Tuesday, October 11, 2011

Money Matters (Part 3): Money-Saving Tips

Okay, back on track with the budget blog.  To finish up my blog from the weekend, Creating a Budget, I wanted to share the creative and not-so-creative/common-sense ways Nick and I have found to save money, so that we have more to spend or save as we like.  (I will use the same categories as I listed in my previous blog.)  I will also see what photos I can dig up off my computer to give a bit of a glimpse into how we actually applied these ideas over the past couple of years. 

Rent  (OR, if you own:  Mortgage, strata fees, property insurance, property taxes, sewage/water).

Now, how much you spend here really depends on your goals in life.  If you plan to always rent, and owning a place down the road isn't a super high priority, well, then obviously you might not want to get the cheapest, smallest rental place possible.  However, Nick and I did want to own a place within a few years of getting married, so we got creative with our rentals.  We rented two places before buying.  (The reason for two places was because our first landlord was a microbiologist, combined with being OCD.  I left a single hair on top of the shared drying without realizing it once, and boy did I get a lecture!  That is another story, however).

Both places required a 45 min - 1 hour commute to work, as we saved hundreds of dollars by being willing to live outside of the city.  And both were very small.  The second place was 420 square feet (wall to wall - this counts for counters, etc. as well, so NOT 420 sq. ft. of floor space by any means).  We learned to live with this much storage space (plus whatever we could squeeze under the bed and into the kitchen cupboards!):



And we had many dinners at our small Ikea coffee table, as we could definitely NOT fit a real table in that place.  We also successfully managed to have a bunch of people over after church for lunch and games around that same small coffee table.  It was way more of a memory that way! 



Okay, okay... maybe we STILL eat on our coffee table even now that we have a proper one:



Nick worked off his laptop in the bedroom when I needed the livingroom to teach piano, and we made it work.  All the money we saved by only paying $700-$750 in rent (all utilities and internet included) helped us save for our downpayment on our current place.  If we had been paying $1,000 or more in rent, we would have used up at least $300 more a month than what we were paying at $700.  Even that over one year ($300 x 12) is $3,600.  There's half of a downpayment just by living cozy!




I could write many blogs on how to save money when buying a place.  Suffice it to say, go HERE for the full story.  Long story, short - we bought a fixer-upper and foreclosure and worked hard for a good solid month.  Foreclosure sale + $5,000 in renovations + one month of weekends and evenings + a lot of help from family and friends = us being able to sell it for about $25,000 MORE than we paid for it just a few month after we bought it.  Not that we did, cause we're sticking around after all that work!  But, we saved about $20,000 (after paying back the money we borrowed for the $5,000 of renos) by just buying something that wasn't move-in-ready. 

Utilities

Do your best to not SHARE these with other tenants or the landlords upstairs.  I have had so many friends try to save and conserve.  Even Nick has been there with his bachelor place.  And the people upstairs jack up the rates for everyone!  Try to get these fixed as part of your rent, and then you will know what to budget for.

If you have coin laundry:

My mom was pointing out to me the obscene amount of underwear that we own.  (I was doing our laundry at her place one weekend this summer).   It is far cheaper to buy more socks and underwear so that you can go 2-3 weeks without doing laundry, than it is to be forced to do laundry every time you run out!  Calculate how many loads you need to do and how many times a month you need to do them.  We take out $20 in quarters every month and that holds us over just fine.

Also, don't do we what did.  Do NOT give away your drying rack because you don't think you will ever need it.  Then your bedroom will look like this if you forget to pick up enough quarters to wash AND dry your laundry:




Also, here is a short video to demonstrate how NOT to spread your clothes out to dry if you find yourself in a similar situation:

video


Bank Fees

Know what they are.  Budget for them.  If possible, find an account where they will waive bank fees if you keep a minimum balance in there.  (If you live a month ahead, as I briefly touched upon HERE, then you should be able to keep that balance in there.  Also, we use a no-fee credit card for everything instead of a debit card, so we don't have to pay extra for exceeding the amount of allowable monthly transactions.  Just make sure you don't use the credit card for money that isn't ALREADY in your bank account!

Transit Pass / Car Insurance 

If you can transit, please do!  (You get 10-15% back on your taxes!).  If you have a job like Nick's that requires a car, then try to get all the discounts you can.  The car was originally mine when we got married.  But at ICBC, I "gave" it to Nick, or "sold" it for $1, because he has one more year of driving than I do, so his insurance is slightly cheaper.  It is also cheaper if the principal driver is the one who pays for the insurance.  Again, that would be Nick.  And if Nick ever gets another speeding ticket, or something that hurts his discount, then we will legally "give" the car back to me, and I will insure it!  Also, if the only people that drive your car have been driving for 10 years or more, you get an additional discount.  We will be getting that next year, as one of us has been driving for 10 years now and the other for 9.

Internet

Use those cheap 3-month promotional offers to try out another company.  We did and found that we didn't really like company A all that much.  So we told them we were switching to company B, which had a great 6-month promotional offer on.  Company A got very worried that we were leaving and offered us $10 internet for a year!  Yes, our modem is a bit slow, but seriously... $11.20 for internet each month after tax?  For a year?  So worth it.  You play phone companies against each other for the best deal.  It totally works the same way with internet providers!

Phones

We ALL spend too much money on these little devices.  I have one question that can save you lots depending on your answer.  Do you REALLY need data on your phone?  Nick most definitely does.  I do not.  Sure, it would be nice.  But I have internet at work.  Internet at Starbucks, McDonald's etc.  And I have it at home.  I am sure I can LIVE without internet for a few hours a day while I commute.  I also did not NEED an iphone.  Nick bought me a used one off the internet for my birthday that we could use without data.  Also, PLEASE call your company and ask them to reduce your rates, or shop around!  I pay $25.00 a month for my phone (2,500 texts, voice mail, call display, free incoming, etc. etc.) and Nick pays $60 or $65 and he has all I do and more plus data with the latest Iphone.  You do NOT need to be paying $100s for phones!  They are JUST phones!  (Note: I called three times, threatened to quit, DID quit and then signed back on to get my $25 deal, so you do need to really work at it to get it THAT low!  Plus, I took over a friend's phone with a grandfather plan on it, which was the main enabler there.  However, even if you know of a friend with a good, recent plan, get their number, call the provider and say you want THAT plan).

Speaking of phones - I am selling my old one for $10 with charger and car charger - any takers?

Seriously, please buy it so I can help pay for my new computer :)


Credit Card Payment

We borrowed money from savings to pay this off (or you could maybe even ask family), which had no interest to pay back.  Then we paid THAT back instead of our actual credit card company which was charging us around 20% interest.  We also had friends that took out a line of credit from the bank and used it to pay off their cards.  Now they are paying their line of credit back which has SIGNIFICANTLY reduced interest rates.  (Don't use these tricks to go into MORE debt, of course!)

Student Loan

Pay this off last.  We get a tax break on the interest paid.  Hit your other loans first and foremost.  However, don't treat this debt like it is nothing.  JUST because Prime is really low right now, and makes payment really affordable, doesn't mean it won't increase in the future, making this debt a much bigger pain in the butt!

Life Insurance 

If this is something that interests you, look into it now rather than later.  The younger you are, the cheaper your payments will be!

Tithe

As Christians, we give 10% of our before-tax dollars to God.  Obviously, this doesn't apply to if you aren't a Christian.  Tithe by definition of the word is technically 10% so I don't really have any money saving tips here!  Um... make less?

Gas

Use the bus when you can.  Carpool when you can.  Walk if you can.  Budget out how much you need each month.  Keep an eye on it.  When you have established a good amount, and you still see yourself going over, look for times where you can transit, or catch a ride with a friend.

Food

Superstore / no-name brand / Costco are your friends.  Buy bulk if you can and portion into meals.  (We picked up a free second small freezer just so we can make a Costco card worth it).  Look for coupons and deals.  Find cheap meal ideas and create a menu that rotates them in often.  Perogies.  Pasta.  Burritos with refried beans.  Soups.  Salads.  etc.  Buying individual size anything will kill your food budget.  Spend a bit more money up front to buy bulk and portion meals out.  Also, if you are going to a party and have to bring snacks, spend 40 minutes and whip up some cookies.  So much cheaper than buying pre-packaged stuff, and everyone loves home baking anyways!  Figure out how much you need and stick to it!  If you are running out, and the month is only half over... well... you'll get really healthy eating salads and soup for a while until you can go buy what you like again!  Oh, and don't use this fund to eat out.  THAT will kill it faster than anything!

Toiletries 

The best money-saving tip I have found here is use what you have!  Seriously, how many bottles of STUFF do we have under our sinks?  Shampoos, conditioners, samples, make up, lotions, face cleanser, etc.!  Don't go buy yourself something brand new until you use what you have!  I just avoided buying face soap for the last two months because I dug under my bathroom sink!  Also, research less expensive alternatives.  A coworker just pointed out to me that rose water acts as a good toner and can be picked up in the ethnic isle of Superstore for just a few dollars.  That sure beats the tens of dollars you would spend for something in a nice bottle!

Clothes

You know what I'm going to say, right?  Value Village.  Yes, it takes longer, but you get quality stuff for affordable prices.  Yes, I do buy stuff at the mall occasionally.   I give myself $15 a month for clothes, and if I choose to spend it at the mall, then so be it.  Or if I choose to spend my "allowance" at the mall, then that's cool, too.  However, $15 will buy me a couple pairs of pants at VV, and only a cheap shirt at the mall.

Haircuts

I have discovered the world of highlighting my hair!  Super fun.  Super expensive.  I've done it only twice, on sale, in the last year.  And now I'm on a break until probably the spring when I'm up to spending my "allowance" on it again.  In the meantime, I cut my own bangs, and live with naturally brown hair.  (Some places will give you bang trims for free if you get your hair cut there - worth looking into!).  I get my hair done at Mastercuts (nothing fancy), and Nick gets his done at the barber down the street.  Nick can get his done for $18 and I can get mine done for $23.  I do mine 3-4 times a year, and Nick does his every other month.  We added it all up, divided by 12, and set aside $20 a month for it.  (Also, go to schools of hairdressing!  I have a friend that goes there and can get super cute cuts for $15.)  When I have kids, I am going to learn to cut hair while they are still too young to care.  Right now, I am avoiding styling...:




Long-Term Savings 

I will admit that we currently don't have anything in this category.  Right now we will save more money long-term by paying off as much of our mortgage as possible.  We also have a real blessing in my parents making an agreement with us to rescue us temporarily (i.e. we stop paying extra on our mortgage and then pay them back asap) from any emergencies that pop up while we focus hitting our mortgage as hard as we can.  If we did not have this agreement, we would be putting aside whatever we needed to have at least $5,000 in there as quickly as possible for unforeseen special levies, car issues, etc.

Okay, now here's the part where you aren't trying to cut back or give just enough.  Here's the part where you want to do the opposite, but should probably reign in!

Nick's "Allowance"  
Laura's "Allowance" 
Entertainment 

For the above three categories (personal spending money for each of us, and money to spend on fun stuff together), we have made lots of adjustments.  (These are also the first thing to get adjusted if we have a really hard month and want to cut back and conserve.  We each currently get $55 a month to spend on our own and $70 to spend together.  (We just gave ourselves a raise - it was a lot less for a long time).  This is the stuff we eat out on, and buy each other presents with.  (We decided to let our "gifts" category be just for Christmas, and if our friends have birthdays throughout the year, we use our allowances for it.  I honestly don't know whether some would consider this a lot or a little!

We just went $55+$55+$70 = $180.  $180 x 12 = $2,160.  Then we said to ourselves, do we REALLY need to spend more than $2,160 on junk food and fun times, and whatever we want a year?  Mmmm.. probably not.   We learned that no matter how much or how little we make these categories, we will almost always spend them within the first 10 days of the month... entirely... lol.  (Well, I DO tend to save my allowance longer than that, but then I buy computers and cameras and expensive stuff, so I never really have money to spend cause I'm always saving up for something bigger!).  You just need to decide what you're comfortable with spending.  Add it up for 12 months, and see if you're okay "blowing" that much a year :)  (Albeit, gifts for friends isn't necessarily "blowing" it, but that majority of it is not used for that!).

Discretionary 

This is not to top up your entertainment fund when it runs out.  This is to top up OTHER more important expenses when you run short.  (No, not your allowance either).  Trust me, I know how tempting it is.  This was an "extension" of our entertainment for over a year, before we realized that we never had it when we needed it then!

This is for the girl guide who comes to the door and you don't want to say no.  This is for when a wedding comes up and you need to buy a present that would ordinarily wipe out your allowance.  This is for when you use a lot of gas one month for some reason.  We put $45 a month aside, but again, this is a personal decision.  This is for pesky passport photos and the like.

Car Repairs

This amount technically doesn't fall under stuff you want to throw a lot of money at.  However, I'm doing these in the order I previously listed them.  This will depend on how old your car is.  This needs to cover oil changes, wind shield wipers, new tires when you need them, and general repairs.  This is so you don't go "oh, oh" when your engine light comes on.  Well, you still would probably say that, but it wouldn't be QUITE as bit of a concern.  This fund has also financed a couple tickets over the last two years :S :S

Netflix

Netflix, cable, whatever you like.  We do Netflix because you can watch t.v. shows on it, and it's only $7.99 a month.  We'll cut it first if we ever need to, but this is our treat.  (Notice how cable and internet are separated?  Yes, one is more of a need than the other in today's society).

Giving

We like to give God an "allowance".  I know, that sounds really cheesy.  But we like to have extra money to give to people in need or the homeless on the street.  We want to support the churches we are a part of with our tithe, but we also want a little spending money on the side to help those who need it.  I can't tell you how much to put here, because 1.  you may not even be a Christian (in that case, substitute charitable donations here), and 2.  it's a personal decision and has to do with what God has put on your heart.

Gifts

Christmas time :)  We used a simple formula here.  Nick's family draws names, so we will get two names a year from them.  My mom and dad makes 4 people total.  Then we added a few others we like to buy for as well.  Then we decided how much we wanted to spend on a Christmas gift for a person, multiplied that by the number of people we wanted to buy for, and divided by 12.  Saving for Christmas all year long :)


Yes, I save ribbons from year to year, too.


Short-Term Savings

Travelling time!  We figured out how often we could feasibly see our families, added up the gas for each of those trips over two years, and divided by 24.  (We didn't do 12 because we sometimes only make it out to the prairies every other year).  Just decide where you want to go, how often you want to go there, and start saving up.  Guilt free vacations right here :)

P.S.  Driving is much cheaper than flying ;)

Notice Nick's eyes are on the road.  This is because we are safe drivers and never speed... ever... 


Mortgage Savings 

This is only because we have anniversary payments where we can pay extra one a year.  Everything that we make above and beyond our above-budget goes here.  Tax returns go here.  Money from teaching piano goes here.  Christmas bonuses, raises, etc. all go here.  We are a little bit hard core in this department (though note, we did give ourselves a spending money raise this year!).  That's just because we have a goal we are trying to reach, and need to hit the mortgage hard in order to do so.  Soommmeettimmmeess we will use a bit of this money to buy a new mattress for our bed, for example, but we have other ways to get extra spending money for house-hold stuff that I will touch upon later.  Basically, we're really happy with the amounts we have allocated everywhere, so we don't really need to begrudge putting everything extra here.  If we did begrudge it, we would sit down and re-evaluate stuff :)


Okay, phew!  Long post!  I think this one "should" be the longest of them all.  Okay, now to go watch some Netflix with my hubby :)




2 comments:

  1. Wow I have learnt so much from reading your post! What a good idea with saving for christmas. Love all your tips and really enjoyed reading about them. Thanks!

    ReplyDelete
  2. Wow, I'm surprised you read it all! It's a VERY longwinded post. Not to mention, it's just one part of a whole set of long-winded posts on the topic! Glad you found it interesting, though :)

    ReplyDelete