Category: Budgeting


March Net Worth: Stocking up

In terms of overall financial health, your net worth is a great indicator of overall success. To calculate your net worth, add up all of your assets (things that are worth money) and subtract your debts (loans, etc). Each month I share my net worth to help illustrate our financial health.

This month I changed my net worth calculation date slightly. I now calculate my net worth on the last day of the month rather than the first. This means rent hasn’t been cashed yet so my net worth will be slightly inflated this month, but going forward I think this is a better way to do it. This will allow me to post my net worth on the last day of the month, on schedule.

Keep reducing your debts

Over the past few months my net worth has grown faster than I would have expected. However this is not a complete surprise because I’ve been in savings mode. Later this summer when I take some holidays, it’ll be time to spend that hard earned cash and my net worth will correct itself. The one number I will keep an eye on is my net liabilities. This number should keep decreasing, as I am saving for my holidays rather than taking out credit to pay for them. As long as my net liabilities keep decreasing, I’m heading in the right direction!

Here’s a breakdown of my net worth for the month:

Assets:

Assets Previous Month Current Month Change (%)
Cash $6,101.60 $8,743.32 43.3%
RRSP $6,092.45 $6,231.37 2.3%
TFSA $1,553.03 $1,642.98 5.8%
Condo $258,0000.00 $258,000.00 0.0%
Personal Assets $500.00
$500.00
0.0%
Total Assets $272,116.83 $275,117.67 1.1%

Liabilities

Liabilities Previous Month Current Month Change (%)
Credit Cards $849.52 $566.83 -33.3%
Family Loan $14,853.57 $14,853.57 0.0%
Student Loan $4901.65 $4,222.55 -13.9%
Mortgage $238,356.97 $237,905.46 -0.19%
Total Liabilities $260,078.57 $257,548.41 -1.0%

Total Net Worth: $17,569.26 (+32%)

Celebrating neighbourhood stores

Recently, a new grocery store opened up about 7 blocks away from my apartment.  It’s sort-of-kinda-related-but-not-really to the giant grocery store I go to once a month, but smaller. 

The downsides: The prices are a tad higher for some products and being a smaller store, there is less selection.  They do not have a fresh deli or seafood section.

The upsides: The store is clean… OH SO CLEAN!  There are less people, less children (I’m sorry, but the children at Superstore seem universally hellish), and the service is infinitely better.  I actually had both my cashiers thank me for visiting.  At Superstore, you’re lucky if they even say hello.  I asked a stock boy about a price and he actually investigated it rather than just telling me it “wasn’t in his department”.  And best of all, I can walk there!

Importantly, this means that I can trim more money from my monthly car budget!  Currently, we allocate $200 a month towards using the Car Co-op.  Usually, we only spend ~$150 and have a bit of buffer left over.  We put part of the buffer towards saving up for a car of our own (… if it turns out we ever need one!)  Now, by cutting out one of our longer car trips per month we can safely cut down on our car budget, while still preserving a buffer.

I haven’t made the changes yet – the bf and I will wait another month or two to get a better idea of how much less we’re spending on the car.  Then, we will probably put some of the savings towards our grocery budget to account for the slightly higher prices (only if needed – the prices differences may not affect our budget) and the rest towards a savings or investing goal.

For the convenience factor, it’s a bit disappointing that there isn’t a seafood or deli section, but we don’t usually buy deli or seafood from the grocery store anyways.  We live near several excellent year-round farmers and community markets which have high quality deli meats, breads, cheeses and seafood for sale, so it should not have a negative affect on our shopping. 

Overall, I’m super happy at this new development.  I love my neighbourhood and the new grocery market just makes it even better.

When to go out for lunches at work

Yesterday I brought my lunch to work.  I had cheese tortellini with carrots on the side and a banana.  Yum.  I bring my lunch to work almost every day, while there are people in my office who go out for lunch every day.  I’ve never asked them why – maybe I should? – but I am often one of only three or four left in the office when everyone else goes out to eat.

While I’m happy to just bring a lunch every day, I will almost always join the office out for lunch on Fridays.  Working downtown, this can put a dent quite a dent in my monthly spending allowance, as lunches range from $10 to $20 without a drink.  I only get $100 – $150 a month to spend!  So why do I do it?

Usually it’s not for the for the sake of lunch itself.  The food I make at home is better proportioned and more nutritious, if all I want to do is get full.  But eating is not just about getting full, otherwise we’d all eat nutritious, calorie dense food and forgo the seasoning.  To me, eating is, and should be, an experience. Eating is pleasurable – so why not enjoy it?

It could be as simple as the experience of enjoying a well made home cooked meal, such as when a family sits down to dinner or when I unpack my lunch to taste something the bf made for me last night.

Similarly, when the bf and I go out to eat, we do it for the experience.  We like having decadent food and great wine, once in a while.  We like attentive service and innovative restaurants.  We rarely go out to eat purely for the sake of eating.  When I do mystery shops for restaurants, the food itself takes up only a small portion of the report.  The larger part of the report asks – how was the dining experience?

When I go out to eat with my co-workers, it is for the social experience.  Friday lunches are when people have a beer, loosen up, and talk over a leisurely (and over-priced) meal.  If I never went, people would have a harder time getting to know me.  By going once a week, it gives them a chance to see how I am “outside” of work – this is especially important in temporary jobs, such as mine.  When I go back to classes, I want them to remember someone who worked hard but was also a fun colleague.  I do not want to be the “aloof” intern who was “too good” to have lunch with the boys.  I want them to remember someone that they would work with again.

It is not worth sacrificing $10-$20 a day every day simply to get full.  But it is worth sacrificing that money once in a while to get a social eating experience with friends and colleagues at the end of a work week.

In terms of overall financial health, your net worth is a great indicator of overall success. To calculate your net worth, add up all of your assets (things that are worth money) and subtract your debts (loans, etc). Each month I share my net worth to help illustrate our financial health.

February is a good example of a normal month. I paid down debt. My investments grew moderately. I spent to my budget. As a result my net worth increased by approximately $1200. It would have been more, but unfortunately our Condo fees increased by 20%  retroactive to January 1st, so we owed a bit of money.

Benchmark Your Net Worth

It’s great to say that my net worth increased by $1200, but what does that mean exactly? Would this be a success if I took home $5000 in income last month? No! Looking at your net worth as a percentage of your income is a great way to benchmark your progress. In my case, an increase in my net worth of $1200 represents approximately 40% of my net income in a month. 40% is now my benchmark; I think I can do better and will set a goal of 50% over the long term.

Here’s a breakdown of my net worth for the month:

Assets:

Assets Previous Month Current Month Change (%)
Cash $6,311.61 $6,101.60 -3.3%
RRSP $5,865.96 $6,092.45 3.9%
TFSA $1,439.26 $1,553.03 7.9%
Condo $258,0000.00 $258,000.00 0.0%
Personal Assets $500.00
$500.00
0.0%
Total Assets $272,116.83

$272,247.08 0.1%

Liabilities

Liabilities Previous Month Current Month Change (%)
Credit Cards $1,075.45 $849.52 -21.0%
Family Loan $14,853.57 $14,853.57 0.0%
Student Loan $5,400.91 $4901.65 -9.3%
Mortgage $238,748.64 $238,356.97 -0.16%
Total Liabilities $260,078.57 $258,961.71 -0.43%

Total Net Worth: $13,285 (+10.4%)

It’s not much, but considering where I was last year, I can’t complain. Check out The Financial Blogger for a look at a net worth with some serious money!

Indulge yourself

Budgets are tough.  It’s easy to want things and so much harder to say no.  Saying no to yourself does get easier over time, but it helps if you leave enough room in your budget for the occasional indulgence.  It’s like a diet.  Everyone knows that eating lots of fruits, vegetables and fiber will keep you healthy, but the occasional chocolate bar does no harm and may offer some benefit as well.  Similarly, treating yourself to a small spending indulgence or luxury once in a while keep you sane and keeps the process of saving enjoyable.

Don’t spend for the sake of spending, but pick something that will genuinely make you happy.  I have two main areas that I like to splurge on once in a while.

Hair, esthetics, and spas

Three to four times a year, I get my hair cut and coloured at my favourite salon with my favourite stylist.  It costs me over $200 including tax and tip.  Yikes!  Over the course of the year, that’s at least half a mortgage payment!  But there is little better than having your head massaged, your hair pampered, and coming out of the hair salon with picture perfect hair two hours later – at least for me!  Ditto for the occasional facial or laser treatment.

Frugal hacks: You can get AMAZING haircuts from top salons for free, or almost free, simply by volunteering to be a hair model for their apprentices.  These cuts usually include a head massage and styling.  When I don’t feel like I have the money to splurge on cuts and colours, this is what I do.  You can also get cheap massages and esthetic treatments from make-up and esthetic schools.

Coffee, tea or a beer

I don’t go to the coffee shop to get a daily fix, but I do like going there once a week or once every two weeks to enjoy a really good, well made latte or mocha.  I can’t make these at home.  Instead, going out for a latte with my friends lets me enjoy a decadent drink (one cup is more than I spend on food in a day!) while having quality social time with the people who are important to me.

Frugal hacks: First, many coffee places will give you free refills if you bring a mug or sign up for a membership.  Take advantage of it to stretch out a lazy afternoon at the coffee shop with friends.  Secondly – not so much a hack as a suggestion – It’s easy to spend too much, especially on alcohol, when out with friends.  Focus on conversation and interaction rather than mindlessly sipping a drink while watching the overhead TV and chances are, you’ll spend much less.

***

Those are the two things I indulge in the most and I never regret either of them!  Importantly, I don’t “steal” from my budget to indulge in these things.  Coffees always come out of my pre-allocated spending money and hair cuts come out of my flex money, supplemented by money from my side jobs.

What do you indulge in?

Recently, I took a weekend ski vacation to our nearby mountain – Whistler. As you know, the trip turned out to be a complete success, however it certainly did not go according to plan. My experiences in the lead up to the trip really got me thinking about the difficulties of planning a trip with your friends, particularly where money is involved. It seems to me that everyone could benefit by establishing some common courtesy rules when planning a group vacation. We ended up losing three friends in the process and I don’t wish that on anyone.

The Background

Since the trip to Whistler was a birthday present, the gf decided it would be great if we could bring up a few of our friends and make a weekend out of it. So, we invited a few friends and went about planning the trip. The friends that we chose were great to hang out with, but have a very different philosophy than I do when it comes to money. In the end, the process made us so uncomfortable that we decided to go it alone and plan our own trip. We haven’t spoken since.

Situations like these are completely unnecessary and avoidable and I want to make sure everyone has the tools to prevent this from happening to you! Reflecting back on the experience, I believe that the following rules should be applied when money is involved between friends and offer the following examples of how it went wrong for me.

Agree on key parameters

Defining what you want the trip to look like is key. Will this be a trip where 10 people pile into one hotel room, or will you book a private condo with enough beds for everyone? Some friends will like the idea of cramming into one room and splurging on entertainment instead of sleeping quarters.  Other friends may prefer the luxury of a hotel room or want specific luxuries, such as a hot tub.

What went wrong: We did not agree on these key issues up front. Our friends ended up taking the lead on booking accommodations and booked an expensive private rental, with hot tub and private bedrooms for everyone rather than the much less expensive, but admittedly more crowded, Living Social hotel deal that we found.

Designate a lead planner

There is nothing more confusing than having five different people trying to make one decision. Identifying a leader early in the process will help avoid confusion and provide for a clear flow of information.

What went wrong: The gf began planning the trip, but then left the accommodation planning to our friends. Our friends did not live by the first rule!

Don’t ask to be repaid before the trip

Just as you designate a lead planner, often it is easier to have one person pay all the major expenses and then be reimbursed later. This lets all of the expenses be divided up fairly, assuming you have already implemented the first rule. Do not expect to be reimbursed immediately, especially if there are a lot of people coming!  It’s just not realistic.

What went wrong: Our friend offered to put the charges on their credit card, and then expected to be reimbursed immediately because they claimed their credit card bill was due a week. If you carry a balance on your credit card and will need to be paid right away, it’s best not to put more expenses on your card.

Treat your friends like friends

The most important rule when planning anything with friends is to make sure you treat them like friends! In order to apply the rules above, there needs to be a base level of trust and maturity between all parties. In our experience with this trip, we found out that our friends were not really that great of friends at all.

Please share your stories below if you have additional rules or stories about planning trips.

A grocery budget for 2!

Last time, I posted my grocery budget for singles, including a breakdown of where this money went over a three month period. This was basically how I ate while I was in university. I lived alone (stupid, stupid, stupid… !) and given the high costs of housing in Vancouver, I had to learn to maximize my budget. It worked out pretty well for me. I cooked most of my meals at home and supplemented this budget with the occasional dinner at my parents’ house. If I decided to go out for a meal socially with friends, I took this out of my Entertainment/Spending money.

But like most people, eventually we find that after adapting to feeding just ourselves, we add more people to the mix! When my boyfriend and I moved in together, I had to once again rethink the grocery budget. It helped that he liked my cooking and I could tolerate his. I also helped that we both enjoyed eating rice frequently. But he needed more cereal and milk, while I needed less meat than he was used to. So it was back to the drawing board.

What supplies do we have already?

Chances are, if you are a individual moving in with another individual, you are not starting from scratch. The exact details will vary, but I’m going to assume that you have some seasonings(salt, peppter, maybe a few spices), a bit of the necessities (oil, flour, maybe a few sauces), and some odds and ends in the fridge and pantry. Not stellar, but not an empty kitchen either. If you ARE starting from scratch, it is still possible to use this budget, though your first few months may be out of whack as you accumulate things or you may have to go without certain items until the next month.

What are we going to eat?!

We decided to do 2 major shops a month, with sporadic trips to the local market to pick up fruits and vegetables during the week.  At the major shops, we would get staples, meats and canned goods, as well as bulk packaged fruits and veggies such as potatoes and carrots.

For the first shop in the month, we usually go to Superstore.  This is a large, chain supermarket which carries just about everything.

For the second shop of the month, we usually go to an Asian supermarket which has excellent prices on ethnic foods, fruits and veggies, and prepared items such as BBQ pork.

You’ll also notice two new categories: Personal and Shop Meal.

    Month 1 Month 2 Month 3
1st shop Meats Beef – ground or roast cut ($11) Chicken – 2 whole or legs/thighs ($11) Pork – side ribs, chops, tenderloin ($11)
    Eggs – 2 dozen ($4) Eggs – 2 dozen ($4) Eggs – 2 dozen ($4)
  Fruits and Veggies Assorted ($30) Assorted ($30) Assorted ($30)
         
  Dairy Milk 2L ($2) Milk 2L ($2) Milk 2L ($2)
    Yogurt ($5) Yogurt ($5) Yogurt ($5)
    Cheese ($5) Cheese ($5) Cheese ($5)
  Grains Bread ($3) Bread ($3) Bread ($3)
  Misc Canned goods ($20) Cooking supplies ($20) Dry goods ($20)
  Personal Anything ($10) Anything ($10) Anything ($10)
  Shop Meal Anything ($10) Anything ($10) Anything ($10)
         
    Month 1 Month 2 Month 3
2nd Shop Meats Seafood eg. Bag of shrimp or fish ($10) Seafood eg. Bag of shrimp or fish ($10) Seafood eg. Bag of shrimp or fish ($10)
      Other eg. Sausages, deli meats, tofu or bacon ($5) Other eg. Sausages, deli meats, tofu or bacon ($5)
  Fruits and Veggies Assorted ($30) Assorted ($30) Assorted ($30)
         
  Dairy Yogurt ($5) Yogurt ($5) Yogurt ($5)
      Cheese ($5) Cheese ($5)
         
  Grains Rice 40lbs ($30)    
    Artisan breads ($5) Artisan breads ($5) Artisan breads ($5)
      Rice noodles($5) Chow mein ($5)
  Misc   Anything ($15) Anything ($15)
  Personal Anything ($10) Anything ($10) Anything ($10)
  Shop Meal Anything ($10) Anything ($10) Anything ($10)

What’s personal?

We realized early on that there were some things which only one of us ate or wanted!  He enjoyed the occasional bag of nachos and salsa.  I have great fondness for marinated tripe.  So, we allocate $5 each from each $100 grocery shop towards buying anything for ourselves.  We’ve found this to be a good compromise as it lets us “cheat” on our otherwise healthy diet and buy something that we enjoy.

What’s a shop meal?

We also found that we would be exceedingly grumpy and hungry after grocery shops!  When we got home, we’d rush to make dinner and just end up tired and exhausted at the end of the night.

So we decided to put $10 from each shop towards buying something for dinner.  Sometimes we get a pizza, sometimes we get a bit of Asian fast food with rice.  The important part is that we are guaranteed a dinner that requires little to no preparation!  The reduces stress considerably and also lets us enjoy a meal immediately after getting home.  A win-win situation.

In the end…

It’s important to note that these are just general guidelines which summarize our grocery buying habits. Sometimes we buy more fish if it’s a good sale or if salmon is in season. Sometimes we stock up on canned goods when we have coupons. But these guidelines are the starting point from which I base my shopping.

January Net Worth Update – Baseline Edition

In terms of overall financial health, your net worth is a great indicator of overall success. To calculate your net worth, add up all of your assets (things that are worth money) and subtract your debts (loans, etc). Each month I will share my net worth to help illustrate our financial health.

It’s been just over a year since I started keeping track of my net worth. At first, tallying up all of my assets and tracking down all the money I owed seemed like a big task! Today, I love calculating my net worth each month. More than anything, it is my barometer of financial health. This is where I see all of my hard work actually pay off. Each month, I will share my successes and failures with you to help you along on your journey.

Historical Data

At the beginning of 2010, my net worth was -$14, 978. Ouch. Throughout the year, I made a concerted effort to reach par, and I succeeded, finishing off the year at $3, 079.  Having finally reached a positive number, there was much celebrating!

Here’s how the month broke down for me:

Assets:

Cash $6,311.61
RRSP $5,865.96
TFSA $1,439.26
Condo $258,0000.00
Personal Assets $500.00
Total Assets $272,116.83

Liabilities:

Credit Cards $1,075.45
Family Loan $14,853.57
Student Loan $5,400.91
Mortgage $238,748.64
Total Liabilities $260,078.57

Total Net Worth: $12,036 (+338%)

I should note that while CF and I combine our money for many things (she provided half the down-payment on the condo), we keep our net worth separate. Since the property is in my name, I put the mortgage and value of the property on my net worth. When we buy our second property, she’ll have it on her books.  This is how we do it, but many couples combine their net worth. Check out Couple Money for their version and a look at their combined net worth.

Sticking to your budget – Use cash!

Having worked a few retail jobs in the past (and currently on the side!) it has always amazed me how few people use cash to pay for their purchases. Even for a cup of coffee, it’s common to see people whip out the plastic – credit or debit.  In the near future, Google hopes that you will pay for purchases with your phone!  With the plethora of options now available to us to complete daily transactions, how can one possibly keep track of how much has been spent?

Why use cash?

Every paycheque, I determine how much money I have to spend and I take that money out in cash. By taking out cash, I can easily see how much money I have left.  I don’t have to worry about remembering to leave enough money for bills and I don’t have any embarrassing moments of card refusal.  Most importantly, eliminating credit and debit cards from my daily transactions has both saved on transaction fees and also made sure that I always have money left in the bank.

How to use cash as part of your budget

If you want to implement this strategy, here’s how you do it:

  1. Find out if you are paid bi-monthly (twice a month) or bi-weekly (every second week). I am paid bi-weekly.
  2. Determine how much money you want to spend each month if you are paid bi-montly, or every two weeks if you are paid bi-weekly. I give myself $150 per paycheque.
  3. Divide you allocation by the number of Friday’s in the month (bi-monthly) or by the number of weeks between paycheques (2, bi-weekly). I take out $75 each Friday.
  4. Spend your cash. When you run out, no more spending until next Friday!

I split up my spending money per week because if you do blow all you money in one weekend, you only have to wait through one week before getting more money.  Friday is a great day to take out your spending money because it ensures you will have some money for the weekend.

I really was a skeptic when I first adopted this idea.  It seemed like a lot of work – trips to the bank, cash to carry around… But after  a while,  I realized that carrying cash reduced the amount of work and stress I had.  I no longer had to periodically check my balance to see how much I had.  I no longer had to track my spending meticulously with receipts.  By carrying cash, these things are all implicitly done for me.

It really is a great way to stick to your budget – I encourage you to give it a try.

Fruits, veggies and costs, oh my!

I love buying fruits and vegetables because they are so cheap compared to the amount you get!  This may seem contrary to popular media reports which expound on the “high” cost of fresh produce, but it’s really a matter of where you shop and when you shop.  Certainly, while I was in Orlando last year, it was definitely true that fruits and vegetables were expensive… but only because my shopping options consisted of Walgreens and convenience stores!

At home in Vancouver however, I am able to choose from a wide range of stores.  By far, the cheapest options are the local produce markets.  Many of these are owned or directly affiliated with local farms.  As such, the produce is often sourced locally, inexpensive, and fresher.  If you prefer service and presentation, by all means, go to your local Safeway.  But if you don’t mind picking your fruit out of cardboard bin displays and dodging over-enthusiastic old Asian ladies (being ethnically Asian, I say this somewhat affectionately!) then I would encourage everyone to support their local market.

The market I often go to is located directly beside my transit stop – no extra travel time required!  I also like the Kins Farm Market chain of stores for their consistent quality, improvement in service, and low prices.  They’re also very active in the community, which is a big plus!

Here’s what I bought this week:

Zucchinni at 59 cents/lb = $0.41
Braeburn apples at 79 cents/lb = $1.25 for 3 large apples
Oranges at 49 cents/lb = $0.89 for 3
Roma tomatoes at 49 cents/lb = $0.45 for 2
Bean sprouts at 79 cents/lb = $0.30 for a large handful
Green pepper at 49 cents/lb = $0.30 for one large
Red pepper at $1.49 cents/lb = $0.45 for a small one

A grand total of $4.05, approximately.  Combined with leftover fruit, carrots (2 lbs for $1.50), lettuce ($0.89 a bunch) and onions ($1 for a small bag) I had at home from the previous week, this took care of all of my fruit and vegetable needs for the week.  Much less than $10 for quite a variety and selection of items!