Save money, live better: what you need to know
Then, list every single expense you incur during the year, no matter how small it is. Do not neglect any single dime, because they all add up quickly.Updated on October 19, 2020, Jolof
Meet Joe and Mary,
Joe and Mary formed a very happy couple with a young daughter and a nanny who was taking care of their daughter when they were at work. They were both working in the oil sands, making both lots of money. They also had a great schedule. They worked a 20-day shift and took 10days off. Joe and Mary went to vacation every time they were off.
With the kind of money they were both making, they never worried about the expensive mortgage of their huge house, and the expensive debt, gas and insurance they were paying on their sport car and their highly lifted truck. They were just enjoying life, spending as the money comes, without thinking about anything, but spending.
End of 2014, the oil price went down. Both companies where Joe and Mary were working respectively, started struggling. To survive, both companies decided to reduce their staff… unfortunately both Joe and Mary were laid off, and that was the beginning of the drama.
Without any money saved, Joe and Mary both applied for employment insurance, but it was not enough to cover their high expenses. Their credit cards debt kept climbing until they both reached their limits in less than a month after they lost their jobs. With the level of debt, they had, they could not get any additional credit from any bank. Later, they lost the nanny they could not afford anymore. Joe started losing his temper, drinking, sleeping, smoking… and his new attitude start impacting the stability of his family. Mary could not take it anymore. She decided to leave Joe and brought her daughter with her to her parents. She decided to turn herself to an escort girl to meet what she considered her needs.
Meanwhile, the banks ceased the house, and both the sports car and the truck that was on lien.
Joe could not accept losing everything. He decided to take his gun and blow up his head.
Poor Joe, poor Mary.
It’s a sad story, but what happened to Joe and Mary could happen to most of us, because not everyone of us depend on some parents or a family who will come to rescue when we need it. Fortunately, there are ways to avoid being Joe or Mary. It’s the what we could call the 2S…Simplify and Save. Buy mastering the 2S, you will be always ready to soften the impact of a bad surprise, like what most Albertans are living now: a job loss. How does it work?
First, if you have a wife or a partner, start convincing him or her. That’s 50% of the step. When you are married, you do not have 100% control over your own money. Because, if your wife spoils her money, you would have to share yours, because you just cannot let your family down. Get her involved… and show her that the 2S steps matters because you love her, and you would like to keep the family worry free in difficult time.
Secondly, create a plan to apply the 2S. You will need to have a budget, if you do not already have one. If you do, you would have to review it. You can use Excel, you do not have to buy a new software… because, remember… you want to save.
Start your budget by adding at the top you take home income – your net income after tax and after RSP contribution. And check how much you have in savings. Some people say that you need to save at least 3 months of your income, but with the current downturn, it looks like it you may even need a year of your income.
Then, list every single expense you incur during the year, no matter how small it is. Do not neglect any single dime, because they all add up quickly.
After that, start cutting expenses. Here are some examples:
1. Do you really need to pay $120 a month for Internet and TV, when you can have what you need for $50? You can replace the cable with Internet for $40 a month + Netflix for $8 and Magicjack home phone for $3 ($35 a year).
2. Do you really have to go to Hawaii for a vacation? Missing that vacation for now would it make you unhappy. It may, but it would not make lose your mind as losing your job with no enough savings would. What about a staycation.
3. Do you really need that cellphone plan? Do you really need Internet on your phone? Instead of paying $70 a month, what about $20 a month w/o Internet.
4. Do you really need a truck? How much would be the insurance? Gas? What about a smaller car that would save you more in insurance and gas…?
5. Do you really need to pay $250 a year for a satellite radio in your car. What about listening your old CD’s in your car or putting some music on your USB memory car for free.
The bottom line is that you need to redefine your priorities and understand what really is a necessity and what is not. Living in a consumerism world, it’s very tempting to be an over spender.
By doing that exercise, you will realize that they are lots of things you are paying for that you do not need. Buy deciding to simplify your life and live within your mean, you will save more, and that would help you to be ready and stay happy. Because, no matter what the saying is, money does not buy happiness, but often, it does save sadness.