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
A Big Purchase Can Be a Good Thing
March 19th, 2008
Originally from Flickr, uploaded by Alan D
Most people really start shying away the moment bigger purchases are involved. Understandably so there is a lot more money involved in a big purchase of say a TV than there is in buying a can of soda. We all like the big expensive purchases but we don’t like to make them. This past weekend we made just one of those purchases, we bought an HD TV.
Before anyone has the opportunity to say anything this was a purchase we were thinking about for a while. I was actually contemplating it for over a year. At that time the prices of HD TVs was way too high and the purchase was out of the question. This time around when we were at Best Buy looking around; it turned out that the prices had dropped quite considerably and we ended up purchasing a TV (32” flat screen with HD).
The purchase itself wasn’t too expensive though there was a very expensive cable that came with it (an HDMI cable, which we’ve yet to use) and we’ll need to buy an alternate TV stand but that isn’t immediate. The biggest impact and why a big purchase can be a good thing for me is the huge space savings we’re getting by going form a 32” tube TV to a flat screen. I am truly amazed by it. We can shrink the TV stand/wall unit in half width wise!
There is one additional benefit from all of this and that is I think with the thinner TV the price of the house might just have gone up. No the TV isn’t staying when we move but it creates the impression of a lot of space where before the living room looked very cluttered and narrow. I think that impression of space might make a huge difference when it comes time to sell.
On a final note, I really enjoyed the Best Buy experience there was no pressure to buy, the person we talked to was very knowledgeable. Not to mention we were given HD cable for a year for free with out subscriber and Best Buy has price matching. Overall it was a very pleasant shopping experience and the TV looks great, I didn’t think HD would make that much of a difference.
Posted in Commentary | 1 Comment
Don’t be surprised by the Weather
March 10th, 2008
Originally uploaded by RedMonkeyVirus
In many parts of North America we’ve had one of the snowiest winters on record. This shouldn’t surprise too many people yet since living in these areas that risk exists. Some winters there’s more snow others less. Personally I prepare for winter the same way each year. I make sure to give myself extra time and when I’m out in bad weather I take my time. Yet people are still surprised by the bad weather.
Lets be honest in our day and age where there is an overabundance of information there is no need to be caught off guard by something like the weather. Granted weather reports loose their accuracy when you look at long-term predictions. But tomorrow’s weather or even today’s weather will be pretty accurate. Staying on top of this type of information will take all of a few minutes but can save you a lot of grief.
Knowledge is one of those important things in life. Knowing that it’ll be snowy means you can take your time to get where you’re going safely without hassles. But by the same token knowing its going to be scorching hot lets you prepare by taking along a hat, some sun block and a lot of water. The end result is that you’ll be a lot more comfortable without needing to complain or scramble and be surprised by the elements.
To use the summer as an example knowing it’s going to be hot means you can take some water from home rather than buying the $2 bottles of water all the time. This can save you money. In the winter knowing it’ll take you some time means you won’t rush and risk getting into an accident. A little preparation and adjustment to the world around you, like with preparing your budget, can save you a lot of hassles in the long run.
Posted in Budgeting and Planning, Commentary | No Comments
Thoughts on Valentines Day
February 14th, 2008
Originally uploaded by iamhomosquirrel
Happy Valentines Day everyone! I couldn’t resist throwing out a post about this holiday since it’s a hallmark holiday that it screams to be avoided. Unfortunately its not quiet that easy, a lot of people attribute a lot to this day which is very sweet and cute but that doesn’t help the pocket book when chocolates, gifts and expensive dinners are involved. To prove the point a little further Yahoo! has an article up saying Americans will spend $17 Billion on this Valentines Day.
This holiday is one that shouldn’t exist, wait hear me out; if we didn’t wait for one day of the year to let our significant others know what we think and feel about them we wouldn’t need to take out a second mortgage just to make it an extra special affair. Now with all of that said it is nice to do something special to show your loved ones you care even if you need a special day on the calendar to remind you. It doesn’t have to be about the gifts and the money. Remember you’re trying to show them you care and you love them not that you can put yourself into debt extra fast on Valentines Day.
So for all of you out there with wives, husbands, girlfriends or boyfriends go out and show your special someone what they mean to you but make it from the heart not the pocket book it will mean that much more.
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The Job Search Series will continue tomorrow with Step 1 – Analyze your previous experience
Posted in Saving Ideas, Commentary | 2 Comments
Frugality in a Consumer Society
January 30th, 2008
Originally uploaded by markmyshots
Western society is geared to make you spend money all the time which makes it incredibly difficult to be frugal and save money. The idea for this post came to me as I was sitting waiting in a store watching all of the people milling about me merrily buying products they probably didn’t need. Don’t get me wrong there is nothing wrong with a consumer society especially if you can afford to spend the money at will. Unfortunately a great many people don’t have that luxury. These are the people who are carrying debt loads that are weighing them down and making them worry about their finances.
Reading through other personal finances blogs you encounter some people who have managed to get rid of their debt through being frugal. These people are naturally frugal and they don’t like spending money unnecessarily. I know a couple people like this and it amazes me what they’re able to accomplish from a monetary standpoint by not spending money. Unfortunately many people who are living from paycheck to paycheck, like myself, find it incredibly difficult to stop the process of spending money all the time.
Each and every day we are bombarded with advertising and news that pushes us into the temples of consumerism, the malls, where we see other people spending money in droves. This pressures us into spending money ourselves. We see shopping as a right and a need, going so far as to use it as a means of letting our day to day pressures go. Personally I find it hard not to spend money though I’ve learned over the years to ignore my impulses. I am not by nature a frugal person though my debts and desire to be out of debt have driven some frugal elements into my life. Living in our society is hard for a person like me and I think there are a great many people out there like me.
Being frugal takes effort and dedication (at least for me), here are some things that I do to avoid spending money (on credit or cash):
- Don’t go shopping unless you need something
- Leave the credit card at home
- Before making an impulse buy question it and yourself (you might not need the item)
- Mentally understand the difference between needs and wants, don’t buy wants unless you have spare money
- Set aside a set amount of money for frivolous expenses
I know this list is far from complete and I’ll take any suggestions people might have to offer. Regardless it’s a starting point, especially if you need to spend less but are used to spending money all the time.
An interesting case study was done by a few people over the past few years where they simply removed themselves from consumer society. They stopped spending money on any item that wasn’t 100% necessary. One of these reads was Judith Levine’s Not Buying It:My Year Without Shopping
Could you Stop Spending for a Month?
The Compact (http://groups.yahoo.com/group/thecompact/) a group of people taking themselves off the spending grid for 12 months.
Posted in Budgeting and Planning, Commentary | 4 Comments
