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Photo by: whitetiger8370

When I say times are tough, it’s not exactly news. My family, like a lot of others in North America, is not only  frightened of investment losses and impending layoffs, we’re already feeling it. Since money is sparse, my parents and I have decided to “cancel” Christmas. No gifts!

My mother is a supervisor in a large corporation’s travel department. She oversees corporate travel and their clients include an ailing North American car manufacturer, a bailed out American bank and an investment bank that filed for bankruptcy earlier this year. Business in 2009 isn’t looking very good and there’s a real chance she’ll get laid off in the new year.

Knowing this, my parents are trying to save money just in case. Mom’s near retirement, but not quite ready for it. She doesn’t like the idea of not doing anything, especially if early retirement means less desirable health coverage.  In efforts to save money, we agreed we wouldn’t get Christmas presents for each other. While others may find this a terribly sad, I’m actually looking forward to Christmas this year—more than other years. Two less gifts to buy means less time in a crowded shopping mall. That means more time with loved ones.

Your two cents: I know we’re not the only family approaching the holidays differently. Are you and your family changing your holiday spending habits this year?

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Photo by: Andrea Chiu

OK, I ended up going on that vacation which is why I haven’t written a new blog entry for a few weeks.  Sorry for the lack of entries and thank you for your input on my last post. I want to continue on this topic of whether you or me deserve a vacation while in debt. As we can see with all your comments, everyone’s got an opinion and they’re pretty diverse.

I asked Gail whether she thought a girl like me deserved to go on a trip and this was her response:

For a girl who calls herself an Unspender, you’re doing a lot of shopping: there’s the trip to Hong Kong, the new laptop (yeah, I know, the ipod was free), the wedding in Calgary and now the trip to Vancouver. Only you can decide if these are worth the long-term costs. It’s your money and your life. But don’t delude yourself. If you are spending money you haven’t yet earned, you’re not going to be in a Happy Place when a crisis hits. And if you think having a 5-year-old laptop was a crisis, think again. You may think you NEED a vacation, but you WANT a vacation. You NEED a roof, enough food, and clothes to keep you warm. You NEED to be able to get to and from work. (Okay, if you work on the new laptop, it might be a NEED, but only if you couldn’t work on the old laptop.) I’m not going to tell people they shouldn’t take vacations when they have debt. I do believe you shouldn’t spend one iota on unessentials until your debt is repaid — and while your vacation is a frugal one, you seem quite resigned to being in debt for a long time. Hmmm. Little Debt Fatigue rearing it’s ugly head? Have you calculated what it’d take to be out of debt in three years? Two years? One year?

Now I don’t disagree with Gail. I know the difference between a need and a want, but I don’t agree with the idea that a person in debt should not spend any  money on any unessential things until they’re in the black. That approach may work for some people and I tip my hat off to them. Unfortunately, I don’t think it’s realistic for me to exclude occasional trips to the movie theatre or a round of drinks with friends. That just isn’t living to me and I know I would be very unhappy and overwhelmed. I think many people feel the same way.

Reader and fellow-blogger Nancy Zimmerman has an approach I agree with much more. She put it well when she left this comment:

What worked for me in the long term – and this goes against almost all financial planners – was to pay just a bit more than my minimum debt payments, and just resign myself to that as part of my life for the next several years, and at the same time, start saving up for things and start investing.

That accomplished a couple really, really important things for me:
1. My money started being FUN and INTERESTING and ENCOURAGING instead of always only about the black hole of debt
2. I discovered what it felt like to save up for something, and go on a trip, and come back without having increased my debt.

Long term, the debt went away, and I still had the savings habit plus a portfolio.

Lots of people will say: don’t do anything but pay off your debt (often said with a judgmental tone!). That makes cold financial sense, true. But even more effective: doing.what.works. for you!

I couldn’t have said it better myself. Let me know, would you recommend Gail or Nancy’s approach to becoming debt free? Perhaps you have another way of attacking debt?

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Photo By: acnatta

Frugal Dad shares the story of an American family that slashed its weekly spending from $660 to under $110. It’s a pretty impressive cut in expenses. In the video (MSNBC), Ellen Roberts, the mother says the key was just knowing where all her money was going:

“You just spend so much money on frivolous things, it adds up. You don’t understand how it adds up until you really see the numbers.”

It seems pretty simple, but even I’ve been surprised by how much more conscious of my spending I’ve become since recording where my pennies go.

Lesson learned: You can’t know how much money you spent, if you don’t write it down.

I’ve still got about a week of recording before I create a proper budget.Judging by my numbers so far, I’m not sure I could live within the budget of the Roberts’. Although Ellen admits she’s going back to getting professional pedicures,  I’m extremely impressed by their ability to spend under $110 for the entire family. As an individual, do you live happily under $100/week? Could you? Could you cut your spending in half?

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  • Photo By: gromgull

    My mother likes to boast that we have a really close relationship. We do, but we also disagree on a lot of things: music, bottled water, people. But more than anything, we disagree on how we spend money.

    A few weeks ago, we argued over the purchase of a new umbrella. My mother’s method of consumption is: buy many for as little as possible. She suggested I go to the dollar store to purchase one for $1. Although they’re guaranteed to break easily, she’d rather spend $10 on 10 cheap umbrellas.

    I love the dollar store. Dollarama is my go-to place for tin foil, party decorations and even drinking glasses. But umbrellas are different. If I learned anything while living in Hong Kong, it was that a quality umbrella is one of the most important things you could own. Through typhoon wind and rain, my trusty Eddie Bauer umbrella was my best friend (thanks to Dana who sent it to me).

    With that in mind, I argued that spending $15 on a good quality umbrella that will not break is a better choice. Mom thinks that’s an unwise financial decision, especially for some one in debt like me.

    I know that spending $1 now is a much smaller expense than spending $15 is now, but is it really saving money overall? For me, spending 10 dollars for 10 umbrellas is not only a waste of time (imagine making numerous trips to the store just to buy a new umbrella every couple of weeks,) but it’s a waste of resources.

    When we all should be trying to reduce our ecological footprint, I think buying 10 umbrellas and throwing out nine) over buying one good umbrella, is bad for the earth. Also, one of my goals for 2008 is to declutter. The idea of having multiple umbrella carcasses in my apartment is a lot more annoying, stressful and unnecessary than purchasing one superior product for a few dollars more.

    I haven’t actually bought a new umbrella yet. But I think this is an important debate regardless of what you’re buying. It goes without saying that there are times when quantity trumps quality, like when the quality is barely distinguishable (eg. generic drug brands). But what are your standards? When is it worth paying more?


    Photo By: Brianware3000

    On this journey to financial freedom, I am not starting with a budget. I’ve done that already. My budget plans have lived on scraps of paper, Word documents, e-mails addressed to myself and little books I designated as my books of money. They have never lasted more than two weeks.

    The problem was not that I couldn’t stick to a budget. The problem was that I drafted them blindly. I never tracked my spending so I could not accurately gauge how much I would need to spend on food, transportation or entertainment. Instead, I guesstimated how much I would spend on each category and I was usually wrong. It was like signing up for a marathon before I knew how long I could run.

    It turned out I couldn’t make it around the block. I would often spend over what my budget allowed. Instead of being realistic, I wrote optimistic budgets that failed to account for birthday gifts, spur-of-the-moment concert tickets or dry cleaning. When I consistently overspent, I was discouraged and quickly abandoned the budget.

    This has gone on for years. I’m ashamed to admit that it’s only now that I’ve begun to track my money. To some, it seems simple enough. To others, it may be a dreadful chore. But when it comes down to it, how can you save money if you don’t know where it goes?

    I now keep my track of all my spending. From the $60 bar tab to the to $1.50 coffee, I’ve recorded all transactions from the past week. So far, I’ve found it to not only be a great way to see where my money is going, but to reign in spending. I’ve only been doing it for a week and a half, but I’ve already determined that I’ve spent too much money parking and entertainment. Perhaps it’s a little obsessive of me, but I have to admit, knowing where I’ve spent each penny is empowering. Dare I say, it’s even a little fun..