Saving money
As many blog posts do, this one started as a long-winded comment on a friends post on Facebook. The basic premise of the discussion was to discuss ways to save money and how to make a small amount stretch as far as possible. Since we've been working through similar things for the past few months as we try to achieve a number of financial goals I thought I'd expand on some of the ideas from the FB chatter and also look at some other things Dora and I have done.
Start with the big stuff
Make sure your debt is under control. No investment or savings plan is going to earn you as much money as you are paying in interest on your credit cards. Get them paid off! If you're running a high balance on your cards, go to your bank (or do it online if possible) and apply for a personal line of credit. Transfer all your high interest debt into this and pay it down instead of the credit cards. Some people recommend getting rid of the credit cards. I say leave them at home instead. The cards are an important way of building your credit rating for things like mortgages and credit lines. They are also good for saving money by buying things online. Just don't spend any money on them that doesn't already exist in your bank account. If you don't have this sort of self-control then you may need to resort to cutting up the cards.
Joint finanaces
If you're in a long-term partnership with someone there are numerous ways to deal with joint finances. Dora and I both want to maintain some autonomy over our money. Since we both bring home about the same amount it makes this a bit easier for us to manage. We setup a joint chequing account and a joint Visa card both with TD. I've also recently moved all my accounts to TD and our mortgage is with TD as well. This makes managing money super easy as we can see our personal and joint stuff all on the same web interface with TD. The joint chequing account is basically a holding place for monthly auto-withdrawals such as the mortgage. The joint Visa is for all purchases that we want to share equally between us including household things, meals, gifts for people, etc. We then each pay half of this every month.
This system has worked fairly well for us over the past few years. If our income situation ever changes we'll obviously have to adjust. I'm also sure there are dozens of other ways to manage joint finances. Feel free to share below.
Everything else
Once the big stuff is sorted out move on to the day to day items. Although many of these seem small, they can add up quickly. Read on.
Item 1: Eating at home and bringing lunch to work, including any extra beverages, is definitely a huge one. Spending money eating out can add up quickly. The side bonus here is that making your own food is generally much healthier as well. I would argue that eating out some times is worth while so long as you find some chea
Item 2: Ride a bike. I can't even begin to fathom the thousands of dollars I've saved by riding my bike ever since I moved to Toronto for the first time 13 years ago. Avoiding the TTC saves big bucks and major headaches. Spend some money to get a good bike for commuting. Take some time to make sure the bike is a good fit for you. Get bags and racks to carry things around with and outfit yourself to stay warm and dry in the winter and cool in the summer. Initially you might spend a lot but this stuff will last you a long time and save you big time in the end. We do own a car but I only drive when required thus still saving thousands in gas, parking and maintenance that I would spend if I drove it all the places I bike.
Item 3: Try doing some detailed tracking of your spending for awhile. I did this for three months using an app on my iPhone calledPennies and it opened my eyes to a few things where I was spending way too much money. I don't do this any more but the three months was enough to get me off some bad habits. In the Facebook comments someone mentioned Wesabe which looks to be an interesting solution for tracking your finances and finding solutions to help you out.
Item 4: Set an allowance for yourself. Every payday I take out a set amount of cash and that is all I allow myself to spend for the next two weeks. If I still have cash in my wallet from the previous payday I don't take another allowance out until my wallet is empty. If the cash runs out I make myself go without until the next payday.
Item 5: The buzz term of 2009 was the staycation and as much as I think this is a ridiculous word, there are some sound principles here that apply beyond your annual two week holiday. Instead of going out to bars or restaurants to hang with friends, invite them to your place or go to their place. Drinking at a bar is a money sink. Drop by the LCBO and drink at home or at friend's. It's MUCH cheaper. Skip the movie theatre and watch a DVD while eating hot air popcorn. Plan board game nights or potlucks. Not only does this all save you loads of cash you'll find it's a better way to engage with your close friends.
Item 6: Some what related to item 5, drop the cable/satellite service. Few people realize this still but you can get free over the air HD channels for a very small investment in hardware. All you need is a converter box and an antenna. You should be able to get setup for around $100. If you have a newer LCD or plasma TV chances are it has a digital tuner in it already and all you need is the antenna. This will give you a basic set of channels to watch, all in HD quality better than what Rogers sends through it's pipe. Anything you don't get over the air, you can buy on iTunes or wait until the DVDs are released. We haven't actually done this although I'm constantly pushing Dora to consider it. The major problem with this switch is the loss of access to the specialty channels, many of which broadcast shows she works on or wants to work on so it's kind of a work related requirement to keep them around. I would also miss Discovery, Food Network and G4TV. If any one knows of a reliable way to get the content that airs on the specialty networks let me know. The big shows can be downloaded but other stuff, especially Canadian produced, can be hard to find online.
The final word
Probably the most useful thing Dora and I have done is force ourselves to sit down and talk about our finances. I hate doing this, but the end result often leads to useful initiatives and ideas that end up saving us more money or making our finances easier to manage. If you don't have a partner to talk with, then talk to friends and family. Start group discussions like the one on Facebook that led to this post. Just don't be afraid to have these conversations or embarrassed about your situation. Chances our, most people are or have been in a similar place.
I hate talking about money. I hate any discussion that involves figuring out how and what to do with my money. I am slowly learning to get over this though as the benefits are huge. The trick is to figure out how to take control of your situation without requiring too much effort or thought from you. This is why I stay away from continuous detailed tracking of my spending and why I moved as much as I could over to TD. I want to spend as little time as possible actually having to deal with this stuff.
I look forward to any comments or ideas that people have to share. Good luck getting to your own financial goals!