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.
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.
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!
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).
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?
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?
Who does Ontario Borrow from ?
And how much is Ontario paying in Debt financing charges?
Interest Expenditures for the Ontario Debt
When I say, what is in it for me (the Federal Budget for 2015), I mean ME, the BCM, since you should really read it yourself and figure out what is good (and bad) for you.
What are the things that I (the Big Cajun Man) dislike about this budget? I am not fond of the “sleight of hand” accounting that is going on to claim the “balanced budget”, I am not that worried about it being balanced, and having odd pay outs on programs (and cutting programs without necessarily mentioning it), smacks of “Nortel-ian” accounting practices.
Image courtesy of nokhoog_buchachon at FreeDigitalPhotos.net
I’d also like to have all taxes abolished, if you were asking, but given that is not likely to happen in my lifetime, I guess I should get on to the things that I do like about this budget:
- The TFSA limit is officially doubled to $10,000, I like that, even though I am middle class, and can’t use all this savings room just yet. I am concerned that the Liberals are already threatening to roll this back to $5000, never a good idea to take things away from folks in programs.
- The “Family tax credit” for families like mine, where I can income share with my spouse is now officially in the budget (although I already have it for the last fiscal year). Wonder whether the Liberals or NDP will try to cut that as well, again, never good form taking money out of folks pockets. The UCCB is nice as well.
- I am kind of baffled/curious about this statement:
Making the Canada Student Loans Program work for families by reducing the expected parental contribution under the needs assessment process.
What does this mean? I don’t know but it sure sounds nice.
- Reducing EI premiums is nice, as it is a tax, no matter how you define it.
- Another useful idea, that I think I like is:
Extending Employment Insurance Compassionate Care Benefits from six weeks to six months to better support Canadians caring for gravely ill family members.
- Seniors now have a less aggressive withdrawal schedule from their RRIFs as well, seeing as I will be thinking about that soon, I like it.
- Another useful credit for folks with disabled family members, or seniors who need to add things to their house to make it a bit safer for them
Introducing a new Home Accessibility Tax Credit for seniors and persons with disabilities to help with the costs of ensuring their homes remain safe, secure and accessible.
- Another interesting and somewhat non-commital statement is:
Launching a National Strategy to support improved financial literacy.
but I suspect that means they won’t be giving me a subsidy for this site 🙂
- Some good ideas for veterans, but still not enough, for someone who you asked to go into harm’s way.
- Another point near and dear to my heart, but again, the wording is a bit odd:
$2.0 million in 2015–16 to support stakeholder consultations on a Canadian Autism Partnership.
I am not sure whom they will be consulting with.
There are a bunch of other measures, that you should read about, to see how it affects you. You could read the Tweets about it, if you want a really short version of the important stuff.
The Liberals re-introduced the budget that caused the “immaculate election of 2014“™ and the ensuing Majority Liberal Government, however, the reactions to this budget have been mixed.
Some of the economic pundits claims the ramifications of this budget is best described in the following video:
While I feel that is a slight over-reaction, I cannot argue that there are some interesting economic items in the budget.
Enough jocularity, the Video is of the demolition of the Sir John Carling Building here in Ottawa (courtesy Fernando Matias ) but when I saw it and then started reading the reactions to the budget I just could not resist mashing them together.
Real Budget Highlights
So you can read the Budget here (and I strongly suggest you do so, so you are informed).
- $2.5 Billion dollars over 10 years to create a Job and Prosperity fund
- $130 billion in public infrastructure over the next 10 years
- Birth of the Ontario Retirement Pension Plan , this is gonna be interesting, the details are a bit thin, but do we need it in Ontario? That remains to be seen. Quebec has a Pension Plan, maybe (or maybe not) Ontario needs one too?
- Lowering Energy costs in some fashion, but given the amount it has gone up thanks to previous budgets, maybe we needed that?
- Minimum wage is going up to $11 an hour
- Balanced budget by 2017 (wow)
- And more taxes for you rich bourgeoisie who make more than $150K (stop oppressing the proletariat).
The really interesting part was at the end of the highlights section:
Going forward, the government will:Introduce an annual program review savings target of $250 million for 2014–15 and $500 million in each of 2015–16 and 2016–17.
- Introduce an annual program review savings target of $250 million for 2014–15 and $500 million in each of 2015–16 and 2016–17.
- Continue the call to freeze the Members of Provincial Parliament’s salaries until the budget is balanced.
- Directly control the compensation of senior executives in the broader public sector, subject to passage of legislation.
- Hold the average annual growth in program spending to 1.1 per cent over three years.
This is where the Devil is in the details, freezing MPP’s salary is window dressing, however, “Controlling” the senior Execs compensation could be interesting. What is a Senior Executive? Could make for some interesting discussions, and how are you going to hold growth to 1.1 % without either:
- Freezing Provincial Civil Servants income (including Teachers)
- Laying off a large amount of the work force
- Finding new income sources
I wish Premier Wynne luck on this one, could be quite interesting.