THE bill-paying season is here. And for many of us, it seems to go on far too long.
There always seems to be "too much month for the money." But I've found that the big problem isn't the income, it's the "outgo." Luckily there are some easy ways to control the spending.
- Make a list. All you need is pencil and paper. Write down what you spend every week for a month. Include all expenses and bills. Then compare it with what you make. That way you'll know how big a hole you're in, and whether you need to stop digging.
- Beware the cash vampires. These are the items that suck the life out of your bank account. With annual rates of 20 per cent or more, credit cards are the worst. So pay off that credit card debt as fast as possible. If you're in deep, consider consolidating your debt with a low-interest line of credit or a personal loan. Then cut up all your cards, save for one, and on that one, slash the allowable credit limit and never max out the card.
- Resist the urge to splurge. Retailers rely on impulse spending to ratchet up that $50 sale to $100 or more. You're in a psychological war with the retailer, so plan to spend defensively: Decide how much you're willing to spend before you ever set foot in the store. Set a dollar limit - even for those "impulse" buys - and don't exceed it.
- No frittering. Love those lattés through the day? That new fashion mag? A little sale item from a lunchtime trip to a clothing store? Those "incidental" expenses could add up to $10 a day or more. That's more than $3,000 a year you're frittering away. Set aside a fixed amount of "pocket money" for incidentals each week, and don't exceed it.
- Hunt for bargains. I know people who'll haggle for an hour to get $5 off the price of a $30,000 new car, a saving of 0.016%. Yet they'll pay the full $1,000 for a new flat screen television when the same one is on offer down the street for $200 less, giving up a saving of 20 per cent. When making big-ticket purchases, shop around, and don't be afraid to haggle. Most retailers will now match competitors' prices for identical items. Over a year, you could save thousands.
- Don't buy lottery tickets. Government lotteries are sometimes called "a tax on stupidity," and for good reason. I've met people who have seriously told me that part of their retirement plan is to win a major lottery prize. And they gamble accordingly, spending hundreds, even thousands, of dollars a year on tickets. But with odds against of 28 million-to-one or more, they have more chance of being awarded an Oscar or being struck by lightning. Don't gamble on lotteries. Instead, use the money to pay down debt, start an investment plan, save for a house, or contribute to a child's education fund.
Robyn K. Thompson is a certified financial planner and president of Castlemark Wealth Management. Her column is provided courtesy of Fund Library, owned and operated by Fundata Canada.