Through the Eyes of a Pirate

With the disastrous sovereign debt crisis in Europe fuelling austerity measures in governments across the globe indebted for more money than they make in annually, two methods are generally setup at odds with one another: austerity & monetary stimulous. The choices government leaders have are to cut back on everything in the hope that the economy will right itself as their debt shrinks, or to go further into debt in an attempt to spur businesses into greater investments, greater production, and even greater growth. Neither approach is popular or appears to have a particularly strong effect when everyone is living in fear. The governments worry their investments will go sour, big business worries that governments will default on their loans and be unable to pay out their contracts, while consumers try to hold their money tightly for fear that they’ll lose their jobs. Disastrously, fear of the state of the world economy, has crippled the world economy.

As governments and big business worry about their pocketbooks and ignore the real effects they have on people, it’s important to re-examine how we, the people, are using the money that we’re trying to squirrel away. Most importantly, it’s time to re-examine how we live in contemporary society. There are a lot of pressures and expenses, and like most of the developed world, individual Canadians are currently straddling a large amount of debt. Some of the debt is reasonable, with the relatively low interest rates that come with the purchase of a car, the mortgage on a house, or a student loan. Others are not, like the gazillion charges on high-interest credit cards for everything from groceries through video games. This high interest debt can really add up, especially if you’re only making minimum payments:

This image is public domain. See Three Credit Cards by Petr Kratochvil

Given that even fast food jobs are getting harder and harder to come by⁽¹⁾,  getting a second job, to supplement your income and help combat ballooning debt is not an option for most people. Nor is asking for any sort of raise. The trick is to find ways to better use what you already receive, while building up a comfortable enough buffer that you no longer have to live one paycheque to the next. With that in mind, here are 5-ways to help you live within your means:

1. Pay Yourself First – Set up a TFSA with the bank of your choice and have something come out of your chequeing and go into your savings every paycheque. Even if it’s only $10 this will build up over time a lot faster than an easy-to-access savings account. The payout is also a lot better than a traditional savings account, and the small amount removed on payday won’t even be noticed after the first month or two.

 

2. Determine Your Meals a Week in Advance – And more importantly, only buy the groceries necessary to make those meals. By doing this, you give active thought to what you’re going to have. This means not only are you more likely to eat healthier, you’ll also be throwing out less food at the end of the week. Less thrown out, equals less money wasted on groceries you weren’t going to eat anyways.

 

3. “Do You NEED it?” – Everytime you reach for something at the store or log on to a shopping site online, ask yourself if you NEED whatever you’re about to buy. Unless you just broke all the dishes in your house, chances are you don’t NEED to shill out for a whole new set. If you find yourself still wanting it, check out the next tip.

 

4. Get it Used – If you do need it, get it used. Tonnes of stuff, often nearly new, is dropped off at thrift stores every day. In many cases, you can get stuff lightly used online through websites like kijiji and craiglist, and occassionally you can get it free through sites like freecycle.org . It may take 10 – 20 minutes of your time to find and contact someone with the “1 year old heavy duty dryer,” but getting it for $150 instead of $500+ new at the store will save you a fortune.

 

5. Leftovers Pay Down Debt – All of it. You’ve made your last grocery run of the month, all your required bills are paid, you have your bus pass for next month, and there’s an extra $100 – $200 burning a hole in your pocket because you decided to make your dinner instead of having fast food, grabbed your “new” summer fashions from someone’s nearly-new thrift-store drop-off, borrowed a novel from the library instead of buying it, and decided you didn’t really “need” to replace your 6-month old cell phone with the latest model. Put it onto those nasty credit cards. Pay the buggers down so you won’t be milked on interest for years to come.

A few bonus tips: Lock up the credit cards someplace inconvenient at home, look into finding a less expensive place to live (perhaps within walking distance of work), and consider starting a small home garden, either in your yard or on the balcony to trim your grocery bill. There are a tonne of places on the internet with all sorts of advice and software for sale to help you trim your personal debt. Doing so may not spur the global economy back on track, but ensuring that you’re more comfortably balanced economically will inevitably lead to additional spending in the long-term as the money you’ve saved by killing your credit cards is reinvested in all the items you “wanted,” but didn’t really “need” when you were fighting your fiscal demon.

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