Lessons Learned

If your outgo exceeds your income, your upkeep will be your downfall.

Truer words were never spoken. My grandfather has said that to me many times, but for whatever reason it didn't stick properly. It would have been great if it had! The last year and a half have been a huge learning opportunity for me. It took me a solid month to write the last two posts, because it was a hard pill to swallow. I dug myself into $19,000 of consumer debt in 1 year. 1 STINKING YEAR!

I get nauseated just thinking about it, but I have to do it. If I didn't think about it, I wouldn't learn anything from it, and I'd be setting myself up to fall again. God only knows where the floor would be next time.

Thankfully, I have managed to learn a few things from this experience. Hopefully in sharing them with you all I can prevent someone else from having to learn it the hard way.

You Need A Budget

This is a surprise to no one. At least, it should be a surprise to no one. This doesn't mean that you need to be categorized and itemized down to the cent in a fancy budgeting program, this just means that you need to know how much is coming in, and where it is going. If your income just barely covers your costs, should you really be going on that ski trip or buying a new wardrobe? Probably not. But unless you know where your money is and where its going are you going to be able to turn it down? Again, probably not.


Be Aware Of Your Income

Different incomes can afford different lifestyles, this isn't a surprise for anyone. Readjusting to a lifestyle on a lower income when you've been riding high for a while... that can be a bit of a shock, and not a pleasant one. It requires being cognizant of how much money you have (budget anyone?), and what it will afford. Anyone changing to a job with lower pay, losing hours, or losing a job altogether will have to deal with this at some point, its best to walk into it with your eyes open.

Life Changes Require Buffers

That lifestyle adjustment I mentioned above takes time, and time is money. Getting adjusted before the change, or having some money put aside to help with the change, will be a HUGE asset. Likewise, if there is another major change coming, such as buying a house or welcoming a baby into the world, you'll want a buffer. Chances are it's going to cost you more than you expect.

Get It In Writing

I thought I had learned this lesson while I was working up north, but apparently I didn't. If it's not written into a contract, it's not guaranteed. Overtime, bonuses, and other perks sound fine and dandy when you're negotiating your wage, but unless you get it in writing you can't rely on it. You need to make sure that you can cover your bases using what's on the page, and what's on the page only. Anything else is gravy.

Distinguish Between Needs and Wants

This one really is a gimme.

I NEED enough food that my body can function properly.
I WANT that Starbucks Chai Latte in the morning because they're yummy...

I NEED enough clothing to keep me appropriately dressed for work and the elements.
I WANT that Lululemon top even though I already have a closet full of clothes

I NEED some way of communicating with people
I WANT an iPhone and MacBook Air.

See where I'm going with this?

If You Can't Afford It Now, Chances Are You Can't Afford It Later

What is actually different between now and later? Are you getting a raise? Is there an inheritance coming? Are you going to cut something out of your daily spending habits? Are your expenses suddenly going to drop?

Is anything different? At all?

If nothing is different, and you can't afford something now, how is it you expect to be able to afford it later when the credit card bill comes in? The easiest answer to this is you can't. Especially when the next payday comes around and there is something else you want...

Find Healthy Outlets For Stress

I use shopping as an outlet for stress. It's a horrible fall back, and I'm actually not sure when it started. I can pinpoint when I started using debt for consumer spending, but I can't pinpoint when I started using shopping as an outlet for stress.

I know there are many, healthier, ways of dealing with it. Exercise it one of the better ones, and I find going to a yoga class or going for a run definitely help me cope with things better. So does getting a hug from a loved one. Seriously, hugs are my emotional/mental saviour. I'd probably be a total nut case if it wasn't for the occasional personal contact.
If I don't deal with the stress issue, my spending goes through the roof. Funny enough though, I don't always have to buy consumer items to get that relief. A little while back I was feeling stressed about my finances, so I put a little more money on one of my debts. It's like I'm slowly buying back my freedom, and it worked to sooth my nerves. Any action that reduces the stress levels without getting you further into trouble is good in my books.

Speak Up

Chances are if you have/had a high paying job, you also have friends with high paying jobs. They may want to do things they automatically assume you can afford, because they can afford to. They're not going to know otherwise until you actually speak up that you can't afford it, so do it! You just might find that some of them are in the same boat as you, and are grateful you spoke up.

Control Your Impulses

And for that matter your daily habits. Do you cave and buy something every time you walk past a bakery or coffee shop? This week try just walking past it once. Maybe on a Tuesday. Just see if you can do it once (I know you can). Once you've done it, try it again next week. Maybe on a Thursday. The point of this is to show yourself that you don't NEED to cave every time you walk by. You are strong enough to say no. Willpower is like a muscle; the more you use it the stronger it gets. You might find after doing it for a while you won't have to make a conscious effort anymore and it will just come naturally.

Plan For The Future

Long story short: it's coming, so get ready.

Whether it's an old jar you put your recycling money into, or an investment account you throw half of your paycheck into, everyone needs to save something. Retirement, investments and emergencies all require money, and it doesn't appear out of nowhere. Despite how it may feel every little bit helps, so snowflake away. You'll be glad you did one day.


Anyway, that's what I've learned over the last year and a half. I'm sure there are more lessons in my future, but for now I'm doing my best to apply these ones.

Fritter Fritter?

*sigh*

Wow. What can I say? I had a distinct lack of no spend days last month. I did add my online payment stuff into this month's calendar, but there are still far fewer no spend days in there than there should be. Here's how it went for the month of March:

A little legend for the calendar below:

Green = No Spend Day

Yellow = Spend Day

Red = Used Credit/Debit Card

March - All Spending
Sunday	Monday	Tuesday	Wednesday	Thursday	Friday	Saturday
		$1.25	$68.71	$110.00	$16.80	$70.00
$19.05	$4.45	$0.00	$52.70	$280.84	$677.83	$14.25
$0.00	$2.50	$6.30	$46.25	$0.25	$14.51	$49.03
$9.61	$0.00	$105.81	$9.02	$11.39	$1,182.15	$16.26
$17.48	$433.38	$0.00	$24.96	$14.50

Before you jump at the red box that's over a thousand dollars, I'll point out that both my mortgage and utilities were paid on that day as well. In fact, any day that you see that's over $100 is due to either utility payments, debt payments, a car/insurance payment or a mortgage payment. Looking at the non-(semi)automated stuff, this is what I spent this month:

March - Cash & Card Spending
Sunday	Monday	Tuesday	Wednesday	Thursday	Friday	Saturday
		$1.25	$68.71	$0.00	$16.80	$70.00
$19.05	$4.45	$0.00	$2.70	$60.84	$22.85	$14.25
$0.00	$2.50	$6.30	$46.25	$0.25	$14.51	$49.03
$9.61	$0.00	$34.07	$9.02	$11.39	$17.17	$16.26
$17.48	$0.00	$0.00	$24.96	$14.50

There is still a distinct lack of No Spend days here. Seriously, what's up with that? I took out the frivolous food purchases, and this is what I came up with:

March - Cash & Card Spending - Without Frivolous Food Purchases
Sunday	Monday	Tuesday	Wednesday	Thursday	Friday	Saturday
		$0.00	$65.92	$0.00	$13.95	$70.00
$19.05	$0.00	$0.00	$0.00	$59.34	$20.00	$14.25
$0.00	$0.00	$0.00	$45.00	$0.25	$0.00	$46.71
$0.00	$0.00	$26.00	$7.52	$0.00	$15.67	$5.00
$10.48	$0.00	$0.00	$19.96	$0.00

That's more like it.

Not all of the eating out was taken out of that last one. If I was meeting friends for breakfast/lunch/dinner, then I counted it as socializing. If it was just me, it was frivolous. I know why I've been eating out so much, and I know it's within my control and I need to find a way to work around it. Usually I spend my Sunday afternoons cooking/cleaning and generally preparing for the week. This last month I've spent pretty much every weekend at The Boy's place, meaning I haven't been doing my food prep. Consequently, I've been running out the door in the mornings without a packed breakfast or lunch of any sort, and nothing really planned.

Oops.

So, I need to fix that. It's far too easy to spend money on food. Last month I spent $84.69 on groceries, and $235.46 on eating out. WAY too much!

The other thing that's been causing me to fritter is stress. Lately, I've been going down to the corner store in the building and picking up a chocolate bar as an afternoon pick me up. Seriously, since when do I buy chocolate bars at work?

Since this year I guess.

Anyway, that's how last month went. I'm going to try to do better this month. I acknowledge that will be a little difficult with exams towards the end of the month, but I'm going to try. This morning I brought my tea to class in a travel mug. That's one step in the right direction, now I just have to keep it up. Tomorrow I'll go over where the *RED* purchases occurred.

I'm Dreaming

Because the last couple days have been a little stressful, I really wanted to do something light and fluffy. Something fun and semi-useless. I say semi-useless instead of useless, because this exercise can give you real insight into where your priorities actually lie. Sometimes that's just as useful as money. So, inspired by Money Rabbit's What I Would Do With $100,000, and Krystal at Give Me Back My Five Bucks' What I Would Do If I Won $1,000,000: 4 Years Later, here is what I would do if I had $100,000:
Credit Card - $4,300 ($95,700 left)

So long sucker. Like a bad ex-boyfriend, I won't miss you when you're gone.

LOC - $11,000 ($84,700 left)

This is like the annoying kid brother to the aforementioned bad ex-boyfriend. Less directly spiteful, but I'll be happy to not have to deal with it again either.

Car - $9000 ($75,700 left)

I still plan to sell my silvery little lemon, but in the mean time I'd rather not have the monthly payments or inflated insurance on it either. Hello extra $450 a month...

Mortgage - $48,000 ($27,700 left)

My mortgage, while it is fixed, has multiple pre-payment options including one allowing me to put up to 20% of the total mortgage down on the balance every year. That chunk right there takes my mortgage out of the oh please don't let the rates get too high category into the *breathe* category. Ah the things you learn when you're young and dumb.

New Homebuyer's Repayment - $15,000 ($12,700 left)

Because when I put money into RRSPs, I want my tax money back dammit.

Emergency Fund - $5,300 ($7,400 left)

I'd plunk the money for my goal of $4000 in there, along with a little extra just for good measure. That puts my combined cash savings and investments between $9,000 and $10,000. I'd feel pretty good about that for the time being, as that gives me several months living expenses should I need it. Or a new furnace in January. You never know.

Renovations - $5,000 ($2,400 left)

I need to finish the flooring on my staircase, and the tile in the kitchen. After that, I should have enough money left to put up the other half of the fence in my back yard.

Pantry Restock - $400 ($2,000 left)

Assorted dried/canned odds and ends, as well as 1/2 a lamb from a farming friend of mine up north. Some containers to hold dried goods in an orderly fashion would be nice too.

Grandfather's Birthday Present - $250 ($1,750 left)

Because he deserves it. I don't know yet what the exact gift would be, but I can assure you it likely includes a large Tim Horton's gift card.

Grandmother's Birthday - $750 ($1,000 left)

It's my grandmother's 80th birthday this year, and the family is all getting together in BC to celebrate. That means flights and accommodation, along with a gift for my grandmother.

Wardrobe Restock - $995 ($5)

Right now the thing I'm most in need of are a pair of gum boots (rain boots, wellies, whatever you call them). The snow is melting around my place, and the water on the sidewalks gets quite deep in some places. Other than that, some good quality work clothes to kick a couple items off my list would be great.

Starbucks Chai Latte - $5 (I'm Out!)

Because, you know, I want one.

;)


*Missed a couple several others - Oops*
Paying Myself
Finance Say What
Debt Free Kid
Fabulously Frugirl
Little Miss Money Bags
Figuring Money Out
Hi That's My Bike

Foul Ball

I went into the bank last Thursday to take out my money for the next 2 weeks. I wish there were still bank machines that gave out $5 and $10 bills rather than just $20 and $50 bills, it would save me a trip in to the bank to talk to a teller. Furthermore, it would save me from the frequent credit product pitches that the bank likes to give.

This is a little chunk of my most recent discussion:

"I see you don't have our XXXXXX visa, would you be interested in signing up for one today?"

"No thank you, I already have a credit card"

"But this is an excellent card. If you do any travelling and rent a car with it, if you get in an accident the card covers the insurance for you"

"I understand that, but I'm not interested in another credit card"

"This card has a lot of other perks as well that you might be interested in"

Seriously, I just want $5 and $10 bills, leave me alone.

"What is the interest rate on it?"

"19.9%"

"That's too high"

"But if you pay the card off every month, you don't have to pay anything and the rate doesn't matter"

"It's more a matter of principle"

Okay, so right now it's not strictly a matter of principle, but in general it is. 19.9% is just greedy, especially when you contrast it with what they pay you in a savings account.

"We also have a low rate card you might be interested in. The rate on it is 11.9%, and the annual fee is only $20"

"My existing card is 12.9%, and I don't pay an annual fee on it"

*blank look*

"Which bank is that with?"

"XXXXXXXX"

"Oh. I'll have to leave a comment in the notes about that"

Seriously guys, I know you can see right on the screen that I have a fairly healthy chunk of debt with your bank, why push it?

Okay, chances are your supervisor is making you do it, but still.

It used to be hard to apply for credit. Now it's hard to avoid having it pushed on you. I just wanted small bills.

The more the banks push, the more I want to pay the debt off NOW so that I have less of a reason to deal with them. I know a lot of people who are getting pissed off at the banks right now over it. One guy told his bank that if they don't stop calling him and pestering him to sign up for things he's going to close all of his accounts and go elsewhere. One of the girls I hung out with this past weekend got a message on her answering machine from her bank saying it was very important she call them back. When she did, they tried to sign her up for a credit card. Seriously? Call me saying it's important if someone has tried to drain my accounts, not because I don't have one of your credit products.

Banks, if you're reading this, PISS OFF!

What Would You Do?

I had one of those "That will never happen twice" strokes of luck last night. At least I think I did, because I'm not sure whether or not I should have handled it differently.

I asked The Boy last night if he wanted to do anything, and he said a friend of his wanted to do a casino night at one of the big casinos in town. I'm not one for gambling, and I told The Boy that, but I said I'd tag along and hang out anyway.

We got there, and one of the friends sat down at the roulette table to play. He had a "fool proof strategy" for winning money in roulette. While the method he used does work, albeit slowly, you have to have a LOT of money to back you up. He didn't have enough. It was painful to watch, because he was betting on red, and it came up consistently black again and again.

After leaving the table, The Boy and I decided to go back and see how long it took before the roulette table hit red again. We got there, and the wheel kept turning up black. I looked down and noticed a bunch of money laying on the floor behind the chair where our friend had been sitting, so I picked it up. It was really busy, but I looked around to see if anyone was fiddling with their wallets and could have possibly dropped it. Everyone was facing tables concentrating on their games. It wasn't near any of the dealers, so I didn't think it was house money. I looked at The Boy, and he told me I better put it in my pocket.

We walked over and told the people we were with what happened. They were stunned, but nobody actually claimed the money as theirs.

The Boy and I wandered around while the friends played $5 black jack and nickel slots, then headed out for the night.

Neither The Boy or I placed a single bet at the casino, but I walked out with almost $200 cash in my pocket.

He says he's bringing me to the casino more often.

Some of the money is going towards a girls night out tonight, but the majority of it is currently sitting snugly in my emergency savings account. It was the little kick start that account needed.

However, I have that needling little bit of guilt in the back of my head. I know that holding it up and saying "did anyone drop this?" would get me swamped, but does anyone know if there is a proper protocol for found money in a casino? Just curious.

Tracking Coinage

Okay, a little legend for the calendars below:

Green = No Spend Day

Yellow = Spend Day

Red = Used Credit Card

Here's how it went for the month of February:

February - All Spending
Sunday	Monday	Tuesday	Wednesday	Thursday	Friday	Saturday
		$75.00	$1.25	$0.00	$1.25	$24.00
$0.00	$2.09	$0.00	$2.85	$3.16	$117.15	$13.13
$0.00	$27.37	$199.59	$2.85	$15.24	$1.60	$0.00
$0.00	$3.57	$4.20	$0.00	$1.60	$31.66	$1.25
$0.00	$1.25

*fritter fritter*

*fritter*

*fritter fritter fritter*

You hear that? That's the sound of me frittering away money on a near daily basis buying tea and breakfast items at the university. It occurred to me about half way through the month that I was doing this, so I decided to see what my spending would look like if I took the morning treats out of there. This was the result:

February - Spending, Without Morning Snacks
Sunday	Monday	Tuesday	Wednesday	Thursday	Friday	Saturday
		$75.00	$0.00	$0.00	$0.00	$24.00
$0.00	$0.00	$0.00	$0.00	$0.00	$115.00	$13.13
$0.00	$25.27	$195.39	$0.00	$12.90	$0.00	$0.00
$0.00	$3.57	$0.00	$0.00	$0.00	$31.66	$1.25
$0.00	$0.00

Considerably more no spend days!

However, when I totalled it up, my morning breakfasts out added up to about $30.79 over the course of the month. That's just over a dollar a day. I expected it to be much higher than that once I realized how often I was doing it.

Now I'm trying to decide whether this is something I want to stem for the sake of saving a little extra money, or just let slide for the sake of sanity? I know that the *right* answer is to bring my tea and scones from home and put the savings towards my emergency fund; but right now I am feeling a bit of frugal fatigue.

It sucks. Hard.

The savings grace of having this habit at the university is where I can go to get my snack attack breakfast fix. If I was getting a venti chai latte and scone at Starbucks, it would set me back about $8. Grabbing an extra large chai tea and scone at Cram Dunk? Closer to $2.50, $2 if they have day old baking. The tea itself is $1.25.

I have a month and a half until class is done. To be completely honest, I'm probably going to let myself fritter on this in the morning.

Frugal? No.

Sane? Yes.

I'm already crazy enough as it is, I don't need money driving me further down the rabbit hole.

*slide*

And now, for last month's slips. Needless to say, it was a little rough for me this month, especially around the middle. I'm not going to beat around this one, I slipped into an old, very bad, habit this month. I used shopping to beat stress.

I seriously deserve a beat down for this one.

After what was the hardest day I've had at work in well over a year, I went shopping. I didn't use cash. I did set myself a limit, I wasn't allowed to spend any more than 50% of my extra payments this month. That way by the end of the month I was still digging myself out, it was just slower than anticipated. Still, it's a habit I need to break.

After reading on Hi That's My Bike that the jeans I had been after were on sale at Anthropologie, I trotted down there and picked a pair up. Originally almost $220, they were marked down to $80.  While I was there I noticed the sweater I had been fawning over the weeks leading up to Christmas was marked down to $40 from $120, so I picked up the last one in my size as well. Tack on a couple small gifts for people, and a tube of mascara to replace mine (it was time), and I was done. Part of what limited the shopping (other than the fact that the mall was closing), wasn't so much the fact that it would mean my debt would take longer to pay off, but the fact that I'd have to write about it on here. Let's face it, admitting to this stuff is embarassing. So, thank you all.
Credit Card Damage: $184.64

I love music. I know what I should do here is delete my credit card information off iTunes, go out and buy an iTunes gift card with cash, and then use that. As of yet I haven't done it. Chalk this up to laziness, I'll buy one next time I'm out getting groceries.
Credit Card Damage: $3.57

As many of you probably saw earlier in the month, I signed up for the Ride to Conquer Cancer. Unfortunately there was a sizable registration cost associated with signing up for it.

That's right, I paid money to raise money for someone else.

I don't feel too bad about the cost of the registration because they feed us and provide us with a place to sleep that weekend. I'm basically paying for a weekend out now rather than in June. They only took either credit card or cheque for the registration costs, and I didn't have any cheques on me, so it ended up going on my credit card. That's the problem with having your card number memorized, its still usable even when it's frozen in a block of ice. My only saving grace on that is that while I have the loooooong number on the front memorized, the short one on the back I don't. That means I usually can't use it online. I put extra money on my card the following payday, but it would have been nice if that money went towards paying the balance down rather than just maintaining it.
Credit Card Damage: $75

That's $263.21 in non-cash spending during the month of February.

*facepalm*

That sucks.

Amazingly enough though I didn't use my debit card all month, other than to take money out of the bank machine every payday. I did however write down and track my spending all month, which was one of my other goals for February. I'll post the results of that tomorrow :)

Savings Decision

After giving it a little thought, I'm going to follow the advice that was given to me earlier this week. I'm going to put the debt reduction on hold (beyond minimum payments that is), and focus on building an emergency savings cushion. I'm going to save $4000 in cash to augment my investments. At their present value, that gives me little over $7500 that I can use in case of emergency if I absolutely have to. That gives me at minimum 3 months to work with. If I take in a renter, sell my car and get whatever job I can while looking for a permanent one it will last closer to 6 months. My freezer is already full, so I only have some dried staple stocking to do.

Once the $4000 is built up, I'm going to switch gears back to debt reduction again. As much as I'd love to have 6 months worth of cash savings, I don't want to be letting those balances sit and accumulate interest while I'm doing it. I'm building a cash reserve for the sake of liquidity, but it still makes more sense for me to pay off the debts before focusing on building up savings. Credit isn't supposed to be used as an emergency savings account, but building up a stash of cash to avoid paying interest on your debt while your debt balance sits there generating interest doesn't really make sense. Hence the savings limit.

*shifts gears*

Moving forward again.

My Two Cents

I never expected anyone would ever read my blog, let alone go out of their way to tell other people about it! Yet it's happened a couple times this week. Thank you to The Asian Pear and Saving for Travel, I appreciate the shout outs. I feel all warm and fuzzy now :)

I picked up a couple pennies at the LRT station. One last night, one this morning. You can't actually buy anything with a penny anymore, I'm pretty sure that even penny candy is all five cents and up now (can you still get candy for a nickel?) Those of you in Canada probably remember the announcement back in December that the Bank of Canada is considering abolishing the penny due to the fact that inflation has eroded it's buying power to the point that it's nearly worthless. It costs more to produce them than their face value.

So why am I picking up a couple dirty coins on my way to the train? Other than because I always have?

Future value.

No, I'm not holding on to them in the hopes that they become rare items and make me a millionaire. They're going in my coin box, the one that goes towards my extra mortgage payment. Those two pennies will save me seven pennies over the life of my mortgage, and that's just assuming that my interest rate doesn't go up. If my rate after renewal went up to 6% and stayed there for the rest of the mortgage, those two pennies would save me about eleven cents. That's eleven cents I don't have to fritter away on my own.

Is seven, or even eleven, cents really going to make a difference on a two hundred and forty some-odd thousand dollar loan? Not really. But if I do it enough times it will. These pennies are my little snowflakes.

Hence the coin jar.

It doesn't take any time, and it doesn't cost anything, so why not?