Xmas / New Year - Time to Review Your Finances

by Simon 26 Replies latest social family

  • Dagney

    ^^ duh I get it. Bingeing "Man in the Hightower" now and I see its downloading not streaming. Yay. I got confused with downloading to a drive.

  • nonjwspouse

    Save to buy a house instead of renting

    Depending on your work lifestyle ( if you move ) and the level of rent, owning can sometimes be more costly. Especially if you happen to buy in an area where home values drop. The added costs of maintenance can be HUGE. I know this after owing 20 rental properties ( most are still mortgaged) . I own my own house with no mortgage, and just the property taxes and insurance add up to close to $400 a month. I have lived in this house 28 years and in a good neighborhood so this is still a better deal for me. The values went down, but now are climbing slowly again. We have a good location which is KEY. These costs are basically the same as paying that much in rent per month, even though I own, plus being responsible for every. single. repair. ( This can get VERY costly, and as a personal homeowner, it is not deductible) When renting, those repairs are not coming out of your pocket. A roof, heat pump, plumbing, electrical problems etc... all add up to a pretty big bill. Plus when renting, and you need to move it is easy peasy, quick. If you own it is way more difficult and take the risk double home payments.ouch. I have seen this scenario too many times to count.

    So the answer is, it depends. It is not always preferable to own.

  • Simon

    Yeah, I agree. I've seen some "rent vs buy" breakdowns that favour renting but they often seem to miss the fact that rents go up over time and mortgages don't (while the asset appreciates). It's probably hard to generalize though - it really depends on the area, the outlook and local factors for what prices go up and down.

    More important is whether you need the flexibility to move for work etc... If I was single or just a couple I think renting would make more sense vs having kids where you want to keep them in the same school and typically stay in the area for longer.

    Another important thing where people often miss the monthly hidden fees is retirement saving. Whatever charges you are paying for management of a fund mean the fund needs to grow much more to offset them and the truth is they rarely do. No one outperforms the market so just invest in low-cost tracker funds unless and until you want to take a more hands on role and lose your money yourself.

    Finally, and specially for xmas, here's one that I hate, hate, hate:

    Greetings Cards, wrapping paper, those little tags and tat that just ends up in a drawer or clutter.

    Basically, all the little "gifty" crap that is just that - crap. It's a piece of cardboard but for some reason you have to pay $6 for it? Feck that. And wrapping paper. WTF? Buy paper so you can rip it off? Genius! (if you sell paper).

    Don't give in to the marketing where they convince everyone that you're doing it wrong if you don't include cards and crap with gifts. Tell your friends you don't want cards and if you must "wrap" things, use the re-usable gift bags and keep swapping them.

  • dubstepped

    First, I love this thread. Thanks for starting it Simon!

    Here are some things that we've done over the years that have helped us:

    1. Get a budget. Track what you spend. It doesn't have to be hard or expensive. We use YNAB (You Need A Budget) with the app on each of our phones. We put in everything that we spend into the appropriate category, and it is all tracked against the amount we have budgeted for that category to start the month. Just being intentional with your spending really helps. I believe we spent like $50 on YNAB and $5 for the app on each phone years ago. There may be better options today. I do know that there's a platform called EveryDollar that is free but has a premium version. It is a product by Dave Ramsey, the anti-debt guy that is so well known.

    2. Speaking of anti-debt, if you can get out of debt by following Dave Ramsey's plan in the new year that really frees your money up. We worked like crazy people for 18 months to get rid of all of our debt, except the house. It was so freeing.

    3. We also worked hard and built up a 6 month emergency fund, and we live one month ahead on our budget. Again, it relieves the pressure. And no, we aren't rich, nor do we have some profession that is particularly high paying. We clean houses. It was just a matter of buckling down and being willing to work like crazy people to build things up.

    4. I've always heard that the beginning of the year is a great time to shop your insurances. I've yet to do so, but I will be doing so this year. You might find that you can save hundreds just by switching to another insurance company. Brokers are often the best to check with because they can shop from many companies instead of being captive to just one. Our health insurance just went up 2.5 times what we were paying because our old policy was discontinued and we now have to go into the Obamacare program. So that hurts a lot. Maybe we can save on our home or auto insurance somewhere and help a little bit.

    5. My wife has a phone through Virgin Mobile. It costs $38 monthly and she bought the smartphone outright for $100 or so. I have a phone through Verizon prepaid that costs me $48 monthly and I too spent $100 or so for my phone. We have smartphones that do just about anything another one would do that costs more, but we don't buy the most marketed phones that cost a fortune. In the past we had two smartphones through Verizon on a contract and paid $160 monthly. We now pay half that. We have the wifi turned on our phones when at home so as to conserve data on our cellular plans.

    6. Money is reflective of our behavior. Don't expect to change everything overnight. We have always struggled with spending too much on eating out. We work a lot and aren't always home to eat. Still, just bringing a lunch here or there helped. Then we figured out some things we could make and freeze at home that we can just pull out and heat up for a good quick meal at home with less work when we're tired. Small changes, over time, add up.

    I'll post more if I can think of any. I'm the self-proclaimed king of driving cheap cars. I bought cars for $1800-$2500 that lasted me for years and years, driving them in our cleaning business every day. My wife finally convinced me to spend a little more and I dropped $3500 on a van that we've now had for several years with minimal problems. You don't have to spend a tone on a car. We never have a car payment. By going up a bit in price we got something that was a little newer and that had working AC. Still, we got a minivan that had 85,000 miles on it and we're now up close to 150,000. It has been great. You just have to know how to look and see cars more as utilitarian vehicles to get you from here to there instead of falling in love with a particular make or model or look.

    Oh, we will also be investing for the first time this year so that we can retire someday. We will be putting money into index funds because they perform well (reflective of the S&P) and have no real fees to speak of like managed funds. We'll see how that goes, but it's a huge step for us.

  • nonjwspouse

    Yeah, I agree. I've seen some "rent vs buy" breakdowns that favour renting but they often seem to miss the fact that rents go up over time and mortgages don't (while the asset appreciates).

    Not the principal and interest, but escrows sure do. Therefore the payments in a mortgage ( with an escrow built in) do go up. Otherwise, it is the increase in all the extraneous costs that go along with a home ownership.

    This holds true with rent payments as well, Those taxes and insurance go up, it will be put into the rent.

  • Incognito

    That $25 may not sound much ... but per month, over 5 years, it's $1,500 even before you earn any interest for it.

    So reverse it - imagine someone will pay you $1,500 to not watch a couple of channels. Hells yeah I'll switch over! - Simon

    What is not even mentioned here is what any of us would need to earn (before tax and other deductions) before we would actually have $1,500 in hand.

    $18 is quite a lot when you consider that they basically just give you VOIP anyway.

    True, but my comment was mainly related to conventional landline costs (ie: Bell). Each company's goal is to make money so they will often charge what people are willing to pay.

    I'm amazed so many people continue to remain loyal to Bell (and their excessive prices) simply because they have been a customer for years and therefore, refuse to even consider other options.

    Our only hold-back in switching to Ooma is they don't yet (hopefully soon) offer numbers local to our specific location. We can't yet port our current number to the Ooma service. I'm OK with a new number but the better half, not so much.

  • Simon

    We did have the option to select a local number with Ooma but decided it was easier and simpler to just pay to port our existing number rather than change it in so many places. Of course we got a call from Shaw offering us great deals for being "such a loyal customer" but even those weren't as cheap as $0 + 911 service & taxes and it felt nice telling them I didn't feel like I was appreciated as a loyal customer.

    Some other drains on finances: motor vehicles!

    Put air in your tires regularly and dump the junk from the trunk. Seriously, if you pay for gas you'll save money if you use less. Of course thinking ahead a little and combining trips can save even more.

    Also, look at the costs of servicing with a garage - things like changing consumables like air filters or brake pads. It's really not difficult to do it yourself and you can easily save well over $100+ or more each time AND you know it's been done and done properly. Pay for the things that need resources and / or specialist equipment (e.g. changing oil).

    Try a new hobby that also saves money - make your own wine!

    You can buy a starter kit of equipment for about $70 and the wine making kits cost anything from $40 up (that make 60 bottles). It's really not difficult and you can rent the fancier equipment like filtering or corking machine for bottling if you don't want to invest in it. We got our friends hooked on it and make an evening out of doing the bottling part. We've started doing some of the fancier kits that cost a little more but give you a $40-like bottle for much less than $3. Seriously, it's good - often much nicer than the stuff you buy at the liquor store.

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