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?

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 ;)

Stuffing Envelopes

I mentioned recently that one of my goals for the New Year was to use a cash envelope system for budgeting. I’ve used the system before, with great results. MP Dunleavey wrote an article about living on cash rather than credit back in March 2009. I quite enjoyed the article, though it can be summed up in a few short words:

If you don’t have the money you can’t spend it.

I’d still recommend it as a good starter for going back to cash after a plastic addiction, as it talks about expectations and adjusting our mind set.

http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/3-steps-back-to-the-sanity-of-cash.aspx

When I was waiting tables in my early university days I’d save my pay checks in my bank account, and live off my tips. I didn’t have nearly the expenses to look after that I do now (housing, utilities and phone were all paid for, I only looked after food, fuel, etc… ), but I never had to worry about going over budget or into debt. I’m a very visual person, and having that stash of cash in an envelope showed me quite tangibly how much money I had to spend, and whether or not I needed to tighten my belt.

Quite simply: It worked.

For some reason or another I quit using the system when I stopped waiting tables. I picked it up again for short periods of time here and there, but sadly I never did it as faithfully as I did before. So, I’m going to change that.

Through the year of 2011, I am going to use cash. Just cash. Bills that are deducted automatically (mortgage, car, insurance) or paid online (power, water, credit card) will continue being paid that way. Everything else (food, fuel, clothing, gifts, etc…) will be paid for using cold hard cash. This is how I’m going to break it down:

Food

This is exactly what it sounds like; if I ingest it (with the exception of medication), it gets paid for here. Food, Alcohol, Eating Out, etc…

Personal Care

Largely toiletries, with a few extras. Feminine products, soap, shampoo, makeup, hair cuts, massages, etc… The massages are reimbursable through work, so some of the money that gets spent in this category will be coming back and can be used again.

House

I’m fixing my place up, and sadly that’s not free. Home care and renovation supplies will come out of this category. Flooring, mortar, lighting, paint rollers, gardening, etc…

Gas

Thankfully quite a small category. Fuel for my car. It’s been averaging under $50 a month if I don’t drive somewhere out of the city, such as too my parent’s house.

Medical

I’m a little ticked that this category has gotten large enough to warrant its own envelope, but it is what it is. Acne medications, antihistamines, asthma medication, etc… Again, some of the items in here are reimbursable through work, so the money will return to the category and can be reused.

Clothing

A largely self explanatory category: clothes, shoes and accessories. Do I need more clothes? No. My body is covered, and the level of coverage can be varied depending on the weather. That being said, this category also provides a certain level of personal enjoyment. I really enjoy fashion. I read about it with great interest, and put a lot of effort into finding things that fit me well. I’m working on building a work wardrobe, and if it’s properly budgeted it won’t contribute to my debt levels.

Gifts

Christmas, birthdays, work gatherings… All require gifts, usually aren’t budgeted. I’m also going to throw Thank You cards in this category, because I’ve been sending them out to people as of late as well.

Entertainment

Books, magazines, movies, sports, dating… You get the idea.

Oh Shit!

Literally anything that would make you say that. Blown tire, roof leak, broken window…

Mortgage Extras

This is all of the spare change I’m going to collect to put towards my mortgage.

Money will be separated into the various envelopes on pay day. If I find myself running short in one category I can pinch some from another category, but it means that category is now smaller. All of the categories are going to be stuffed in labeled envelopes with the exception of “Oh Shit!” and “Mortgage Extras”. As I mentioned above, I’m a very visual person, I do not want to see the money in these categories. I want to pretend it doesn’t exist so it just builds up in there while I remain oblivious to it. The holding containers for these will be a little different; I’m going to take old jars, paint the insides so they’re opaque, and then glue their lids on so that all I can do is put money in the slot at the top.

 Basically, it’s a cheap piggy bank that you have to break to get the money out. I’m not very often inclined to break things, so this should work well.

So, that’s the plan for goal number 1. Does anyone else out there use the money envelope system for their day to day finances? If so, how do you break it down? Do you do anything differently? I’d love to hear it!