Stop staying poor

I recently read an article explaining why poor people stay poor, and was advised by this article that saving money costs money. I then continued to read about how this person lost their truck over a few hundred dollars. When I read further to find out that this person was running between two part time jobs, neither of which paid a hundred bucks a day, I found myself wondering, why in the world did this person think she could afford a truck in the first place?

A motor vehicle is a huge expense for anyone; the cost of the vehicle is just the tip of the iceberg. Add in the cost of gas, insurance, and maintenance, and it soon becomes apparent that owning a vehicle is an expensive luxury. Funny thing is, something like an old worn-out pickup truck might cost more month over month than would a new small car along the lines of a Mitsubishi Mirage. But then this line of logic would play into the whole notion of the cost of saving money, which misses the entire point. The real issue is, what was this person doing with a truck in the first place?

It's often the case that a person would feel insulted that I might suggest they should not own a vehicle; they see vehicle ownership as some sort of right. What has really happened is they've bought into the lifestyle marketing campaigns of the automobile industry that tell us we need to own a car or a truck. In fact, it's quite often the case that we're constantly chasing after different lifestyle dreams that are advertised to us, our lives become a disjointed mess, then suddenly, we believe we need to be chasing after two part time jobs in order to attain our dreams. In reality, the dreams aren't really ours, things are barely holding together and, unsurprisingly, a couple of unforeseen expenses undoes the whole "Rube Goldberg" machine.

What I suggest is that people take a moment to tune out the advertisers and take a holistic look at their life. I recommend starting with understanding the actual cost of owning a car. Some studies put just the cost of owning an average car at nearly $10,000 per year of after-tax dollars. If you believe you need to work at two part time jobs to own a car, the first thing to consider is whether one of those jobs will net you $10,000 after tax in a given year, the second is if owning the car is worth the hassles of that second part time job. To put this into perspective, if you're earning $11/hour, you'll need to put in 22 hours a week EVERY week of the year JUST TO OWN AND OPERATE a car. Even if you got the car for free with a full tank of gas, sooner or later these expenses will need to be paid if you actually expect to continue to drive. I ask you; is the second part time job really worth it just to have the headache of car ownership?

Perhaps it's better to abandon that second part time job, sell the car, and use the extra cash to invest in yourself. Growing numbers of people are living car-free, but it takes a big-picture view of your life. For example, you may need to relocate to a different city or find a different job. If you're in a relationship, it may mean making some short-term compromises. If there are children in the picture, there's all the more reason for you to start taking a holistic approach to life. There is no single easy solution, this is why it's critical for each of us to take a holistic approach to our own unique lifestyles.

I'm not suggesting anyone give up on the dream of owning a car forever; what I'm suggesting is that it will impede progress if one is struggling financially right now. Giving up on the car may allow one to focus on the better of the two part-time jobs, and perhaps that will allow you to develop a career out of it. Or maybe the time gained from leaving the less desirable part time job could be put towards self-improvement. It's all baby steps towards building a life that works. At the end of the day, recognize the car as a tool rather than an entitlement and necessary expense.

It really doesn't cost money to save money. What it takes is recognizing that saving money isn't be be-all and end-all in financial stability, and that taking a holistic approach to life is the solution. The money not spent on keeping that truck means a second part time job may not be necessary, which could mean time better spent at building a lifestyle that suits you and is one you can truly call your own.

Finally, if you find this blog post offensive, then you are looking to find offense in that which is not intended to be offensive, but perhaps feeling offended is the first step to your financial recovery and putting yourself in a position where you no longer consider yourself poor. It really is your life, nobody is in control but you. Make it the best life for you that you can.

The low cost of gas and our liberal government

When the price of gas was creeping up ever higher earlier this year, our government enjoyed an increase in tax revenue, as the tax they receive is based on a percentage of the overall price of the fuel. They could have provided us with relief by lowering those taxes and keeping their tax revenue stable, but they didn't; instead, they advised us to buy more fuel efficient cars, so I replaced my not-so-fuel-efficient Pontiac Grand Am GT with a fun and frugal brand new Nissan Micra SV. It's a brilliant little commuter, and an excellent choice for the frugal minded who still like to have some fun when driving. It's not just me; lately, I've been seeing gas sipping cars growing exponentially on our roads and highways: Honda Fit's, Nissan Versa's, Mitsubishi Mirage's, Hyundai Accent's, Ford Fiesta's, Chevrolet Spark's, in addition to hybrid and electric cars have exploded in numbers.

We listened to our government, and did what we were told. We're using much less gas and generating negligible amounts of pollution. As a result, the overall demand for petroleum has declined. When it came to electricity, rates went up when our demand dropped, but that's because this utility is a province-controlled monopoly. Not so with gas, and now we have gas prices that have not been seen in nearly 10 years. Hooray for us, our frugal choices should mean that we now have extra money to do things like take care of household debt, contribute to our retirement, or go out and have more fun by redistributing those savings back into the economy through theatre, restaurants, and other leisure oriented businesses. We Canadians should be able to reap the rewards of our collective frugality.

Not so fast! Our provincial leader, Kathleen Wynne, has announced that, since tax revenue has dropped due to low gas prices, her liberal party is exploring options to increase taxes on gasoline.

Now, one would think that government would have become more efficient over the past 10 years, but they have not. They have only become even more bloated and inefficient. This means that you and I will need to be ever-increasingly frugal in our choices just so government can continue wasting a lot of the money it gets. Waste in the form of gas plant cancellations. Waste in the form of two separate but very similar school boards. Waste in so many other ways, it would take several blog posts to go over them all. Someone voted them in, and it certainly wasn't me.

The provincial government of Ontario does not have our best interest in mind, so enjoy the low gas prices while you can. Just don't expect our government to make it easy to get ahead in life, unless you have a government job.

Happy holidays!

I admit, the reboot has been rather slow. Life's been busy. The good news is, I have a lot of things to write about, so 2015 will be a great year for Frugal Paul!

This is the time of year when a lot of us get into financial trouble buying presents for all the people we care about. That's why it's so critical to set a budget and stick to it. As difficult as that may seem, I recommend keeping the following in mind to help you stay on budget:

• Expensive gifts for people other than immediate family can make the recipient feel uncomfortable, which is probably not what you would want. Instead, purchase a bulk pack of inexpensive but nice quality gifts for those people. Holiday crackers are always a safe festive bet. Also consider discount books from places like Chapters, where there's plenty of good reads that cost less than $10. Multi-packs of items like decks of playing  cards can also make fun individual gifts.
• Go for quality, not quantity. Get to know the person you're shopping for. Are they a fan of a particular show? Sites like amazon.ca have lots of popular television show-related items in a wide range of prices. Remember, it means more to those you care about to show them how tuned in to them you are, rather than how much money you want to spend on them.
• If you're creative and have the time, why not make something for those you care about? I enjoy taking photographs and videos through the year of various family events, and some years I've brought it all together to create a DVD of memories. It's a gift paid for by my time and efforts throughout the year.
• Take your time when shopping. If you can't find just the right gift, then don't buy anything until you do. Spend more time getting to know the person you're buying for; talk to their friends and others who know them; you might find out something about them you never knew, and the perfect gift might come to mind. Buying a gift just for the sakes of buying a gift can often be a waste of money.
• Perhaps the person you're buying for is really nostalgic for a certain period. Nothing wrong with a used relic from that era that's still in great condition to bring a smile to their face!
• Sometimes there's a less expensive option; for example, the person may have expressed interest in an iPad, but they might be just as pleased with a low-priced Android tablet. Play it safe and get a gift receipt just in case, so if they really have their heart set on the more expensive option, at least you've contributed financially to their goal, creating a win-win situation.
• Thinking of getting someone a cell phone? Avoid the contracts at all costs, unless the recipient has explicitly expressed interest in this. Rather, find out who the recipient likes as a carrier, then get them an unlocked or prepaid phone for that carrier, and give the gift with no strings attached.

Keeping on budget is key to long-term happiness beyond the holidays, and giving gifts that really show you care rather than showing how much money you're willing to spend will make the holiday season a delight for everyone. I hope your holiday season is full of love and happiness, and if you can't have that, I hope it's at least free of regret and disappointment.

Frugal Paul reboot

It's been over a year since my last blog post here at Frugal Paul, as I explored other interests. However, as of late, I keep seeing stories come up in the media that I find demonstrate an incredible sense of entitlement and a complete lack of understanding the importance of keeping financial business in order. I am reminded of a much younger me.

I wasn't always frugal, and there was a time when I was terrible at managing my money. I didn't have much direction in life; I was working as a construction labourer here and there through the week, and worked as an overnight security guard at a local factory on the weekends. The factory wasn't in production during this time, but because there were huge boilers, they employed boiler room engineers to be in the boiler room around the clock. Usually after 3:00am, Gerry the boiler room engineer had completed his checks and everything was quiet in that sleepy town, so we'd pass the night having conversations about life. Gerry was around my father's age, but I could talk to him as a friend. I was becoming frustrated with always being broke and never seemed to make enough money. I brought this up to Gerry, about how unfair life was and explaining to him what I thought the problems were, when he told me I was living beyond my means.

At first, I was infuriated! I lived in the cheapest rent slum one-room apartment, I didn't own a car, I certainly wasn't buying nor eating the best foods, and it had been nearly two years since I had bought any new clothes. I was using an old Amiga 500 that didn't even have a hard drive and used a 2400 baud modem. I watched TV on a small black and white set. Then Gerry pointed out that I smoked, and that smoking was a rich person's habit that I couldn't afford. I couldn't believe what I was hearing; I should give up the one thing that brought me pleasure in life?

Finally, Gerry put it to me like this: Living beyond my means meant that I was spending more than I was earning. One way I could help this situation was to give up smoking. Another thing I could do was to increase my income. If I believed I had done everything possible to reduce my expenses, then I had to look for ways to increase my income.

I was already working 7 days a week, and when I wasn't working I was looking for work. I was good with computers, but I couldn't seem to get a good job. That's when Gerry told me that I need to prove to potential employers that I knew what I claimed. Gerry related to me his own story of being poor, finding a way with being frugal to become educated as a boiler room engineer and how he'd study while working at a low paying menial job, and how he succeeded in becoming who he wanted to be. Up until then, I had no idea that people lied on their resumes. It wasn't enough that I could tell an employer I could write computer programs, I had to have a diploma or certification of sorts from an accredited institution to back up my words to get a job as a computer programmer. Up until then, I thought of school as a place people went to learn new things, but using school to demonstrate skill and knowledge was a new concept.

That marked a big turning point in my life. That's when I realized I had to invest in myself and live a frugal lifestyle in order to live better and happier. I calculated the cost of going to college for 3 years and estimated the amount of student loan money I would need, then I compared what I was then earning to what the lowest paid computer programmer would be paid. It was a significant difference; I would easily double my annual earnings. If I continued with a frugal lifestyle, I would have the student loan paid off in just over a year. It was both amazing and empowering, and it really did work out.

I'm going to reboot this blog because it's clear to me that there are too many people who are just like I was, and I want to help them just as Gerry helped me all those years ago.