One of the themes for me this year is that this is the year of less and as part of that I want to simplify what parts of my life that I can. A little while ago my wife and I reached a tough decision that would help us in this quest and would help us financially at the same time. The decision we reached was to sell our boat. Over the years we’ve used the boat off and on, but the couple years before our daughter was born we used her a lot. The boat itself is nothing big, being a 20 foot sailboat that can sleep two comfortably. The boat holds a special place in my heart because our family has had her for years and I’ve got a few happy memories with that boat.
The idea behind this blog was originally conceived on that boat almost 4 years ago. Unfortunately with a little person space requirements change and we just won’t use her as much as we used to in the past. The net result is that we’re left with maintenance costs and marina bills that really become hard to justify. In the end these costs would amount to between $1,500 and $2,000 per year which just doesn’t make sense to pay if we’re not going to use her nor are we likely to in the next couple years.
By getting rid of the boat we can take the money we would have spent on her and put it to better use such as paying off debt (rather than incurring it). As I mentioned this decision was a bit difficult to reach because both my wife and I enjoyed using the boat when we had the time but there is a lot of work and money that needs to go into it. Once the little one is a bit older maybe we’ll get another boat or a cottage property we could utilize more but in the short term it was financially the right decision.
The hard part about this decision for me is two fold, the first is the aspect of memories and not being able to have the boat in the future. I was able to reconcile myself with this because I have my memories and I have pictures. The second aspect that I had to come to grips with is the monetary one, while I never bought the boat in the first place (my dad did), I have spent a lot of money maintaining her since I took her over. I really don’t have anything to show for this money and to sell the boat I’m only getting a fraction of what I’ve spent back. What finally convinced me mentally was the fact that spending more just because I had some emotional attachment to this item because of the money was silly – the sad thing is I know I’m not the only one who does this. I’m sure we all know someone who keep spending money on the stuff they own even though they no longer really use it or care about it.
The boat has been listed and we’ve had a few people show some interest but as of right now she’s still up for sale. The money we make from selling her will be used to offset the cost of a small bathroom renovation we’re about to begin. This whole experience has forced me to take a step back and reevaluate my mental attachment to stuff I own – do I keep more stuff that’s costing me money for no good reason? I think I do. My question to you readers is: Do you have stuff that you keep around that costs you money but you just don’t get rid of it? What is it and what’s holding you back?
We’re all a little lazy for the sake of convenience every now and then and usually it doesn’t have any impact on our lives. At other times it costs us and today is one of those days for me; today my laziness cost me a lot of money. I needed to renew my license plates and where I live when you pay for this they check to see if you have any outstanding parking tickets which they make you pay before you can renew your plates. Unfortunately I had accumulated a bunch of parking tickets over the last year and i was lazy in paying them, I was also lazy when I got the tickets in the first place (but that’s a different story), but I knew that I’d have to pay for it. What I wasn’t prepared for was the cost. The unpaid parking tickets added up to a grand total of $720!
The really painful part of the story is that a significant chunk of that cost was late fees for not paying the tickets on time (about half the cost to be specific). By being lazy came back to bite me in the ass in a very major way. Not only did I let this amount get so high by being lazy but I got all of the tickets by being lazy (they were all from parking on my street without a parking permit which costs $10 a month). The moral of the story is that be careful of your laziness because there are times when it will come back to haunt you.
Taking the easy path might seem like the best approach but the path can very quickly change from being easy to being much harder and more costly than simply being proactive. In this case I am already being proactive since I have purchased the necessary parking permit for the remainder of the year, I just have to remember this day when the permit expires and get a new one.
It just makes me wonder how much money do we (in general) waste because we’re being lazy and don’t want to spend 15 minutes or 20 minutes to do something? I think I might need to look at other parts of my life to see if I’m not wasting more of my hard earned money.
One of the things that really amazed me during this recession was the level to which interest rates dropped and I was able to take advantage of the decreased cost of borrowing money. My credit cards have reasonable interest rates (9.15% and 16% respectively) but my lines of credit were able to give me interest rates of 7% so I took the balance from my credit card that had the 16% interest rate and moved it to my line of credit. By doing this I’m able to save on the interest that I’ll be paying the bank while I repay the money. If I keep my payments the same as they were before I’ll pay my credit cards off that much sooner. This simple balance transfer is a great example of taking advantage of the great interest rates around.
Rates are going up
My simple example is just one way that I’ve used the current economic situation to save myself a bit of money on the debt that I’ve been carrying for years. While its never a great thing to carry consumer debt at least this way I’m not paying as much in interest for it. But rates are starting to go back up, at least in Canada they are. If you’re going to take advantage of these unbelievably low rates you might need to do it now before the rates go up too much. If you don’t know if you can do this or what your options are just go to your bank and talk to a financial adviser.
Paying down consumer debt
The whole idea behind moving balances from where I had them into different areas was done for a couple reasons: to decrease the interest I pay on them and to improve my cash flow. I have the consumer debt and there’s not much I can do about it the fact that I have it, but I can optimize how quickly it’s paid down and make sure that I’m not living from paycheck to paycheck. Now that the money moves have been done all I have to do is keep paying the same amount as before and I’ll be able to repay my debt that much faster.
Now that I’m going to be making more money I’ll also start paying more onto the debt as to get rid of it. The idea is to use the low interest rates to my advantage and maybe get rid of my bad debt once and for all.