EQ Bank Savings Plus Account

Post COVID-19 Budget ?

Now in the 2nd month of the COVID-19 lock down (May 2020) many folks are starting to see exactly where they have been spending money. Those lucky enough to have kept their jobs, but were asked to try to work while at home, now have a good snapshot of their spending habits, while at work.

Now, you should have a good perspective on how much you spend on:

  1. Commuting, gas costs, or mass transit costs. Did you ask for a drop in your insurance rates for your car? You should. What if you chose to take mass transit when you return to the office? How much would you save.
  2. Eating and drinking at work. How much were you spending on a few coffees, and your lunch? How about those Friday lunches out with a few drinks, or after work drinks?
  3. Clothing and dry cleaning and such. You might not have a solid hold on how much you spend here, but you haven’t really been able to buy new clothes (as easily) these days.
  4. Various subscriptions and gym memberships and stuff. You aren’t still paying for those are you?
  5. What extra costs you have incurred not going to work
    • Extra electricity usage?
    • Internet, did you upgrade your access?
    • Did you add new streaming services?

These expenses and a few others I didn’t mention should help you see where your money is going.

What To Do?

With this data you could:

  1. Make a budget for the COVID19 era (for lack of a better term). How much should you spend while you are locked up at home? This may be helpful so you now understand what you are spending money, and where you can save money.
  2. Make a budget for your return to work, and maybe cut this spending in 1/2, giving you more money to live with? When you return to work is it going to be full-time? If not, maybe you need an interim budget and then a return to full-time work budget?
  3. Figure out if working at home full-time, part-time or occasionally might be a thing for you? Many folks like working at home, I enjoy the interactions of an office, but you at least have a view of how this might work.
  4. See how much money you have saved and maybe put that on your debt load?

Something for you to ponder while you are at home not spending money.

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Bad Budgeting

I am not someone who deals with a budget well. I simply try to not overspend, but every budget I have had, I have broken, or abandoned. Everyone needs to understand their limitations, and I know mine.

I was reading an article (on Life Pro Tips on reddit)  which said after you set up your budget, you should revisit it every six months. On the face, this sounds like a good idea, and if you have discipline it should work. My opinion is that this kind of tinkering, could easily lead to lifestyle creep.

For those that have not read my thesis of lifestyle creep, let me sum up. As your income increases, lifestyle creep, is when your lifestyle over steps that income inflation. Instead of saving more, many folks simply spend more, and that is bad.

Bad Budgeting and Lifestyle Creep

How can adjusting your budget every 6 months lead to lifestyle creep? Simple, that is the definition of lifestyle creep. Think of the following rationalizations you might have doing this tweaking.

  • You notice, normally,  you never have enough cash, two days before you get paid. You just got a 5% raise, you decide to not increase your saving, so you have enough money those last 2 days. This is the prototype for lifestyle creep.You should increase your savings level by 5%, and figure out how to spend less. Don’t treat the symptoms, cure the illness.
  • Your income has increased by $350 a month, and that is precisely how much you need to buy a car (on a 7 year term). This equates to adding a $4200 a year anchor to your life. This tweak could cause other ripples in your budget tweaking, which will sink you financially.
  • Thanks to a bonus, you now have a 5% down payment, and at current interest rates you can afford to make the monthly payments on a mortgage.  If you can’t tell all the things missing from this, you need to get help.

Conclusions

If you have intestinal fortitude, and can keep from rationalizing spending too much, then this idea might be a great idea. For others like me it is a cautionary tale. There are still others like Michael James who just don’t really need a budget, and good for them!

 

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Little Known Secrets of Financial Planning

Yes, this is the new hack writer trend out there (what is worse is those terrible articles that you find on major sites that are links to horrible, ad laden (and most likely malware laden) sites). Little Known Facts about any topic (including secrets of financial planning) end up being a simple rehash of things that most folks have already heard, or have heard rumours about it (and many of these facts are simply rumour based), so with that in mind, let us delve into this important topic

The other important point is that the article always has a “click here” thingy to force you to click (and God knows what you are downloading when you click it), so here is mine (I promise it is simply a link to the rest of this terrific piece of writing).

💰Click here for a sure fire money tip💰

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On-Line Grocery Systems as a Budgetary Tool

My wife is looking for some ways to “switch things up” with our grocery bill (which is fairly hefty), so this past weekend she tried out the “Click and Collect” Loblaws on-line ordering and on-line grocery (and other thing) shopping system to see how it works, and she now has a theory that these kind of on-line ordering systems might be a useful budgetary tool for families (other stores offer the same kind of services (Wal-Mart also offers it in our area).

Auto Shopping

Robo Groceries

The whole experience went fine (although for some odd reason they did not have lactose free milk in stock on a Saturday at noon (when Mrs. C8j picked up the order)), so I suspect we will be using it again, but can it control impulse spending?

The ability to choose specific brand, was quite good, however, the weekly flyer sale items were not obvious on the site (but she has since figured out how to find them). There is an ability to search by many different criteria (food type, brand, specific food (e.g. banana)).

Advantages and Drawbacks

How would this be a useful budgeting tool? Mrs. C8j had a few good points

  • There is a running total that shows when you start putting things in your basket, so you will know how much you are spending (a minimum order of $30 at Loblaws).
  • You are shopping from home so you are less likely to buy things you already have (OK, we didn’t quite get that right this time, we seem to have overloaded on yogurt, but next time we won’t).
  • If you think of it there is a chance to do less “impulse buying” (e.g. buying magazines at the check out, etc.,), however, given most things are available, you can still buy crap you don’t need, easily.
  • You do save “time” which some have said is worth something.

A few downsides:

  • The $5 service charge means you really shouldn’t be using this for small orders, maybe just for your “large weekly orders”.
  • The following is from the FAQ for the Loblaws service, “When your order is prepared, the selected payment method will be authorized for up to 125% of the order total to accommodate updates to your order. If you choose another method of payment when you pick up your order, the authorization will remain on your card until it is expired by your bank (typically 3 – 7 days).“. That really sucks, so don’t change payment methods

Has anybody else tried this out? What are your opinions?

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The Ontario Provincial budget appeared last week to little fan fare, even though it looks to me like an austerity budget ( the media has dubbed it a Tory budget) and a long-term austerity plan, trying to balance the ever mercurial Ontario Budget (i.e. Ontario’s economy has been up and down like a dory in 20 foot swells).

If you use public transit (as you should (but I don’t)) there is money there for new programs (in Toronto) but not much for other areas. I suppose they could have cut Ottawa’s Light Rail money, but there doesn’t seem to be money there for the inevitable “expansion” of the light rail program here (but then again, is Ottawa actually in Ontario? Lots of folks in Toronto don’t seem to think so).

The major selling point of this budget is the attempt to balance Ontario’s Provincial Spending:

The deficit for 2014–15 is now projected to be $10.9 billion — a $1.6 billion improvement compared to the 2014 Budget forecast. Together with prudent fiscal management and actions to find smarter and better ways to deliver programs and vital public services that people rely on, Ontario remains committed to eliminating the deficit by 2017–18.

That is a very aggressive goal, and they are going to try to do it on the back of their major allies, the Provincial Public Service and Teachers’ Unions, and that is where they may end up with some problems (given the strikes already being called by the teachers). Could be some very unsettled labor issues for the next little while (given the assumption is no pay increases until the budget is balanced (effectively)).

Lots of other fixes that don’t cost much on Social Spending areas, but not a lot, given the austere plans the government has for its future. Some more help for post-secondary education grants (not a bad idea to slow down the creation of a Generation of Debtors, whose major lender is the government).

Where does Ontario borrow its money from?

Borrowing, Ontario Style

Who does Ontario Borrow from ?

And how much is Ontario paying in Debt financing charges?

Ontario Debt finance charges

Interest Expenditures for the Ontario Debt

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