Tag: budget

Nobody Should Die For What I Wear

Nobody Should Die For What I Wear

Today marks the anniversary of one of the worst industrial disasters in history – the Rana Plaza building collapse that killed 1,134 and injured another 2,500 on April 24, 2013. Severe cracks in the Bangladesh garment building’s walls compelled police to require an evacuation. Disregarding […]

Credit Scores Aren’t Financial Report Cards

Credit Scores Aren’t Financial Report Cards

Have you ever received one of these letters from a bank? “Congratulations on being a responsible credit user! We’d like to offer you an increase on your credit limit. We appreciate your business and hope you enjoy this extra purchasing power!” Now, to me that […]

Things I Missed When I Quit Shopping

Things I Missed When I Quit Shopping

The novelty of trends and designs

The time between unwrapping a perfect object and its first sign of wear, entropy in action

The marking of occasions and milestones

The feel of soft fabrics running through my fingers

The thrill of completing a task that only a list maker could truly appreciate

The expression of personality

The lights and sounds and subtle scents of new beginnings

The distraction from difficult moments

The not-so-casual conversation with strangers paid to make me feel good about myself

The sense of control in a life that felt out of it

Shopping isn’t just a stereotypically frivolous activity that we shame women for enjoying. It’s a complex web of sensations and neurotransmitters. How we feel can be as important as what we buy. When we try to overcome an unhealthy relationship with spending simply by stopping, we remove a source of fulfillment and a coping mechanism from our lives.

Unsustainable at best, destructive at worst.

You deserve to feel all of those things – pleasure, joy, accomplishment, celebration, originality, excitement, distraction, confidence, novelty, control.

Find them wherever you can, in ways that aren’t accompanied by the guilt and anxiety that overspending can be.

Visit a museum or art gallery and lose yourself in the expression

Create something with your hands

Take a walk outside and touch the space around you

Clean and care for the things you already own

Learn a skill that ignites you and puts you off balance

Volunteer and be a force for change

Strengthen relationships with people who lift you up

Speak to a therapist about your closely-held insecurities

Do something you’ve been afraid to

Carve out time and space for yourself, violently if necessary

If you just like to shop  – embrace that too.

In a world that questions our every step, walking confidently in your own direction is its own act of self-love.

When Did Living Alone Become The Minimum?

When Did Living Alone Become The Minimum?

One of the opinion pieces that fascinates me every year is the minimum amount it costs millennials to live in my city – Vancouver, Canada. Here’s the breakdown: Housing: $1,929.67 Phone and Internet: $105 Transportation: $133 Groceries: $211.97 Entertainment: $321 Fitness: $75 Insurance: $20 Total: $2,795.64/month, or $33,547.68 annually For most of these […]

Treat Yo Self

Treat Yo Self

I’ve tried many different spending challenges over the years – not buying clothing for a year, setting up a budget for specific categories, not eating out for 100 days, aiming for a certain number of $0 spend days every month. I can’t argue with the […]

The Worst That Could Happen

The Worst That Could Happen

In some ways, the most enjoyable moments of our life are when we haven’t started yet. We haven’t added up the debt we owe, we haven’t calculated how long it will take to pay it off, we haven’t started saving or investing. All we know is that we will do it at some point in the future.. maybe tomorrow, or the tomorrow after that.

Instead of starting down the chaotic path of change, we continue to pour our energies into our romanticized shadow self, the aspirational self that we’ve curated over time out of the qualities we admire in others.

This avatar is so close to perfection that we become intimidated by the herculean effort that it would take to transform ourselves into them. We compare our current selves to our ideal selves and begin to think about all of the perfect steps that would need to happen along the way.

Rather than attempting the impossibility that is perfection, what if we considered a more mundane path? What if we just started now, in the midst of all our flaws, with our most insidious habits at their peak?

What’s the worst that could happen?

If we set aside the details and just took action, without considering every angle and without learning the theory behind every strategy, what’s the worst that could happen?

We’d feel overwhelmed, embarrassed, judged. We’d feel like we were missing out, or that we were failures.

Don’t we already feel all of these things? Staring down our dreams while we preemptively micromanage without making a single, tangible move to achieve them is overwhelming. It is embarrassing to reflect on the same resolutions, year after year, without ever meeting them. We do feel judged for our lack of evolution, and our inability to progress. We are missing out, and we will continue to miss out, because we haven’t prepared for our present or our future. We do feel like failures when we aren’t living up to our potential.

The worst that could happen? We shouldn’t even be worried about it. We’re there, right now. Ignoring our finances and delaying our freedom is the worst thing that could happen.

Start today, in all of your imperfect glory. Do one tiny, simple, achievable thing, and do it today. Sit down and write out all of your debt balances today. Open your bills today. Do a written budget today. Check out one personal finance book from the library today. Listen to one money podcast episode today. Calculate your debt free date today. Sell one thing today. Move $10 to your savings account today.

Don’t think about the implications of this one thing, or the emotions around this one thing, or the future actions that this one thing will set in motion. You can do more later, if you want, but don’t think about later. Focus on that one hurdle, and accomplish it now.

What’s the best that could happen?

If the worst thing that could happen is already upon us, what about the best thing that could happen?

You finally face an intimidating number and feel proud that you’ve made the first step. You put aside the past and begin to forgive yourself. You start to gain momentum, even with that one simple action, and feel like you have a future ahead. It won’t be perfect, and it won’t be easy, but at least it will be real.

The Zero Dollar Clothing Year

The Zero Dollar Clothing Year

I’m a fan of experiments, particularly ones that test boundaries and challenge complacency. In the past I’ve hit step targets and weight loss milestones (decent), skipped eating meals out for 100 days (manageable), and waited to purchase a new cell phone for a week after […]

My Heisenberg Moment

My Heisenberg Moment

Facing a desperate situation – a six figure student loan debt with no six figure income – I did what many graduates do at first.. I ignored it. I decreased my spending enough to make slightly more than the minimum payments. In some months I […]

Financial Ruin Is Not Empowering

Financial Ruin Is Not Empowering

If you think your finances are entirely ruled by careful consideration and freewill, riddle me this: Why does consumer research show the exact opposite? Why do marketing budgets show the exact opposite? Why are lenders making serious cash hand over fist?

The emotions behind spending are complex, and a shift in technology and communication means that consumers are more informed but also more accessible than ever. Advertisers were quick to identify and exploit this shift – but don’t take my word for it. Next time you see an advertisement for a financial product, ask yourself how it makes you feel. Does it bring out your wanderlust? Did you mentally place yourself in a new situation? Do you feel empowered?

Empowerment isn’t necessarily a new advertising technique. Edward Bernays, hired by the American Tobacco Company after WWI to encourage women to start smoking, sparked the commodification of the women’s equality movement with slogans like ‘torches of freedom.’ With the Internet and streaming video, ads are at our fingertips and they’re more powerful than ever. We don’t have to stretch our imagination based on a tagline or a cartoon image anymore – we are shown aspirational versions of ourselves in vivid sound and color. Check out these ’empowering’ viral ads targeting women.

Despite feeling empowered, are we actually empowered by ever-increasing levels of consumption and debt?

Build Your Future

In Vancouver the housing market has reached an entirely new level of madness. Mortgagors are being encouraged to ‘take advantage’ of skyrocketing real estate prices to borrow against their increase in equity through HELOCs (home equity lines of credit). Canadians owed $211 BILLION DOLLARS on three million home equity lines of credit in 2016, at an average balance of $70,000.

HELOCs are praised as a low interest, convenient, flexible way to borrow, if used responsibly. The assertion that a product like this will be used responsibly completely ignores the realities of consumer behavior. If used responsibly, a liquor cabinet fully stocked with 151 is a low cost, convenient, flexible way for everyone at a house party to enjoy an alcoholic beverage or two. Tell that to my raging hangover tomorrow.

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The reality is that about 40% of those with HELOCs are making no regular principal payments! Their home has become an ATM and they have no obligation, or inclination, to make payments above the interest.  

Organizations are obsessed with tapping into the emotions of homeownership – the reason that you don’t see the word mortgagor on an advertisement very often is because the word homeowner invokes a sense of pride. You might only own the welcome mat on the front doorstep after borrowing your down payment and using a HELOC to buy yourself a new kitchen, but congratulations.. you’re a homeowner!

HELOCs are especially terrifying because they’re often on variable rates and they can be called in at any point. This year the Bank of Canada has raised interest rates twice already, with more increases to come. For mortgagors that were already stretched at the time of purchase, it’s about to get desperate.

Reward Your Hard Work

Credit cards have completely revolutionized the way we make purchases. We no longer need money to buy anything – we just need a score that represents how well we handle other money that we don’t have.

If you’re part of the 58% of Canadians who pay their credit card balance in full each month, that’s nice for you. However, studies shows that most people are probably overspending on credit cards. We all like to think that we’re different and in complete control of our decisions, myself included, but the research says that most of us are lying to ourselves. Sorry. If you still think you’re one of the very few that can pay off their credit card balance in full each month and never spend more on credit than with cash, I applaud your superhuman money management skills and I wish you all the best! This is for the rest of us.

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Research has shown that it is psychologically less painful to use credit cards than cash. Credit cards are insidious in their separation of the pleasure of the purchase from the pain of the payment. During an experiment on spending, credit card buyers bid more than twice as much (!) as cash buyers at a silent auction, suggesting to researchers that the psychological cost of spending with cash instead of credit could be 50 cents to the dollar.

If you’re enticed by the cash back or free travel, you can bet that credit card companies are not losing money on these reward programs. It’s not just people who pay interest because of outstanding balances that are subsidizing the benefits – it’s also those who pay off their balances but end up spending more than they would otherwise.

Even if you pay the balance in full every month, and live within your means, you’re potentially leaving money on the table by spending more with credit than you would with cash. Consider whether the amount you spend is worth the amount you obtain through rewards. If you spent $5,000 on a 2% card and your cash back was $100, ask yourself whether any amount of that $5,000 was an impulse purchase. If you spent just 1% more than you would have with cash (a much more reasonable figure than the whopping 200% from the experiment above), you’ve now wiped out the benefit of using the card. If you overspent by more than 1%, you’ve actually lost money.

Canadians had a total of 43.4 million active credit cards last year, with increasing balances and delinquency rates. All signs point to the fact that Canadian consumers are overstretched and using credit card debt to tread water.

Ride In Style

We all have basic transportation needs, but what makes some of us choose walking or biking over public transportation? What makes a new vehicle more attractive than a used one?

Advertisements for vehicles tend to include major themes of safety, performance, and emotion. Marketers count on intense images of a sports car drifting around mountain corners to evoke a sense of excitement. We place ourselves in the driver’s seat, and even though we might never do something unsafe, we like that the potential is there.

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The Financial Consumer Agency of Canada noted in a 2016 report that the average loan term for new vehicles had reached six years, with some as long as eight! Many aren’t paying off their balance before purchasing a new vehicle either, instead rolling negative equity into a new loan. The percentage of Canadians with negative equity was approaching 30% in 2015, and even those who do have equity are often encouraged by their lender to sell back their ‘in demand’ model and trade up to a new vehicle.

Financial regulators have raised concerns over Canada’s vehicle purchasing behavior, with even Ford Motor Co. worrying that consumers are overburdened with debt. If the vehicle manufacturers are wringing their hands over our financing habits, we have a problem! Consumers are clearly thinking about monthly cash flow and not about the long-term cost or risk of these loans.

Do you feel empowered yet?

Ironically, our drive to satisfy these imprinted emotions by purchasing is just setting us back even further. We’re on the hedonic treadmill and we’re buying into the idea that we can catch up by increasing the speed and incline. That inevitable misstep will send us stumbling, with friction burns from the belt as we’re launched off. It’s time for a cool down – back off the speed, lower the incline, and take a deep breath.