Friday, September 23, 2016

Financial Tips from the Financially Inept

I've been a single parent most of my adult life. I've been solely responsible for financing our living most of that time. I have scrimped, budgeted and lived meagerly when necessary. I have also enjoyed spending, living and giving in my more recent years. The tables are in the process of turning again. Here I am, changing my career path at the age of 55 with a mortgage, a student loan, no retirement savings or emergency fund. What words of wisdom do I have to offer?

I've learned a few things along the way. Do I always adhere to that knowledge? No. But when times get lean, I do have a few budgeting strategies I naturally fall back on.

My number one rule is I always, always, ALWAYS pay my credit card balance in full each and every month. I didn't pay it in full ONE time, back in 1988 while I was waiting for some money to come, which would pay off my credit card a few days late. I was shocked and angry when I found out I didn't just owe a few days worth of interest on my outstanding balance. The minute you don't pay your credit card balance in full, they go back to the date of purchase and your interest starts accruing from that point. Credit card interest isn't cheap. Avoid paying it like the plague.

Instead, use that very same credit card to your advantage. My paid-in-full credit cards not only do not cost me a cent to use them, but they actually reward me for using them. My finances were getting pretty tight a few months ago and suddenly I had reward points, settle up credits on my equalized utility bills, a Co-op rebate and Air Miles rewards totalling $621.45.

Yes, I keep track of every penny. I highly recommend it. When you see, appreciate and account for every incoming and outgoing dollar you have the ability to track "trends". One thing I have noticed is the more I appreciate and respect my current state of financial affairs, the more I am rewarded. The month I had to rein in my spending and received this assortment of "rewards" from previous spending, I also received cash rewards in the form of gifts from unexpected sources. It was nothing short of amazing.

One thing I would do differently, if I was to live my life over again would be that I would record every financial gift I received and how I spent it. I've been very blessed in that regard. I know this. But I didn't keep track. I wish I did. I have something to show or remember for some of it but not all. If I had been more accountable, I think I would have invested some of those gifts more wisely.

Don't put off for retirement, what you want to do today. I always joked that I was going to save taking ballroom dance lessons until retirement. My reasoning was, that I had no idea who I was going to be when I retired so I needed something to look forward to. Best "mistake" I ever made was dancing when the dancing was good. I spent a small fortune during my ballroom dancing years. They were some of the best years of my life. They brought me to life and I finally got to live every girl's dream (well, my dream anyway) of feeling like a princess at a ball. Total dollar amount spent could have probably chipped a big portion off my mortgage or been the equivalent of six months wages for my emergency fund. Regrets? Zero.

Use your house to the best of its advantage. I was very fortunate to have bought my house when real estate prices were incredibly low. I would have had it paid off seven years ago if I had stuck to my original financial plan, which included saving for retirement, paying off the mortgage, accumulating an emergency fund and having adequate insurance in place. ALL which I highly recommend. But I was miserable. My mortgage came up for renewal just before my youngest son was born and reamortizing made the world of difference in my ability to stay home and enjoy my last chance at motherhood.

Look at all the options your bank has for mortgages. When I remortgaged once again, I borrowed off the equity of my home and got a flexible kind of mortgage where all I MUST pay each month is my interest. The difference between what I owe and what is approved is a revolving balance. This mortgage has allowed me to "live" and eke by through some pretty lean years. Paying my mortgage interest and property taxes has made my housing expenses lower than I could ever imagine paying if I lived elsewhere.

See what you can do to make your house work for you. I turned mine into a daycare 18 years ago. I am wondering what I can do next, to help it pay its way. Renting the main floor? Renting a room? Checking into Bed & Breakfast options for my existing home? Working out of my home doing bookkeeping? There has got to be a way. And you can be sure I'll turn over every stone trying to find it.

Keep your receipts! I can't begin to tell you how often being able to retrieve my original receipt has allowed me to return items, even long after I thought I would be able to. I have a credit card that doubles the manufacturer's guarantee as long as you paid for the purchase with said credit card and have the original receipt. Recently, a defective product was paid back in full just by going to the company's website and telling them of the issues I was having. They supplied free postage so I could return my item and get a full refund. All I had to do was enclose my original receipt with my defective item.

Remember that your garbage is someone else's treasure. There is quite a little business in reselling your old wares. I have a habit of holding onto original manuals and I admit I am compulsive about ensuring all parts and pieces to the original product are kept and I know where they are. This has proven to be an excellent marketing tool. When I say "all original parts and pieces" are included and also include a picture the owner's manual on my ad, I find what I put up for sale seems to get a lot of attention.

Speaking of someone else's garbage ... buy used whenever it is a viable option. I bought some ridiculously expensive brand new blinds with the rational that we hadn't replaced our original blinds in the 21 years prior, so in the end it would be a good investment. These expensive blinds broke twice within eight months. I suppose this is also a reason to recommend buying big ticket items from a reputable source because when I asked for a refund in full, my wish was accommodated. I exchanged $1270 brand new blinds with a set for $20 off of Kijiji. It was a win, win, win situation. My new blinds are not the most up to date but they sure beat the sheets we had up.

Look at me, handing out financial advise like I know what I am talking about. I am 55 years old. I owe too much money on my home. I do not have enough money saved for retirement. my emergency savings are nil, I'm living pay cheque to pay cheque and that pay cheque just got slashed by 69% of what I was making a month ago.

What do I have as a back up plan? I have assets to sell and I am selling them. I had been overspending and I ceased that activity immediately. I have funds I could borrow from my revolving mortgage but that is my only source of "emergency funding" so I'm not using it. I have a pension I can withdraw from. Again, this is a last resort source of funding. And I have an over generous parent who is willing to step in to keep me financially solvent. "This" is the reason I wish I would have kept better track of gifts received over my lifetime. Because the gift I just received has already been received by me sometime in my past and I have nothing to show for it. I should have stashed it away so I had it for this rainy day.

It is never to late to make or revise your plan. Live for today but do keep an eye on the future. I'm forever forecasting my financial future and I love having tools to make that a little easier. My bank has financial calculators for almost every conceivable financial contingency. Personal Capital offers a retirement planning tool and free financial software tools page. Play with the numbers which add up to your life and see what you can come up with.

If I was to live life over again, I would hope to have my mortgage paid off by now. But that very mortgage has allowed me to live a life I am glad to have led. I wouldn't be where I am today, if I had stuck to "Plan A" and had all debts, retirement savings and emergency funds in place. I could afford to live but I wasn't living my life. Would I recommend this to everyone? Not an easy answer. There is a fine line between living the life you want to live and having debt and money overrule your world. Everyone's line in the sand is different and that line gets washed away and redefined with every high tide.

Draw your own line. Be willing to redefine your goals. Rework and revise when necessary. And when the going gets tough, remember the tough stop spending. At least until you have a chance to find your new line in the sand.

I wrote this and found this in my inbox, courtesy of Project Happiness (

Set goals that excite you. It doesn’t have to be a big goal but set your sights on something. Life will pass you by if you aren’t careful. I spent the first 45 years of my life sitting back and waiting for life to meet me half way. Sometimes it did. Sometimes it didn’t. I like it better when I take the lead in my own life. It gives me the illusion that I have some control over my destiny.

If you truly want to do something, don’t let anything hold you back. Keep moving in the direction that you want to go and you could be amazed at the doors that open for you as you make your way towards living a life worth remembering.

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