First thing is first: I am NOT an expert on anything, just a practical person who has a bit of experience in living life. I am going to share with you 10 of the best ideas I have been trying to implement in my life that help to ease the financial woes.
We are a young family of four and we want more than anything to get out of the renting cycle and buy our own house (I have this vision of me having a farm with chickens for our own eggs, a goat that I milk and make cheese which I sell for a bit of side money, the kids running naked through the fields…. this will more realistically be a townhouse in the city with a postage stamp for a yard). I have been feeling extra stressed about this because the boy starts kindergarten in a year and a half and I want us to be settled by then so he isn’t moving schools.
1. KNOW WHAT YOU OWE: It is impossible to save efficiently, pay down debt, or move on unless you know how much the looming sum is. Figure out exactly what you owe on all debts and add them up -there, that is the number you can work down from. I made a simple spreadsheet in Excel (Debt Spreadsheet Example) which tells me each debt, how much I owe, what the interest is & what I pay monthly). I update the spreadsheet once a month to see the progress even one month can make. USUALLY the big total number goes down, but almost always around the holidays we end up incurring a bit of debt (which I am trying to eliminate -the holidays are about family, not increasing your debt load)!
2. GET RID OF THE SMALL DEBTS WITH BIG INTEREST: Somehow my husband and I ended up with several small debts, some with crazy high interest, some with 0% for 36 months. These were for purchases we didn’t have cash for such as TV, laptop and engagement ring, plus I had racked up a small load on a department store card. I know they always say to pay down the debt with the highest interest first, but for me it was so much more rewarding to get rid of the tiny things fist, and then focus on the bigger amounts (credit cards, line of credit, loans). Another benefit about getting rid of these types of things first is that they look especially bad to creditors. The minimum payment for these debts is usually small (they want you to drag it out and pay as much interest as possible) so find a reasonable amount you can pay towards it and get rid of it!
3. INVISIBLE SAVINGS: The way we have managed to save a few thousand dollars in less than a year is through what I call “Invisible Savings”. This means we save money off a paycheque before we ever see it. We have an account set up with ING Direct which is a free online savings account that you can easily transfer your money between. We set up a TFSA (tax-free savings account) that has no fees and $50 from my husbands bi-weekly paycheque is automatically deposited into savings without any thought. It doesn’t really feel like a sacrifice because it is almost like the money never really existed. My husband works a job that provides a lot more hours and overtime in the nicer weather. Another way that we save “invisibly” is by saving everything off his cheque over a certain amount. We picked a number that was enough for us to be comfortable on and we automatically save everything over and above that. One last way to save is by setting up a savings program through your chequing account. Everytime we perform a transaction with our debit card $0.50 is transferred to our savings, this may not seem like a lot but it adds up! Everytime it reaches $50, I transfer it to our TFSA. Doing this is so easy and it also helps you think twice before making a purchase -you can choose to have more taken out as well, we may upgrade to $1 per transaction soon!
4. BUDGET: This one seems obvious, that is because it is! I am not perfect at this and I give into temptations for sure, but I have found the best thing to do is to go to the grocery store with cash in hand. I try to get groceries once a week, and go to the store with $80-$100. This usually covers the necessary food for the week, but I will occassionally need more if I am buying anything household (laundry soap, toilet paper, etc.). Set a monthly budget for these things as well. If you go shopping with just cash, you can’t spend what you don’t have! I have been using a really handy app for my phone called Mint that has all my debt inputed, allows me to set a budget for every expense throughout the month and keep track of where I am spending too much.
5. SWAP & SAVE: This is something I just started at the beginning of the year. I am trying to be more green and environmentally aware. This includes selling and buying used items. I am a part of a facebook group that is a local moms swap & shop. I decided I will only buy things when I have sold things of my own to get the money. I keep a “swap & shop” jar where my money goes from selling clothes, toys, household items. This is the only money I will use to purchase new things. Doing it like this almost feels like free money and it is two birds with one stone. You de-clutter AND get cash which you get to use for things you really need (ie. selling my 3 year olds too-small clothing for new baby items for my 2 month old!) This could include money from consignment or yard sales as well.
6. COMMUNICATON: If you are in a relationship this is key! If you are anything like us, one person predominantly deals with the household finances. In our family that person is me. It naturally fell onto my lap pretty early on because I am organized (and maybe a bit of a control freak); however, “with great power comes great responsibility”. Being the person who deals with the money also means the stress of it usually falls on you. For years my husband had no idea where we were really at financially, so it was easy for him to drop a few bucks here and there for a coffee or a burger. Once I confronted him with the total debt and started to throw some facts at him (like how much interest we pay in just one month) he realized how important it was to make better decisions about spending. I still deal with the money and the bills but I try to give him an update about once a week or so to let him know how things are going or if we have to penny-pinch a bit till the next payday. This also takes 100% of the money stress off me and puts us in the same boat.
7. HANDY DANDY NOTEBOOK: Last year I kept a word file with each bill we had to pay and the dates etc. It was great except sometimes I just plain forgot to look at it, or I goofed up and didn’t add something. This year I went back to my old tried and true method. I keep a small pocket planner and clip on a pencil and a highlighter. I write in all the bills and income we are expecting on the appropriate date in pencil. I highlight it when it has been paid or money has come in. I find this method easier than a document and more accessible as I can take it with me when we are away from the computer to make it easy to know which bills are coming up. I wrote in all the bills and the amount (or guesstimate) for the entire year and then I correct the amounts if they change. It is a really easy way to look back and see what you paid in previous months (ie. comparing hydro bills).
8. THINK TWICE: This one is pretty straightforward. Think twice before you buy. I started asking these questions. Do I need it? It is on the list? Could I get it second-hand? Could it wait? Enough with the impulse buying and start re-thinking your purchases. Sometimes our “wants” get a little bit confused with the things we actually need to live and survive (which is really quite little).
9. REUSE & REPURPOSE: Instead of running out to buy something, see if you can come up with something to use that you already own. A recent example of this in my own life happened the other day when I needed to organize my 3-year-old’s crayons, pencils & markers that were all over the place. I was about to run to the dollar store, which would have inevitably ended up in more than $1 being spent, to grab an organizer. Then I stopped to think if there was anything around the house I could use instead. I had a large can that was clean and just sitting in the recylcing bin. I grabbed it and got my son to decorate it with stickers -voila, a new holder! Ideas like this are great for saving money and the environment.
10. DON’T FORGET THE FUN: As important as it is to get your financial situation in check -don’t forget to have fun! If you try to cut out everything and just save, save, save you will break down, trust me! Set aside some money in your budget for fun. This could be something as simple as going for frozen yogurt with the family, ordering a pizza once a month, renting a movie. Find an amount that works for you and make the most of it. Even $10/month could be enough to do something that feels like a bit of a splurge. We try to do something fun with the whole family every Sunday, but before I spend a dime I try to think of any free options or community activities going on.
Thanks for reading, hope you learned something new. Feel free to comment and add your best ideas for saving a few bucks!