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Being Money Smart

March 11, 2010

I like to think of myself as ‘money smart’.  Academically, I’m not that great but when it comes to saving money, I’m an A student.  I guess that stems from my dad – he was always a saver; he believed in always making sure you had some money in the back for a rainy day and of all his words of wisdom, that is one thing I’m glad I picked up.  I ain’t no Mr. Roper but I know the difference between spending frivolously and spending wisely.  That means I will fork out money – even if it’s a lot – for things that are are pricey but worth it rather than buying something that won’t last me as long just because it has a cheaper price tag.

This skill has allowed me to stay at home for almost two years without having to struggle with money woes and still allowed me to indulge in my vices (read: makeup, purses, random things I just had to have).  Don’t get me wrong – it’s not because we make tons of cash – it’s because over the years and before I got pregnant, I got smart and thought ahead.  It was forward-thinking that led me to where I am today.  So dear readers, I will share in the money-saving tips I employed and will continue to employ in the years to come.

Put the majority of your money in a high-interest account. Large banks give you shitty interest rates – bottom line.  I don’t even think it’s even 1% interest – it’s maybe a fraction of that.  Invest your money in either mutual funds if your down with that (but invest wisely) or stick your money in high-interest accounts like ING Direct that offers a better interest rate (approximately 1-3%).    Let your money work for you and a bank like ING can help you.  If you are constantly tempted by the pretty things at the mall, look for a bank that doesn’t offer easy access to your money.  ING requires you to wait about 2 business days for the transfer to come through to your regular bank account, giving you time to think about what you want to buy and that could be enough time to talk yourself out if it.

Set up automatic monthly transfers to your high-interest account. This is a no-brainer.  Even if you set up a bi-weekly transfer $100 to your high-interest account, you’d be surprised how much money you can accumulate within 6 months.  The best part is that once you set it up, you kind of forget about it and months down the road when you take a peek at your account, you’ll see some fat interest dollars adding to your growing savings.  It’s awesome.  Kinda like Christmas!

If your high-interest account offers a Tax-Free Account with higher interest, enroll. Transfer the maximum amount into that Tax Free account to get the best interest rate.  Typically, these interest rates go for about 2-3%; ING is 3% for $5000.

Look for a bank that has low (or no) service fees. Banks make tons of cash.  I don’t know how but I think a large part of it has to do with the ridiculous service fees they charge their customers.  I don’t know what the point is to charge me $15/month just to keep my money sitting there while it collects their shitty interest rates.  If you don’t use their services such as bank drafts, money orders, debit purchases etc – all of which I barely do – then maybe it’s worth considering taking your money out of there and putting into a bank that doesn’t charge you as much.  I do most of my banking online unless I have to get money which I’ll drive my ass over to a RBC ATM and use that.  So if you’re looking to avoid costs which can cost you about $180-200/year, put your money in a bank that has low or no service fees.  I think PC Bank has this which I’m seriously considering doing.

Always take 15-20% of your paycheck and stick it in your savings account.  So if your bi-weekly paycheck after taxes (damn you tax man) is $1500, 15% isn’t that much.  Try and put as much as you can into your savings account and leave it there for as long as you can.

If you have a bunch of credit cards, only keep two that have no annual rate and cancel the rest. Having too many credit cards not only taints your credit record (could make it harder for you to get a loan if ever you needed one) but tricks you into thinking that you have copious amounts of cash.  We tend to forget about the ridiculous high interest rates credit companies charge (some as high as 19%!) and only balk when we get our monthly statement.  Another wise decision would be to reduce your credit limit to a maximum of $5000 because really, are you ever going to spend $15,000 on your credit card in a month?  if so, stop reading my blog and check yourself into Shopaholics Anonymous.

Try and go without a credit card. You’d be surprised how hard this is but if you actually manage to pull this off, you will save a TON of money.   It’s so easy to overspend with plastic; the amount of money you’re spending doesn’t nearly hit you as hard as it would if you’re actually counting out the bills and watching them leave your hand.  That’s why my dad rarely used credit cards – having cash in your wallet meant you had to be extra careful what you spent it on and you are very likely to think twice about buying [insert wonderful product here].  That’s why many of us get our monthly statement and think: WTF? WHAT did i BUY??

If you need to have a credit card, pick one that gives you cash back or at the very least, earn points.  You spend money so therefore you should get something in return.  I personally like the Capital One Platinum Master Card which gives you 1% cash back annually for every $1000-3000 you spend (I can’t really remember the details but so far, I can redeem about $500).  You can either get a cheque or have it deducted from the balance of your statement.

ALWAYS pay off the full balance on your credit card.  If you have the money, pay it in full.  Credit card companies make tons of cash from customers who only pay the minimum amount.  If your balance is $1200 and the minimum payment is $10 and the interest rate is 19% … you do the math.  That’s a lot of money the credit card companies are making – off of you.  So do yourself a favour and pay it off or at least more than half of it.  It’s better to hurt for one month than to stretch out that pain over several months to years.

Go through all of your insurance papers (car, home etc) and read the details.  Insurance companies are sneaky – they talk in their insurance mumbo-jumbo and all you hear are “low fees” or “included in package”.  When we renewed our car insurance for the new Subie, DH read the fine print when we got the new policy and noticed that they tacked on all sorts of “services” that we didn’t need and went about it in a sneaky way.  You see, all they need is for you to say “Yes” to their questions so they’ll talk about your existing coverage which you already know about and then slip in new services without really telling you they’re new services.  When you say “Yes” to confirm, they key that into your account and charge you for it.  DH caught that one and I immediately called them to retract it asap.  Then I went through all of our documents, caught some more stuff and further reduced our monthly payments.

If you really want a frivolous product, leave the store and give it 5 days. This is my “if it was meant to be” trick.  I almost always do this when I see a new bag or something as equally frivolous.  My 5-day rule allows me to think about the purchase and whether I really want to fork out that kind of money.  It also falls into the “if it was meant to be, it will be there 5 days later” and when I go back and it’s not there, it was simply not meant to be.  If it is, that’s when I call DH and ask him to talk me down but he never does so I’m left to making this agonizing decision myself.  He would not be a good sponsor.  I almost always end up buying it too…what other choice do I have?

Don’t follow fashion trends.  These can really do a number on your bank account.  Fashion trends come and go but what’s key here is to pick a few timeless items that you can mix and match with everything in your closet.  If said fashion trend happens to be a timeless item (like a trench coat or high boots), then spend the money and get good quality but if it’s something like satin pants or polka-dot shirts, move on.

All jeans are not created equal… but you can get a pretty decent pair for much cheaper.  I admit, I love designer jeans.  They do fit better than most but these days, companies like Gap or Old Navy are really upping their designs when it comes to clothing.  Of course, if you’re a die-hard label-hoe, try your luck at Winners or other discount designer stores.  Your designer jeans ARE out there for a fraction of the cost – you just have to put the effort in finding it.  I myself, hate stores like Winners.  I don’t have the patience to sort through all that mess and the disorganization of the store – what with all the clothes strewn haphazardly on the racks/floor/corners etc – I just can’t get around to sifting through it and frankly, that mess is disturbing.  Funny how I have no problem looking or sifthing through the mess in my bedroom but I just can’t do it in a store.  Because of this low-tolerance for retail disorganization, I have resorted to looking at other brands of jeans and I have to say, Old Navy jeans aren’t that bad.  They have great sales and come in various styles AND they’re only $30; $19 if you get them on sale.  Sure beats dishing out $200+ for a pair of Sevens or R&R.

Try to find loop-holes in the banks’ services.  I have and it’s great.  Totally legit too but I’m scared to post it on my blog because after all, this is a public blog and the internet has many many eyeballs!

Brown-bag itSteph reminded me of this super money-saving tip.  An average lunch costs around $10.  If you buy lunch everyday during the work week, that’s $50/week you could be saving or $200/month or $2400/year if you were to brown bag it.  You don’t have to be a genius to know that this just make sense.

Minimize eating out as much as possible.  I mean for dinners.  For example, a salad at a restaurant will cost you on average about $8-9.  Buying all the ingredients (lettuce, onion, cheese etc) will cost you a fraction of that AND you get to eat more of it.  A whole meal at a decent restaurant – or even at the local greek place – will run you about $25 per person.  I don’t have to work this out for you to see how expensive it is to eat out all the time.  So stop being lazy and make your own dinners!  have fun while cooking and exploring new reciepes.  Take it from me – I hated cooking until I had to for Kayla.  Now it’s not as bad and I actually like it!  Trying new dishes is fun and even if you fuck up, you always know what you did wrong so you can correct the next time around.

Get rid of your landline. OK, so I haven’t done this but I would if my mom didn’t live with me.  Also, our internet is connected to our landline and DH gets a discount so it just make sense to keep it around.  Landline charges are stupid expensive so if you don’t need it and have a cell phone with a decent plan, get rid of your landline and save yourself $60/month

If you don’t need it, get rid of your cable.  Many networks air their episodes for free after they’ve aired on regular programming.  Some sites provide movies for fees as low as $0.99 so if you’re on a tight budget, get ridof your cable – which can cost you up to $100/month – and turn to your computer for movies and tv shows.  I won’t go into the darker side of this but let’s just say it’s possible to be up to date with current movies and tv shows without having cable.

What are your money-saving tips?

6 Comments leave one →
  1. March 11, 2010 11:40 am

    Excellent tips, Kat! I myself am with PC Financial and am really thankful that I don’t get dinged with all those little service charges. I also just have 1 credit card, with a low limit and I’ve specified to my bank that the limit is not to be raised without my prior consent, ever. A couple of other things that have saved me a lot of money over the last year is bringing my lunch to work every single day, and as well eliminating any visits to Starbucks or Tim Hortons – I bring my tea from home and store it in my drawer here.

    • March 11, 2010 11:54 am

      ahh good ones! i for one NEVER pay for tea! I think it’s a waste!

      also, I never pay for movies or software either…. um let me rephrase that.. I always borrow movies and software… 😮

  2. Katie permalink
    March 11, 2010 10:51 pm

    So funny you posted this…I just got in the mail today Dave Ramsey’s total money makeover. I thought though, if you cancel credit cards it actually hurts your credit. I’m also curious about your info on bank loop holes. I am horrible about saving money. With 3 kids there always seems to be something that is “needed”. I’ve gotten pretty good about not buying for me. In fact when I stopped working I sold all my coach purses on ebay. I only buy my clothes from Old Navy, Gap and Target. I use to love shopping at AT Loft. I was also a huge shoe shopper from zappos. Now I shop only sales and always look for online coupons or join their mail groups and wait for them to send me coupons. Same with organic groceries. I have emailed so many companies requesting coupons becaue I want to try their products and they will send them to you, pretty fast too! I also buy a lot of the baby’s clothes and toys from Craigslist. I found a nice rich women who buys out all of Gymboree’s lines…her son can hardly wear every outfit, well she will email me and let me know what she has in Luke’s size and I buy for 50 -75% less, and they are all in GREAT shape!!! As far as phones and cable…if you call and tell them you want to cancel they will normally offer you a discount or free service to stay with them. We went a whole year with free phone service. I also stock up on groceries when it is BOGO. I personally like CD’s for saving money…what do you think about those?

    • March 13, 2010 2:09 pm

      good idea about shopping on craig’s list! i’m actually looking for a wagon for kayla because she seems to like them. also looking for one of those long tube things that she can crawl into… beats her crawling under the chairs!

  3. March 12, 2010 10:45 pm

    Great post Kat! It was like reading everything Jay tells me….everday.

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