Radical Budget Cuts? Step 2: The Plan and Stakeholder Agreement
Okay, after a small discussion and a little bit of negotiation I think we have a plan.
We did it in 3 steps:
- Understand fixed expenses or savings that we can’t or don’t want to change.
- Review previous year expenses to understand where we’ve ignored our budget and seek out opportunities to cut spending.
- Set achievable targets.
Here were the results:
- We are keeping our mortgage on an accelerated repayment along with our RESP and RSP savings and we can’t reduce child care, insurance expenses or utility bills.
- We absolutely must deal with our ‘going out for coffee and treats’ habit. It’s also time to reinstate some discipline with respect to ‘stuff’ and clothes.
- We’re going to stick to our budget on gifts, clothes, recreation and vacation and entertainment. No more coffees and/or treats out, nixing extravagant gifts to each other and no more ‘stuff’.
This doesn’t mean that we won’t order in because let’s face it, we’re all tired at the end of the week and ordering in every couple weeks is a huge break. It doesn’t mean that our kids won’t play sports or go to birthday parties….they will. Some smarter grocery shopping may produce some savings too and every little bit will count.
Now we’re on the same page!
Posted: August 14th, 2014 under CEO of the House, Money & Lifestyle, Money Savvy Tips.
Tags: Budget, Dear Piggy Bank, Financial Planning, Money Systems
Radical Budget Cuts??
My husband is proposing radical budget cuts and I do mean radical! He read an article about a couple that didn’t spend any money for 1 year other than rent, utilities and food. Their estimated spend avoidance was $36,000. A very tidy sum.
You’d think being a financial blogger that I would happily jump on board but I haven’t. To say that I hesitate is putting it mildly…I don’t want to give up cable/internet, recreation or travel. I totally support restraint and frugality and willingly cut out treats (coffee out), adjust our menu, reduce meals out, slash the clothes and stuff spending, change our vacations to local car trip and family-stay-style but I don’t want to cancel Thanksgiving in the Okanagan with the family or miss out on playing soccer or field hockey this season (my knee has just been fixed!). We have two kids and they keep growing out of their clothes and want to play soccer.
Rather than saying ‘no way’, I plan to look at our previous years’ spending to see where we have opportunities to ‘slash’ our budget without missing out on the things I think are important. Let’s see if I can put some game rules in play that will work for the household. We have a big trip to save for and this will be a great way to do it.
Posted: August 7th, 2014 under CEO of the House, Money & Lifestyle, Money Savvy Tips.
Tags: Budget, Dear Piggy Bank, Financial Planning, Money Systems
Summer Holiday Budget
I realize that I don’t always follow my own advice! What I budgeted for summer holidays and what we’ll spend are two different things…let’s see what the difference is.
I budget $250 * 12 months = $3,000 which is a reasonable amount of money but it’s theoretically intended to cover the whole year. I think it’s enough to pay for a few weekend trips (including accommodation), summer holiday camping weeks and summer expenses such as child care camps, activities, special events and increased transportation/gas costs. I know I can do a better job making sure I include all the costs of summer holidays especially child care because now that they’re in school, the cost of full time care over the summer is a bit of a shock compared to before and after school care during the school year. Between camps, babysitters and special activities such as soccer camp and swim lessons, it adds up! What a fun summer though and isn’t that what it’s for?
In reality $3,000 isn’t enough for various holidays over the year and larger trips out of province or country which require flights and hotels so my habit is to plan and save for these separately and that’s the difference between my holiday budget and our actual spending. I haven’t totally left it out…simply provided for it in a different place in my planning.
Posted: July 23rd, 2014 under CEO of the House, Money & Lifestyle.
Tags: Budget, Dear Piggy Bank, Financial Planning, Money Systems
Both of our girls are summer babies which means summer birthdays. I was always envious of my brother’s birthday in the summer because it meant fun presents like dingy boats, flippers and masks. Compared to a November birthday (mine) which is an ‘in between seasons’ birthday.
Some moms seem to plan their childrens’ birthdays with such ease but I find it quite a challenge with a lot of moving parts such as cakes, goody bags, activities, food and drinks. Also, celebrations for family as well as kids mean several parties for the birthday girl.
In many ways we keep it simple but with our guests in mind – especially since they’re 6 and 8 years old. Some old style games (6 year olds doing the egg and spoon race along with squirting a picture of Olaf is a lot of fun to watch), a basic menu of hot dogs and veggies and hanging out at a spray park in the summer sun. Luckily the weather has been great which makes the park venue an option because our home is smaller and an excited group of kids would quickly run out of space to play.
Because it can be tricky to get good attendance at summer birthdays, we postpone our oldest’s party until the start of the school year. She’s old enough to understand that the wait is worth it.
I realize that a big part of the girls’ fun is the planning. Who’s going to come, what will be in the goody bags and what will we do? Now they’re old enough to understand how all the bits and pieces fit together we can have the discussion about what’s reasonable to do for a party and what’s a little too much. We don’t dwell on the dollars but it’s a good opportunity for them to learn that the cupcakes we bought for the kids’ party cost a lot more than the cake we made for the family party….and they get to lick the spoon when we bake the family cake!
Posted: July 17th, 2014 under CEO of the House, Money & Lifestyle, Money Savvy Tips, Tips & Tricks.
Tags: Budget, Dear Piggy Bank, Kids
Making Friends With Your Banker
You may ask ‘What’s the point? I never go into my bank because I do everything online’. It would take a very long time to save enough cash to buy a car or a home and so when we do want to make a big purchase, most of us go to the bank and ask them to lend us the money.
It may seem simple to us but banks look at our financial situation with a different lens basing their decision on our ability to repay the money consistently and without fuss. It’s our reliability that they’re most interested in.
How to get in their good books:
- Hold a steady job or a proven and reliable source of consistent income.
- Build a positive credit rating – if your credit history shows you may your minimum payments on time, the bank is happy.
- Grow a positive net worth – more assets than liabilities.
- If it’s a big purchase, be prepared to put it up as collateral until the loan is repaid.
Back to the original question….while the proof rests with the numbers, your banker will be happier to submit and support your application if you have established a positive financial profile.
Here are some tips:
- Choose your bank carefully and stick with it….holding an account for 10 years without a NSF (non-sufficient funds) cheque looks a lot better than opening the account 6 months ago.
- Keep your credit shiny by making your payments on time and don’t hold or apply for excessive credit.
- Be prepared to provide the information that your banker requests (pay stubs) – direct deposit pay doesn’t hurt either.
Posted: July 9th, 2014 under CEO of the House, Money Savvy Tips, Tips & Tricks.
Tags: Dear Piggy Bank, Education, Money Systems
Summer is here! The July long weekend is fast approaching and summer plans are well underway.
Summer is loads of fun but the reality is that I don’t really look at our budget while we’re in busy enjoying ourselves. I make sure the bills get paid but that’s about it. Now that we have most of our plans set out, it’s time to check the cost of the fun against our budget L
There are 3 elements to our summer budget:
- Regular Expenses – While you’re away, regular expenses don’t go away so it’s important to make sure the money is there to pay the bills.
- Vacation and Travel – I heard on the news this morning that Canadians plan to spend an average of $1,800 on summer travel – down from $2,400 last year. Gas has gone up and air travel is always more expensive over the summer months. Of course other vacation expenses to include are accommodation, transportation, meals, activities and incidentals.
- Additional Childcare – With school out early, many of us are already managing higher childcare expenses for June and summer camps all come with a cost. Be sure to factor this into your budget.
Often the early bird gets the worm and booking ahead can save you some money but now that we’re close to the wire, last minute deals are popping up. Flexibility is the ticket!
Posted: June 25th, 2014 under CEO of the House, Money & Lifestyle, Money Savvy Tips.
Tags: Budget, Dear Piggy Bank, Financial Planning, Kids, Money & Stress
Childcare Crunch! Is Your Budget Big Enough?
Organizing childcare is a challenge whether you’re returning to work or it’s school break. It’s one of the most important support systems if you’re a working parent but also one of the most difficult to get!
Do you know how much childcare costs your family each year? I think we’d all be surprised when we look at the numbers. There are many configurations and certainly one size does not fit all!
- Group Child Care
- Home-Based Child Care
- Flexible Child Care (Patched together because your work schedule is part time, flexible or you have family who help out)
Monthly care for full-time working parents ranges between $1,000 and $3,000 per child by the time you consider fees or wages (including deductions, benefits, vacation and pre-school).
Add a layer of complexity when your children go to school to manage before and after school, Pro-D days, school breaks, summer and strikes. How do you do it and what it the cost? I always forget that winter, spring and summer breaks mean weeks of extra child care in the form of camps or other activities and at a few hundred a week, per child, it adds up quickly. A reasonable monthly budget number is $500 per child which may not seem too much except when you multiply it by the number of children you have and add it in to everything else to keep life ticking along.
Posted: June 18th, 2014 under CEO of the House, Money & Lifestyle.
Tags: Budget, Cash Flow, Dear Piggy Bank, Financial Planning, Kids, Money & Stress
How to Get Rid of Your Mortgage ASAP :)
No one said it’s going to be easy peasy lemon squeezy but if getting rid of your mortgage is number one priority for you, then it can be done.
There are 2 strong motivating factors to pay off your mortgage as soon as possible:
- No more mortgage payments = more of your pay cheque is discretionary income.
- Paying down your debt faster = less interest paid to your creditor.
The fact of the matter is that you owe a whack of money to your bank and it won’t magically disappear but most mortgages can be repaid faster by either increasing the payments or making lump sum payments. In either case, anything paid over and above the contracted payment, goes directly to pay down the principle owing. This means a lower amount to calculate interest on each month!
Most of us receive little bits of money here and there and very often, it trickles in and it’s spent before we know it. Things like:
- Tax refunds
- A small raise
- GST Refund
- Universal Child Care Benefit
- Expense reimbursements
- Extra income
Put this money against your mortgage they can make a big impact. Save them up for a lump sum payment or increase your mortgage payment by your raise – either way, check out how you can make extra payments with your mortgage lender.
You may say that your mortgage rate is really, really low and it’s true that if you have other debt with a higher interest rate, that should be your first target. Just think how great it would be to choose what to do with your mortgage payment each month!
Posted: June 11th, 2014 under CEO of the House, Debt, Money & Lifestyle, Money Savvy Tips, Mortgages, Tips & Tricks.
Tags: Budget, Cash Flow, Dear Piggy Bank, Financial Planning, Loans & Debt, Money & Stress, Money Systems, Mortgages
Will We Ever Live in Lotus Land Mortgage Free?
I worked for one of Canada’s Chartered Banks for seven years and not once did I hand a client their mortgage discharge papers. That may not seem significant but I’ve heard stories from those in our parents’ generation who worked hard to pay off their mortgages as soon as possible, in 15, 10 or even 5 years.
I hear from friends who live outside of the Lower Mainland that they are mortgage free. Sometimes the little sarcastic voice in my head mutters….’and we pay not only a house mortgage but almost the equivalent of another mortgage in child care!’. It’s easy to slip into the mindset that living in Lotus Land comes at the price of a forever mortgage but I think it is possible for Vancouverites to be mortgage-free too. Herein lies the opportunity…repay your mortgage more quickly once other financial obligations have ebbed (i.e. child care) or as household income stabilizes or increases.
Just imagine how much more money you would have each month if you didn’t have to pay a mortgage payment! Herein lies the motive….
No more mortgage payment = no more interest paid out of your pay cheque. Once that mortgage is gone, there is money for savings, travel and work flexibility. The positive impact on your monthly cash flow is great! Not only is it good for your bank account, it’s good for you psyche – less debt = more choices.
Posted: June 4th, 2014 under CEO of the House, Debt, Money & Lifestyle, Money Savvy Tips, Mortgages.
Tags: Budget, Dear Piggy Bank, Financial Planning, Money & Stress, Mortgages
How Much Can I Afford to Pay to Live in Vancouver?
Whether you rent or own…we pay a premium to live in Vancouver. The question is – what can you afford to pay?
The recommendation is that you do not pay more than 32% of your gross (before taxes) monthly household income towards housing. This calculation includes the housing payment (principle and interest or rent) plus property taxes, strata fees and utilities including heat and gas. For example, if you earn $48,000 per year or $4,000 per month, 32% of the gross monthly is $1,280 per month. Whether or not you can afford to pay this much on housing depends on your other financial obligations. Do you have a car loan, pay for child care? These are all large and fixed expenditures. The bigger the chunk of your paycheck that goes to them, the smaller amount that is left for savings, lifestyle and discretionary spending.
For us, about 32% is just right, much more than that though and we’d feel the pinch each month.
Posted: May 28th, 2014 under CEO of the House, Debt, Money & Lifestyle, Mortgages, Tips & Tricks.
Tags: Cash Flow, Dear Piggy Bank, Financial Planning, Money & Stress, Mortgages