COVID-19 (Corona Virus) update

We are ready to help you through financial uncertainty. Find out how we are supporting you with free volunteer income tax filing, navigation of the new COVID-19 benefits, help with dealing with your lending institutions, and free confidential credit counselling advice.
Learn more

When I found myself in my early 20s and deep in debt I was shocked and ashamed that I had let things get so out of hand.  I was just finishing school and looking towards the opportunity to start a job, purchase a home, a new car, it was time to move into the real world and I had a mountain of debt holding me back.  I had no idea how money really worked.  I lived paycheck to paycheck with nothing saved for emergencies and was using credit to supplement my expensive lifestyle.  I felt awful when I finally took the time to add up all my liabilities only to see a huge number looking me back in the face.  I knew instantly that I was going to have to do way more than just “cut back” on a few things.  The reality was I was going to have to cut out a lot of things.

There are numerous blog posts and articles out there about people who have paid off thousands of dollars worth of debt.  They use different methods of either paying down debts or increasing income, but hardly any of them talk about what they really had to cut from the budget.  I was already working long hours at my job and still wanted some time to myself.  Getting a second job or a side hustle just wasn’t an option.  The only alternative was to cut some of my spending lifestyle choices.  Below are 10 things I had to cut from my everyday spending to tackle the huge debt load I was carrying.

  1. Estimating Costs

We all do it.  Instead of calculating the actual cost of an item we just tend to “ball park it”.  The truth is math isn’t everyone’s favourite subject.  Not many people want to calculate the taxes or the number of payments over time.  Math is everywhere, and because people don’t want to do it, it costs them in the end.  It’s so much easier to just approximate the final total then it is to calculate it.  Doing this has cost me hundreds over the course of my life.  Instead of budgeting for an item at $55.56 I used to just round it up to $60.  I did this with everything.  Over the course of a week I would have overestimated a dozen purchases costing me a lot of money.

Now you might think that overestimating every purchase would leave me more money at the end of the month than I had thought, but the reality is it left me money that I would spend foolishly.  Since I had already spent the money in my head I had no reason to allot it for anything else like savings or paying down debts.  It usually went to purchase other inessential goods like books, movies, music, or alcohol.  Of course that only worked when I overestimated.  Sometimes I would underestimate; by a lot.  This meant that my groceries or other purchases cost me more then I had anticipated and, like I have mentioned in other blog posts, there was no way I was going to put stuff back once I was at the checkout.  The shortfall would go onto a credit card and increase my debt load even more.  It was a never ending cycle.

Not accurately calculating the costs ahead of time meant I was not being financially realistic.  I was out of touch with what my financial reality was and this led to spending money recklessly and foolishly.  By letting the math slide I was sending myself deeper into debt each time I went shopping.

Now I keep a detailed tally of what I’m buying with prices and do the calculation BEFORE I get to the checkout.  It’s a lot easier to skip a purchase you don’t need when you’re not standing at the checkout stacking items on the conveyor belt.  My teachers used to tell me I would never walk around with a calculator in my pocket, but now I have a smart phone, and it has a calculator, so I use it every chance I get.

  1. Not negotiating

Negotiating is something that is just not taught these days.  Likely it’s because the bulk of our shopping is done in places that do not negotiate; or that’s what we are led to believe.  While it is true that Amazon and Ebay might not allow you to talk down the price of an object, places like Walmart or Canadian Tire will absolutely entertain negotiations with their customers, and places like your internet or cell phone providers expect it!

Negotiating is first and foremost knowing the value of the item you want to buy.  There is no point in starting a negotiation if you have no idea what you are talking about.  Do some research and see what the item you want to purchase is selling for at other locations.  Remember, these places want your business but also have guidelines they have to follow.  Use the fact that an item is cheaper at another place to entice them to meet, or beat, the price.  Is the item scratched or slightly broken?  Use that to your advantage and ask for a discount.  Has the item expired?  Tell them you’ll take it off their hands for a reduced price.

I had to overcome my fear of negotiating before it became comfortable.  It’s like public speaking, the more you do it, the better you get.  Besides, what is the worst they can say?  Negotiating in as many purchases and transactions as possible will end up saving money in the long run.

  1. Attending every social event

By going to every happy hour, every birthday bash, every guys weekend, and every game night I’m spending more money than I really have.  It’s OK to go to an event every now and then, but by choosing to attend every event you are spending way more money on entertainment than you should.  Chances are you know you can’t afford all these events but your fear of missing out just won’t allow you to skip it.  What if that person you are interested in shows up?  What if you miss a job opportunity or a chance to network?  The reality is there will be many more opportunities to do all these things and more.  You don’t have to attend them all.

Getting out of debt and staying socially active are pretty much mutually exclusive.  Entertainment costs money.  Period.  If you are anything like me, that promise to yourself to only stay for a

“couple of drinks” always turns into closing the bar.  In fact it was almost like torture to have to leave an event early.  Seems every time I was about to go, something great was about to happen.  I soon learned that just not going to the event was less painful than trying to leave after just a couple of drinks.

An even better idea is to try and plan something with friends that won’t cost you a small fortune.  A night in watching movies with a bottle of wine or a six-pack of beer is much more cost efficient.  In reality, your friends will likely appreciate a cheap night out.  There will be other parties and gatherings, save your budget for a truly exceptional night out.

  1. Eating out

This one is both the most obvious and most difficult choice to make.  Eating out can cost a ton of money; especially when you are going out with friends.  If you are anything like me, your friends never wanted to go for supper at the local A&W.  They always want to go to the newest restaurant, have cocktails before hand with plenty of appetizers, a huge main course, and then desert followed by more drinks.  My dinners out could easily cost $100 or more every time I went out.  At even just once a week this was costing me over $400 a month!

Now I’m not saying you have to stop eating with your friends.  You just have to start cooking for yourself!  The high cost of going out for dinner is not because the ingredients are so expensive, it’s because you are paying someone else to cook the meal, bring it to you, and then clean up afterwards.  Save a bundle and host a dinner at your place.  You can even make it a pot luck dinner and have everyone participate.  And when your guests ask if they can help clean up don’t say no.  Say yes, and get everyone helping out.

You might also be thinking, “What about the days when I don’t want to cook?”  Those are the days you should be relying on pre-made meals at home.  Meal planning is very popular right now.  Check out the internet and find some motivation to meal prep for your lazy days.  By cutting out the frequent meals at restaurants you will be saving a bundle every month.

  1. Dead end hobbies

I didn’t have many hobbies per se.  My biggest downfall was collecting.  I collected books, movies, music, and all other manner of multimedia I could find.  Of course, this meant that I also needed equipment to view, listen to, and store it all.  It became very expensive to keep up this hobby but I could always justify it by looking at how much I had already spent to date.  It seemed like too much of a waste to stop now.  I always looked at it as an “investment” into my hobby.  I learned much too late “investment” was not the word I should have been using.  If I could only have a fraction of the money I wasted on this pursuit back I would be a happy man.  Not only did I lose money on this “investment”, but I racked up debt because of it too.

Whether it is collecting books or constantly trying new hobbies out, you have to take a hard look at how much you are spending keeping this habit alive.  Do you pick up a new hobby only to lose interest when another one comes along?  Do you “invest” in a hobby to the tune of hundreds of dollars only to let it fall into the background after the excitement wears off?  If so, you are likely using a lot of money that can be much better spent somewhere else.  Plug that leaking budget by going back to a hobby you have already invested in or find a way to pursue a new hobby for free.  Check out a local library for free books, movies, and magazines.  Surf the internet for free ways to learn to knit or macramé.  There are ways to try something new that won’t cost you a dime; you just have to get a little creative.

  1. Media comparison

All media out there is designed to make you feel inadequate and less fortunate than you really are.  I think you would be hard pressed to watch any form of media for more than 10 minutes without seeing something that you wanted to buy.  Whether it’s a new car, nicer clothes, or a fancier phone, mainstream media sends a very clear message; buy this to feel better.

For me, it was wanting the lifestyle the people on TV shows, movies, or commercials had.  New houses, top of the line cars, expensive trips to exotic locales pushed me to spend more than I actually had.  This of course, led to using credit.  I eventually realized that the short lived feeling of accomplishment from purchasing these expensive items didn’t erase the overwhelming sense of shame and guilt that came once the bill came in.  I had to make some tough choices which led to me cutting out all the media sources that made me feel inadequate.  Eventually, I came to no longer care about keeping up with the Jones’ and instead focused on what I could do to make myself happy within my budget.  I learned to appreciate what I had and not focus on what others had.  This lesson took quite a bit of work but was worth it in the end.

  1. Aspiration purchases

Aspiration purchases are purchase you make with the aspiration of fulfilling their use.  Clothes that are too small now, but will fit once you lose a few pounds.  Books you will read “eventually”, once you have read the others stacking up on your dresser.  Food you will make meals out of, when you find the time and energy to cook.

For me it was books.  I bought books that sounded interesting and exciting that I wanted to read.  I never gave a second thought to the stacks of books that were piled all over the house that had yet to be read.  Buying the new books made me feel accomplished and well rounded.  I would read them one of these days, just not right away.  I soon realized that I was never going to find the time to read all these books and continuing to buy them was just hurting my bottom line.

Whether it’s books or something else that you purchase with the idea that you will use them someday, you will be much better off once you realize that those items will always be around when the time does come for you to use them.  That’s the time to buy them, not months or even years before you have the time.

  1. Impulse purchases

When you get into paying off debt you can become very isolated, especially if you are alone in the struggle.  You’ve given up going out every night.  You no longer indulge in every passing fad or interest.  You buy only the bare essentials.  In short, you have become boring; or more accurately you are becoming bored.   This is probably the most dangerous time for you while you are trying to pay off debt or build a savings account.  The temptation to do something to boost your mood can be almost irresistible.

It is very easy to want to shop yourself out of boredom, especially when shopping has been reduced to a click of the mouse, but this will only serve to ruin everything you have worked for thus far.  Get to the root of your boredom and find things to do to keep you busy.  Tackle a project you have been avoiding around the house.  Pick up one of those hobbies you abandoned months ago.  Take a walk.  Clean the house.  Do anything to keep yourself from spending money you don’t have.

  1. Expensive relationships

We all have that friend who lives like there’s no tomorrow.  They spend money like water and don’t seem worried at all about the bill coming in at the end of the month.  More often than not they are living off their credit cards with no plan to pay them off.  Eventually, reality catches up with these people and they have to make some hard decisions, but for now, they’re living it up like money is no object.

I had more than one friend like this.  They had the best of everything and I wanted everything they had.  Just being with these people made me want to compete with them at every store and restaurant.  It was expensive just being around these people and I eventually realized that I couldn’t keep it up any longer.  Everything was about status and they never wanted to do anything affordable or, heaven forbid, free.  I realized that they did not accept that I was trying to reach a financial goal and would never give up their lifestyle for even just one afternoon to spend with me.

It took me a long time to realize that when it came to these relationships I wasn’t so much a friend as I was an accessory to them.  Ultimately, it was costing me real money to feel secure with them.

  1. Impressing others

I’m not saying you should stop trying to impress people.  Just stop trying to impress them with what you have or how much you can spend.  So much of my spending habits hinged on trying to impress people with how much I could spend or what I could buy, that I didn’t realize I was digging myself into debt for people who didn’t even care about my situation.  I bought many books to impress others that I had no intention of ever reading.  I spent money I didn’t have to hang out with people in places I couldn’t afford just so they would hold me in high esteem.  Even many of my hobbies were taken up with the intention of impressing someone who didn’t deserve my attention.  In the end, I was left with a mountain of debt and the people whose attention I wanted to attract were gone; moved off to some other expensive location or event that I couldn’t afford to attend.

All because I felt the person I was wasn’t good enough.

The very heart of all my spending was my own feelings of inadequacy and worthlessness.  I needed so much external validation in my life that I was willing to accumulate mountains of debt to get it.  Of course, even after spending all that money, I still didn’t feel like I was worth any of it.  And now I had a pile of debt to pay off.

If you want to impress others, impress them with who you are and what you have accomplished.  Once I learned this life became much less complicated.  I started to meet and hang out with people who actually mattered.  My job became more fulfilling because I no longer saw it as a vehicle to purchase more stuff but instead as something I could take pride in.

It took a lot of growing, self discipline, and picking myself up after making mistakes, but it was all worth it.  Struggling to overcome my spending habits has allowed me to look at the world in a whole new light.  Don’t get me wrong, I still struggle every day with fighting back the old impulses.  The difference now is that it is a lot easier because I see the big picture and what living within my means actually involves.  I live a much better life now that I have a concrete picture of where I want to go and a plan on how to get there.

If you need help in setting up your financial plan or just someone to point you in the right direction call us at 705-560-0430 to set up an appointment with one of our credit counselors today.  We offer free advice on budget planning and debt management.  There isn’t much for free these days, take advantage of our services today!