Tag Archives: Expenses

Spaving (Spending to Save) during sales

By thebudgetingtool | Published December 31, 2012

I am here to give a friendly message about SPAVING which is really just the act of “SPENDING TO SAVE”.

(You heard it here first.)

Spaving is when you tell yourself:

OMG it’s 50% off!

I don’t want or need it, but what if I do sometime!??

I’m saving 50% on this, it’s like I’m saving 50% of my money!

I HAVE TO GET IT!

funny-baby-sticking-tongue-out

WHEN YOU SPEND YOU AREN’T SAVING

Whenever you spend money, you are not saving it.

Technically, you’re actually just spending 100% of your money and saving 0%.

So spaving? It’s an excuse to spend your money, even if it’s a good deal.

WE ALL SPAVE

That said, we all spave.

For instance, I spaved a lot this month (actually, make that the whole year), which will you see coming up in my December 2012 What I spent post, but I’m very happy with my smart spaving.

This month was excellent because of all the Boxing Day sales and push to get people to spend more of their money and boost the bottom line before 2012 closes; so when you encounter 50% signs, or 15% off what you’ve been eying for a while, it’s hard to imagine that kind of sale will come around soon, let alone on what you want.

I’m starting to get into the mindset of waiting until I can find it secondhand, or if it’s on at least a 20% discount, or more.

(Even just thinking about buying things that are easily depreciated at full retail price is starting to irk me.)

Other pitfalls of spaving, are when you encounter programs like Ebates Canada, and they give you back cash for things you’d otherwise buy anyway.

It makes you think: Wow I’m saving another 4% on what I was going to buy! Let’s see what else there is….

Or even for us Canadians who head down south to the U.S. to do a little cross border shopping, and see how much lower the prices are now that the CAD is almost at par with the USD, and you save on not only the currency, but the lower taxes and the lower prices!

..JUST BE CAREFUL TO SPAVE ON WHAT YOU WANT OR NEED

Don’t go around buying useless knickknacks if you aren’t planning on using it.

When I spave, it’s on kitchen equipment that BF needs to keep making great meals, or when I see things that I want and otherwise would not pay full retail price for.

Or perhaps, to stock up on things I use a lot of such as contact lens solution, or my favourite cleanser.

I log all of my purchases, expenses and my general financial life into my handy budgeting tool, and when I see something I THINK is a good deal, I sometimes go back and check to see what I paid for it before.

Oftentimes, I realize I had gotten a better price for it elsewhere even with a sale of 20% off, and I don’t buy it just because it says 20% off (but the price was already inflated by 25% for instance).

Enjoy your spaving!

Use this superpower of finding great deals in good financial health.

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Hong Kong and Macau 2012 Total Cost and How We Saved Money

By thebudgetingtool | Published November 14, 2012

As promised in an awesome infographic that I spent a lot of time on.

(Gawrsh those things take a long time!!)

Update: It is actually 24 days, because in addition, 4 days were spent traveling (time zones) which makes it 28 days, or 4 weeks.

It isn’t exactly 5 weeks (as in 35 days), but it was the tail end of one week, and the beginning of another, so I thought of it as 5 calendar weeks in my head, when the actual weeks by numbers is really 4.

I am making this long-winded note because I don’t want to redo the infographic. *sigh*

Update 2: Damn it. DAMN my OCD self. I updated it to say 4 weeks.

Here’s what the budget looks like in terms of percentages:

As you can see, flights and hotels obviously cost a lot more than everything else.

SAVING MONEY ON FLIGHTS = $800 SAVED

We took flights that had a stopover and that was about $400/ticket in savings.

Actually, this is probably better than a direct flight because it gives you a break from the plane.

Our flights were basically 2 legs: 15 hours, 3 hour stopover, 1 hour flight from somewhere in the U.S. back to Canada.

It gave us a nice break from the airplane, a chance to stretch, and either the first or the last leg was very short.

SAVING MONEY ON HOTELS = $720 SAVED

As mentioned, we stay in cheap hotels like Ibis.

There were two of them in Hong Kong — Ibis North Point and Ibis Sheung Wan, with the Sheung Wan location costing about $30 more per day.

We didn’t stay there because it was new and we didn’t know how big it would be (almost double the size of the Ibis North Point, and the size of an American-normal-sized budget hotel room).

As a result, we saved a lot by sleeping in a 120 square foot closet, also known as the Ibis North Point hotel.

SAVING MONEY ON FOOD = $935 SAVED

Food is the third biggest cost, and it could have easily been double if we had not been avoiding restaurants, and eating pre-made meals and buying fruit from a grocery store instead.

The hotels we stayed in also had mini fridges, so we bought milk for the morning and were able to keep small things in there.

A typical breakfast would be about $10 per person, and lunches and dinners are $20 per person, so had we been going out to eat every day for 24 days, it would have been $50/day per person on average.

24 days x $100 (for 2 people) = $2400 which is a reasonable budget for what we consider good food

(Also, we don’t like cheap or junk food when we go to restaurants because it’s crap, and if I’m going to a  restaurant, it had better serve real food.)

Instead, we bought everything we wanted to eat (fancy yoghurts and sushi), and spent only $30.51 per person, or a little over half.

24 days x $61.02 (for 2 people) = $1464.48 is what we really spent

We saved about $935 doing that, although BF was getting antsy about the food costs near the end and wanted me to stop stuffing my trap so much.

SAVING MONEY ON TAXIS = $1000+?

We used the handy Octopus card, and spent $252.39 for the two of us to travel pretty much anywhere we liked in Hong Kong.

In contrast, taking a taxi would have probably tripled that budget, to about $1000. Or more.

$1000 / 24 days = $41.66 per day for transportation.

(We have no clue what it costs, as we don’t take taxis even in our daily lives, but if the prices are anything like in Toronto, it’s an expensive luxury.)

Cabbing to and from the airport, to and from sights and back and forth from the hotel adds up.

Anyway, the tram was way more fun and a great, cheap way to tour the city for the low price of $2.30 HKD or $0.29 USD!!!!!

TOTAL SAVINGS = ~$3455

Not too shabby.

Every little bit and every little sacrifice adds up to significant savings when you travel. That amount that we saved above, is enough for another week or two weeks somewhere.

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Living on $534 a month, not including housing

By thebudgetingtool | Published July 9, 2012

$534. That’s what the IRS in 2011 thinks you can live on as a single person without including the cost of housing:

Source: Mental Floss, May-Jun issue, Page 15 — A magazine MADE for curious cats, such as myself. I will faithfully subscribe until the end!

With two people, it’s $1068 a month as a budget.

COMPARED TO MY AVERAGES

Just for fun, let’s see how I..er..stack up against this budget.

I took the past 5 months (Jan to May 2012) and averaged the amounts:

YIKES!

I spend 2.8 times MORE than their recommended base budget, although I’m pretty proud of the Food budget.

Touché, IRS.. Touché.

ER…WHAT ABOUT THE OTHER PARTS OF MY BUDGET?

That’s not even including the OTHER categories I spend on such as:

  • Eating Out — I don’t consider it food, it’s a treat to not have to buy groceries and cook.
  • Treats — Umm.. this is where candy goes, or other things that are treats for my lifestyle but perhaps not my belly
  • Internet — Kind of required for me, although I don’t pay for cable TV
  • Cellphone — Again, a requirement for my job
  • Transportation — I use public transportation when I can, but that is ~$100/month
  • Electronics — Yeahhhhhh
  • Books & Gifts — Includes magazine subscriptions
  • Travel — LOVE!
  • Website – To run this blog

Although I can see their point. I’m reviewing everything above (even my 3x spending amounts), and they really are WANTS more than NEEDS.

WOULD THIS BE POSSIBLE?

I’m considering trying this $534 budget out for real.

Just for one month.

The only problem is that we’re building our household equipment (cooking stuff) here, so would I include those pots and pans, or not?

How about my cellphone or transportation? Those are needs for me, I won’t be able to cancel them just for a month…

It may not be feasible, but it would be a great test of my mettle. Maybe I can do a hybrid of this budget.

Anyway, if I never subscribed to mental floss, I’d never have been brought across these stats in the first place.

(Talk about consumer justification, eh?)

I may just do this $534 budget in September to see if it’s possible. Or sooner, but I’ll mark expenses like pots and pans, as “not included”, as I won’t be buying pots everyday.

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Almost Rich: Earning $160,000 – $200,000 a year and barely making it

By thebudgetingtool | Published June 14, 2012

There was an article shared by Single Mom, Rich Mom in her post Judgey McJudgeypants referencing a Toronto Life article entitled: “Almost Rich: an examination of the true cost of city living and why rich is never rich enough“.

FYI, SMRM makes more as a single income earner than any of these people, and she is even more frugal than I am, which isn’t saying much because I don’t consider myself frugal… but I thought I ought to point out! :P

As a short recap, these people earn about $160,000 – $200,000 gross a year and are saying that it still isn’t enough to live the way they want and save. Toronto Life writes:

…the threshold for the top one per cent of income earners is much lower than you’d expect: $196,000, in the latest Statistics Canada numbers.

That’s no small amount of money, but hardly the means for a life of leisure.

In an increasingly pricy city like Toronto, where we pay a premium for everything from milk to car insurance, $196,000 can seem positively middle-class.

I am no good at reading these expenses in a huge paragraph, so I made graphs for two profiles I thought were the most interesting:

At the end of the month, after all the bills are paid, they usually find they have nothing left. “We have a weakness for designer furniture,” says Suzanne. “In 2010, we spent $5,000 on a table and Eames chairs for our dining room.”

THE LEWIS-KOONINGS BUDGET:

I estimated that they earn $125,000 net a year after taxes.

NOTES I’D LIKE TO POINT OUT:

  • They’re saving 1.18% of their income for their kids and 0% for themselves
  • …but are spending 4.73% of their income on Wine and 4.73% on Eating Out
When you prioritize Wine and Eating Out over saving for your kids or yourself, something is wrong, unless I’m missing the big picture and they have an INCREDIBLE retirement savings plan from their employers (very possible, especially if they work for the government).
 

He tries to stay debt-free, but occasionally he splurges on travel or a big-ticket toy, like the $7,500 Royal Enfield motorcycle he bought last year. “People think I make a lot of money,” he says, “but I lose so much of it in tax.”

THE HAYNES BUDGET:

I estimated that he earns $115,000 net after taxes.

NOTES I’D LIKE TO POINT OUT:

  • I don’t think his budget is that bad…. because he prioritizes what he wants to do!!!
  • He also seems to be saving a total of about $40,000 a year based on his budget ($20K in retirement and $20K in budget leftover).
  • I’m sort of curious about his quote about not making a lot of money and losing most of it in tax — he’s a single income household earning about $115k net a year which is a phenomenal amount of money

Read the Toronto Life Article here.

THEY EARN PLENTY TO SAVE, THEY JUST SPEND TOO MUCH

Same old, same old.

I will admit, I was reading the article and I was a bit shocked that they think what they earn, is not enough, but maybe that’s just Toronto Life’s spin on things to garner some shock so that the article goes viral.

I earn $30,000 less than the lowest earner, and I think what I earn is more than enough as a dual income no kids (DINK), although BF and I don’t share our income, we do split the essential bills 50/50 like Rent, Household and Groceries.

For those couples who say that they don’t seem to have money at the end of the day (Lewis-Koonings), they need to re-examine their budget.

The rest, seem to be saving, although not as much as they’d like.

EVERYONE PRIORITIZES WHAT THEY WANT TO DO WITH THEIR MONEY

They either want to spend it on Wine and Eating out instead of saving for their kids or their own future (Lewis-Koonings), or they decide that Wine is important, but they still make it a point to sock away the maximum for their retirement (Haynes).

I am not saying that NO ONE should be able to eat out or have a great bottle of wine a week.

I’m saying that if you feel like you don’t save enough, and you’re always living cheque to cheque then you need to re-examine your budget and put your money where your mouth is.

People who claim that they HAVE to eat out because they don’t have time to cook when they get home or are tired, are people who are not organized and conscientious about their money to be prepared for those weekly challenges.

I’m tired too. I get home, it’s late, I’m annoyed, but I cook ahead of time so that I don’t go hungry and start eating condiments and spices.

I AM NO SAINT… BUT I DO SAVE MY MONEY

I am no saint. I definitely spend when I want to spend, and I do what I want with my money, but that’s because I can afford to and I know it.

I save when I can, and when I feel panicky or anxious that I might be turning into a McSpenderson, I cut back and start re-evaluating my goals.

I always review my budget each month that I track with my budgeting tool, I set very lofty goals for my net worth (perhaps too lofty…), and I have significant savings outside of my retirement plans.

I try to be conscientious about my money, but I also want to live my life and be happy, even if it means spending $2.50 on a single macaron! (OK who am I kidding, I eat 4 macarons at a time… so make that $10.)

SO, IS A 6-FIGURE INCOME MORE THAN ENOUGH FOR YOU?

 

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How I got out of debt

By thebudgetingtool | Published May 21, 2012

Disclaimer: This will not work for everyone, but this is how I got out of debt.

THE BACKGROUND

I was $60,000 of debt when I graduated from college (all tuition), with no consumer debt (I’ve never paid a red cent in credit card interest). I cleared it in 18 months.

I only realized I was in a big financial hole when I started paying attention to how much interest they were charging me on my debt (5% and 7.5%), now that I was no longer a student and it was no longer interest free.

I decided I wanted to get out of debt, but not having managed or handled money in an intelligent manner my entire life, I figured I needed a crash course in Money 101.

I started reading as many articles that had the word ‘money’, ‘finance’, and ‘budget’ as I possibly could, which included blogs, books and articles in magazines.

After I got the gist of what I had to do by budgeting and tracking my expenses, I started paying down my debt and I finished it in 18 months.

So how did I do it?

Looking back, this is what I think helped.

DECIDING TO GET OUT OF DEBT

If you earn $10,000 or a million, if you are in debt and comfortable with that hanging around your neck, it won’t matter whether you are in debt or not.

You have to make a DECISION to get out of debt, and not to be comfortable with owing people money.

DECIDING TO CLEAR IT IN 5 YEARS

My plan was to get rid of it in 5 years. I didn’t want to keep paying it for the rest of my life, and the loan period was going to be about 10 years before I would clear anything!

STARTED CARING ABOUT MY OWN MONEY

I started caring about MY money. Rather than “someone else’s debt”, it was MY debt.

I started caring about my income, my debt, my expenses, my obligations and basically.. my money.

I really wanted to do things right, financially and stop having to care or worry about where my cash would go each month.

By the end of 6 months, I had a routine down pat, where each paycheck would hit my bank account, and it would be allocated to each category down to the penny.

STARTED A BUDGET AND TRACKING MY EXPENSES

That was the time I created my budgeting and tracking expense tool.

It has been proven time and time again that if you make a budget, track your expenses and stick to your financial plan, you will become debt-free and wealthy.

You do not need to make a high income to be able to save or to get out of debt, you just need a change in lifestyle and in your mindset.

People who make 6-figure incomes and spend every penny of it, are no better off than those who make a fraction of that, because they don’t save anything.

In fact, people with high incomes who don’t save, tend to feel like they deserve to spend more than what they earn, and may end up with bigger debts than someone with a lower income.

EARNING A GOOD INCOME

I graduated from college and got a job at $65,000 a year.

I obviously worked hard to get to the level where I could get a job that paid that kind of money, but it was also not during a recession and the general economy was quite good.

As a result, my fairly high income for a new college grad, allowed me a net income of about $3200 each month after taxes to spend.

HAPPENED TO BE A CONSULTANT

I also entered into a profession (consulting) that offered me a lot of benefits, such as:

  • Lots of expenses to pay for that would be reimbursed – this gave me credit card points to use towards groceries and other living expenses
  • Ability to travel and live where the project was – this was cheaper than flying me back each week, so I gave up my apartment and lived in each project city, with shelter and food paid for 100% by the client

For the first year, I paid for an apartment and realized I hadn’t really lived there for most of the year, and it was $1500 out my net income each month.

So I gave up my apartment, and my net income was freed up by not having an apartment hanging over me.

I was able to put up to 90% of my net income towards my debt each month (but it doesn’t necessarily mean that I did).

BECAME VERY EXPENSE-CONSCIOUS / CRAZY

Even though I had the ability to put 90% of my net income towards my debt, it didn’t mean that I did it regularly all the time in the beginning.

I was more in the mindset of: Great! I have all this money, now I can pay my debt comfortably to be out in 5 years, and spend the rest.

It wasn’t until I realized how silly that was, that I slowly started increasing my net income payments towards my debt.

Near the end of my debt ($15,000 left to go), I was counting pennies to try and hit my target of 90% of my net income towards my debt.

I didn’t go out to eat let alone eat! I ate less, and I kind of went nuts. It was kind of obsessive compulsive and I was told I was really going too far off the deep end. :P

I even briefly toyed with the idea of NOT putting money into my retirement fund (100% employer matched), just to have that extra cash each month towards my debt. Luckily I didn’t do it, but it did cross my mind.

QUIT MY JOB AND FREELANCED

Near the end of my $15,000 it was about the time I got sick of my company, quit and started freelancing.

I quadrupled my income, and cleared the last $15,000 with the money I earned.

Even without quitting my job and freelancing, I was on track to finish off my debt by the following year, a good 2 years less than my estimated 5 years.

I already had fairly good money habits in place, I was already putting a lot of my net income towards my debt, and I was being very careful with my expenses, all of which helped.

SUMMARY

This is NOT a story that everyone can replicate fully. My situation is different.. even unique, and I just made the most of the opportunity I was given.

I absolutely acknowledge that not everyone could and SHOULD do this, but the main parts that are still relevant to everyone getting out of debt are highlighted in red.

  • Decided to get out of debt
  • Decided to clear it in 5 years
  • Started caring about my money (and my debt!)
  • Started a budget and started tracking my expenses
  • Earned a good income
  • Happened to be a consultant (in the right profession to save money)
  • Became very expense-conscious / crazy
  • Quit my job and freelanced

And that’s how I did it!

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