Dec. 8, 2021 "Pattie Lovett-Reid's 10 tips on managing your finances amid runaway inflation": Today I found this article by Pattie Lovett-Reid on BNN Bloomberg news:
Young families are increasingly having to make tough decisions, financially speaking.
Nick and Jane are a classic example - eager to start their careers and family, while at the same, coming to grips with the harsh reality that living in a major urban centre isn't going to be part of the plan.
They made the decision to buy in a much more affordable community, just outside of Peterborough, Ont.
As a young couple, they make a great living. He is the chair of physical education in a local high school and she works at a foundation in a major hospital.
They now have one child and are contemplating a second.
However, life has become expensive. Really expensive. They moved to a more affordable community but, now, their commuting costs are going through the roof. In fact, most costs are going higher and the money they did have left over at the end of the month can no longer be redirected to savings as it once was. They are getting by but the frustration is growing and they just don't see a solution any time soon.
They aren't alone.
Stories like this are being played out across the country. Canadians are angry, frustrated and exploring their options in order to make ends meet. Real estate prices have skyrocketed, food prices are soaring and gas prices have been inching higher while salaries haven't kept up with the cost of living.
In other words, the standard of living is deteriorating when many truly believed they were living below their means. They tried to do everything right and then a pandemic hit and the corresponding impact across all aspects of our lives have left them searching for solutions.
If higher inflation proves to be "transitory" - or temporary - then relief could be on the horizon. Even as supply chain issues subside, the reality is, either way, it is going to take time for prices to come down.
In the meantime, you still have to try to make ends meet.
Now is the time to take control of your financial situation line by line.
Begin by looking at exactly how much money you have coming in and what you are spending your money on.
Most of us know our after tax take-home pay and that is a great place to start.
Step two is to then direct your attention to your expenses line by line and look for ways to shave off even a few dollars.
What you will find is that coming up with a little extra cash each month isn't about doing one big thing right - it is about doing a lot of little things right.
My top 10 inflation protectors:
1) In a perfect world, you would have the shortest amortization period you can manage on your mortgage. However, if you are feeling squeezed and coming up short month after month, stretching out your amortization is far better than defaulting on a payment. Explore extending the period and other options with your lender.
2) Recurring costs such as cable bills, insurance premiums and even streaming services are normally costs you might think are non-negotiable but you will never know if you don't ask.
Plus, it never hurts to shop around. While you are at it, be sure to cut costs that you no longer really benefit from. How many streaming services do you really need?
3) Delay purchasing big ticket items. Full stop. A low interest rate environment is not a green light to continue spending money on things you know you can't afford.
4) As food costs continue to climb, many have turned to bulk buying, meatless Monday's and browning bagging lunches. Households are scrambling to cut grocery costs and one obvious way is eating out less.
Check flyers and ads for specials,
clipping coupons is back in vogue,
shop seasonally,
use leftovers and if you do find yourself often disposing of food waste - ask yourself why and how you could do things better.
Get the whole family involved.
In fact, growing vegetables can be great fun. I'm not talking about a farmer’s field, however, I do know many who grow and share tomatoes, cucumbers and peppers, to name a few.
5) Don't leave money on the table by not fully understanding your entire compensation package. For example, ensure your household isn't doubling up on medical and dental plans.
Go through your entire compensation package line by line to ensure you are fully utilizing all of the benefits you are entitled too.
6) Pay off the most expensive debt you have first. This is the one with the highest interest charge (and that may not be the same one with the biggest balance). A quick calculation will help you determine which is costing you the most monthly, and by paying it off quickly, you will save money in the long run.
7) Change your filters for improved efficiency, insulate to save money and turn down the heat - especially when you aren't home. You could also consider timers on your water heater to activate and deactivate, according to your household schedule.
8) Barter or exchange goods and services with colleagues and friends. Your skill could be someone else's shortcoming.
9) Look for additional revenue streams. For example, Jane told me she teaches a spin class a few times a week to satisfy her desire to work out and picks up a few extra dollars along the way.
10) Finally, although many still find them distasteful, I believe budgets work. Align big expenses with your pay frequency so fixed costs are covered off the top. It allows you to see instantly how much money you will have left over for discretionary spending - if any. But you need to know so you don't dig yourself in deeper.
For now, it is all about controlling what you can, and you can only do that when you know your numbers.
I feel for those starting out. Jane said to me, "we both have Masters degrees and work hard but it just doesn't feel like we are successful.”
The truth is they are successful and hopefully some of the challenges they face are just speed bumps in their life's journey.
Pattie Lovett-Reid's 10 tips on managing your finances amid runaway inflation - BNN Bloomberg
Jan. 11, 2022 "9 ways Warren Buffett's frugal habits can help you save money like a billionaire": Today I found this article by Serah Louis in the Financial Post:
Warren Buffett might have billions of dollars to his name, but unlike other celebrities and financial gurus, he prefers to live life simply, for the most part.
The investing icon practices what he preaches when it comes to financial discipline, saving and paying off debt .
Buffett gave an early warning last May about today’s higher prices when he told a livestream audience of over 28 million during Berkshire Hathaway’s annual meeting that “substantial inflation” was already hitting businesses.
When one of the world’s most successful investors raises concerns about rising prices, it’s probably a good time to apply some well-tested strategies to tighten your belt. Here are nine ways Buffett’s frugality can help you save and spend wisely.
1. He lives in the same home he bought back in 1958
While most billionaires bulk up on expensive real estate, Buffett originally paid US$31,500 for his Omaha, Neb., home — that’s about US$289,000 in today’s dollars — and he’s lived there for over 60 years.
His home is by no means tiny, however. The 6,570-sq.-ft., five-bedroom house has had plenty of renovations and additions over the decades and is worth about US$1 million today. It’s also protected by fences and security cameras and most likely has a good homeowners insurance policy as well.
Buffett has no plans to move out, calling the house “the third best investment I ever made,” in a 2010 letter to Berkshire Hathaway’s shareholders.
2. He rarely takes out loans
Buffett’s one-and-only mortgage was on a vacation home in Laguna Beach, Calif., that he purchased in 1971, although he certainly had the cash to afford the US$150,000-listed seaside property.
He told CNBC that he took out the 30-year mortgage loan because “I thought I could probably do better with the money than have it be an all-equity purchase of the house.” He decided to use the extra cash on hand for shares in Berkshire Hathaway — the company that brought him billions.
Buffett’s point about not locking up capital still resonates. And if you own your home, you have options to free up some of your capital by refinancing quickly at today’s historically low rates before they rise this year, as forecasters expect. A switch may save you thousands of dollars a year.
3. He buys breakfast cheap
“When I’m not feeling quite so prosperous, I might go with the $2.61, which is two sausage patties, and then I put them together and pour myself a Coke,” he says in HBO’s 2017 documentary Becoming Warren Buffett. He continues: “$3.17 is a bacon, egg and cheese biscuit, but the market’s down this morning, so I’ll pass up the $3.17 and go with the $2.95.”
Instead of going out for meals or buying a latte from Starbucks every day, make your own lunches and coffee.
You can also get a little extra money by signing up for a cash-back app that gives you actual cash back, not points, on your purchases.
4. He buys marked-down cars
Many billionaires and millionaires keep a collection of flashy sports cars and vintage models in their garages, but Buffett allegedly prefers fixed-up automobiles that he can acquire at reduced prices.
He upgraded from his 2006 Cadillac DTS to a Cadillac XTS for just US$45,000 in 2014. “The truth is, I only drive about 3,500 miles a year, so I will buy a new car very infrequently,” he told Forbes.
Whether you opt for a brand-new car or a slightly used model, emulate Buffett by spending within your limit. That means you won’t want to go for the first loan you spot and should look around for better deals. A good habit is to do a quick check of auto insurance rates every six months.
5. He doesn’t splurge on brands
Buffett doesn’t much care for designer suits or the latest iPhone model — he relied on his $20 flip-phone for years before swapping it out for the Apple smartphone in 2020.
Buffett avoids unnecessary spending and once said, “Do not save what is left after spending, but spend what is left after saving.”
Park your funds in a high-yield savings account or in a diversified investment portfolio so the money can grow over time.
Set aside your extra cash for an emergency fund or retirement instead of blowing it all on nonessential purchases.
6. He doesn’t invest with borrowed money (anymore)
“I’ve never borrowed a significant amount of money in my life. Never. Never will. I’ve got no interest in it,” he told students at Notre Dame in 1991.
Although a young Buffett once borrowed 25 per cent of his net wealth to buy shares, he warns investors against repeating the same mistake.
Even skilled stock traders will tell you borrowing to invest can be risky. And there’s no real need with investing apps that allow you to start with a small amount of money, like one that lets you invest using nothing more than your spare change.
7. He does what he loves
Buffett credits some of his success to his passion for investing. “You have to love something to do well at it,” he says, urging people to take the jobs they love, instead of positions that look good on your resume.
Even if you can’t quit your full-time job to focus on the things you truly enjoy, you can certainly find the time for some affordable hobbies. Buffett himself enjoys card games and playing the ukulele.
And if you’re looking for a way to boost your income, capitalize on your skills and hobbies, try setting up a side hustle, such as being a mystery shopper.
8. He finds creative ways to save
When Buffett’s first child was born, he converted a dresser drawer into a bassinet. For his second, he borrowed a crib.
“If you buy things you don’t need, you will soon sell things you need,” the billionaire says.
Take a good, hard look at your finances and figure out what you can cut down on.
Get yourself a library card and borrow books and movies instead of purchasing them.
Read a few thoughtful advice columns on saving money.
9. He uses cash, not credit
While most of us prefer the convenience of a credit card for our everyday purchases, Buffett uses hard cash.
He told Yahoo Finance Editor-in-Chief Andy Serwer in 2019 that he uses cash “98 per cent of the time. If I’m in a restaurant, I’ll always pay cash. It’s just easier.” While the method may sound a bit old school, relying less on your credit card can help prevent spending money you don’t have.
Using most of your available credit and falling behind on your monthly payments damages your credit score. If you’re struggling to pay off your credit card debt, you might want to consider bundling it up into a debt consolidation loan with a lower interest rate.
This article was created by Wise Publishing. Wise is devoted to providing information that helps readers navigate the complex landscape of personal finance. Wise only partners with brands it trusts and believes may be helpful to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
9 ways Warren Buffett's frugal habits can help you save money | Financial Post
My opinion: I like this part the most, and I put that in my inspirational quotes:
“You have to love something to do well at it,” he says, urging people to take the jobs they love, instead of positions that look good on your resume.
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