Getting Lifestyle Creep Under Control

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Have you ever wondered why you are still short at the end of the month, in spite of that raise or promotion at work?  You may be suffering from lifestyle creep – that silent condition that instantly devours any disposable income you think you have.

Moving up in the world is commendable.  You start out in adult life with less – less than you were used to at your parent’s house, less income than you expected to have and bigger expenses.  Over the years, though, you notch yourself up on the pay-scale, perhaps celebrating with a new car, or more amenities.  After all, you deserve that for working hard and making good, right?

Yet, contrary to expectations, you are not meeting your goals towards saving up for the down payment on that dream home, trip-of-a-lifetime, or college expenses for your kids.  That’s lifestyle creep.

Once you realize this might be the case, here are some suggestions for dealing with it.

 

Identify where the creep is occurring.

Make a list of all expenses.

First, look through and list last year’s expenses – checks written, withdrawals (including debits), things bought with cash, credit card bills, interest and payments on all loans.  Include it all – utilities, subscriptions, rentals, trips, medical, dental, insurance, gifting, everything.

This is no fun and will take awhile, but it is absolutely essential to being able to see where the creep happens so you can deal with it.

Next, make a list of future goals and what you now do towards them.  How much do you contribute to savings for retirement, for college expenses, for that new car or house or other big purchase?

Analyze the information you gathered.

Categorize your expenses.  Note, if you are working from a budget, you probably already have them categorized.  If not, this categorization could be the foundation for a budget.  (I  know, the B-word elicits horror and anxiety, but budgets of some sort are desirable).

Then evaluate whether you need each of the things causing the expense.  If so, think through how you might be able to (relatively painlessly) reduce that expense.

Do you use multiple TV/Movies subscription services (for example Netflix AND cable TV AND HULU AND Amazon Prime)?  Do you really need all of them?  Which do you use most often?

Finally, review how you got started with those expenses, was it conscious or spontaneous?  Knowing this will give you insight into how to better control future lifestyle creep.

Take action.

You spent all that time listing your expenses, then evaluating them, now is the time to decide what to act on.  Look for things that will give you the most savings with the least disruption to your lifestyle.

Sometimes, that may even mean spending a bit more money.  For example, if you have determined that your heating or cooling bills are too expensive, you may decide to buy a programmable thermostat to automate setting temperatures in the house up or down when you are not there.

With other items, you may decide to try to alter your (and your family’s) habits.  One example might be to institute a cooling-off period prior to buying anything with disposable income.  For instance, if you are wanting that new TV, forcing you to wait until they go on sale can a) make you realize you don’t really want or need it all that much or b) give you time to do more research as to what kind you want and the best place to get it or c) help the kids learn delayed gratification or d) let you save up for it instead of putting it on the credit card and paying high-interest rates until you pay it off.

Once you’ve trimmed off the fat on your expenses, use that fat to go towards your goals. Set up auto options to take part of your paycheck and put it to work in a savings account or investment.

Then, start doing a better job of tracking expenses as you go.  I know that when I charge something on your card it is harder for me to remember that it is there than it is when I write a check.  Likewise, when I get a bunch of cash out and spend it, it is difficult to remember exactly where that money went.  Set up a system that works for you and your family so that all know where the money is going.

Plan to avoid future lifestyle creep.

This plan should include methods to alter habits creating needless expenses: techniques to contain spontaneous purchases and a schedule to review your lifestyle creep situation at least once a year or so.

The plan could specify dates to review and negotiate ongoing bill creep (like those ever increasing cable TV bills).

It could include time once every couple of years to go through the entire above process again, or to do so whenever the family income increases.

It could even extend to taking that ‘B’ word seriously and create and stick to a budget.

How about you all? How have you handled lifestyle creep?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/ian-arlett/34233379390/sizes/l

Do You REALLY Want to Be Rich?

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Let’s face it, most of us aren’t part of the elite 1% financially.  Many of us live paycheck to paycheck.  A lot of us using part of that paycheck to service our debts.

As of 2014, in Canada, the median income was $78,870.  However, the average salary in Dec of 2014 was just over $49,000 (Statistics Canada). Canadian consumer debt topped out at $21,348 in early 2016 (CBC News).

Forty Nine Grand isn’t a lot to cover the cost of housing, food, transportation, education, health care and entertainment for the typical family of four, let alone trying to get those debts paid off and put something aside for old age.

Perhaps we struggle through our daily lives, rising groggily for that 5 AM buzzing alarm to hit the road to hang onto that 9-5 job; searching all avenues to find the best prices on the items we need or want to buy; choosing between paying down the credit card or the mortgage; and shopping that garage sale instead of buying retail while wondering how life would be different if we were rich.

Who hasn’t bought a lottery ticket, knowing the odds against winning are substantial?  The mere possibility of having gobs of money raises visions of luxury and abundance in our minds.

 

A Vision of what it is like to be Rich

Just think about it!  You would not have to work for a living, someone else would clean your house, mow your grass, and worry about paying the bills.  Vacations would be a blast – whether staying at your own vacation villas in different parts of the world, touring the world from the deck of your condo/cruiser or taking off in your private jet for a dinner meeting in another city.

You would never again have to decide whether to pay down the credit card or beef up your savings; wait to buy the latest tech toy; or dream about having your own swimming pool.

The vision is tempting, but is real life as a rich person really going to match that vision?  Probably not.

There is a reason that old saying ‘The grass is always greener on the other side of the fence” is still around.  Even Royals may wonder – as in the musical Camelot when GUENEVERE sings:

” What else do the simple folk do  To help them escape when they’re blue?  and King Arthur answers:

“They sit around and wonder what royal folk would  do And that’s what simple folk do”

Wondering how the other half lives is a prime pastime, allowing folks like Robert Frank (CNBC & Secret Lives of the Super Rich host) to even make a good living from exploring the topic publicly.

What being rich can mean

Becoming rich won’t make you a new person.  Being rich won’t fix most of the things you feel are wrong in your life.  Rich or poor, we all have issues.  We all make good and bad choices.  The rich just have more opportunity to make the bad ones!

 

What can be good about being rich

You have financial independence – no more trudging to that boring 9 – 5 job each day.  You can do what you want, when you want (as long as you know what you want!).  Riches usually bring a level of comfort to your situation.  It reduces stress to know that you have the backing to keep your life from tanking if a few things go wrong.

You have the financial ability to pursue multiple interests.

Lets face it, sometimes pursuing opportunities, hobbies or interests costs money.  You can set yourself up in your own business, move to that elite neighborhood so the kids can team up with neighbors in the know; start that charitable organization to help out your favorite cause or buy and restore that vintage auto.

Being rich provides opportunities to help others.  Money can help you make a difference in your world – allowing you to sponsor the education of a child in your area; helping out that senior who can no longer get out to maintain her home; or even just shoot off a check to your favorite political candidate.

Money helps you make more money. 

It can be a great passive income generator if you invest smartly – allowing you to maintain your new level of wealth and perhaps even pass it along to your next generation.

Riches can solve problems.

Having plenty of money may help alleviate some stress and help you sleep better – no more staying up worrying about paying the bills.

Wealth allows you to get where you need to be.  You don’t have to plan months ahead to catch a flight or get to that event – you have the backing needed.

If you have medical issues, wealth can help.  You can afford that special medicine or ignore the constraints of insurance.  In fact you may decide to enlist special health care, such as concierge doctors.

 

Some of the potential negatives rich people may experience

No matter how rich you are, it is probable that you can’t have all of the things you want all of the time.  Like the rest of us, you are limited to enjoying some of the things you want (but maybe all of the time) or all of the things you want (but maybe just some of the time).  Rich people still have to make choices about what they spend.

Being rich might make you a target.

Many really wealthy folks try to hide their wealth, attempting to avoid situations where relatives, friends and strangers ask for money.

Rich folks may have security issues.

Depending on wealth level and general public knowledge of their wealth, the rich may need to have safe rooms, bodyguards and may worry about their children being kidnapped and held for ransom.

Wealth can make you subject to lawsuits.

It is an unfortunate fact that the world is full of unscrupulous folks who might make unjustified accusations about you – filing lawsuits to try for some of your wealth.

Some rich folks work long hours at high stress jobs.

If you earned your wealth, there is a good chance you have been and will continue to put in long hours to keep the money flowing. Work life balance remains out of kilter and health issues can result.  Time away from home affects family life and relationships.   In fact, it can be a major complaint for children of first generation wealth producers.  They don’t really develop typical relationships with the earning parent.  That parent is not there.  The child is raised by surrogate parents, like nanny’s or sitters and can only see the parent from afar.

Having money may result in behavioral expectations.

The sad story of Princess Diana comes to mind.  The Queen, the Prince and others in the royal household had definite expectations about how she should look, speak and behave as well as the kinds of activities in which she should engage.  If expectations don’t match your desires, problems result.

Privacy may be at a premium.

Not only may you be surrounded at all times by household or other employees, you may also be subjected to pestering by the press, or the public.  What you do, say, spend on or wear may become news!

Managing household employees may not be your cup of tea.

Although it might be great to never have to dust or clean out a toilet bowel, I doubt if it is much fun interviewing or managing maids, gardeners, butlers and the like.  Having to let someone go is a stressful event, yet you can’t allow shoddy work, right?

You may lose your sense of worth or purpose.

If you become rich, you may find that striving for money and having it are two different feelings.  While you are striving, you are working towards a goal, making an accomplishment happen.  Once you are there, you may look around and say, so – now what.

Your kids may grow up spoiled.

Giving children everything even before they think of wanting it can lead to a sense of entitlement.  How do you raise grounded kids when you are rich?  What is your logical stance for having them learn the value of work – when you pay other people to do yours?

People may treat you differently.

Stories of lottery winners losing life long friends abound.  People knowing about your wealth can make them treat you differently, or cause them to expect you to behave differently (like pick up the tab for everything!).  Former friends may start to exclude or ignore you.  You may be treated with (undeserved) obsequious behavior by strangers in hopes of favors.

You may either give up some control over finances or spend a lot more time managing investments.

Having money brings the responsibility for making sure it is managed well.  Doing it yourself may eat up more time that anticipated.  Having someone else do it results in a loss of control and a less than desirable sharing of private information.

You aren’t inhibited financially from making really bad life choices.

If you have a propensity for drinking, gambling or drugs, finances are no longer an issue.  You may find yourself deep in an addiction cycle.

Likewise, you can’t blame a lack of funds for avoiding pursuit of opportunities that come your way.

Although many of us think we want riches, having them isn’t all cake and pie.  Money is only a tool.  It won’t make you a better person, give you everything you want or make your life paradise.

So, are you sure you really want that the rich life?

***Photo courtesy of https://www.flickr.com/photos/jayphagan/8610311915/

3 Keys to Live a Minimalist Lifestyle

minimalist-my-personal-finance-journeyThe following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

We hear the term thrown around all the time, but what is minimalism anyway? According to the gentlemen over at theminimalist.com,

Minimalism is a tool used to rid yourself of life’s excess in favor of focusing on what’s important so you can find happiness, fulfillment, and freedom.”

There are no defined rules of minimalism. There’s no one that says you can’t own a house or a car and still be a minimalist. Minimalism is different for each person. Some people choose to own less than 100 items, and others own a house in the suburbs and drive a car, and there are (of course) many people mixed everywhere in between.

To be a minimalist, you just need to unbind yourself from the stuff in this world. For those minimalists that own homes, their house does not define who they are and they certainly aren’t struggling from month to month to make the payments. They live far below their means each month so that they can be free from life’s daily struggles. They choose to live on far less than they earn so that they have options to do whatever it is that they please. By getting rid of the excess, they find out what is truly important to them.

The Keys to Live a Minimalist Lifestyle

Minimalism isn’t for everyone. If you like the way your neighbors look at you when you drive past in your new luxury car, then you’re probably not ready to live a minimalist lifestyle. If, however, you question yourself monthly (you know, when all those bills come due) and wonder why you keep torturing yourself with all of those payments, then it’s probably time to start considering a pseudo-minimalist lifestyle.

So if minimalism intrigues you, where should you start? That’s easy – start with the stuff that pains you the most – those big ticket items.

1) Downsize Your House

There are so many people out there that are house poor. They have this huge mansion of a house, which looks awesome, but it comes with such a large monthly payment that it cripples them financially, and they can’t ever have any fun because they are stuck making that stupid payment each month.

This is certainly not the way to live. If you are discontent with the mortgage payment on your home, then why not consider downsizing? Or maybe you could even rent a small apartment above someone’s garage. Think about it. What kind of freedom would you have if you cut your house payment in half? What if you got rid of it entirely? By downsizing your home, you could probably save yourself a thousand dollars a month. Wouldn’t that be such a freeing feeling?

2) Downgrade Your Car

The second largest expense for most people is their car. It often comes with a monthly payment, high insurance costs, maintenance costs, and fuel costs. It’s not uncommon for a person to spend nearly $10,000 per year on their vehicle alone.

What if you went from owning a $20,000 car with payments to a $5,000 that you paid for with cash? Your monthly payments would be gone, your insurance would go down, and your maintenance costs and fuel costs will likely remain the same. By downgrading your ride, you could save yourself around $5,000 per year.

3) Buy Quality Food for Less

People waste so much money on food. Instead of frying up an egg themselves for $0.10, they go to a restaurant and pay $3.00. Or, for the so-called “wise” consumer, they’ll go the grocery store for their eggs instead. But, instead of going to the discount grocery store where eggs are $1.29 a dozen, they’ll go to the nearby grocer where they’re selling for $1.79. Why? Because they feel too sophisticated to shop at a discount grocery store. In my option, that’s just downright stupid.

If you want to save big money on food, avoid restaurants and shop at discount grocery stores like Aldi or Save-A-Lot. The food is good, the prices are cheap, and you’ll save a bunch of time as well (I’m often in and out in less than 10 minutes). Instead of spending $1,000 on food each month, you could just follow this simple advice and cut that bill in half, saving you $6,000 per year. That’s huge!

Final Key Points to Live a Minimalist Lifestyle

To save even more money, do your best to combine all three of these points. If you decide to downsize or move into an apartment, pay careful attention to where it’s located. To save the maximum amount of money, you should find a place that’s within three miles from work and three miles from the nearest discount grocery store. This will allow you to do without your car much of the time, and maybe even allow you to get rid of it entirely! This simple move will save you money in gas, insurance, and also means that your car doesn’t even have to be very expensive since you could bike or walk everywhere anyway!

How about you all? Are you ready to live a minimalist lifestyle? What will you reduce in your life?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/mes_regards/12167414035/

10 Ways to Save More Water

water-my-personal-finance-journeyThe following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

Water is a precious resource. Of course, I’ve always known this, but when I lived in the Midwest where water and rain are both abundant, I didn’t think much about it.

Last year, we moved to the middle of the desert in Tucson, Arizona, and my feelings about water have changed dramatically. Water here is literally liquid gold.

While the drought rages on in California, the news in Tucson is constantly about how we’ll be affected since California and much of Arizona share the same water supply—the Colorado River—which is shrinking rapidly.

However, Tucson is very good at finding ways to save water. Here are just some of the ways we’ve learned and are now utilizing to do our part in the water conservation battle:

1. Pick landscaping that is not water dependent

Our home, and almost all of the homes around us, have colorful stones on the yard instead of grass. Some people stop landscaping there (which is quite a boring look, I must say), but many others plant native cacti or trees that require very little water.   I have seen only a handful of homes with grass, and by midsummer, after weeks and weeks of no rain and 100+ degree temperatures, the grass turns brown and patchy.

By planting landscaping that is not rain dependent, you’ll save a significant amount of water. According to Realty Times, “Water-efficient landscapes can help you save almost 10,000 gallons of water per year.”

2. Catch rain water

When we get rain here, which isn’t often, we usually get a quick deluge. My husband and I set out all of the empty buckets we have to catch the water and use it later in our garden or on our lawn vegetation. (You may not want to do this if you have very young children due to the risk of drowning.) If you wanted to carry this further, you can install a rain barrel that will hold more of the rainwater for a longer period of time.

We also put a bucket under the drip spout for our air conditioning condensation. During hot summer days, that bucket fills up twice a day and can be used on outdoor vegetation.

3. Conserve what would be wasted water indoors

The average family wastes a lot of water without thinking about it. If you have vegetables to rinse, for instance, you likely leave the water running while you scrub. All that precious water goes down the drain. The same is true when you turn on the water in the shower and let it run while it warms up to the appropriate temperature.

A simple change can save all that water. Some people have a clean 5 gallon bucket in the shower. They have the water spray into it until it is the right temperature. Then the water can be reused. When we wash vegetables, we now do so in a bowl full of water so later we can use the water to water our vegetation.

4. Turn off the water when you brush your teeth

Before I moved to Tucson, I was guilty of letting the water run while I brushed my teeth. What a waste! If you brush your teeth for the recommended two minutes, that’s over 8 gallons going straight down the drain. To put it in perspective, EPA Water Sense Kids states, “Just by turning off the tap while you brush your teeth in the morning and before bedtime, you can save up to 8 gallons of water! That adds up to more than 200 gallons a month, enough for a huge fish tank that holds 6 small sharks!” And that is just for one person. If you have more people in your household, imagine how much you are saving!

5. Turn off the water when you soap up and shampoo in the shower

My uncle, who served on a submarine, called these Navy showers. You rinse yourself completely, then turn off the water while you soap up and shampoo. Turn the water back on to rinse off completely. According to Tree Hugger, “A typical shower takes as much as 60 US gallons of water, while taking a navy shower can use as little as 3 US gallons; one person can save 15,000 US gallons per year!”

6. Take a five minute shower

If turning off the shower while soaping up doesn’t feel like a true shower or isn’t relaxing enough, try the five minute shower. Since most people shower for 10 minutes, the savings can be significant. Consider, “the average 5-minute shower takes 15-25 gallons of water—around 40 gallons are used in 10 minutes” (Glen Canyon Institute).

7. Install a low flow toilet

If you have a regular toilet, you may want to replace it with a low flow toilet. According to Bell Home Solutions, “If you have a slightly newer toilet from after 1980, it could use as much as 3.5 gallons per flush. You will save between 11,000 and 35,000 gallons of water per year just by upgrading your toilet. That’s a savings of between 55% and 77% of your water consumption from one simple upgrade.”

An even more efficient option is a dual flush toilet. These toilets use half the amount of water when flushing liquid waste and the regular amount when flushing solids. We have a dual flush toilet in our home and have found that the option that uses half the amount of water is sufficient in almost all cases. A manufacturer of dual flush toilets, Caroma, “estimates that you can reduce your toilet’s annual water usage by 80%. The average American uses more than 18 gallons of water for toilet flushing. With an 80% reduction, this amount is reduced to about 3.5 gallons, saving about 15 gallons per day, a dramatic decrease in water use and improvement in efficiency” (North Carolina Museum of Natural Sciences).

8. Run your dishwasher only when it’s full

If you wait until you’ve saved every space in your dishwasher, you could save yourself 1000 gallons a month (Squeeze Every Drop). If you’re single, you may have to wait a few days before running your dishwasher.

9. Wash towels every other use

If you have a family, you could run loads of towels several times a week if you wash them after every use. We’re a family of 5, and once the heat climbs above 100 degrees, we all take showers every day. However, I only wash our towels after every other use. That saves us half the amount of towel loads we would normally use.

10. Wash clothes on an as-needed basis

We don’t automatically wash our clothes every single day. My girls are 5 and 6 and don’t yet have body odor issues as adults do. If we have a low key day where we stay home, and their clothes are still clean at the end of the day, I have them wear them again the next day. This doesn’t always happen, but I’m guessing I reduce our laundry by about 1/3 by using this strategy.

Saving water just requires some simple changes. If you do so, not only will you help conserve water, but you will significantly reduce your water bill. How much depends on the rate your town charges, but remember, water rates are usually based on levels, so the more you use, the higher the average rate you have to pay.

How about you all? What strategies do you use to reduce your water consumption? How often do you wash your towels and clothing?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/zaheerm/5392447566/

How to Stay in Shape This Winter

cross-country-skiing-my-personal-finance-journeyThe following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Do you have plans to shed a few pounds this winter? Or maybe you’re already in shape and would like to continue to stay active this winter. If you had absolutely no plans to get your heart rate up this winter, I think you should really reconsider. Did you know that exercising could keep your wallet a little fatter in the upcoming years?

By taking some time now and etching out some time to work out, you could avoid some serious medical complications in the future. Or, at the very least, you could extend your lifespan by a couple more years.

Set Simple, Yet Effective Goals

Goals are incredibly important in all areas of life, whether it be a financial, fitness, or a relationship goal. If you do not have a goal the odds are already overwhelmingly against you. For, with no goal, one will quickly forget the aspirations of yesterday and will simply blow along with the wind of today.

So how does one set an effective goal?

Well, by definition a goal is a future ambition to be accomplished on a set date. Without a date, a goal is simply a dream. So, what you must first do is set a goal for yourself, and then set a reasonable date to accomplish the goal.

In regards to exercise, your goal might be to lose 10 pounds. In order to do so healthily, I would suggest setting this goal two months in the future. If you decide on this goal on January 20th, plan to lose those 10 pounds by March 19th. Then, almost more importantly than the overall goal, set little goals along the way to keep yourself on track. Continuing with our example, on February 1st you might set a goal for yourself to lose your first three pounds.

If you achieve this goal, reward yourself with a new pair of sneakers or a Fitbit watch (or whatever it is that you fancy). In order to stay on pace with your overall goal, be sure to set those small goals to keep you on target.

Find Activities That You Enjoy

Personally, I enjoy being active, but running on a treadmill or riding a stationary bike is torture! If I had to get in shape by only doing these two things I would probably gain 20 pounds instead of losing weight! Stationary running just isn’t my idea of fun.

For me, I stay in shape by running outside, riding my bicycle outside, and swimming. I also enjoy playing basketball and tennis when the weather is nice outside. If it’s snowy, then I’ll resort to cross country skiing or snowboarding. These are the things I enjoy doing. They keep me active and it hardly feels like exercise.

What are the activities that you enjoy doing? If they keep you in shape and fit within your financial budget, consider doing them more often to get yourself into shape and stay trim. You will have fun and your future self will thank you for the reduced medical bills, and therefore reduced costs.

Partner Up or Join a Activity Group

Unfortunately, even “fun” activities still aren’t all that fun by yourself. Instead of going for a solo bike ride or a solo jog, it is often much better to have a running partner or sign up for a group ride once a week. Joining conversation to exercise makes it feel much less like exercise and more like a social event. Plus, by joining a group you will likely feel that you are held more accountable. Miss a week and you might just receive a phone call from one of your activity group friends.

In the name of exercise, it’s good to have a nudge to get your heart rate up on a consistent basis don’t you think?

How about you all? Do you exercise on a regular basis? Do you have a new fitness goal that you are trying to achieve? Share your experiences by commenting below!

**Photo courtesy of http://commons.wikimedia.org/wiki/File:Pas-de-patin.jpg