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 Mint.com 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.

New Years a time of change.

While there is no right time for change or new beginnings; the time around the New Year is as good as any, many people are thinking about resolutions and changes and that line of thinking is pervasive in our society. To top that off Christmas is done and the craziness around the holidays are hopefully finished; so it’s probably a better time than most because you don’t have as many additional factors causing your plans to go awry.

It’s a new calendar year and you can use that time to assess where things went right or wrong in the past year (or more) and to pick up the pieces where they stand. The key to this is to not be judgemental and simple to learn from the past rights and wrongs. Instead of beating yourself up because you overspent and in debt, see what caused you to get there, what habits were causing you to stay in debt and what spending habits need to change.

If you use the famous 80/20 rule you get 80% of your results from 20% of the actions. To put that into perspective you can make a significant change by only changing 20% of your actions which is high impact and can make a lasting change, while not being as daunting.

I’m taking the time around the new year to assess were we stand financially, knowing that there are some challenges with me being out of work. Knowing where stand financially and then figuring out what our goals are for the New Year is key. Something that is measurable and will likely make the most impact for the least amount of effort.

What I’m referring to is the big impact items, so if you like to get your Starbucks every morning this likely your biggest point of impact. To continue on that thread if you get a coffee every day and cutting it out would be both a challenge and only save 2$/day then it’s not as effective as trimming your grocery budget down by $25 or even $50/week or getting rid of cable which can be $100/month and paying down debt.

Goal setting is next; if your goal is to set aside $5000 in savings then you might feel daunted any try finding money everywhere starting with the small amounts, for example that cup of coffee at Starbucks. Breaking the task down will make it more manageable and achievable. Using our example of $5000 translates to $416/month or $96/week which is feasible for many people and can be done fairly simply (Note if your budget is tight be sure to set yourself realistic goals).

Finding and tackling a few more impactful items will achieve your goals quicker and with much less headache. It’s challenging to find the few things that will make the most impact but if you do it you’ll find it easier to tackle the changes and set realistic and achievable goals.

Merry Christmas!

Merry Christmas everyone, I hope your holidays are wonderful and happy.

Bitcoin loses half its value overnight!

Yesterday an interesting thing occurred in the world of business: the value of the Bitcoin dropped by close to 50%. Essentially one of the largest Bitcoin exchanges in China decided to no longer take deposits in the Yuan (This Guardian article has details). To put this into context the Bitcoin was valued at about $1000 USD; so this drop erased $500 of value for each Bitcoin, which is an enormous drop.

This development and the whole topic of Bitcoins are fascinating because what it could mean in the future. But what are Bitcoins? Well in a nutshell it’s an electronic currency that is not tied to any existing world currency or country. It is fully distributed and people can get bitcoins by using their personal computers to help validate and confirm transitions (other than exchanging other currencies for it). I’m still learning the details of this but at its core it is a form of currency.

Now what’s really fascinating is that this currency isn’t tied to a single country, region, or even bank like most money but some institutions that will allow you to trade in them. The idea is really intriguing since it’s the first potential global currency and shows us an example of what currencies might look like in the future.

Unfortunately Bitcoins are risk inherent for the same reasons as we saw yesterday and many investors lost a lot of money since they expected the value to keep increasing (similar to how people invest in forex). With the dramatic valuation drop their investments were cut in half. Though this is something that can occur with a regular currency.

Does the bitcoin have merit? Personally I’m not sure; a lot of investors and people definitely think so. I believe the idea behind the Bitcoin has merit and kind of like self-driving cars – some variant of the electronic currency is here to stay.

Some Bitcoin references for the curious:

A New Look and Twitter bound!

In my post earlier today I discussed the inevitable Christmas cleaning that occurs this time of year and in the spirit of that cleaning there are a few changes around the site. First of all we’ve moved to a new theme and while there are still a lot of items to clean up it is a lot cleaner and I like it. There will be small changes and additions as kinks are ironed out.  Note: there still problems with Category pages.

One Million and Beyond is now on Twitter! You can follow us at @matt_OMB

Christmas cleaning – under the rug it goes

It’s that time of the year where more than likely, people will be coming to visit; even if they’re not a little voice in the back of your head tells you that the house should be clean. Which means it’s time for that inevitable Christmas cleaning. Everyone talks about spring cleaning but the reality is that it’s more likely to occur in December than in the spring.

But it’s not really cleaning, it’s just tidying to get the stuff out of the way. Yes, let’s not sugar coat it, the cleaning that occurs this time of year is meant to get our shit out of the way. It’s a particularly busy time of year with more things to do than normal so it’s understandable that we just tidy. But those are also the same reasons that make this a good time to purge, time for decisions is smaller, and you’ll feel so much better for de-cluttering. Unfortunately that maybe easier said than done.

I started our cleaning and I got a reminder of how much stuff we have around the house. It collects and piles up, we don’t see it on a day to day basis and then before we know it the crap and clutter has managed to make itself known. For those of you who are very compulsive about keeping your place clutter free, I am very jealous. Unfortunately for us this clutter only gets dealt with once in a while even though I’ve been trying to lessen the crap in the house over the years. It still seems to pile up.

I have a bit of a confession in this case because this year I’m not going to be much different than anyone else, I too will hide the clutter and make the place tidy. I am making some effort to de-clutter but that seems like a much larger job.

The really amusing thing about this winter cleaning tidying for the holidays is that we know there is more crap coming. For those of us who celebrate the Christmas holidays they’ve become so commercialized that most gifts now are knick-knacks that just pile up. Not to mention all of the wrapping and plastic that these gifts come in. All of it has to be dealt with, lest it too become clutter.

Our goal this year is to limit the amount of crap coming in. My wife even asked me what I wanted for Christmas, suggesting something that was practical. I have pretty much everything I need so this was a hard question, one I haven’t answered yet, mostly because I don’t want any more crap in the house.

But for now it’s back to the tidying and hopefully getting rid of some of the clutter if I can.

This year are you simply getting someone a knick-knack or are you taking the time to get them something they can use?


Best Christmas Promotion ever by WestJet

Christmas is the time of year where companies ramp up their sales and promotional events to get them in the news. At the end of the day you can’t possibly blame these companies especially considering that for most retailers they don’t make their annual profit until approximately November during the year.

With that said most of these sales and promotions are simply that, nothing more than means of getting you into the store or to buy something. That is why this story that crossed the news yesterday is so unique and so genuinely nice. A Canadian airline, Westjet, ran a promotion where they asked passengers what they wanted for Christmas as they were boarding a flight from Toronto to Calgary. Up to this point that is just a cute gimmick; this is where it takes an awesome twist.  When that plane landed all the passengers got exactly what they asked for (some of those were big screen TVs!! and then there was the socks and underwear)

Check out the link below – the looks of surprise and amazement on these peoples faces are worth it.

A Christmas Promotion Miracle!

Company Press Release: WestJet and Santa surprise travellers with a holiday miracle

Now that is how you do a Christmas promotion right!

The Grocery Game – Can you save 15% on your groceries?

We all have to buy groceries in order to have food to put on the table during the week; well most of us do at least. Each week we make the trek to the grocery store, to get food, for some of us this is a fairly inexpensive outing but if you live in a big metro area or buy organic everything this could end up being a pricy trip.

For us, a family of three + 1 cat, we typically spend about $150 or so per week on groceries, living in one of these before mentioned metro areas. Now that’s not overly expensive all things considered and works out to about $50/week for every person in the house divided evenly or about $7.15 per day per person. We eat fairly well with lots of fresh veggies and fruit and to top it off we’ve got a picky eater for a daughter.

Some people will be surprised that the number is so high and others the exact opposite. Now when I look at that number I know it can be lower. To prove this I’ve been playing a little grocery store game with myself lately. The game is pretty simple:

What didn’t you need to buy!

The steps to the game are pretty easy:

  1. Go to the store and get what you need for the week, make sure you take the receipt.
  2. Sit down with that receipt and go through it line by line asking the question: what didn’t we need? Essentially, did you need the item purchased or not.
  3. Add up these items.
  4. Next week – repeat and see if you can beat last week’s score and what is the lowest amount you can get.

I’ve been playing the game for a few weeks now and inevitably I have items on the list that we didn’t need. The game is very simplistic but it shows a few very important things:

You will buy things you didn’t need

For example this week, I bought a jug of apple cider. Now this is something that can easily be replaced by drinking water, even if its boring. Or you can simply buy apple juice which can come in a can for less than a dollar. Snack food is often a big component of this amount for me. Don’t get me wrong these extra items rarely go to waste.

You buy things you think you need but really don’t.

The next item that creeps onto this receipt are things that you thought you need but really didn’t. Again to use my receipt from this week, which is sitting beside my laptop right now, as an example, are apples. Arguably a good thing to have on the list but what you didn’t know is that we had a bunch sitting in the fridge that could have been eaten first. Again this isn’t going to waste because we go through apples pretty quickly but it was something that I thought we needed but didn’t this week.

You got seduced by a sale.

I got lucky this week because all of the things that were on sale in the cart were things we actually needed. But let’s not kid ourselves if we see a ridiculous sale on something non-perishable we can easily be seduced into getting it even if we don’t need it at the moment. I will freely admit that I have made these purchases buying boxes of crackers or 6-packs of diet coke when they are drastically slashed. These are calculated purchases intended to save me money in the long run. But this also apples to being seduced by the idea of saving a lot of money on something we won’t use.

How to use the Grocery game to your advantage.

Now for the most important part of the grocery game: use it as incentive to buy fewer things you didn’t need. Going back to those apples I mentioned earlier. I need to make sure to remember to double check if we still have apples before going to the store next week and I can take that extra charge of $3 off next week’s receipt.

For arguments sake let’s say that in the course of a week we can trim about $20 of purchases that we didn’t need from the grocery store trip. This will amount to about 13% of the budget (in our case) and if we can keep it up over the course of a year it amounts to just over $1,000 for the year. All of a sudden that doesn’t seem like a small number.

The caveat here is that we can probably reduce our grocery bill a lot more if we needed to or really wanted to but my intent isn’t to be as frugal as possible. It’s to use a simplistic game to remove unnecessary spending and show you that being more conscious of your spending can allow you to spend less without any real need to cut back.