Reducing the (Financial) Stress in Your Life
These days, we are spending more time with some neighbours as our kids "play" together after us parents go home from work and after eating dinner. From what I've heard, this family's (let's call them Sam and Diane) income is basically going to bills. Diane jokes from time to time that when they get paid, the money instead gets diverted to bills. Or when she picks up the mail, she jokes about what bills are in the community mail box. Although, she jokes about it, you can clearly see this stresses her out.
Aside the fact that our bills are delivered electronically, these interactions are a small window into the daily happenings of people who don't have a tidy sum saved up like yours truly.
Although, we're not financially independent yet, we don't sweat the small (or big) stuff like spending an extra $4 for yogurt or $40 for pure vanilla extract at Costco or a $400 bike trailer.
While I don't know the intricate details of this family's financial situation, I know that they think their bills are too high. After speaking with Sam, I know they think their property taxes are too high. I also know they think their house is small and that they would like to finish their basement, but cannot afford or save the $20,000+ it would take to renovate*.
Diane mentioned the other day that she keeps track of the family's finances on an Excel spreadsheet and that she's basically the one in charge of the money. This is great.
The first step in trying to reduce your stress is to keep track of where your money is going. She's already doing this.
You can keep a notebook to keep track, or you can use an Excel spreadsheet or Google Sheets, or you can even use an app like Mint**.
Second step is to look at your expenses and figure out where you can cut back.
Without knowing the exact financial circumstances of Sam and Diane, I know they recently cancelled their TV service that apparently charged upwards of $150 a month. However, they replaced it with an IPTV option that charges $15 a month. Still, 90% savings is a great start.
Sam works for one of the big three. If he has a similar employee discount like my sister, they get 50% off their bills. If that's the case, unless their monthly cell phone bills are over $80 a month, they don't need to switch to something like Zoomer Wireless.
Sam also managed to call retentions to lower his monthly internet bill. He currently pays LESS than the Loonie household***. However, in the case of Internet service providers, I prefer the convenience of not having to call in every 6 months or year and have to threaten to cancel my service in order to get a cheaper monthly bill. In Sam's case, he was able to reduce their bill from $108/month to $60/month. At least for 6 months before he needs to call in again.
These small changes should help with their monthly bills. They have more expenses like gas and highway tolls that I am aware of. However, my understanding is that these expenses are required as it is to pay for their commutes to work. Diane may be able to cut these expenses by taking public transit, but that would decrease the amount of time she can spend with her son (recently, she starts work at 7:00am and finishes around 5:00pm and doesn't get to see her son in the morning).
In terms of space in their house, Diane has come to our house so her son can play with our daughter and marveled at the fact we have one room dedicated to BG's toys. She lamented the fact that when they moved into their house, Sam convinced her to purchase a dining room table and chair that sit in the dining room and remains unused aside from special occasions.
The solution to this is quite simple. Sell the dining room set and everything they don't need to get more room in their house. The reason we have so much room and why we can spare the family room for BG and her toys is because when we moved into our house, we didn't buy a lot of stuff to furnish our house. We moved from a condo, so whatever stuff that was crammed in there, was spread out throughout the house. We did buy some things like a bigger bed and a bigger dresser for our room, but pretty much everything else is found stuff or given to us from family members.
If they do manage to sell some stuff, they'll find themselves with more room in their house.
They'll also find themselves with more money they can use to start saving for a renovation if that's what they want to do. They shouldn't borrow money to do this renovation as the loan and interest payments would increase their stress levels. That is the opposite of what we're trying to accomplish.
Overall, if we can cut our expenses from 94% of our take home pay to 45%, it should be doable to cut even the tiniest amounts so you're not stressing through the financial side of life. Even a little bit of breathing room makes the biggest of differences. When you're not worried about the financial side of things, you're just worried about the other stuff in life.
*So while our own renovation cost us over $30,000 two years ago, apparently, because the previous owner started on framing and because of the smaller house, they were quoted something around $20,000 from a guy Sam has worked with.
**I used to use Mint, but I found they had a lot of issues connecting to websites. As such, I deleted my Mint account and exclusively use Google Sheets.
***We're currently paying $63.95/month (+ taxes) for our 100M/10M internet service.