Stop and Assess

Picture for a moment, you’re walking in a forest or a park and you don’t know where you are, what do you do? The first thing most people do is stop to get their bearings; to see if there is anything around them that might give them the necessary perspective. They stop going forward and try to get as much information that they can and based on that they then plot a course of action.

This doesn’t only apply when you’re lost or not sure where you are, but it’s useful in many situations. If you can stop for even a moment to take stock of the situation you’re in and collect as much relevant information you become that much better equipped to move forward. Take a moment to think about your finances, even if everything is going ok in your financial world it’s good to stop and take a look at the whole picture before moving forward again.

Stop and assess

We’re incredibly busy in our lives and something like our finances keeps going month after month, even if we’d love it to stop (this is for most people). We can easily assume things are ok when in reality they might not be

Stopping and assessing the lay of the land will give us the perspective to choose the best path. Once we have this perspective we can choose a direction, even if that choice is not changing anything at all.

By stopping you can gather all the information in your financial life and the best part is this activity should only take a short time, even if your financial life is in tatters and scattered. Here’s a starting list to get you the base information you’ll need.

  1. Assess your debts
  2. Assess your spending
  3. Assess your income
  4. Assess your assets

If you’ve got those you can start formulating actions that you might need to take

Assess your debts
Your debts are what you owe people for borrowing money from then; be they credit cards, mortgages or loans, they’re all things you have to pay back and they also cost you interest. If you’re really organized and out of debt you might not have anything.

The whole idea here is to know who you owe how much to, AND how often you need to pay them back.

Assess your spending
Do you know where your money goes? How much you spend on gas on average? How much your monthly groceries cost?

If you’re thinking – I’ve got an idea then the answer is no. But its roughly X$ the answer is still no.

This is extremely valuable info; it shows you exactly what your money is spent on. This info becomes as starting point for a budget. If you have one then it becomes the info you use to see if you need to reassess and adjust your budget. Either way it lets you know where your money is actually going instead of a rough idea.

You might be surprised by this info if you’ve never done an exercise like this; I know I was the first time I did it.

Assess your income
For most people, this one is pretty easy since they only have one source of income. But regardless it’s good to do. If you have many sources of income (say you’re a freelancer) then knowing which sources pay how much can be good (but that’s a different story).

Assess your Assets
Like debts you also want to know what your assets are doing, many of them like your house don’t do much from year to year and others like a car decrease in value. It paints a picture of what you have and what you own and more importantly it gives you options.

On top of this comes your investments (retirement and otherwise); if you don’t have any then you might want to start thinking and planning in this area. The stock market does weird and wonderful things all the time, and while watching it like a hawk would give many a person an ulcer, it does make sense to take stock from time to time (pardon the pun).

Now with all of this info you really get a picture of your financial situation and can start planning a direction. Here are some questions to get you started and from there you can tailor it to yourself.

Do you have a budget? Do you need a budget?
How does your spending measure up against said budget?
Are you spending money on things you don’t want to?
Are you saving enough?
Does your spending outstrip your income?
Are your assets making you money?
Do you have assets?

I know that for many people questions like the ones above cause them  to panic mildly. But I think they’re important.

If you’ve gone through this exercise then actions start to appear and a direction shows up very quickly. It paints a realistic picture of your finances and gives you a snapshot of the reality as it is now. You’ll know if something needs to be done, and warnings and watch outs will appear.  With that info, you can adjust course or completely change direction.

Without it you’re just taking a wild guess on where you’re going and why. The best part is if you’re feeling really lost a financial advisor will be aiming to get the exact same info and build up from there.

I started this blog many years ago with some grand idea; possibly even a delusional idea but I need to stop and reassess and instead of just writing about it, I’m going to show you in the next post.

2015 The year of Recovery

January is the holy month for gym owners; loads of people make new years resolutions to work out. They sign up at the gym, go twice and then pay for it for 6 more months. Gym owners love it!

By itself coming up with goals at the beginning of the year is a great idea; one I try to do each year. At some point this morphed into giving each year a theme (an idea that was probably borrowed from better bloggers and writers then myself). I believe that instead of just coming up with goals and having a driving purpose as a direction for the goals is a much stronger approach. It gives purpose where a individual goals may not really have that same oomph and can help you push through to achieving them.

To illustrate this; when I was 25 I was working and in debt, I didn’t have a university degree and this bugged me. So much so, that I went back to school while working full time. I managed to pull it off with amazing success. I got so much done in those three years it astounds me to this day and I attribute it to having a driving purpose.

There has to be a purpose before there are goals.

This year will be a year of recovery for me and I’ve used that in the past but it has a more meaning for me now.

When I say year of recovery, in my head I have an image of a weak and frail person slowly recovering, getting their strength back by doing simple exercises over and over. The idea behind the word recovery is for me associated with to health. Based on how the last year went and where I am, I think tying everything to health and recovery is extremely appropriate.

I am at a point where like that recovering person I need to build back up in many areas, to truly recover. Here are my thoughts on the various areas of my life and how they’ll all tie back to the theme:

Health – This is a broad moniker because it has so many facets. But each one is valid and ties back to recovery. My actual health will continue to get better and I will make sure keep the recovery going. Along with just health comes diet and exercise because without them you can’t have good health. All three need to be better and will be in 2015.

Emotional – This is a hard category for me to write about and define because I am not an overly emotional guy, the goal here is to by happy, unstressed and in a good spot. I also want to tackle some of the demons that have held me back like fears.

Mental – again this can be a very broad category but to me it seems that I have lost a bit of the mental challenge that I had in my life previously. I want to recover some of this and mentally challenge myself in 2015. I have loads of ideas how to do this but trying to do much won’t work either. Stay tuned while I define it more.

Financial – at the end of the day, I’ve been out of work for over year (partly by choice and partly due to health). This has left our finances a bit battered and beaten. They need to recover. This will tie back to my career, which will have to be dusted off while still pursuing real estate.

Family – Like health family is one of those things that can easily be neglected and put to the side in our busy lives. I don’t think we need to recover anything here but we can make it better and I don’t want to forget it.

Social – growing and maintaining relationships with friends and acquaintances is something we all need to do (even if we don’t know we’re doing it). This past year I was forced to slow down and look at my life and I don’t think I’ve been quite as good at this as I used to. Friends can be neglected in the ebbs and flows of daily life. But like family you also have to keep them up; your friends are part of your support network.

Now these aren’t specific goals in and of themselves, those I want to break down and get more granular with as needed. Also many of these categories overlap with each other so the idea for the year is to recover in general and get better in all.

Looking at it from a more holistic point of view. My limbs and organs don’t each live in a vacuum, they all work integrated into the whole. In the same way you can’t just look at a single part of your life and compartmentalize it. I know people who have tired but it doesn’t work well.

Welcome to my year of recovery.

And now back to your regularly scheduled personal finance blog…

2014 The Year that kicked my ass

This has been a really rough year for me. One that I didn’t expect in any way, but who expects to have a rough year? Wait, don’t answer that; I don’t want to know. I just know I ended up with one, but even through it there are silver linings to be grateful for.

Why was it a rough year?

At the end of the day its tied to one thing and one thing only; health. But as with most stories there is a lot more to it than that. We’ll start off with the fact that I was in the process of changing careers; getting my real estate license. Now this by itself is hard and challenging, mentally and emotionally, and it forces you to dig deep. It was interesting and challenging in all the right ways. Then things went south

In mid May, I had this wonderful life experience called a stroke! Life lined me up and gave me the fucking ass kicking of a lifetime. It’s hard to say if I was to blame because I was a smoker, or because I never went to the doctor. All that is irrelevant I survived, now its time to move forward. I’m sarcastic about it because in a weirdly odd way it was wonderful.

  • Wonderful because I survived
  • Wonderful because I got a second chance
  • Wonderful because I am recovering quite well
  • Wonderful because I appreciate life more
  • Wonderful because I got more time with my wife and daughter

I’m looking at it from a positive point of view but it doesn’t mean it wasn’t the biggest physical, mental and emotional ass kicking I’ve ever gotten (or ever want to receive). After the stroke getting back to some semblance of normality took months and even now I’m still working with my doctors to get my health truly in order. Slowly it’s coming together and will continue to do so.

As you can see from a health point of view it’s been a very rough year. I’ve spared everyone the nitty gritty details but suffice it to say I have struggled with some of it and it’s beaten me up at times. Mentally and emotionally there have been many ups and downs throughout the recovery and its made the career change go in a backwards fashion in some ways which has added to the challenge. But overall I am stronger for it.

It has definitely given me a new perspective on life. Remember those silver linings?

I have slowed down; life is not meant to be rushed. I routinely see people in a hurry to get where they are going and while its occasionally important most of the time it isn’t. You miss all the important details along the way rushing through life. Let me ask you a simple question: how many important life moments have you missed? How many dreams have you forgotten?

Life is about the journey and not the destination.

You only have so much time on this planet, you don’t want to die or get sick rushing around and working as hard as you can. Stop and spend time with your kids, your wife, your friends, your parents or whatever is important for you.

I’ve also learned a lot, not only about various interests and real estate but more importantly about myself. I’ve gotten a better understanding of what’s important to me and in many ways this just the beginning of the journey. While running around as hard and as fast I did I seem to have forgotten who I was; or maybe I’m different now. I’ve started to rediscover myself (luckily so far I like what I see) and this learning process will continue well into next year and likely beyond.

The end of 2014 has now passed and we’ve rolled into 2015, life’s slow forward progress continues and as it does changes continue. This year will be the year of recovery in a many ways.

Happy Thanksgiving!!

Today is Thanksgiving in Canada; its time to be thankful for all the things in our lives. And in North America we have lots to be thankful for. I know we shouldn’t need a single day to be grateful and thankful for all we have but it’s a nice reminder.

So for all my Canadian readers Happy Thanksgiving!

Life Throws Curve Balls

The lights of the MRI machine were shining brightly in my face as I quietly lay there getting my brain scanned for the second time in the past few months. I had a moment to reflect on the unbelievable events of this year.

When I last posted on here I was alluding to the fact that I was making some significant life changes, and I was. I had changed careers completely and I was quite excited about that and was planning to share it on here.

The Career Change: Its slowly moving forward.

Back in November of last year, I decided to change directions and become a Real Estate agent. I had gotten a package at the company I was with and the career I had for about 15 years was eating at me and there was nothing about it I enjoyed anymore. Too often I was pushing projects and people forward without any real meaning or purpose and work was overflowing into my time outside the office, including vacations. The timing was right to try something new. Over the last 10 or so years I have completed multiple major renos, house and cottage projects, and every time it felt really good to work on. The logical choice was to tie it to that while still using some of my previous skills; becoming a realtor seemed to fit all of the criteria.

After some research and a few months of classes and exams, I did it! At the end of March I officially had my Realtors license. In April I started slowly and the learning curve was huge!

Little did I know there was much more in store for me than that. As we know life has a tendency to throw us curve balls when we least expect them, and I was just about to get real doozy.

Life lined me up and threw me one hell of a curveball.

Mid morning on mother’s day, my life changed, I had a stroke! At the age of 37! I knew something wasn’t right when I couldn’t talk clearly and water wasn’t staying in my mouth and dribbling down my chin. Off to emerge stat! I ended up being a statistical rarity and I had a stroke at a young age with relatively minor effects. Thankfully the affects were limited and with time the doctors expect I’ll have 100% recovery (or close to it). I was in relatively good health I thought; I did smoke but nothing else seemed out of whack.

Though I hadn’t gone to the doctor in 10 years, which is never a good thing.

Well everything wasn’t fine, I had runaway hypertension, and my smoking and general lifestyle weren’t helping. Working all the time with no time for taking care of my self and exercise was merely a half formed idea. After so many years of abuse something gave out but I’m still here. That’s the good news and it truly is good news; now its time to realize what’s important in life and treat this curveball seriously and make changes.

At the end of the day all of the stuff in the world doesn’t really matter; driving yourself extremely hard to collect more and barely being able to keep up with the payments isn’t a healthy way to live. Life is short and fleeting don’t get stuck doing what you don’t want. Never ever forget to live your life.

So I’m back and still getting better week by week and month by month.   The real estate career is slowly moving forward and we’ll see where it goes. My health is getting to a much better place and with diligence and care hopefully it will be for decades to come. I have a new perspective on a lot of things and the value of things; material things do not have nearly the same pull and relationships with family and friends mean a whole lot more. Above all if you do not have your health you have nothing.

Buying Quality

When you think about a quality item, inevitably you’ll think it will be more expensive and for the most part this is true. The reality is there are times when it makes sense to pay extra and buy the quality item. When it comes down to it; it’s about finding what the best balance is for you, between quality and price. Not paying excessively for quality you don’t need and not necessarily buying luxury for the expected quality.

Quality items and buying a quality item doesn’t have to mean that you’re buying a luxury item. Luxury items, while they might be associated with quality, doesn’t always mean that quality is there. Luxury items are often defined by the brand rather than the quality. I recently read a post (sorry can’t find the link) where the author was talking about someone buying a luxury purse, that luxury purse was probably well built but that wasn’t what drove the cost, it was the brand. You could probably buy a similar quality purse for 1/10th the cost. What we’re looking at here is paying extra for quality not necessarily buying a luxury item.

Finding the balance between quality and luxury can be a challenge; buying an item that is high quality can seem like a luxury. But at the same time it can also be a challenge if you’re trying to justify the cost of the extra quality. The perfect example in this would be when buying a car, you can get a good quality car for a reasonable price where the luxury equivalent is a lot more expensive. You might get something nicer when it comes to the luxury car but essentially most of those become nice to have items. Conversely this contrasts with the beater you can buy from the used car lot which might serve a purpose but come with its own headaches.

It comes down to finding the balance of quality for price. If you’re extremely frugal then the lowest cost is always the driver for any purchase but I would argue that there are times when you do want to spend a bit more money to get a quality item. So when does it make sense to buy quality?

  • if the item is used often and the quality difference is noticeable
  • when the added quality gives you added benefits
  • when the quality means less breakage and maintenance
  • When it saves you time (money and aggravation inevitably fall into this)

There are financial and psychological benefits that kick in when you start to increase the quality of an item. For example quality items are likely to not break down as often (thus reducing replacement costs) and won’t cause you aggravation in upkeep. Using our car example you might save a lot by buying the beater from the used car dealership versus a good low mileage used car. But one will break down on you a lot more often and probably at the wrong time. The headache you save yourself not to mention money to keep the beater running is really worth the quality used car even if its more expensive. For those curious I didn’t compare the beater to a new Lexus to keep them remotely close.

Now for me I try to price things out based on a balance of quality and price. I don’t need my day-to-day running shoes to be the best on the market. I’m not a runner and the main reason I like wearing running shoes is comfort so the ultra-high quality runners would be a complete waste. I buy them for the comfort so I balance the price for the quality I want.  On the flip side we renovated our kitchen when we got our new house. When we did this we needed to buy a dishwasher (I know this by itself is a luxury for many); our previous house had one and we had bought it as cheap as we could. When that dishwasher was running you would think a freight train was trying to come through the kitchen it was so loud. When buying a new dishwasher we went for the added quality of a very quiet dishwasher and paid for it. Now our kitchen doesn’t sound like a train station and while we spent more money for the quality the mental peace of not having to deal with the noise is worth it.  

It’s important to note that buying cheap, normal, quality or even luxury really comes down to what you can afford. We bought a dishwasher for our new house but if we couldn’t afford one then we simply wouldn’t have, or found a better deal if our budget was limited. It’s all about finding the balance; finding the best quality for your needs at a reasonable cost. We shopped around and found what was the best in our situation. It was a trade-off of quality and features for the price and my mental state has benefited.

Buying a quality item has a place even if you’re on a budget. The dishwasher that doesn’t rattle your teeth was really worth it for me even if we could have used the extra money elsewhere. Every person will have items where paying for the extra quality is worth it. Finding the balance between quality and price is the key and it’s totally different from buying a luxury item for the sake of the luxury.

5 Personal Finance Lessons can you learn from the Olympics?

On the eve of the Winter Olympics I think it’s good to take a moment and look at what they can teach us.  The best of the best in the world will be competing in Sochi, Russia in a couple days and the stories that are going to be told will be both inspiring and at times heart breaking. We can definitely learn from them and these lessons can apply to aspects of our lives especially when it comes to our finances.

Athletes spend years practicing, training and competing; they experience huge successes and suffer gut-wrenching setbacks along the way. Failing and picking up the pieces; the perseverance and passion is just amazing. When the Olympics are on TV stop for a moment and just watch the sheer determination that each and every athlete has. The Olympic Athletes and competition can show us 5 personal finance lessons that are worth looking at:

  • Perseverance
  • Determination
  • The power of coaching and getting help
  • Always aim for the your best
  • Learn from your mistakes


There are times when you won’t succeed, something inevitably causes you to fail. When this happens, each one of the athletes in the games, picks up the pieces and continues on despite the failure. A single failure doesn’t stop these athletes*, they persevere regardless of what happens. All the setbacks and stumbles on the way are just part of the journey.

When it comes to personal finance, as you’re learning and assessing your own situation you’ll make mistakes and you’ll have to adjust and keep going. There will be things that come up are simply beyond your control, but you can’t let them stop you. The perseverance comes in that you pick up the pieces and keep going, learn from the mistakes and setbacks and do better. With perseverance you will achieve your goals.


The fight not to give up; the mental fortitude to just keep at it and to keep pushing. You need the determination to try new things, seeing what works and what doesn’t. The athletes at the Olympics have a single minded determination with their sports. They know what they are aiming for and they just keep at it.

This is exactly what needs to be done with your finances, you know what your goals are and you have to be single minded about your approach to them. Yes, you will have setbacks but you can pick up the pieces and keep moving forward. If you fail once, see what you did wrong and move forward.

The power of coaching and getting help

Every athlete has a slew of coaches and trainers with them at every step of their competitive careers. They provide the athletes with feedback, motivation, experience and most importantly coaching. They drive the athletes to do better than they could possibly do by themselves. The coaches and trainers are extremely important, the athletes know this and truly rely on them.

Most of us try to go it alone, fumbling and struggling along the way.  You might succeed in the end but the journey is hard with many potential pitfalls. If you do succeed it will take you longer than it would otherwise. When you bring in others to help you, you can rely on their expertise and experience to help you achieve what you want. When it comes to your finances, you can use experts like financial advisors who know what they’re doing and have experience with situations like yours or bankers who can help you with arranging financing (just to name a couple). Finding the right experts or coaches and trainers for your finances can easily add to your financial successes.

Learn from your mistakes

Everyone makes mistakes but it’s what you do with them is that matters; you can learn from them and gain valuable experience or you can let them haunt you and bring you down. Every athlete analyzes their performance and looks for the mistakes they made. They look at how they can fix the mistakes for their next performance. For them the mistakes can be the tiniest wobble of their feet; but they still look at this as an opportunity to learn.

This really isn’t any different in everyday life; except maybe the mistakes aren’t as small as the athletes. You can take a look at what happened, see what you did, and more importantly how you can make adjustments to correct the problems. If you set a budget but it didn’t work out, instead of getting upset look at what happened and what you can do for next month’s budget.

Aim for the best

When athletes are competing they are aiming for the best, they’re trying to win, and they aren’t there just to put in a performance. They do this every time they’re in a competition and often when they’re just practicing. They do everything they can to win.

You can use this approach in everything you do, you can aim for the best every day. You won’t be first or at your best every day but you can aim for the best each time. From a personal finance point of view this approach of aiming for the best can easily be translated into action. You do everything you can to get to your goals. Even if it’s as simple as staying on budget or stretching yourself to save a little more than last month.

Inspiration for what we do every day doesn’t have to be an internal item only, you can derive inspiration from all sorts of sources. The athletes competing over the next few weeks are a spectacular source, they are driven, they compete and do the best they can possibly do every time they go out. But they also fail, they struggle and have setbacks but they pick up the pieces, learn from their mistakes and persevere. Every one struggles at times but it’s a matter of what we do when have them that determines what we can achieve. We can learn from what we see and do every day.

*Before anyone gets technical on me yes there are times a single injury can end an athletes career, I’m just illustrating a point.

Out of Balance

There comes a time in most people’s life where they’re going to find themselves out of work. Be it a layoff, a move, or something completely different. This might not be as horrible as it seems, it’s likely not going to be permanent and it gives you time to evaluate your situation.  I still remember when I was just starting high school my father was without work for close to a year. He had started a business that failed and then he just got stuck without work for a while, if you think about it, it happens to most of us at some point. But this isn’t a post behind the psychology of being out of work.  It’s about those situations where you end up finding yourself out of balance financially.

Currently we’re out of balance because I’m out of work, instead of finding the first possible job I took the time to evaluate my options. So what does this actually mean? Simply put our financial situation is currently relying on my wife’s income and our savings; essentially our cash flow is out of kilter because there just isn’t as much money coming in.

What it means is we need to do a few things to manage being out of balance, so things don’t get out of control. There are a few steps that we’ve taken in order to help the situation until things right themselves. Most of these are similar to what you need to do when you’re starting to get out of debt and they’re all important in their own way.

Know your cash flow.

From what I’ve seen, most people don’t really know where there money is going. They’re happy with the status quo and it works for them. We don’t have that luxury, we need to know where our money goes so we don’t waste it unnecessarily. I’ve written in the past about tracking your spending and how there’s any number of ways to track it. Ultimately if your cash flow is positive (you’re making more than you’re spending) then it’s not as critical to track every detail because you’re already covering everything.

When you’re out of balance you need to clearly know what’s coming in and going out. The accuracy helps you plan what to spend your money on, make sure none of your bills get missed and to make sure you’re not spending frivolously.

(Note: this is an important step, in my opinion, if you’re trying to get a hold of your finances)

Limit your spending.

I would like to think that most people are like me and my wife. We don’t always spend our money perfectly and we buy things we just don’t need. It doesn’t have to be overspending; our money is spent on things we just don’t really need (but want). We’re in a situation where expensive fancy cheese’s and nice wine are luxuries we can’t afford. Now that we’ve got a good idea about our cash flow we can reduce spending where we can to limit the financial bleeding.

What we’ve done so far is to cut back on things we know we don’t need, I mentioned a few food items because this is the first place I started to look. Cut back on fancy foods, eating out and alcohol, you don’t need them to survive (or even eat well for that matter). There are alternatives to a lot of spending that a typical household does that can help stretch that almighty dollar further. We’ve done this and will continue to do so.

Make a plan

Now that you know where your money is going and cut out some of the spending fat that existed it’s time to create a plan. You have to come with a plan for your money or before you know it it’ll vanish and the situation will get worse. Initially it doesn’t have to be extreme but to start things off you need to keep bills paid so your credit score doesn’t get damaged. Next you need to know how long you can last before things get dire.

From what I’ve found this has to be ongoing and adjusted as you’re moving forward in time. Be honest with yourself about your spending and how much savings you’re using. You want to prevent a nasty surprise that will leave you scrambling. In our consumer society spending money is almost an expected behaviour and if you’re not careful about it can easily get the best of you.

Find sources of income

You might have a couple years of savings and credit you can lean on till you figure things out, most people don’t. Eventually the money will start to run out. What do you do before then? Well you need to find sources of income, hopefully the reason for being out of balance has been solved before then but that’s not always the case.

Finding sources of income can come in so many different ways that I would be writing for a year and still would only scratch the surface. You have to go through and check for the obvious sources, are you taking advantage of your benefits, are you submitting claims? Are there programs that the government offers that can help?  I’m on our version of jobless benefits, this is a source of income to help keep money coming in. You need to look around and take stock, remember you might have large collection of stuff you can get rid of for money too.

For me the term out of balance means our cash flow is negative and this is a situation that a lot of people find themselves in at some point. Like it or not that’s how you get into debt in the first place and you can use these steps to right the financial ship.

Realistically the situation for us isn’t dire and I am working on a longer term solution but that’s another post entirely which I’ll write about soon. I’ve chosen to remain out of balance in order to change things around and I’m glad I have been able to. In the short term we’re going to remain out of balance and we’re going to do what we can to make sure we can last as long as possible.

Bell Let’s Talk day – raising awareness for mental health

Today is Bell’s Let’s Talk day for raising awareness for in Canada, while it’s a sponsored event it’s also a very worthwhile cause. I wanted to write about it because mental health is something that wasn’t mentioned or talked about when I was growing up. Now thankfully events like this one have brought some light to mental health and the stigma around it aren’t as profound but they’re still there.

Being healthy isn’t only about being physically healthy but also mentally healthy, it’s hard to admit there might be a problem even to yourself let alone others and get help. Unfortunately that leaves you battling the demons by yourself which rarely ends well.

If you’re not sure if there’s a problem, mention it to your loved ones and if you’re worried they won’t understand go see your doctor, they might be able to point you in the right direction. It’s an important topic one that should all be aware of, even if mental illness doesn’t impact you.


Small Stuff – is it important?

The devil is in the details, most of us have heard this statement before or some variant of it. What it means that small things can make a huge difference. Now you’ll notice I said could make a huge difference. Sometimes they mean less than nothing.

The reality is choosing the small things and how they apply. For example I’ve used the latte effect as an example before. What is the latte effect you ask? Well it was coined for the small purchases in our lives that can add up to huge amounts in the long run. The latte was used because so many people like to get one every day. Really this could be any small purchase but it’s become coined as the latte effect.

Now you’re reading a personal finance blog you would think that my take on the latte effect would be to use it to your advantage and save that money. But the reality is that isn’t always the case and the devil is in the details (and how they apply). Let’s just say you go to your local coffee shop and get a latte ($5 for arguments sake) and work, and you do this every day. But by working in this coffee shop for an hour each day you’re incredibly productive, and by being productive you get a raise (or work on your side business). All of a sudden this latte a day is an important one that is worth $5/day.

It’s important to look at these small things in the context of the bigger picture. Small changes will undoubtable make a huge different but is it the right difference. Saving on that daily can cost you thousands in potential productive time, or it can save you about $1,250 a year.

A while back in the life of this blog I advocated tracking all of my spending to the penny and I think that this is a great tool. But whenever I did it I had trouble staying on top of it and it inevitably fell to the wayside. It was causing me stress because I wasn’t able to stay on top if it or the results were not what I wanted. I saw I wasn’t getting the right benefits even if it was logically the best choice; I gave it up for a less specific system and stuck to that. Now that tools such as Mint exist the problem is solved for me and I can go back to getting the benefits.

I adjusted my system of tracking my money without losing my mind and feeling guilty. Tracking your money is an important thing but the daily act, for me was unproductive and causing me stress. This small activity was having the opposite effect.  I knew tracking my expenses to the penny was beneficial but I also knew I couldn’t keep it up for long, I changed my view until I could track it more accurately. I found the right solution by looking at the bigger picture and making small adjustments to until I got something that worked. I also kept refining the system which is now using to track most of my spending. Small changes were all that was required.

Small stuff can be incredibly important but only the small stuff that matters. Remember to look at it in the grander scale, if getting that latte and working at a coffee shop every day means that you’re productive then it really might be worth keeping it. Conversely it might just be something you can get rid of and save yourself a ton of money. If you apply this carefully you can save yourself money and still keep the things that are important to you in place.