wear clothes that get dirty which we wash with washing machines (well most of us do) and this activity requires a type of fuel of sorts (detergent). I think it’s is a perfect analogy for my saving tip.
We have grown accustomed to using our washing machines just like our cars and we’ve gotten to essentially need them. We need to have clean clothes. Just like with the car there are other alternatives to get our clothes clean that are far less expensive than owning a washer and dryer that we don’t use for the sake of convenience.
Now assume that all of the detergent makers decided to raise the price of detergent by 3 or 4 times what we pay now. So rather than paying say $7.50 for a pack of detergent the price was suddenly $30. We would instantly notice but we might still pay. For the sake of argument let’s say this went up 40 times (my logic is we drive and use our cars at least 10 times more than our washing machines). The price of that same pack of detergent would now be $300. How many of us would still continue to buy the premium brands? And just to make this analogy completely outrageous let’s just say that the washing machine was costing you $350 per month in financing costs and you were required to have insurance on your dryer of another $150 per month. Doing laundry would all of a sudden cost us $800 per month.
At this point how many of us out there would consider the alternatives? Probably all of us. We have alternatives when it comes to cars as well. We can drive less and not buy fuel or gas guzzling cars. We are in a situation where we are reliant on an incredibly expensive means of transportation when alternatives exist. I know this is a bit more of a challenge for some people and in some circumstances but walking, biking, transit and car pooling would probably be accessible to most people in some way.
The way to save on gas is to not buy it; we need to either improve the mode of transportation or find an alternative means. Cars have been around for about a 100 years and in that time we’ve come to rely on them so much that people are convinced they cannot live without them. I like most bloggers have a car that I drive to work for convenience, thankfully it’s pretty close and I’m saving time by driving which is my logic for continuing this. But if the price of gas were to go up another say 2 times I would start taking transit. I know there are alternatives and I would use them.
The question I’ll leave you with is at what point would you stop buying gas? What would the price need to hit before you couldn’t justify the cost?
Posted in Saving Ideas, Commentary | 1 Comment
Cars are Expensive
April 11th, 2008
Let’s face it cars are expensive, from car payments to insurance costs to gas prices all of these items add up to a great deal of money. When I was younger I really took this for granted. As I got further and further into debt I started to look at where my money was going and I realized that my car was costing me a great deal of money.
Now when I see a young person driving an expensive car I wonder how they’re able to afford it. In order to have a nice car or even a new car most of us need to incur a lot of debt to get that vehicle. We need to find a way to finance that car somehow from loans to leasing the average new car will cost hundreds of dollars per month.
It still blows my mind just how expensive it all gets and that’s before the cost of actually driving that car. The simplest way to illustrate this is with my own costs. For the privilege of having a car I can drive whenever I want I have to pay the following on a monthly basis:
- Car Loan: $350
- Insurance: $230
- Gas: $150
- Maintenance: $50
- Total: $780
All of this adds up to just under $800 per month! The really scary thing is that I drive a used car, I can only imagine what this would be like if it was a new car. If I didn’t have this car I my debt load would decrease dramatically. Until I looked at these numbers a few years back I took it all for granted and I think that a lot of people are in the same boat. We simple assume we need to have that car and that it’s not expensive. The reality is that having a car can cost you more than you would pay for your mortgage.
There are a few things that you can do to keep these costs down. First off don’t buy a brand new car especially if you’re going to need to finance it. A used car that’s a couple years old will cost you thousands less than if you were to buy it new. The best part about doing this is that with a little effort you’re likely to get everything that you want in that car with low mileage. The next item to keep the costs down is don’t drive a gas guzzling car, with the price of gas where it is these amounts can very quickly add up to hundreds a month that could be invested or used to pay down debt.
How you drive will also affect how much your car costs you; by driving slower (aka the speed limit) you’re going to burn less fuel. Not to mention you’ll be less likely to get a ticket which will keep your insurance costs down. Also don’t be afraid to shop around when it comes to your insurance; with a little bit of looking around you can find a better deal than you have and quite possibly save you hundreds of dollars a year.
We have become addicted to our cars, our cities are planned with cars in mind and we are simply expected to have them. Going to the store or out for dinner means we hop into our cars to get there even if the place is close. The transit systems in our cities also don’t help the matter since often it’s a serious inconvenience to use public transit. If you’re looking to buy a car take a serious look at how much it will really cost you to have that car and what that will mean to your finances.
Posted in Budgeting and Planning, Commentary, Debt | 1 Comment
Be Realistic About Big-ticket Items
March 20th, 2008
Have you ever wanted something so much that you were willing to spend more than you could afford to get it? I’m pretty sure we all have and with the average consumer having as much credit card debt as they do I think a lot of us have indulged a little. Its one thing to indulge $100 for a pair of pants on a credit card and another to buy a brand new car while you’re making minimum wage.
The purchase of the TV this past weekend really got me thinking about purchasing the bigger ticket items. I know that I’ve run into the big-ticket items in my past that I wanted but couldn’t really afford. In the case of the TV it wasn’t so big that we couldn’t pay for it outright, but much bigger and we wouldn’t have been able to. You have to be realistic about life’s bigger purchases because wanting it doesn’t mean you can necessarily afford it.
When you’re faced with a big purchase like a brand new car you have to be realistic about the purchase even though it’s hard. Cars and houses are great examples since they are so incredibly expensive few of us can buy them for cash. We had the opportunity to buy a cottage a few years back at a great price. We had most of the down payment and we could have almost afforded the payments. The reality of it was that there was more there that we weren’t considering because we really loved the idea. Being realistic about a big purchase like this can be hard but you have to do it! We were trying to be realistic but we were still being clouded by the thought of the purchase.
The best thing to do is to take the emotions out of it. I know this is easier said than done, but if you let the numbers do the talking then you’re more likely to keep those emotions clear of your decision. If you have the luxury of time you should try the payments out for a couple months. Pretend as if you had made that big purchase and set the money aside. In the case of our cottage I think we would have very quickly realized that it was more of a pipe dream than a wise decision. Buying a car or a new set of kitchen appliances can be very similar.
Think about the decision as rationally and logically as you can. If you have to seek some advice from an impartial person then do it but by all accounts don’t make your situation worse as a result of the purchase. We’ve all been hearing about the mortgage crisis and all those houses being foreclosed. I’m sure each case is unique but I wouldn’t be surprised if a lot of those people were buying homes that they weren’t realistic about and couldn’t afford.
The hardest part when you’re looking at big purchase is stopping and forcing yourself to think about it from a rational point of view. We can all see ourselves driving that new convertible or imagining what we’ll do with all the extra rooms. Be realistic about the big-ticket items you buy so when you do buy them you own them and they don’t end up owning you. As a side note, in hindsight if we had gotten that cottage our financial situation would have been very bleak right now so I’m glad we ended up not getting it. There will be other cottages in the future.
Posted in Budgeting and Planning, Commentary | No Comments
