Wednesday, 30 November 2016

Something for (almost) nothing

There are many loyalty programs out there.   So many that you may start to think that you shouldn't spend a penny without some future benefit accruing to you.   I used to have a 'free' credit card, two in fact.   They didn't cost me anything and one of them paid me (a little) cash back once a year and the other accumulated points that could be used to get merchandise or gift cards.   It was win-win as far as I was concerned because I never allowed myself to be put in the position of having to pay interest.  I liked to use cash for smaller day to day expenses and used the credit cards for larger purchases.   I remember once having to put a credit on my account to charge a $16,000 family vacation that was slightly over my credit limit at the time.   (See, you can arrange your life to have fun!)

One day I got thinking about my credit card benefits.   Half of one percent was awarded to me, so that meant I would have to charge $10,000 to my credit card to receive $50 back?   Why hadn't I realized this before?  $10,000 was a lot of money and the merchants were charged 3 - 5 % when a customer used their card.   This was on top of the 18 - 22% interest rate charged to those who carried a balance.   I was so amazed by my mathematical discovery, I had to telephone my second credit card company to confirm that they were equally (not) generous.   No point threatening to cancel one card to use the other exclusively.

Some supermarket point systems don't seem to be worth much.   Some enable you get get a cheaper price at the point of sale on something you were planning to buy anyway.   But the accumulated points, in my experience at least,  will get you something like a mug after six months of shopping.

Then there are credit cards that accumulate points for flights.   A family member extolled the virtues of a bank credit card, with an annual fee of $120, that enabled the family to have paid airline tickets at least once a year, whenever and wherever they wanted.   What had I been missing?   Enter the world of getting something extra for every cent you spend.   Now you need discipline for this and attention to detail.   It can get crazy with some brave individuals juggling a dozen different cards.  

It seems that everything, every pack of gum, must be charged to the credit card.   This can lead to a nasty surprise when the bill turns up, so keep track of your account on-line.   Check it regularly to ensure you will be able to pay it off before the due date.   Don't be one of those people who spends more or more often when paying by plastic as opposed to cash.  

This is an interesting topic to research on-line.   Lots of ideas and tricks.   Offer to put restaurant bills for large groups on your card and get everyone else to pay you (first) in cash.   Probably they hadn't all intended to pay cash.   People with small businesses who purchase goods and supplies on their credit card have a lot of potential to accumulate points.  

But be careful and make sure you are suited to something like this.   Credit card debt is no joke and can skewer any financial goals.

Wednesday, 23 November 2016

Is it still special?

When you and your significant other go out to dinner, is it special?   Do you look forward to it, plan what to wear, think about what you will order?  Are you marking a special occasion or rewarding yourselves for overcoming a difficult time?     Unless eating in restaurants is one of your life's priorities,  be aware that the cost is likely five to ten times the cost of eating at home.

By going to restaurants several times a week, you are missing the opportunity that restaurant dining used to provide when it was a special, looked-forward-to event.   Think about it.   Lots of things that mean the most to us are rare or at least occasional events.   Christmas comes but once a year.   A marriage proposal, a honeymoon is a rare event.   I know my first glimpse of the Eiffel Tower, years ago,  emerging out of  the morning mist from the window of my approaching train, far surpassed later visits.

Here's something a little unusual to consider trying:   Go on a cruise.   Yes, make it a cheap, last minute deal type of cruise.   If it's your first cruise, you'll definitely enjoy it.   Take advantage of all the meal offerings, there are many opportunities to eat.  It's all included (and free) You might even come to dread meal times.  But make a point of tallying up the likely cost of at least one extravagant dinner in which you order the crab cocktail, the seafood chowder, the ambrosia salad, steak and lobster and tiramisu for dessert. (or whatever is your favourite indulgence).    Was it $100 or $150?  You got it for free!  And that was just one meal.   After you return home, you'll resent having to actually pay for what was an included part of your cruise.   Your restaurant meals at home, added up, would likely buy you both a couple of cruises a year.   All that lovely food, plus the travel and entertainment.   Just watch your not-included bar bill!

You see, the purpose of this blog is not about total deprivation.   It's about priorities and smart spending when you do pull out your wallet.

Thursday, 17 November 2016

What's all this about dreaming?

You might find the title of this blog (and the book) a little odd.   Budgeting is a good thing, right?   And best to save dreaming for night time.   Dreams can lead you astray.

I suppose there is nothing wrong with budgeting.   It can be enlightening to keep track, for one month, of all income and outgo.   Usually there are some shocks involving the amount spent on restaurants and take away.   But this can devolve to a situation where you don't see the forest for the trees.   Or, in other words, you miss the big picture.

By dreaming I don't mean those weird dreams that I keep wasting my sleep time with.   You know the ones.  Someone is chasing me and I'm running but my feet feel like they're mired in mud.   I'm in some large building or on a ship trying to find my way around.   Or my least favourite, I'm waiting at a bus stop for a bus that never comes.    I suppose it could be worse.   My dreams hardly qualify as nightmares and occasionally I have the odd exciting one where I'm actually flying.   What a sensation!

Your day time dreams are really your goals, even if you haven't recognized them as such.    It's when you mutter about the traffic jams that are becoming more frequent in your morning and evening commutes.    It's when you get a lump in your throat at leaving your infant at daycare.    It's when you haunt programs like Househunters International.     You are dreaming but you just don't know it.  We get good at pushing are dreams down deep and goodness knows, we're too busy (or too exhausted) to analyze our fleeting feelings.

Anyway, when we look around, it seems that this is what everyone else is doing and most of us like to be agreeable and fit in.   Certainly we don't want to appear strange.    We all need to stick together and validate what we are doing.    It could be so much worse and the evening news will certainly provide lots of examples for why we should be grateful we are right where we are.  

To be continued . . . 

Thursday, 10 November 2016

Pet Insurance

I treated myself to a purebred puppy ten years ago.    It wasn't that much of a splurge as I discovered the local SPCA and Petfinder site charged about half the price for their dogs.   Yes, I know they need homes too and over the years I have obtained dogs and cats from the SPCA.

Much like when you buy an expensive outfit and you feel you need expensive shoes to go with it, my new puppy needed extravagant accessories.  Or I thought she did.   The new leash and collar didn't cost that much but what I came to regret was taking out Pet Insurance.   The glossy brochure was right there on the counter at the veterinarian's office.   I was sold.  Twenty-nine dollars a month would surely be a worthwhile purchase.

I paid dutifully for six or seven months and then received notice of a rate hike.   Oh,  $31 now.   A few months later I took my one year old dog for her annual check up.   Oh, annual checkups and vaccines aren't covered.   Routine tests aren't covered.  I didn't know that but then I hadn't read the policy.   A visit to the vet for an itchy ear was partially covered but not the drops, which were non-prescription.   Oh.  A notice that the monthly premium was going to $33.  Oh.  

After eighteen months, I decided to cancel the policy.  I'd realized that the policy had breed exclusions for the problems most likely to develop as well as other limitations.   Coverage could be changed unilaterally by the insurance company.   Only one knee operation was covered in dogs prone to knee problems. Genetic disorders are often not covered.  Some plans have their own schedule as to what they will pay.   That may not be the same as what your veterinarian charges.   If I had put the insurance premium into a savings account designated for vet bills I would have about $500 already.  Don't forget, your savings are transferrable, to another pet or some other expense.   Your pet insurance policy will lapse and your payments will disappear when your pet dies at the end of their life.   

My puppy is now ten years old.   She's been well cared for with annual check-ups and vaccines, lots of love, good food and exercise.   The $5000 plus I would have paid in premiums would not have been paid back in benefits by a long shot.     If you put the money into a designated savings account at least you don't have to worry about finding out that for some reason, your claim 'isn't covered by the plan.'  The annual deductible can be considerable.   There are exclusions you weren't prepared for.  I just didn't feel secure that after paying premiums for a dozen years, a claim I made wouldn't be denied for some obscure reason.  And, remember, you still have to pay the veterinarian's office up front and then wait and hope for some kind of reimbursement.   Or not.

Tuesday, 8 November 2016

It's All About Priorities

Budgets are a bit like diets.   They sound like a good idea but don't work for most people, at least not long term.   And there are some definite down sides to it.   Whether it's money or food, you deprive yourself until you break down and binge.  You feel bad, lash yourself with recriminations about your weakness and lack of willpower.   They may work in the short term but I don't know anyone for whom strict dieting or budgeting has worked in the long haul.   Maybe you do.

So what's the solution?    Whether it is food habits, a flattering wardrobe or a financial way of life, a customized, made-just-for-you approach,  is more likely to lead to success.   But it helps if you know yourself.

I'm going to suggest that a combination of strategies is more likely to lead to success.   You will likely be more successful in some areas than others but but using several or many different approaches will be a clearer path to your dream, whether that dream is an African safari or being able to stay home with your children while they are young.

On this blog I am going to strive to cover all, or at least most of the bases.   Follow along!