A Different Mind

My friend told me the other day that she wants to make a big purchase in 4 months time and was wondering out loud if the place would let her make it in payment installments.

I quickly suggested that since she is planning her purchase ahead of time she might as well divide that amount into 4 and put aside that money for the purchase she wishes to make. Not only will she not have to pay interest on payments later but she might even get a reduction in price for buying in cash.

After years of ingrained behaviour it can be very difficult to ‘flip a switch’ and start thinking differently, to not buy things we cannot afford, even if we do actually NEED them (and not just want).

I wonder what our financial behaviour would be like if we didn’t have things like credit cards which give us a false sense of “money in hand”.

And now the secret to successful budgeting – spend less money than you make.

 

 

Second Chances

So my efforts in creating more income have shifted gears this week as I plan ahead for some big expenses in the coming year. While having a ‘day off’ with a sick kid at home I was finally able to begin (again) some of my sewing projects which have been neglected for months (if not some years).

Our couches were a gift a few years back, and while I am super grateful for them and they are fabulously comfortable, they did look very used, especially with a dog and two toddlers with sticky hands. We (DH and I) have been debating for a while if we should try and sell them and buy a new one ($$$$) or reupholster ($$$$) and since both include spending money eventually – I have been dying to DIY something myself.

And so I present to you our “second chance” couches:

And then a light bulb appeared over my head (well not literally) – If I can do this for ME, then surely I can do this for OTHERS ($$$)!

So I am very excited to start my ‘Second Chances’ business and already have a meeting with my first client tonight – wish me luck!

All the Single Ladies (and guys)

I am the eldest in my family with quite a large gap between me and the second born. This naturally put me in a position where I was the first to get married and start a family. Now I get to watch my siblings enter early to mid-adulthood and try to “warn” and guide them to financial balance.

It’s quite interesting to watch them make different financial decisions than me and each other since we all grew up with the same “teachings” and habits we saw our parents making.

One of them thinks about today and plans only for the immediate future, while the other looks further ahead and is safely putting his money away when he could easily spend it on exotic vacations and car payments. While some may think it’s shameful to be living with your parents during your mid 20’s, it is perhaps the wisest financial decision if you have a goal in mind and minimizing expenses is what you need to do for this to happen.

Obviously it’s much harder to get through to the one who has a shoe and bag addiction and doesn’t know the first thing about creating and setting a budget. But maybe one day…

I wish I knew then what I know now and had safely put some money away while I had fewer expenses then I do today. If you are single – what do you spend most of your money on that can maybe take a “budget cut”? Do you put some aside for a rainy day? If you are parents to teenagers and young adults are you doing your best to make sure your children are able to stand on their own two feet and plan ahead for whatever life holds in store?

Family Budeting: Are you left Wanting?

I’m sure many articles have been written on what we think we want and what we actually need.

Sometimes I can be very hard to tell the difference. I guess it’s easier if we were to compare it to dieting and brand our desires as food. Do I need that chocolate cake (new car-even though my old is fine and running) or do I just want that pizza (new bag)?

My children need an education – does it have to be at the most prestigious kindergarten or will cheaper daycare suffice for a 1 year old? You may find that this can be an area where you don’t wish to compromise and that is fine. For us – we decided that this was a priority and opted for the more expensive facility.

We need food – do we need that special bread or will regular bread be just as fine? Cookies, cakes and frozen products are often cheaper if we make them ourselves or buy them fresh.

As you can see there are many areas where you can distinguish between your wants and needs.

Where do you draw the line? What are some of things you absolutely need and if you can admit to yourself – what are the things you spend money that you actually only want?

The Payment Trap

In my country there is a very “clever” system to teach you that you can have what you want now and pay for it later –  Splitting your purchase into payments.

This is not only harmful in planning and keeping to your budget on a monthly basis but it also nourishes the need for immediate gratification.

Instead of learning to save for what it is you wish to buy, it teaches you to buy now and think later about how you’re going to pay for it.

For example instead of saving an x amount each month for something you want to buy (TV, computer, speakers, vacation, shoes, etc…) and then having the option of paying for it in cash which more often than not usually gives you bargaining power or some sort of discount, you go out and purchase your item and pay for it in payments. While this might not seem like the most tragic thing you can do it can be very hard to keep track of what you actually spend a month on certain categories. Most often I find people forget how many payments they actually have and just keep adding to them.

For me this issue really comes home when after the credit bill is paid, I start the month with hundreds if not thousands of $ already “spent” on the card (in payments) and if I add to that all my regular purchases and expenses it adds up to quite more than I budgeted for.

There are some cases where you have no choice but to pay in payments, mostly in cases of emergency. Which is why it’s always a great idea to have an emergency fund.

Unfortunately for me I am still in the first steps of covering and eliminating debt so more on the savings and emergency funds tips to come in the future (hopefully near).

Are you guilty of splitting payments? How do you battle the urge to spend money in hopes of ‘making up for it’ in the future?

Taming our Inner Child: aka I WANT THAT!

Much like dieting – when it comes to budgeting and sticking to it, all of a sudden we are much more aware of all the things we CAN’T HAVE.

In the first few weeks of our new budgeting lifestyle we had to go through ‘withdrawl’ and close examination of things we NEEDED and things we WANTED (more on this topic infuture posts).

I clearly remember avoiding entering any malls or going to places where I would either “have to” spend money or want to.

This is very hard and as the months go by and I become more ‘relaxed’, I find myself spending money on things I really shouldn’t.

The best example of this are the daily coupon deals.

Food coupons are great – unless you weren’t going to buy the product in the first place. If you’re just buying because it’s on sale and would’t have bought it otherwise it’s not really saving is it? I argue this point many times with a certain family member (you know who you are dad) but some people like to feel they are getting a bargain when in fact they are spending money needlessly.

As for the all vacation, gadget, electronics, toys and so on ‘daily deals’ – There was a point where I would browse them daily and be very tempted to make some purchases. Sometimes I did and later regretted it. Now I make a list of all the things I wanted and didn’t buy as a way of ‘documenting’ how much money I “saved” by not purchasing it and feeling GREAT about it.

I once read an article on ‘impulse buying’ and basically how sucessful it is when there is a sense of urgency. For instance when you see an sales ad for something you want and you see the original price crossed out and the selling price much lower and the words ‘for a limited time only’ or something of that nature, there’s something in our brain that triggers ‘I must get this now before the price goes up again!!!!’ I know I feel this way sometimes and I always have to fight the urge. Truth is 9 out of 10 times the ‘special sale price’ remains for many more months, if not permenantly, and I laugh and congratulate myself for overcoming my inner child.

I would love to hear how do you conqure yours?