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Thursday, September 25, 2014

Fixed vs. Variable Expenses and the Wisdom of Gail Vaz-Oxlade

If you are a fan of Gail Vaz-Oxlade and her shows, Money Moron, She’s a Princess, and ‘Till Debt Do Us Part, three TV shows about people who spend foolishly, you already know about the difference between fixed and variable expenses.  A fixed expense is one that does not change from month to month, and therefore over which you do not have much control.  Tuition fees, rent, utilities are pretty much fixed expenses.  However, most of the rest is variable expenses: food; clothing; transportation; entertainment, etc.  Not that these do not exist, but they can be trimmed; usually, there is lots of wiggle room between what we spend in each of these categories and what we need to spend.
Assuming you cannot change the budget of your fixed expenses, you need to look at your variable expenses to bring them down.  First step: write down everything you spend for a week.  Whenever you get home, pull out your receipts and write down what you spent since the last time you were home (home refers to wherever you are staying while at university).  An easy way to do so is to have a pad of paper at the corner of your desk or dresser where you’d typically ‘unload’ your purchases and wallet.  You’ll probably trim your expenses that first week as the week develops and you see on paper how much you are spending and on what – this is the affect I get anyway!
After a week of spending, put items into categories: food; clothes and gifts; entertainment (bars, movies, etc.).  Look at your spending and see if there is an area that is outrageous: do you spend money on restaurants many times a week? Do you use shopping as a hobby instead of when you need something? Is your entertainment spending larger than your share of the rent? If any part of your spending seems unless you have a category which is extremely low on spending (like $5 on gifts), trim it by 20 % and use that as a budget for the following week.  Twenty percent is normally do-able unless you are already very frugal.  Twenty percent is only reducing your food spending from $50 to $40.  For most people, it means reducing some restaurant expenses or fancy coffees.
Many people in Ms. Vaz-Oxlade’s show find that it is not difficult to live on less when they try.  Yes, they miss the shopping and the going out at first, but these are quickly replaced by much cheaper or free activities: you like clothes? Try designing your own on paper, or learn to sew; you like a night of drinking and music? Try it at home and make it BYOB.  Stop eating out; only buy what you can use and need.
And if you have not seen the show (available on Slice cable TV and http://www.slice.ca/til-debt-do-us-part/ ), you may want to watch a couple of episodes.  A few things that Ms. Vaz-Oxlade says in most of her shows:
- There are fixed and variable expenses: you can reduce the variable ones
- If you can’t afford it, don’t buy it
- You should not have consumer debt: the only debt to have is a mortgage (and maybe student loans)
- Shopping is not a hobby
- Make a budget that balances
- If you can’t handle credit and debit cards, learn to live on cash.
Sure, it may be easy to laugh at the mistakes people on her show make, but often we find that we make at least some of the same mistakes.  It’s worth a look at!

Sunday, September 7, 2014

The 'Dollar' Store

Dollar stores are popping up everywhere in Canada – there are even chains of them: Dollarama, the Dollar Tree, etc.  They offer very inexpensive stuff and can be very tempting, or off-putting for some.
I have found some very good deal on some things at dollar stores, and yet there are some things I refuse to buy there.  Dollar stores operate, it seems, on getting the cheapest stuff from China and offering it to you at a low price.  Sounds too good to be true? For many items, it’s great.  For others, I tend to be a cynic and would rather pay a bit more in order to ensure I’m getting a higher quality, and perhaps safer, item.
For one thing, I don’t ‘trust’ food containers at dollar stores.  They all come from China, I don’t know the content of the glassware or the plastic that is used and in a word, I’d rather not use it every day.  For containers from which I drink every day, put my lips around, I’d like to ensure, as much as I can, that it does not contain lead and other potentially dangerous chemicals.  So I do not buy lunch containers, glasses, cutlery or other food-container items at the dollar store.  But that’s just me.   For the same reason, I also stay away from most skin care products (soaps, lotions, lipsticks, even nail polish) from the dollar store unless I recognize the brand name (and I usually don’t).  I will also avoid food from the dollar store if I do not recognize the brand name.  After the scare in China with baby formula being contaminated, I don’t trust the Chinese government to have safety checks for my food if it’s not a brand name I recognize (and yes, maybe I should not trust these either – but I’m assuming the large food companies, based in Canada and the USA, have good oversight of what happens in their factories – time will tell if I should or not).
I am, however, very fond of the dollar store for inexpensive paper products like notebooks and index cards, decorations like Halloween d├ęcor, craft materials like scrapbooking supplies and embroidery threads, and plastic items that do not touch food directly: plastic baskets to organize ‘stuff’, shower curtains, toilet brushes, etc.  I also find them great for buying hair accessories: metal hair clips are much cheaper than anywhere else and seem to be the same quality as the more expensive ones and hair elastics are great too (and they will be lost before they break in our house!).  I was at one today and found fun stickers that would look great on a laptop computer cover for $1.25, artist’s canvases for less than $4 (probably not the quality required for a fine art major, but fine for a hobbyist), funky patterned Duck Tape (brand name) for $3 (instead of the usual $7) and a shower curtain for $2 (the choice there ranged from $1 to $3 for shower curtains).
My last dislike for dollar stores is that they make me spend more!  What happens is that I typically find all kinds of neat little things at such low price that I pick up a few things that I didn’t really NEED.  Oh, oh, I better stick to my list!

Monday, September 1, 2014

Opt-Out of Extras (and their Fees)


In September, you are expected to pay for many college and university fees.  To ensure that most students will pay most fees and therefore bring their financial support to different organisations o campus, these are ‘bundled’ in one large fee.  In order to not pay all of these, you need to opt-out AFTER you have already paid, and then you get a reimbursement.  If students were asked to opt-in and pay extra fees, most would not do it.

So what fees are mandatory and which ones are optional? Not all the fees you disagree or won’t use the service of are optional.  This is mostly because to get some of the deals the university obtains for students are only valid if the entire student population pays the reduce fee.  This is the case with public transportation: if your university has a public transportation fee, whether you use public transportation or not, you have the pay the fee.  However, many are optional, and you can get a list of optional fees from your university website in most cases.  For example, here is a list of opt-out-able McGill fees: http://www.mcgill.ca/student-accounts/tuition-fees/fee-descriptions . The opt-out period is typically ONLY during a week or two in September and the same in January (for students who were not present in the Fall term); this makes sense as you should make up your mind and not use a service and then change your mind and opt-out.  The organisations or departments your fees support also need to be able to work with a budget!  At McMaster’s, for the 2014-2015 school year, the additional fees (not all of them opt-outable) add up to slightly more than $1000!  That includes many mandatory and expensive fees, such as bus ($138.65), student services fee ($132.60), as well as optional ones such as dental insurance.

What are typical fees you can opt-out of? A series of low fees that support different causes and projects around campus – for example, expect a few $2 to $5 fees for a green energy engineering project, the student food bank, a mature student support group, an on-campus daycare, etc.  These are small fees that add up though – but they are also a nice way to contribute.  Your $2 may not seem like much, but when it adds up with all the student body’s $2, it’s a large part of that group’s funding.  Other fees are much more personal, such as the dental insurance coverage, as well as the medical (read : medication; your medical services are free in Canada) coverage.  At the university of Regina, these two combined (dental and medical) add up to $192.74 for 12 month coverage (Sept 1st to Aug. 31st) (http://ursu.ca/services/ursu_health_plan).  Many students, however, are covered by their parents’ insurance until they are 18 as children, and until 25 if they are full-time students.  So, please spend 10-15 minutes reviewing your parents’ policy to see if you really need to pay almost two hundred dollars to get something you already have.

So just before classes start, see if you are eligible for your parents’ medical and dental insurance (if they have some) so you know if you can opt-out of these at school.  Also look up the list of opt-out fees and decide if you want to pay for these or not, and if you want to opt-out, write down the dates of the opt-out period.