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.

On The Side

So it looks like I'll have a second roommate as of this weekend. This works just fine for me, as it means I'll have 2 people helping out with housing costs, and I won't have to worry about finding people to keep an eye on my house if I go out of town for a while.

Unfortunately that means I'll also have to pay taxes on that money. Bugger.

So, I've been trying to decide what the best way to handle that money is. I could use it to pay off debt and reduce my interest load, but then I'll have to pay taxes on it next spring and may not have the money handy. I could put it directly into RRSPs, which would negate the whole tax issue, but then the money is locked up until retirement. I could put it into my emergency savings account, but it will eventually hit a point where I'd have more in there than really necessary (I don't have anything against savings, I just have other pressing issues that need attention as well). I could invest it, but again I'd be taking a risk of it shrinking and not having the money available to pay taxes.

I could use more dilemmas like this more often. There really is no purely bad outcome here.

I honestly think I'm going to end up splitting the income. Half of the money will go into savings, and half of it will go onto my highest interest debt (the credit card). I'm going to double check, but I don't believe I have to pay 50% tax on rental income, so putting half in the savings account should more than cover me there. I'll probably bump the savings account goal up to $6000 so that I have both emergency savings and tax money. Once that target has been hit I'll divert the excess payments back to debt. Once the credit card is payed off, I'm going to put the money towards the line of credit.

I don't think I'll be able to pay off everything in a year, but hey, what's the harm in trying? ;)

We'll see where my life is sitting at that point. I'd like to pay back the new homebuyer's plan RRSP loan well before my 15 years is up, and I'd love to use up my unused contribution room on my RRSPs as well. At the same time, I want to take a good solid chunk out of my mortgage; I'd like the balance owing to be under $200,000 when it comes time to renew in little under 4 years.

Or maybe I'll sell my house and use the proceeds to start a tea shoppe :)

Realistically, planning this far in advance is a bit of a pipe dream, but it's a fun one. For all I know I could be back to no roommates next month trudging away at my little *cough* pile of debt.

Only time will tell.

In the mean time, I'm going to scope out some sources of side income to help tackle the pile. I'm thinking I might see if there is a need for math tutors here in town.

What do you all do for side/secondary income?

Roommate Luck

It's hard to believe it's already almost the end of the month!

Normally I'd write a post a day on the 31st, 1st and 2nd, but it occurred to me today that I'm going to have to do some prep writing this month. Why?

I'm going out of town to meet The Boy's mom on Friday.

*cue panic*

I've never actually been "taken to meet mom" before. I've always either known them before, or met in a very casual setting.

I'm meeting her at her birthday party.

Awesome.

So, yeah, I'm going to have to get my posts written early because Friday is going to be spent hyperventilating into a paper bag.

Possibly Thursday night as well.

Anyway, on to money stuff. I actually have a roommate now! Actually, I've had one since the middle of February. I lived with him for my first couple college years, so I know we can live together. He had been unhappy with his existing living arrangement (living with parents, unemployed), but was hesitant to take the first steps forward to actually change it. He was worried about money, obviously, because he didn't have an income to make the jump with. The area he was living in isn't exactly known for being an employment hot spot either.

So, I told him to move to Edmonton, crash at my place, search for work here, and we'd work something out rent wise when he found a job. I haven't asked for anything since he'd moved in, but this month he pitched in on utilities. Yay! I think he felt bad when he saw that my electrical bill spiked after he moved in (he has lots of electronics).

Apparently I overestimated the job market here though, this weekend he FINALLY got a call back on a resume he took in over a month ago. That took far longer than I expected.

Anyways, he has an interview on Thursday. Wish him luck!

Getting Stressed

I've pretty much come to the conclusion that my job security has all but run out.

Needless to say, I'm freaking out internally right now. I'd be lying if I said I wasn't crying at my desk this morning.

I came in to a very strongly worded email in my inbox this morning. The catalyst for the email was actually a misunderstanding, as the person writing it misread the report I wrote, but it gave me a pretty good feel for where the mindset at work is. I'm seriously afraid to make a mistake right now, lest it cost me my job.

I'm sending out feelers to see who in the industry is hiring right now.

To say I'm stressed out would be a LARGE understatement.

I think the only real uplift to my Monday was opening up my email and seeing a message from YoungandThrifty saying that I had won one of the copies of tax software from H&R Block. That was quite possibly the only thing that made me smile yesterday. THANK YOU! That software couldn't have possibly come at a better time.

It may possibly have come just in time for me to need my emergency fund.

Keep calm and carry on.

*laughing hysterically*

*crying*

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.

Employment Uneasiness

So apparently someone at work doesn't like me.

That was news to me, especially seeing as I get along with everyone. No one acts even remotely off towards me at work. But, they're there.

And they're after my job.

I very rarely work with this person directly, it's more like we work on the same floor and some aspects of our jobs overlap on occasion. They're higher up the chain too. Most of my interaction with them involves seemingly pleasant lunchroom conversation about what we're making for dinner tonight and what our weekend plans are. Nothing out of the ordinary.

Behind closed doors though, they're arguing for my dismissal. Until about 8am yesterday morning, my head was on the chopping block for a round of layoffs for corporate restructuring. The higher ups that I do work for directly argued on my behalf and managed to get me taken off the list. I found this out from my manager at lunch time. Can you say blindsided? I asked if there was a problem with my work, if I had done something to piss them off, what I could have done differently.... nothing. There wasn't even any way for me to have seen this coming, because it's happening at a much higher level that I don't get to see. It would have literally have been good one day, gone the next.

Gee, think I feel secure right now?

It's sneaky and underhanded, and apparently this isn't the first time this person has done this. If they like you, it doesn't matter how poor your work is they'll argue for you to stay. If they decide they don't like you, they'll try to get rid of you. It's very political, and you'll see from the about me on the side that I hate politics.

*grumble*

They've been trying to do it to do the same thing to another person at work, based on her appearance. She works in a creative field, and her appearance reflects that. It doesn't fly with Mr. Not-Our-Direct-Manager though, and it doesn't matter that her work is freaking awesome, she was on the list too.

But I still don't know why they has a problem with me.

&%*^%$#!!!

I hate pettiness...

But anyway, it's making me rethink my debt repayment schedule again. Right now my plan was to hit my credit card hard, and knock the debts off one by one by the highest interest rate before I moved on to anything else. Now I'm thinking I should consider bulking up my emergency savings. I currently have about a month and a half worth of savings in investment form, which might not be enough if I didn't find a job right away. Our job market is improving, but I really don't want to be banking on that.

What would you guys do in this situation? Would you keep attacking the debts, build up the savings cushion, or both? And if savings, how much? I could use a little clarity in a bit of a stressful time.

Mmmmm Payday

I'm happy that since starting my cash only year I've been much less concerned about when payday actually occurs. While some of my envelopes tend to run out rather quickly (I'm looking at you Food and Entertainment), its soothing to know that I have cash sitting in the other envelopes for when I need something. It also feels like the 2 weeks between paydays go by much faster now. Rather than sitting impatiently waiting for the money to come in again (MUST SPEND MONEY! RAWR!!!), I'm a little more content. Scratch that, a lot more content.

That doesn't mean the internal shopping beast doesn't occasionally try to manifest itself, it's just that I'm getting a little better at beating it into submission.

Along with the lower spending comes higher debt payments :) I love dumping a decent size chunk of change onto the totals. I feel like I'm sticking it to the credit card companies every time I do it (not nice, no, but if it's keeping me going...). I've also gotten better at writing my spending down in my day planner! So far I'm up to date with my February mini goal. I'm not blogging the result of that weekly, though I plan to do it all in a more visual form at the end of the month. I know you like the visuals FB ;)

I'm also a little excited about this payday, because I have a new way to track my money now :) One of my friends read that I have problems writing things down, so we met for coffee and she showed me how she tracks hers. She also gave me one of her little note pads, which was/is SO appreciated (Thanks M!), and I plan to start using it today as soon as I take my cash out for the next 2 weeks :)

On a side note, apparently Tim Horton's is trying to rebrand some of their products again. Their danishes and croissants are now European Style danishes, and European Style croissants. Really? Last I checked they haven't changed at all. Yay marketing?

Anyway, that's it for today. I hope you're all doing great ;)

Reduce Reuse Recycle

I know what you're thinking, and no, this isn't about cans and bottles. It's about money. I've been trying to employ the 3R's into my financial life as well as with items at home. Hopefully I can keep both of them out of the trash? Here's how it works:

Reduce - Your Expenses

Reuse - Your Expenses

Recycle - Your Expenses

Okay, so they all say the same thing, but it's actually two different types of expense I'm talking about. I'll explain.

Reducing expenses is fairly self explanitory, almost everyone reading this blog is trying to do the same thing. In my grandfathers words:

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

I like that saying; it's catchy and it gets the point across. If you want to keep more of what you bring in, you have to figure out how to spend less of it. Sometimes it's as easy as keeping track of where it's going, sometimes it requires painful cuts and changes in lifestyle and expectations. Mine required both: I needed to track where my money was going to see that I needed to adjust my lifestyle and expectations. I don't use any fancy accounting programs or online software, I use plain old Excel. Or on my home computer, Numbers. Pencil and paper works fantastic here too.

Reusing expenses is one that I've actually been doing a fair bit now that I think about it. The most recent example of this was this semester's university tuition. School is expensive, and I didn't have $2000 sitting around waiting to be used on courses and books until work reimbursed me in May. So, we got work to reimburse me as I was paying out of pocket, rather than at the end of the semester. My first expense was $250. When I got that money back I added a little more to it and paid $300. Then $400. Then $450. I snowballed the same money onto my university tuition until it was completely paid for with minimal pain. Same with my medical expenses; as I pay out the money and get reimbursed for it, the money will be put back in the medical envelope to be reused the next time I need medication.

I've done the same thing with a $25 microloan I made while I was in university. I had been reading about microloans and how they were giving a hand to people that the banks wouldn't lend to due to the size of the loan or not enough credit history. I signed up with Kiva, who seemed reasonably reputable, and donated $25 to a young woman in Tajikistan to start a business. When that money was paid back, I donated it again to a young woman in Ukraine. It will be paid back again soon, so I'll be able to lend it to someone else. It's like the charitable donation that keeps giving.

Recycling is easy; once something has outlived it's usefulness, turn it into something else! My last tuition expense reimbursement should be sitting in my account tomorrow. Rather than saying "Yay, free money!", it's going towards my internet set up costs and a big credit card payment. It's going to feel so good watching that sucker get knocked down another notch! The hard part here is avoiding the "Oh perfect! Now I have money and I can buy ________." or "Now I have money for Starbucks this week!"

No. I. Don't.

I have money that can be used towards my goals, not instant gratification. Isn't that what got me into trouble in the first place? Right, avoiding that. Onwards and Upwards.

Exceeding Expectations

I had close to a 6 figure salary at my last job. Very close actually, after benefits I was only a couple hundred dollars away from making $100,000 a year. This year I will be making approximately $55,000. Don't get me wrong, it's still a very good living, but it's almost a 45% reduction from what I was making a year ago.

And a year ago I only owed money on my car.

I kick myself, because I've taken on $15,000 in consumer debt in a year. And really, it was for no good reason. It will take me longer to get back out of debt than it took me to get into it in the first place. I know how to live within my means, my mother did a lot to teach my sister and I how to be self sufficient and make do. So what happened? Long story short, I got used to a certain standard of living. When my income contracted, my perceived standard of living didn't contract with it. I can see how two income families who quickly go to one income, whether due to layoff, illness or birth of a child, can find themselves getting into trouble financially. I basically went from a two person income to a one person income by myself.

We're creatures of habit, and habits take time to change. Life however, doesn't always want to give us that adjustment time. That's why a budget is so important; it allows you to see, on paper, when things aren't adding up. Putting my own finances on paper helped spur me into action, and even then it wasn't right away.

I know I'm not always the most frugal person, and I have a long way to go, but I'm glad that I have the room to make those adjustments. it's a long road ahead, but the only way to go down the road is by taking the first step.