This is where your finance takes place

I establish an interesting theory about being frugal. I constantly wonder why several people have the incredible ability to save money wherever they go whatever they do. They always manage to save a few bucks here and there. Therefore, they have more money in their pockets; not me!

Most of the time, I am on the other opposite. I buy stuff wherever I go and it’s not necessarily deals! This is where I determined that these people must have developed what I called The Frugal Reflex.

It is an ability that you will gain throughout your life. Some people will never acquire this reflex and their wallet will suffer desperately. I think that for the frugal of us, every time that they are about to buy something, the Frugal Reflex kicks in and make ask themselves a ton of questions: “Do I really need it right now? Can’t I buy the same thing cheaper elsewhere? What are my needs? Can I find a cheaper substitute? What is the best way to get what I need?”.

These questions are not 100% purchase proof but you will still take the time to think about it. Most of the things we buy are the result of an impulsion. If you have the Frugal Reflex, you will avoid your a part of your emotions and make a more rational purchase. In fact, emotional purchases are the biggest source of wasted money. “I really want it, it’s so cool! Is it that cool or I am just being manipulate by some marketing genius here?”.

How to build The Frugal Reflex

Being frugal is not the easiest thing to do. It’s like quitting smoking or drinking. Spending is another addiction. If you don’t take much money with you when you go out, chances are that you will not spend much money. What about credit card? There is only one rule to use credit cards correctly: you can buy whatever you want with your credit card, as long as you pay it off at the end of the month. If you follow this simple rule, you will definitely start asking yourself some questions and save some money!

Another way to develop the Frugal Reflex is to establish a budget. You have to know your numbers by heart. In fact, if you are keeping track of all your expenses for your budget, you will get the Frugal Reflex every time you are about to spend money on something. Even better, it will probably force you to find creative way to not spend money in order to stick to your budget.

Determining goals in term of money saved is another way to build a stronger Frugal Relex. If you try to save $1,000 within the next six month, you will try to save money a little bit every day. So days after days, you will strengthen up your ability to save money. I’ll come back later on with another post on this method as I am trying it right now. I love to be my blog’s guinea pig!

The Frugal Reflex is all about self control. Control your soul, control your mind and control your body. These are the key to live a better life (with more money in your pockets!).

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Being frugal is certainly one of the hardest things to do for me! Once again, filled by good intentions, I decided to go to Maxi to buy my food. For those who do not know Maxi, it is a very-cheap-large-surface-with-no-service type of grocery store in Quebec. Basically, you can find you need at a smaller price. Well… this is how they advertise this brand anyway!

Do people know how to live?

First things first, people seemed uneducated and without manners. I guess I should not expect more than a cheap grocery store located in a poor area of my city… Anyway, I almost got ran over by a car on my way to the store (you know those big yellow stripes on the parking ground are not for design purposes!). Then, I pick a cart and go to the entry, there is a 50ish lady with her cart going out the store and taking all the place in the world to go through. No way in for me until she took off. The entry of the store gives to the fruits and vegetables. I saw more peaches on the floor than on the rack… nobody is around. I guess nobody cares period, it’s only good perishable food rotting on the floor after all!?!

Where is the good food?

Fruits were only good for pies and vegetables for soup! Most of their perishable products were on the line of walking away from the store by themselves. Usually, we buy a lot of them. That day, I had to stick to some grapes and salad. There was nothing too fancy as well… the most exotic fruit was the oranges! Overall, we had a very hard time finding our usual healthy products that we buy on a regular basis.

The World of Fried chicken, Chips and Ice Cream

Instead of good stuff for health, I found alleys full of fried foods (I swear, they fried almost the ice cream!), chips, soft drinks, cookies and ice cream. While I love these things, I am trying to find food that is better for my health than for the growth of my belly!

Was it cheaper?

The company was advertising a cheap place where you can find a ton of food. They were right. The food is not so good quality and unhealthy, but damn cheap! Most stuff I bought was on sale. I found great bargain on peanut butter and other non-perishable food. So we did save money on these articles.

Conclusion

I do not know if it was because I did not eat before I went to the grocery store or because all the junk food was on sale, but my grocery bill was not smaller than usual. In fact, I bought more junk and I still had to go back to my regular grocery store to my more fruits and vegetables. In the end, I did not enjoying the experience of shopping there, I bought less healthy food and probably ended up by paying more for food this week than usual. I learnt my lesson; I will not try to save on food anymore. My health worth more than trying to be frugal!

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I recently discussed with Chris, a loyal reader at The Financial Blogger. He was explaining to me how he setup his personal finance in order to be able to live under one income. As I was quite interested to know how he manages his stuff, I asked him more details about it. It’s funny how most of these tips are easy to do and mostly evident but most of us don’t necessarily think about it our daily lives.

 

Don’t increase your lifestyle along with your raises

Next year, I’ll finally buy a new car with my raise. Everybody has goals linked to their next raise. However, if you use your raise to increase your debt payment (think about a debt elimination process) or to invest this money, you will get in a much better financial situation. Just think about the power of compounding interest. In a few years, you will be able to afford whatever you want and there will still be money left. Save now for tomorrow instead of burning your potential next raise up front.

 

Improve your credit score

While improving your credit score makes thing easier to get new credit, it also has other benefits. In fact, insurance companies are now linking your credit score to a risk grid. Studies shows that people with higher Beacon score will more likely be responsible and have less incidents in their life than people with low Beacon Score. Then, you can save upon car, life and house insurance. That will definitely increase your monthly cash flow.

 

Pack lunch for work

While this one is obvious, so many people still eat out for lunch. You can probably pack a lunch for about $3 a day while eating out will cost minimum $10. That $7 a day becomes $1,820 at the end of the year. Think about it.

 

Make big cash down on house and refinance your mortgage to a lower rate and shorter term

Before his wife quit her job, Chris and his wife were using her salary to build up their cash down. When you are about to cancel one income, a good way to see if your plan could work is to put all this money aside for a while. If you never need to take this money out, you are ready to cancel the income.

 

Big cash down will not only make your approval an easy process but will also leads to good lending condition. It is easier for you to finance your house with a better rate and a smaller amortization. These are two ways on saving money along the road.

 

Stick to your budget and use software to track down your expenses

The biggest business killer is the miscellaneous expenses you may have months after months. Plan the unexpected and stick to it. A budget is your best friend to keep money in your pocket. If you are having a hard time to setup your budget, you can use an Excel spreadsheet or software such as Quicken or Microsoft Money. Theses software will help you out determining your expenses and revenues according to a complete category list.

 

 

Keep your car!

Chris says he keeps his cars for a good ten years and never buys them new. In fact, a brand new car will likely loose 50% of its purchase value after three years. If you buy the same car after three years and keep it for ten years, you will save literally a ton of money.

 

Reduce your marginal tax rate

Chris is living in the USA and was able to drop his marginal tax rate from 28% to 2,5%. I’ll come back later on with another post on this topic. However, it would never hurt to meet with an accountant to look at your income report. He might find several ways for you to keep your money away from the government. Make sure to use a reliable accountant that will only lead you to legal ways of saving money.

 

Borrow at low rate

Chris was also able to borrow money at very low rate. When you can have access to promotions that drop interest rate on transfers for a specific time, you can save a lot of money. A debt consolidation could decrease your monthly payment and reduce your interest rate at the same time.

 

As you can see, these tricks are pretty simple and easy to use. However, if you can use all of them to your personal situation, you can only be in a better financial situation in a few years from now. If you have other tricks, please add your thoughts in the comment section.

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When we had our first child two years ago, we were already looking for ways to save money. My wife decided to breastfeed her baby as it was good for their health. In fact, it was not only good for them, bur for my wallet too! Unfortunately, milk is only good for so many months. At one point, William was starting to look after something more consistent. This is when we decided to make our own baby food. My wife and I then started to buy tons of carrots and other vegetables.

Thinking it was better for our baby’s health and also because we thought it was cheaper, we spent a lot of time concentrating on this baby food. Looking for special price on bundles, going after the groceries’ coupons and preparing the food before we can it was part of our weekly routine until that day. That day where William was finally sleeping for more than 2 hours and we could watch some TV.

It is funny as when you become a parent, you always think about your children. Even if you are dead tired and sick of hearing them crying, you take a few seconds for yourself to open the TV and watch baby oriented programs. In fact, that TV show was about how to manage money. But this time it was regarding baby food.

They made a comparison with some well-known such as Heinz and Nestle and also home made baby food. I spent the next half an hour realizing we were totally wasting our time. The result of this study was shocking.

In fact, they were able to demonstrate that you can find all the good vitamins and other nutriments in the manufactured baby food than the one you make at home. More than that, Heinz was sometimes making better than at home. They added up more vitamins to the baby food to make it even better. Then, I tried to reassure myself by telling me that at the very least, I was saving money.

Then again, this TV program blew my perception away! When you are calculating the time you spend looking for specials and making baby food, you are actually better of by buying manufactured baby food from Heinz or Nestle. Even worst, as you can buy them in bundles, chances are you will save more money (without counting energy and time!) buying these products.

In the end, we still made some of the baby food and we will surely do the same thing with our new kid. While we are saving a bit of money, time and energy by buying some manufactured baby food, there is nothing like giving your baby food that you prepared for him!

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Having children is a blessing for many reasons. Unfortunately, it has also a big impact on your finance. Being a father twice now, I have to overcome two issues: the raise of expenses and the drop in my wife’s income. Being more frugal seems to be one of the best solutions to compensate for these two financial issues. Then, I decided to create this series in order to share with you my tricks and my thoughts about this topic; Frugal with babies. The very first thing I noticed when we find out that we were going to be a parent for the second time was: there are people around you that care. You should accept their help and while building stronger relationships, you will have the opportunity to save a lot of money.

There is nothing better than grandparents for babysitting

They know what there doing as they already went by it all, they are reliable and always looking forward to see your children and… they do not cost anything! My parents and my in-laws just love to take care of my kids. While they are having fun with them, it gives my wife and I a great opportunity to relax and rediscover the couple we used to be. We are never worried about what could happen or if we are late or not. This is just the perfect situation!

Co-workers can help too!

How many of your colleagues have older children? You probably know some of them. While I was never going to ask anybody at work for clothes or toys, one of my newest co-workers gladly brought a huge bag full of clothes for Amy. I was totally speechless. I could not believe that this guy that your came two months ago gave me for I don’t know how much in baby clothes. On top of that, for my first one, everybody at work pooled together and offered a gift certificate. We then bought several useful things such as a baby’s chair for William. Co-workers are definitely a great help when you have a baby!

Brothers, sisters, godmothers and godfathers

Your close family might not have a clue about what would be the best to offer to a newborn baby. How about a contribution to an RESP? This money will grow over not less than 20 years and will definitely be a great push to your children’s future. It will also help you out bearing the burden of a newborn’s expenses without having to worry to much about their education.

Do not get me wrong, these frugal tips are not given to abuse your relatives. Every time that someone around me gives us direct on indirect financial help for our children, I take good note and surely give it back by another means. The chain goes like this: the more you give, the more you receive. Being frugal sometimes mean being more generous in other ways than money.

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