Let’s Talk About Country Pricing

cost of livingThis morning, Maclean’s released an article titled, “Canadians pile up debt faster than anyone in the world“.

I don’t know about you, but I am so fucking sick of reading these sort of headlines.

Don’t get me wrong, I love reading Maclean’s, and they are not the only offenders. For months, every week there has been a new article published by a major news source about Canadians’ infatuation with debt. Painting Canadians as weak minded, impulse driven, irresponsible consumers who can’t get enough of our large homes, gadgets, RVs, clothes, and just general lifestyle inflation. I am sick of the victim blaming.

May I introduce to you, the concept of Country Pricing.

CBC News did a piece in 2013 explaining country pricing which is linked here, but country pricing is the concept that manufacturers can set prices at vastly different prices depending on what each country’s population is willing to pay for said item.

Here is the best example of Country Pricing. I grew up in the Niagara Region, and lived there until I was 18, and still travel there frequently. For years, (until our exchange rate became so poor), it was extremely common for locals to drive across the border to do their groceries. Hell, my husband even did this for years. Why? Because prices were significantly cheaper in the United States. However, it isn’t just groceries. One quick Google search and you can see that everything from clothing, electronics, household goods, cell phone costs, etc. are usually priced cheaper in the United States.

It is bullshit to put 100% of the blame on Canadians consumers for being in debt, when higher costs of living were not something we signed up for. Stagnated wages are not okay. There are higher costs of goods, just because companies can, and will do it. 

Fruits and vegetables, warm clothing, a cell phone, baby products are all necessities for me to live, unfortunately. And because it is a necessity, I have to pay any price that some goods sell for.

I didn’t want to rant and I also don’t want to be seen as an anti-government whack-a-doodle, however we need to stop talking about Canadians being in debt and being painted as irresponsible, when we should be discussing new ideas and how we can help consumers to create a better Canada. Of course there are always going to be some people who are reckless with money and have poor personal finance skills, but we need to look at the whole picture.

Personally? I’m also trying to purchase things second hand more, purchase some large ticket items with friends, (for example, you can share a lawnmower), and have a strong sharing economy within my social circles.

Let’s start discussing ideas instead of pointing the finger at Canadians who are just trying to stay afloat.

Reduce Your Daily Exposure to Advertisements

I love talking about personal finance and in my day to day life I really pride myself on being a saver. I pride myself that I can’t be pressured by sales people, or guilted by friends into purchases. It just doesn’t happen.

However, I’ve been thinking lately. The things that I do have to purchase… Cleaning products, consumables, children’s products, etc. How much of the purchases that I do make, have been swayed by clever marketing? How much have I been conditioned to believe certain brands are superior?

Last night while researching, I quickly found an interesting article in Psychology Today, linked here if you’re interested, which illustrates that it doesn’t matter how strong willed you believe you are, some of the marketers’ message is still being received. Even if it is just brand recognition, it’s still a win for marketers.

My immediate next question: “So what can I do about it?”

I have the joy of raising two beautiful little boys and I desperately want to instill good habits in them, so the following steps are what I am trying to do for my family.

(Fun fact: brand loyalty can start as early as two years old. This topic is more important than it may seem.)

Reducing Ad Exposure Digitally

  1. Unsubscribe from email lists as they roll into your account. Hit unsubscribe, and delete the original email immediately.
  2. Get a quality ad blocker on your computer. Some are free, some are not. This is really whatever you prefer.
  3. If you watch Youtube, unsubscribe from sponsored Youtubers such as lifestyle YouTubers immediately.
  4. Limit time on, (if not abolish completely), time spent on social media. Social media is awful on so many levels, but I’ll discuss this further in the future.
  5. Don’t mindlessly shop online. If you absolutely need something, great! Go nuts. But don’t window shop out of boredom.

Reducing Ad Exposure in Real Life

  1. Cancel cable. For every 1 hour of television, 13 minutes and 25 seconds are ads. Plus, is it just me, or is product placement everywhere nowadays?
  2. Opt for reading books instead of magazines.
  3. Shop for whole foods on the outskirts of the grocery store, (fruits, vegetables, bulk foods, fish), and avoid the processed foods in the aisles.
  4. Or, if you can, grocery shop online to avoid this dilemma altogether!
  5. Make more things from scratch at home. (Like, soap for example). Bonus points for using a glass container, with no labelling on it.
  6. Listen to audiobooks, podcasts or music while in the car instead of the radio.
  7. Go to war on physical junk mail and do your best to stop it from reaching your doorstep. The book, “Zero Waste Home”, outlines steps you can take in order to stop your home from receiving junk mail. Check it out at your local library!
  8. Don’t take free products just because they are free.
  9. Avoid wearing clothing that has a huge brand logo on it. You are not a walking billboard.

If anyone has any other tips on how to reduce exposure to advertisements in day to day life, I would love to hear them. 

You Don’t Need a Brand New Vehicle

I need to get something off my chest.

The average Canadian does not need to purchase a brand new vehicle.

We as a society need to get it out of our heads that purchasing a vehicle new is better, safer, more economical, etc. It is so incredibly wasteful for not only your wallet, but also the environment.

1. Vehicles are not an investment.

It’s no joke that vehicles depreciate the second you drive them off the lot. Without getting into the specifics as it varies heavily from vehicle to vehicle, look into the difference between a 2018 model vehicle of your choice vs 2017. Below is a handy graphic just to illustrate my point:

Vehicle Depreciation

2. You are not technically the owner of the vehicle… Yet.

If you purchase a vehicle from a dealership lot, it is likely you will have a lien holder on the vehicle, so the vehicle is not really yours. Just like with a mortgage, it belongs to the bank. To put it in perspective:

“A lien becomes the legal right of the creditor to sell the collateral property of a debtor who fails to meet the obligations of the loan or other contract. The property that is the subject of the lien cannot be sold by the owner without the consent of the lien holder.” 

In addition, any insurance settlements would go immediately to the lien holder before you see a dime. For example, if your vehicle is written off, and your insurance company gives you a cheque for $3000. However, the remaining loan on your vehicle is $4000. You don’t receive any of the money because the bank takes it and pays it to the lien holder immediately. In addition, you still owe the lien holder the remaining balance.

I cannot stress how often this scenario happens. 

For example. My vehicle is worth approximately $8000, while my remaining loan is approximately $14,000. In the event your vehicle is deemed a total loss, your insurance company gives you the Actual Cash Value of your vehicle. Not what remains on your lien. 

3. Used vehicles can save you so much money in the long run.
Used vehicles depreciate slower than new vehicles and the insurance tends to be cheaper because lower actual cash values means a lower risk. (Don’t forget to shop around for insurance however). Of course there is always the risk of purchasing a lemon, but make sure to buy used from a reputable dealer. Buying a vehicle online, can pose a lot of risk when the seller doesn’t have a reputation to uphold.

4. Most people buy bigger vehicles than they need.

Unfortunately many Canadians do tend to purchase vehicles that are bigger than what they need. It’s easy to fall into the, “what if?” trap.

What if I go camping? What if we have more children? What if I need to lug a 300lb bear in my trunk?

However, if you are able to purchase your vehicle outright, (in my opinion), you are more likely to purchase a vehicle that suits your needs.

Thanks for sticking around until the end! Before you think that I’m crazy. Imagine for a second how nice it would feel to not have a monthly car payment (and the interest associated with it). Imagine how nice it would be to not have to carry collision coverage because you don’t have a lien holder on your vehicle. Imagine not paying an arm and a leg for gas!

I know I would enjoy having an extra $400/month. How about you?

DIY Haircuts + A TV Obsession

 

When I started my frugal journey, I started by writing down all of my monthly expenses (rent, insurance, cell phone, etc.) and looked as to where I could cut trim the fat. Fast forward to now, and I’m looking our variable expenses (groceries, clothing, diapers, etc.). Coincidently, both my oldest son and my husband desperately need a haircut at the same time and I thought… Hey, I could give it a shot.

xander 1xander 2

This is the before and after picture of my son. We went to the store, picked up a $25 kit and gave it a go. Not pictured is the BIG patch that’s missing from the back of my son’s head from when he moved. But if I took anything from this experience, it’s that you can’t get better at a skill if you don’t try… And hair grows 😉 Plus, if I can cut both my son’s hair, that’s an estimated savings of $400 a year!

america unplugged

In other news, has anyone else watched America Unplugged?! I’m obsessed.

It’s a mini series on Netflix, (8 episodes), which highlights Americans who are living off the grid and have homes which are completely sustainable and self sufficient. The elaborate power systems, water systems and gardens that people have is incredibly inspiring.

With hydro costs soaring in Ontario, I can’t help but wonder what the long term savings vs up front investment would be to install solar power, or how reliant we are on grocery stores despite soaring food costs. Anyway, it’s a wonderful show for some self reflection and with 20 minute episodes, it’s a wonderful way to spend an afternoon 🙂

Happy Easter everyone!

Zero Waste

Trends come and go but environmentalism will always be in style – at least that’s what I hope.

I’ve always been very passionate about the environment. I recycle, abstain from eating meat, and if possible, always choose biking over driving. However, I’ve been increasingly curious about the “zero waste lifestyle”. I’ve finally had a chance to look into it and wow, what some earthlings are willing to do is pretty freaking awesome.

By no means am I advertising that everyone should immediately give up all forms of plastic, live off the grid and buy a goat. However, while learning about the Zero Waste lifestyle, I couldn’t help but think about how the habits the lifestyle is promoting, could save you hundreds, if not thousands of dollars.

Think about it. When one is committed to living zero waste, there is a lot of self reliance involved. Gardening, creating your own products (ex. cleaning, hygiene, makeup), purchasing clothes second hand, purchasing your food in bulk, etc. For God’s sakes, who in this day and age knows that you can make your own toothpaste out of baking soda and coconut oil?! I sure didn’t.

If anyone is still reading this; in which case… Hi! I really encourage you to watch the videos listed down below. It’s extremely thought provoking, especially from a financial standpoint to think… How much money am I throwing away on marketing, branding, distributing, etc.? And hopefully we can encourage better habits in each other!

 

 

Cut the Cord + A Coffee Alternative

There are countless articles online about people happily cancelling their cable, so I’ll make this brief… WOOOOOOHOOOOOOO!

Last night my husband cancelled our cable, Crunchy Roll account AND lowered our Netflix from 4 screens to 2, therefore saving us roughly $50/month. This is a huge deal because he’s been very attached to cable in order to watch NHL/NFL, so I’m incredibly proud of him. I really, really encourage you, (if anyone is reading this), to look through your monthly expenses and see where you can trim the fat. Entertainment is huge because I’m hoping our family can transition from the time we spent watching tv/movies to doing puzzles/colouring/stories/family walks/etc. instead 🙂

Here are some stats about television viewing in Canada:

  • In 2016, approximately 202,000 Canadians cancelled their cable from the largest seven providers, a number which has been rising since 2014
  • As of 2015 in Canada, the average television subscription cost $66.08… That’s $792.08 per year!

Also, a small confession… Since my second son was born about a month and a half ago, I’ve been going to Second Cup almost every day and spending $5.30 on coffee per day. That’s completely unacceptable with the amount of debt my husband and I have.

But I have found the holy grail of almond milk, caffeinated drinks so (hopefully), no more take out coffees! If you’re hooked on take out coffee, and are trying to kick dairy. This is totally for you.

And of course I buy the large size for $5.99/1.4L each because 1. Saving money and 2. I am very, very tired 🙂

Rome wasn’t built in a day and my debt sure won’t be gone in a day either, but I’m getting there 😉

Rewards Programs Aren’t That Rewarding

loyalty-rewards-cardsThere are very few absolute truths in the world; death, taxes, and everyone likes free things. This would explain why 90% of Canadians have loyalty reward cards, and a surprising 40% have at least 4 rewards cards! While it can feel great to see your points add up, and the bliss you experience when you can finally collect a reward – I don’t personally use them because I feel that the cost does not equal the reward. Here’s why.

Loyalty reward cards encourage consumerism. In my personal experience, loyalty reward cards encourage spending. This is particularly problematic because they encourage spending at one single location. Take groceries for example. I have heard people say countless times that they shop at X store because of Y benefits. But if you commit to this mentality – how likely are you to shop around for deals? Read flyers? Find the best price? You’re not.

The benefits typically aren’t that great and you can easily lose more money in the long run. From what I have seen on the Canadian market, the rewards you can receive aren’t that great and not worth the hassle. It can take months, possibly even years to see any sort of benefit. For example, with Shoppers Optimum points, you earn 10 points per dollar spent… However, for the first tier of rewards, you need 8000 points (aka spend $800), in order to save a measly $10. It’s just not worth it.

They’re often tied to credit cards. Full disclosure: I loathe credit cards. I have one in the event that I need to rent a car/hotel/parking/etc but they’re awful. I feel that even the most disciplined people can struggle with using a credit card correctly (ie paying it off in full and never carrying a balance) – which is why I personally feel that it’s better to ignore them altogether. Plus, who in good conscience can charge consumers 19.99%+? Pure robbery.

The “rewards” can change at any time without the consumer’s consent. Remember the Air Miles fiasco that happened a few months ago? In 2016, Air Miles realized that it was bad business having unpredictable liabilities as they couldn’t predict when consumers would cash their “miles”. To combat this, they implemented a rule that miles expire after 5 years… And Air Miles consumers collectively lost their minds. And even worse, a lot of people ended up with garbage they would not have wanted in the first place. Unfortunately, rewards programs can change without notifying the consumer which could lead to a headache later on.

All of this being said: I’m definitely not perfect. I have 3 rewards programs cards currently in my wallet right now. But personal finance is about progress and not perfection, right?