How to save money in 2011

[Red_Liner740]

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The Sad part is, you have to be more and more frugal just to keep your head above water, not to be able to save up for some bit ticket item you wont.

BTW, i have ZERO dollars in debt. If i cant buy it outright with cash, i dont buy it.

 

[CanadianBiker]

We got rid of the house phone years ago and just use BlackBerrys; not neccessarily cheaper but certainly cheaper than both. And the BBs are a legitimate business expense.
No cable or satellite TV. Can't get cable where we live and the cost-per-hour of satellite for the little we watch just isn't worth it. Big ol' rabbit ears work just fine.
In the same vein, use your local library. Even our small town libray gets the latest books soon after they're published. Make friends with the librarians and they'll start knowing your reading habits and putting you on the waiting list without even having to ask. DVDs are also available for free.
Magazines, esp bike magazines. I used to buy them all, almost. Now I only get one.
Choose your entertainment wisely. I'd rather go to a really nice restaurant once a month than a Kelsey's or similar once a week. Costs less overall and the food is better.
Plan your errands to maximize gas efficiency. This is big for us, as we live in the country. Every loaf of bread means driving. But we both work in the city, so we always check with each other on the way home.
Bring a bagged lunch. $5.00 to $10.00 a day adds up in a hurry.
Single biggest thing anyone can do: understand the difference between want and need and acting accordingly.
It's not about depriving yourself or living like a hermit, it's about weighing each decision and deciding what means most to you and letting go of what means the least.

 

[AdRath]

great thread. I wish I had to paid more attention to my finances when I was younger because now I have so many expenses I can't cut back on (kids and house etc) that it really gets harder to take care of past financial mistakes.

Thanks for the tips

 

[Banger]

Hey man! Forgot to tell ya I am joining the Reg Force as a medic ..... well kinda. I am going to civilian school first than I have to do my time in. If they send me back to Pet I am offing myself.

 

[nfq]

Put into a spread sheet all the reciepts you get every month, .......

Here ya go folks, I started using this years ago, until I created my own version, but this was great to get me started.
It's just a simple excel spreadsheet already laid out nicely, no macros, nothing to install, free to use.

Main Site: http://www.vertex42.com/ExcelTemplates/personal-budget-spreadsheet.html
Direct Download: http://www.vertex42.com/Links/go.php?urlid=file-PersonalBudget

Tip 1:

This one is not easy, but avoid holding cash. This will prevent a lot of those penny transactions that add up - coffee, chocolate bars, etc.

Moreover, try to pay everything with plastic. That way you avoid having loose change. That loose change almost always turns into said penny transactions above.

As an added bonus, your spending is detailed via bank statements.

Tip 2:

Always get your bills on paper. Avoid online statements. You can have your bills paid automatically via your CC or bank account, but get a paper statement. Environmental issues notwithstanding, you really see where your money is going. If you don't get a paper bill, the money just comes out of the CC or bank account, and you don't always take notice, in case there are any errors, or if you realize that you're spending more than you should on a particular service.

As much as those little transactions add up, I'd have to disagree with you. For example, it's a lot easier to user your interac card more often because you don't "SEE" the money leaving your account. Whereas, let's say you take out $50 every monday, and that is your coffee/smokes/lunch/mad money for the week. everytime you spend, you see the money leaving your hand, and when that $50 is gone, that's it, it's gone. whereas with every swipe of the card, you're thinking "ok, what's my balance now?"

Ever see those "get out of debt" shows? first thing they do is say "give me all your cards, debit credit etc" then it's usually "call your bank, ask for a lower interest rate"

You can't get a cookie if you don't ask for one. Maybe it's a north american thing, I came from a european background where they'd haggle just about everything, to an extent. Give it a try, you'd be surprised.

I'm liking this thread so far, let's keep it going.

 

[Cat13]

Hey man! Forgot to tell ya I am joining the Reg Force as a medic ..... well kinda. I am going to civilian school first than I have to do my time in. If they send me back to Pet I am offing myself.

My dad was in pet for a few years. It sucks. But plus side is thanks to caopa you can be a medic still when you get out of the military.

 

[crankcall]

I have a house budget, its pretty basic. Utilities cost what they cost and car ins. / maintainence , house expenses are "semi fixed" , you cant budget a $300 furnace repair, but you can set aside emergency money so its not harsh.

All great advice given, all I would add is keep some cash on hand for stuff like grocery. If you have X as your amount, when you spend it, thats it. No juggling at the register. Try and plan meals, getting caught with nothing to prepare makes you order in or go out when you dont really need to.

Think ahead, couple primer drinks with friends at home is a couple less drinks you'll pay full pop for once you get to the club.

Never let anyone you know travel without utilizing the duty free option, an opportunity wasted is a bottle bought at LCBO retail.


Date and marry/move in VERY carefully, his/her habits with money become your problem. There may be no bigger expense or financial setback in life than a divorce. They should have a better job than you, that's not hard ...
and if they cant manage debt or wont disclose how deep they are in, look out. Credit councilling is not an embarasement, but they have to want help.
A marital partnership can make life very enjoyable if both parties want security and prosperity and are realistic about how to achieve what is real success.
As my dead Presbyterian Gran used to say, it matters not how hot a chick is, somebody somewhere is tired of paying the bitches bar tabs.

 

[Red_Liner740]

yes your partners habits are very important as well. i've had g/f with which i couldnt rub two pennies together for some reason and others which really put in the mindset of waste not, want not.

Man, if i just had this mentality when i was younger, killing the OT, bringing in more money than my parents and blowing it all on partying, cars and other ****....i'd have a sizeable downpayment for a house...

 

[Riceburner]

Don't get married.

or ....don't get divorced. You go from decades debt free and building a retirement and kids education funds to being in the hole overnight.


+1 to CanadianBiker's post above. Self control and wants vs needs.

 

[Chaos]

As much as those little transactions add up, I'd have to disagree with you. For example, it's a lot easier to user your interac card more often because you don't "SEE" the money leaving your account. Whereas, let's say you take out $50 every monday, and that is your coffee/smokes/lunch/mad money for the week. everytime you spend, you see the money leaving your hand, and when that $50 is gone, that's it, it's gone. whereas with every swipe of the card, you're thinking "ok, what's my balance now?"

Ever see those "get out of debt" shows? first thing they do is say "give me all your cards, debit credit etc" then it's usually "call your bank, ask for a lower interest rate"

You can't get a cookie if you don't ask for one. Maybe it's a north american thing, I came from a european background where they'd haggle just about everything, to an extent. Give it a try, you'd be surprised.

I'm liking this thread so far, let's keep it going.

Fair point. My approach does take discipline. But it has worked for me. I've never put myself in a situation where I require 'money in jar' type of discipline. I hope I will never have to either.

Also, you can mimic the cash only approach by using CCs with low balances. You can't spend more than you're allowed.

 

[strictlye]

A lot of people seem to have serious issues getting out of high interest credit card balances.

If you have high interest credit card debt but haven't totally wrecked your credit rating by missing payments, sign up for the various credit card offers that come in the mail every now and then offering super low interest rates. These rates can be as low as 0%, though 1.9 and 2.9% are more common.

Once your new card is in hand, get a cash advance on it to pay off the high interest debt on your original credit card. Do not use the new card for anything but loading up that one-time cash advance.

On a $10,000 19% credit card debt transferred to a low 1.9% promotional rate credit card, instead of paying $160 a month in interest, you'll now be paying $15. Note - on some (not all) cards you'll also pay a one-time cash advance fee of 1%, or $100 on $10,000, but that's still less than the interest you were paying before at 19%, and the service fee is applied only for just the first month.

Once paid off, use your original card for nothing but day to day purchases and pay off the balance at the end of each month. This does a couple of things - 1) it means you'll pay no interest charges, and 2) the paid off balance may improve your chances of getting promotional cash-advance rates on the card too.

After paying off the original card's balance at the end of each month, take whatever extra money you have and use that to pay against the card you loaded-up. Don't fall into a minimum payment trap again, which is how many people get sucked into credit card debt in the first place. If you're smart, you'll pay at least your interest savings back against the loaded-up card. The goal is to pay it down as fast as you can.

A few months down the road, apply for another card offering low promotional rates, but do not use it. Put it on the shelf beside the current loaded-up card.

When the promotional rate on your loaded-up card is about to expire, see which of the other two cards is offering the best promotional rate. That will become your newly-loaded up card. Write yourself a cash advance cheque sufficient to pay off the card whose promotional rate is about to expire, and then pay off that card with the cash advance. Now put that newly-loaded-up card on the shelf beside the one you just paid off, and repeat the cycle in 6 to 18 months.

If you're disciplined about not using the two cards for anything else, the interest savings will quickly wipe out your original debt. Caveat - if you're not disciplined enough, this will just bury you in deeper.

Thats the best way to mess up your credit rating. Carefull who takes this advice, this is very bad advice. Most people try to do this and end up running up both credit cards.

Your credit score will drop because you are applying for more credit and make it more difficult to get approved for credit in the future because you will be increasing your TDSR (total debt service ratio).

 

[turbodish]

Thats the best way to mess up your credit rating. Carefull who takes this advice, this is very bad advice. Most people try to do this and end up running up both credit cards.

Your credit score will drop because you are applying for more credit and make it more difficult to get approved for credit in the future because you will be increasing your TDSR (total debt service ratio).

That depends on your discipline. My credit score is in great shape.

Yes, having too many credit cards can have an impact on your credit rating, especially if you're applying for new credit frequently. The goal is to obtain enough credit for your needs, no more, and then to use it responsibly by not running up everything to their limits and by making ALL required payments on time.

My example has you carrying longer-term debt on only one card at a time, and paying off the daily-use card in full at the end of every billing period. That should not have any adverse impact on a person's credit rating, and a reliable payment history will work to build and improve your credit history. At the same time, using the promotional interest rates will reduce your interest expenses and make it easier to erase any carried debt completely more quickly than if you were still saddled with the usual high credit card interest rates.

BUT, it does require discipline to track and stick to your plan. Just because some are unable to do so doesn't mean that others can't benefit from doing so.

 

[nfq]

Noticing a trend?

Discipline = money management

That is all

 

[Lightcycle]

Take advantage of the parity between the Canadian and US dollar and shop online from US stores.

Edit: Oh, and get them to ship USPS. No brokerage fees and if they label it as a gift or return/repair, then no duty either!

 

[strictlye]

That depends on your discipline. My credit score is in great shape.

Yes, having too many credit cards can have an impact on your credit rating, especially if you're applying for new credit frequently. The goal is to obtain enough credit for your needs, no more, and then to use it responsibly by not running up everything to their limits and by making ALL required payments on time.

My example has you carrying longer-term debt on only one card at a time, and paying off the daily-use card in full at the end of every billing period. That should not have any adverse impact on a person's credit rating, and a reliable payment history will work to build and improve your credit history. At the same time, using the promotional interest rates will reduce your interest expenses and make it easier to erase any carried debt completely more quickly than if you were still saddled with the usual high credit card interest rates.

BUT, it does require discipline to track and stick to your plan. Just because some are unable to do so doesn't mean that others can't benefit from doing so.

You are doing a lot of assuming. I was a credit specialist for Equifax and credit cousellor for the bank. Every time you apply for more credit it reduces the average length of your credit file, which means you are a great risk and that is reflected in your score (it can decrease). Also if you pay off your credit cards in full every month you will not optimize your credit score. Reason is the score is supposed to reflect on how well you MANAGE your debt. Thus the thinking is if you don't carry a balance you are affraid to spend and can not manage your finances. If you balances are over 90% of your limit again you are not managing you debt very well. The idea percentage of debt to limit should be around 35%-50%. This is saying you can manage your debt without getting into trouble.

The total number of inquires @ hits can also negatively impact your score. If you are looking for more credit you become a risk to your existing creditors since you may be spending more money which means less for paying bills.

Getting back to avg length of your credit file. This is important because.

Mastercard 15yrs
Sears 15yrs
Visa 1yr
Promo card 1yr

(15+15+1+1)/4 = 8yrs is the avg length

and another 2 new cc's and the avg length will be 34yrs/6 cards = 5.6yrs

Younger file means higher risk....score drops.

I saw a file on time where a customer applied for one credit card and got declined in 3yrs. Never missed a payment in 2 yrs and the score dropped over 200points because the customer declared bankruptcy 5yrs prior. You have to be very carefull, every situation is different.

 

[turbodish]

The idea percentage of debt to limit should be around 35%-50%. This is saying you can manage your debt without getting into trouble.

Read my post again. My strategy does not involve applying for new cards every 6 months in perpetuity. It requires having only two, maybe three cards, of which only one is used to hold high $ longer term debt at super-low promotional rates that the banks won't match. If all cards have similar credit limits, that's a 33% to 50% debt to credit limit ratio right there, close to what you suggest.

By making the required payments on that longer-term debt regularly and on time, you are showing that you can manage your debt without getting into trouble.

There may be a slight initial hit to your credit score when you first obtain the additional card or two, but that should mean nothing to the average person. If it did, everyone's credit score would be in shambles every time they got even their first and second credit cards, and that is simply not the case.

 

[Torren]

I would also have to suggest to stop using interac and credit for day to day purchaces. As stated you can't see the money leaving your account so it's easy to spend more then you intended. Not to mention, you can sometimes get a better deal paying cash, esp things like auto repair or home services.

This is what works for me.

My rule for cash and holding on to it is simple. Try to carry nothing smaller then a $20 on you. If your going to buy something, and your going to get more then $15 in change, you probably don't need it. If you do, go for it but if you can do without don't. I will spend a five on anything, but i always hate to break a 20. It's nothing to do with the actual money ammount it's all mental, so I try to use that to my advantage.

When you get home take any $5's and all change and put it in a container and leave it there. You won't miss it once you get used to it and it add's up quick.

Use that money initially for my next point. Savings. You need to have savings. You need to have $500-1000 set aside for those unexpected or irregular expenses. This is different then retirement savings or a vacation fund. This is buffer money. Nothing throws me off my personal spending plan more then having to "come up" with a couple hundred bucks unexpectedly. Heck even when I expect it, that $600 property tax installment messes up my other payments. When i dident have a buffer, I would find myself paying "stealing" money from other things so i would have money to cover it. This can be used for anything like dentist visits, eyeglasses, car repair.. stuff like that.

Another tip would be keep busy. Get a hobby that is free like running, walking, gardening things or that nature. I find I spend money unwisly when Im bored. That trip to Princess Auto to "just take a look" when I have nothing else to do usually ends up costing $100+ on things I don't really need. I give in to temptation, so I dont put myself in a situation to be tempted.

Speaking of shopping make a list before you leave the house and stick to it.

Research all purchases. There's really no excuse not to with the Internet these days. If your going to spend your money might aswell make sure you are going to get the best bang for your buck..

 

[Torren]

Another think, don't save a penny to spend a dollar.

There's no point going cheap on something your not going to use or enjoy. Your better served to spend a little extra and get something you want and will use.

A small example ketchup;

I like Heinz, and only Heinz. for example sake it's $5 a bottle. The cheapo stuff is $3. I won't eat the cheapo stuff because i don't like it. I will buy it because im cheap. I saved $2 on the purchase, but it will sit in the fridge almost unused till I throw it out months later to make room for a bottle of Heinz. Although there was an initial $2 savings, in the end it was a waste of $3.

I know it's a little petty example but take a look at your spending and see how many other things you can apply that logic too.

Edit: A motorcycle related example. That helmet you bought at last years show was a great deal. Too bad you don't wear it much because it's a little too tight at the temples. But it was a good deal...

 

[Yamaha_Gurl]

Sorry to veer off topic a little, but I have a question for Strictyle: What is the official highest credit score? I've heard 800 is the tops for Canadians, and that for the US the limit is 850?

How does one get anything higher than say a 758? Let's assume 1 cc, and no late payments were ever made. You've mentioned opening another cc would lower it, so...how does one get it higher? Just wait until that cc gets older?

 

[turbodish]

Sorry to veer off topic a little, but I have a question for Strictyle: What is the official highest credit score? I've heard 800 is the tops for Canadians, and that for the US the limit is 850?

From my Equifax Creditwatch statement:

Background Back To Top

Credit scores are based on the information in your credit records. The majority of credit scores are between 399 and 862. Higher scores are better, because they increase your chances of getting the loans you want. Keep in mind that when lenders evaluate a credit application, credit scores are not the only factor they use in making their decision. They usually ask for additional information (such as income and monthly payments) to determine your ability to repay the loan.

Factors
Here are the top factors that make your score higher:

Total high credit for national card accounts.
The total high credit or limit on accounts and the balance outstanding is grouped by industries to determine your present and potential usage of credit in that industry, and the diversity of your present and potential credit experience. Generally, the more diversity in industries and types of accounts, the higher the score.

Total monthly payments.
Lenders evaluate the total monthly payments required to meet your obligations to lenders and compare this to the amount of credit available as well as your previous payment history. Generally, the lower the total monthly payments, the higher the score.

Number of sales finance accounts.
Having credit available to you is usually a positive sign, providing you pay your bills on time, however lenders also consider the diversity of your experience in the types of credit and lenders you have dealt with in the past. Generally, positive experience with one lender in a given industry or type of credit will indicate good probability of positive future experience with a similar type of credit. The risk a lender takes on an account depends in part on whether the account is installment, revolving, or open payment. For an installment account, money is advanced up front, presenting a larger initial risk for a lender, whereas on a revolving account, the amount typically builds over time as you are establishing your credit. Open accounts require payment of the full outstanding amount every period, therefore the risk is on a month-to-month basis. Another indicator of risk is the type of lender you have had experience with in the past. For example, previous experience with bank loans "paid as agreed" are a good indicator of your ability to pay future bank loans as agreed and will result in a higher score.

Number of revolving accounts with high utilization.
Lenders can tell how you are managing credit by the amount you have available to you, compared to how much you are using at any given time. When you are applying for new credit, the lender evaluates the number of revolving accounts (where a minimum monthly payment is made) compared to the total available credit on those cards to see if you are reaching the maximum credit available to you. If so, that is a warning sign that you are not able to carry the debt, are incurring high interest charges, and may be taking on additional credit that will cause further difficulties down the road.

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