Wednesday, February 27, 2013

Confessions of a (Hopefully Former) Shopaholic

It is not easy trying to develop good spending habits. Weeks ago, I shared my quest to get a better grasp on my personal finances. It's been hard trying to figure out where to start. My goals are big. I want to pay off debts, save, invest and you know, maintain some semblance of a life. I don't know what to target first, so I'm doing little bits of everything. It probably sounds like the direct route to failure -- taking on too much all at once and accomplishing nothing. But once in a blue moon this strategy works out for me. I tend to strive under pressure (mainly because I am a procrastinator, and there's a mini rush that can be very motivating). I also love the task of making puzzle pieces fit -- but I often do things all out of order and put it together in the end. A little (albeit controlled) mayhem to liven things up.

My goal is to get a grip on my Becky Bloomwood way of living life: buying things unnecessarily. 

So here's the plan. Identifying my shopping excuses (these come in all shapes and sizes, I really excel at justifying things to myself), a reality check to think about if to stop from falling into my own trap and learning when it can be a good to shop. 

Disclaimer: I love shopping. This is really about lessening impulse purchases. I'm not as bad as I'm making it sound, but I do tend to treat myself way more often than I should. This is not about cutting out shopping altogether (because let's face it, I couldn't), but rather about becoming a more responsible consumer.

Rebecca Bloomwood, Confessions of a Shopaholic

1. "But, it was on sale!" 

Nothing like the lure of a good deal. Here's the general thought process I go through: I don't really need that. But I will probably in the future. And it's such a good deal, I probably won't find it at this price again. 25% percent off of 50%? I mean that's like getting it for free. 

Reality check: Likely the markdown isn't that great. How often have you fallen prey to the one-day sale that actually lasts three weeks? And even if it is, if you don't really need it, you're spending money you could be saving for something even better. 

Tricks: Sales can be really helpful though, and retailers have a general pattern for when they mark things down. If you do make a list of things you need, you can keep an eye out or budget strategically to make purchases when there are good deals on i.e. laptops during back to school sales in August.

2. "But, I could need it someday!"

This generally works in conjuction with the "but, it was on sale" excuse to justify purchases you really do not need. For me, one of my guilty pleasures is notebooks. I buy notebooks for "someday" on sale all the time. End result? A box of super pretty notebooks... Yeah, it's pretty useless. The thing is you could need almost anything at some point of your life but if you don't need it right now... well then, you don't need it.

Reality check: Buy things you need now and that's it. You need to have an actual use for what you are going to buy. For example, if you want to buy a new shirt, ask yourself a few questions. Where will I wear this to? What will I wear it with? When will I be wearing this? Make sure you have concrete answers that are more than "work, with some pair of pants at some point." Buying for sometime in the future can also backfire as in that time, new things could be on the market better than your someday purchase.

Tricks: Make a list of not only things you need, but also when you need it for -- this can help you prioritize your real needs and help you stay on track.

3. "But, it'll help me be a better person." 

This one is my favourite. I love projects to do with myself. Yeah I said it, can you not tell? And I love coming up with new things I could buy to help me. Some of you must do this one too, like those new pair of trainers for all that running you were going to do? This excuse too can be used in conjunction with the "but, I could need it someday." Part of this is also not so much about change, but picturing the life you want to have. I sometimes have the overwhelming urge to buy a tea-set. Not that I drink tea. But I picture the mini cucumber sandwiches, cheese scones and chocolate biscuits, and think how adorable would it be to have a tea party?

Reality check: Buy for the life you have, not the one you want. Shopping in this case is not going to help you achieve what you want though the brand marketers are doing an excellent job at making you feel that way.

Tricks: When the change comes, things will quickly jump to your "needs" list, and you can purchase things then. Until then, work on the real factors that will help you achieve your goals and lead the life you want.

4. "But I've earned it!"

This covers everything from buying yourself something to cheer you up on a bad day, or having had a stressful week and celebrating making it through.

Reality check: Just because you've worked hard (as if no one else ever does, too!) doesn't mean you're making more money -- it does really justify splurging. Also, it does not really make a bad day better, the joy of an impulse purchases wears off quickly and hardly ever changes anything.

Tricks: Rewards do motivate some people. If you made it as part of a plan, go ahead -- reward yourself with what you wanted. Chances are you've been thinking about it for a while and actually turned it into something to have been earned, rather than just saying so. 

5. "I've been so good lately/I've been so bad already."

The first bit can also be another way of saying "but I've earned it." And the latter, well, that's sort of like a diet cheat day. You've spent so much at this point, who's counting? Well, you should be! It's not easy and both situations can be triggers for shopping.

Reality check: If you've been good, keep it up. If you continue, you'll be even better than good! And if you've messed up, that's okay. It happens but you have to turn it around, not make it worse.

Tricks: Reward yourself with little treats. You'll go nuts if you try to be perfect, but if you keep a little money aside to buy some things that aren't on your list, at least you won't be breaking the bank. If you've been bad, part of it may have been that your goals were too rigorous or you didn't have a plan in the first place.

General tips: Create a budget. It does not have to be too detailed, but should cover what you have coming in and what you are spending. Leave a little room to play and think out what you need before you go out to buy. Everything in moderation! 

Thursday, February 14, 2013

Top 10 Fictional Couples: TV Edition

It's no secret that I love me my TV shows and I'm a sucker for a good love story. Here's a countdown of my favourite fictional couples on TV, in no particular order.

Some of the couples didn't make it... because even feel-good TV show writers can be pricks.

No, Ross and Rachel didn't make it on the list. Because when you spend more seasons apart than you do together, it's clearly not the epic love story people want it to be, but Chandler and Monica, without the loud fanfare just make sense with each other. So let's start there:

1. Chandler Bing & Monica Geller, Friends

They're funny...

Chandler: Y’know I was thinking, what if I uh... unpack here?
Monica: Then all your stuff would be here.
Chandler: Well, what if all my stuff was here?
Monica: Then you’d be going back and forth all the time, I mean
it doesn’t make any sense.
Chandler: Okay. What if we lived together and you understand  what I’m saying?
Monica: Live together? There have been no signs for that.
Chandler: Me asking is kind of a sign.
Monica: YES!!!!!!!!
Chandler: Okay!!!!!

And sweet...  

2. Pam Beesly & Jim Halpert, The Office
Pam Beesly & Jim Halpert, The Office

3. Pacey Witter & Joey Potter, Dawson's Creek

4. Cory Matthews & Topanga Lawrence, Boy Meets World
Cory Matthews & Topanga Lawrence, Boy Meets World

5. Lily Aldrin & Marshall Eriksen, How I Met Your Mother
Lily Aldrin & Marshall Eriksen, How I Met Your Mother

6. Mitch Pritchett & Cam Tucker, Modern Family

7. Phil & Claire Dunphy, Modern Family
Phil & Claire Dunphy, Modern Family 

8. Meredith Grey & Derek Shepherd, Grey's Anatomy
I've had tumultuous feelings about this couple, at first -- I loved them. Then I couldn't stand them and now I'm at a genuine appreciation for their relationship.
Derek Shepherd & Meredith Grey, Grey's Anatomy

8. Barney Stinson & Robin Scherbatsky, How I Met Your Mother
Barney Stinson & Robin Scherbatsky, How I Met Your Mother

9. Zack Morris & Kelly Kapowski, Saved by the Bell
Zack Morris & Kelly Kapowski, Saved by the Bell

10. Homer & Marge Simpson, The Simpsons
Homer and Marge Simpson, The Simpsons

Wednesday, February 13, 2013

Let's Talk Money

If you know me, it's no secret -- I like to spend money. Never money I don't have, but always more money than I should. However, I've realized that impulse shopping is not only an unsustainable way of life, but quite detrimental.

My sister shared a scenario she heard in university (which highlights not only that it is important to save, but that it's important to start early). Take two Students, both age 22. One saves $2,000 a year for 10 years and stops, while the other waits 10 years, then saves $2,000 a year. Assume an average rate of return at 10% and that the contributions are end of year. What will they have at 65 years of age? By age 65, the first student would have $740K, while the latter would have $445K.

So, I've made it part of my mandate to get a better grasp on my personal finances. I'm starting out in the negative, as I have a lot of student debt that needs to be paid off. However, there is such a thing as good debt and bad debt, and student debt is definitely the good kind -- as long as you're working towards paying it off with regular payments.

I've made three goals:
  1. Paying back my debts
  2. Saving 
  3. Investing. 
One of the things I have struggled with is deciding whether to do things separately, in that order (debt repayment, saving, investing) or whether it is okay to do it all simultaneously. I've opted for all three at once. I am the sort to try to have a finger in every pie, and it works for me. It has not been easy trying to decide how to allocate my financial resources but it has been part research and part trial and error.

My financial plan started with assessing my current situation. The first thing I did was lay out where I owe money, and how much interest was accruing. I'm still not fluent in financial literacy but interest in terms of debt repayment, is what screws you. On the other hand, when you're saving or investing, interest is your best friend. Based on what I owed and what I have income wise, I made a plan to pay off my debt in monthly installments. I try to stick to it, and when I have extra, I put it all towards this goal. The quicker I can pay off my debts, the less in added interest I have to pay (I know, so simple, but sometimes easy to forget).

In terms of savings, the rule of thumb is to should put away at minimum 10% of your income. [Through my workplace, I automatically contribute to my pension with every pay cheque, which is a relief to not have to think about. I have yet done the research on this but will report back as I understand how it works.] This is not always easy, though for those of us who still live with their parents, this can definitely be upped. Accordingly, women should actually be putting aside 12% (as women tend to typically live longer, they require more savings in the long run). Here's where it's important to do your research and prioritize your goals. Research your bank, what it offers you for putting your money into savings there. Also, research the different types of accounts there are and what the interest rates are -- if they're fixed and so on. It's amazing how many people our age stick to the banks and types of accounts they were with as students instead of looking into maximizing their dollars. Some accounts charge you to even own that account, and then extra for transactions and withdrawals, etc. I bank with President's Choice Financial, no fee banking all the way. It works for me. If and when I have a lot more money, I will definitely look into larger banks but for where I am in my life, PC is effective. I started a Tax Free Savings Account last year, and I recommend everyone does the same. I consider it as part of my longer-term savings (over 5 years) though you can decide what you want it for for yourself.  My other savings account is for the nearer future (2 - 5 years) to help me move out, go on vacation, etc.

Investing is a longer term goal for me, and I am just starting to understand mutual funds and whether it even makes sense for me right now. In the meantime,  I've started a "spending log" to keep track of where I am mismanaging my funds. It's quite thorough and definitely makes me more accountable to myself. I downloaded an Excel template from Microsoft, but you can even keep track on the back of your planner. You don't have to continue forever, but it is helpful. I also use Mint, which tracks all my spending for me -- you can do this online and through the iPhone app. 

In all, I am becoming more invested in my personal finances and I thought I'd share what I'm learning, because maybe it can help you too.