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?

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?

An Argument Against Toddler Birthday Parties

birthdayRepeat after me: Not choosing to hold a birthday party for your toddler, does not mean you love them any less. It does not mean there will be a horrible void in their childhood. It does not mean you are a bad parent.

My son’s second birthday is fast approaching and after numerous conversations with my husband, it really doesn’t seem like we’re going to be hosting a birthday party and I am sick of being guilted into feeling like I am a terrible mother for making this decision.

First of all, it is not uncommon for parents to spend hundreds of dollars on a birthday party. This is completely absurd considering 48% of Canadians live paycheque to paycheque. It’s not as though this is on purpose either. But when you factor in the costs of possible venue, activities, food, cake, presents, goodie bags (don’t even get me started on goodie bags) – how do parents stand a chance?

And think about it. I recently attended a birthday party for a one year old that her mom went above and beyond for. It was Strawberry Shortcake themed, the food was lovely, there were lots of balloons for the kids to play with and you know what the birthday girl did for 80% of the party?… Sleep. Even if she was awake the entire party, she wouldn’t remember it but instead children remember how their caretakers made them feel overall. That they felt loved, secure and cherished.

Finally, I have to ask: are birthday parties at such a young age really for the kids? Or are they for ourselves to a certain extent? If you have birthday parties for ages 1, 2, 2.79 – whatever, and it works for your family and makes you happy – that’s great! I just want you to ask why. Is it societal pressure? Social media? Because it’s just the thing to do?

This isn’t to say that when my son’s birthday comes, I’m going to ignore it. We’ll celebrate in our own way. By doing what he wants that day, (yes, even if that means 5 hours of watching Paw Patrol…), getting cupcakes and showering him with love and attention. The point of this is to say that parenting involves a lot of hard choices and in this case – I choose financial responsibility.

Buy Nice or Cry Twice

As of today I am 36w1d pregnant with my second little boy so I am expected to give birth… In another 8 years, or so it feels like. Since my due date is getting scarily close, little man and I went out today to get a breast pump!

january-5

I’m pretty frugal when it comes to most things for children. Clothes, books, even some furniture can be bought at consignment stores for significantly less than retail price and still be in fabulous condition. However, there was something about making the leap and buying a second hand breast pump on the Buy/Sell page that I kept thinking, “I should hold off” and “something tells me I need to look into this more.”

An excellent explanation I found was:

“In an open system, the pump’s motor can be exposed to your milk. This is important because the milk that is unintentionally drawn into the pump can often go unnoticed. This can result in mold growth and transmission of viruses.”

“A closed system breast pump is designed to keep every drop of your expressed milk away from the pump’s motor and into your collection container. This decreases the possibility of mold growth and infectious particles. Closed system pumps are considered more hygienic because they have a barrier, such as a filter, which catches any milk before it reaches the pumps working parts.”

Ultimately, I ended up picking up a Medela Swing Breastpump which is an open system pump and designed for one user. (There was even a warning notice in the box!) But the main thing I have learned from this experience is when it comes to anything regarding hygiene or where infection/disease could possibly be transmitted, do your research. Sometimes frugal isn’t always best.

RIP $248