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Peter's site
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www.MadmanPierre.com
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Living Well, Cheaply.
My wife and I have had many years where, because I was doing everything I could
to get one or more companies going, we had to live personally 'on the cheap'. And
then, when we did have significant disposable income, we wanted to donate a very
large portion of it to charitable causes that we volunteer for. (Please note: Do
not call me to add your charity to the list we donate to. We choose to donate to
a small number - less than 20, and donate heavily to them. And we do not add any
more to our giving unless we first have volunteered there for some time and have
gotten to know the organization very well and trust it. If you want your charity
to be considered, you may send us a letter or an email, but all phone solicitations
will be turned down without exception. and indeed, ones that phone us are less
likely to be ever put on the list than ones that email (cost effective) us. Ones
that mail us are in the middle, we are concerned that they are wasting money by
doing a mailing, but at least they are distrurbing us while we are trying to eat
or have family time/dinner, so we'll consider them.)
Whether you are trying to live on the cheap so that you can donate the rest, or
whether you are trying to live on the cheap because your income is low, or whether
you are trying to live on the cheap so that you can build up a nest egg to last
you through your retirement years, these are
some tips that may assist you. If you
think that there is no reason to live on the cheap - please don't waste my time
by emailing me and telling me I'm wrong to try to live on the cheap (Yes,
people have actually done that, I just erase their emails). Instead, just grin at
how much smarter you are than me and enjoy spending your money. (Of course, if you
need to, come back and read this page in a few years.)
These are all tips that we (my family) do use now, with a few
exceptions which are tips that we can't use anymore but can still work for other
people in the right circumstances. Some will work for you, others (like buying suits
etc.., in China) probably won't. But if a few help you, that would be great! Consider
donating half of your savings to your favorite charity, and keep the other half
for yourself, that would be a great way to repay me for the free advice. (Note that, because you
will get a tax receipt, you will actually get to keep more than half for
yourself this way.)
I buy almost all my clothing and many household goods in two ways:
1. We buy from stores like the salvation army stores, thrift stores etc.., While
many people have a stygma about buying second hand, we don't!
2. We buy a lot of clothing while on business trips to places like China and such.
This is particularily effective if you are going two or more times to the same location.
The first time - just scout out and find out what the prices are. The second time
- you can buy with confidence knowing what the right price is. And, in Canada, we
are allowed to bring a large amount back without paying duty - just be sure to keep
an accurate list so you can report when you reenter the country.
3. Buy in the wrong season. By Summer wear in the Fall, buy Winter wear in the Spring,
when prices are the lowest.
Between the first two, we probably save 80-90% on our clothing. Yes, we spend only 10-20%
what other people pay, and we don't look like we are live in poverty.
Buy things in downturns for use in the upturn. For example, in the 2009 recession,
there are/were excellent opportunities for buying real estate in North America and
around the world. And some of the resort areas, like Costa Rica are some of the
absolute best deals now. Buy low...sell high. Or, just, buy low and enjoy!
Buy with discounts. Buy your gas from Superstore or similar, where you get cents
back on your gas, use your Airmiles card, use your Safeway card (but make sure that
the items at Safeway, with the discount, are actually cheaper than at your alternate
purchase location). And btw, one of the best things about Safeway is they put in
what your cost per oz, per gram, per can is on the price tags, so you can easily
figure out which item costs less. That way you can tell whether one size is better
value than another, or which brand is your better option.
Buy generic brands wherever you can. 9 times out of 10 the generic food items taste
just as good as, or better than, the brand names. Figure out which are are the
9 for you, and
buy those. Then, for the 1 in 10 that you really don't like the generic - buy the
brand name you like.
Look ot the items on the top and bottom shelves. Typicially the highest profit margin
items
are at eye level and the best value items are up high or down high or down low. Simple marketing
techniques, but now that you know, you can at least take the effort to look
up or down to see if they are better.
Wash clothing in cold water. Don't pay for unnecessary gas or electricity. Air dry
your clothing as much as possible, cheaper than paying for the heat. When buying a house be aware than gas for cooking, drying clothing and water heaters is much cheaper than electricity. In the Calgary/Airdrie area, our local ELECTRICAL company says that gas costs 15% of electricity for those purposes- and the gas supplier agrees
Wash your car at home, instead of paying for a carwash.
When your kids are the right age - encourage them to get a job at a location that
you already shop at and spend a lot of money at and that you can
get a significant discount at. For example, if one of your children works at Walmart
- you can save 10% on virtually all purchases - including groceries. I wanted one
of my kids to work at Home Depot until I found out they were only given a discount
on one purchase a year and that purchase had a limit as to how much it could be
- I got the same benefit by getting a home depot card, no need having one of my
children work there!
Don't eat out often. This is a major expense. Learn the art of cooking! There are
many quick and easy recipies. When you do eat out - use a coupon
book and go to the resturants that give you 50% off. Or eat on on Tuesdays at a
resturant that gives a discount on Tuesdays. Eat out at lunch time, often you can
get nearly the same sized meal for less at lunch
Brown bag it to work. The cost of buying lunch every day, even a "cheap" lunch,
is extremely expensive. In the more than 25 years I've been in the work force, I've
brown bagged it all except for maybe 50 days. And I feel guilty for having wasted
the money many of those 50 days. The time to eat out is when your company is paying for
it, or another company is paying for it.
Since I own the company I tend to avoid
even that, but for most reading, that won't be a factor. Since I own the company:
I love, when travelling, to get my hotel within easy walking distance of a Costco
or Safeway. That way I can brown bag it when I'm on the road. If you have an expense
allowance - don't waste it - brown bag it wherever possible when travelling and
pocket the allowance. If you are paid based on direct expenses, well, I guess then
you eat out on the road and get your need to eat out out of your system. Just don't
get used to it such that, when you are back home, you are in the habit of always
eating out. Or, brown bag it and gain favor with
your boss!
Don't buy packaged foods (like TV dinners etc..,) While this is more cost effective
than eating out - it is still a very expensive way to eat. Learn the art of cooking.
It is easy, doesn't take much time and, as I said above - there are many
quick and easy (and low cost) recipies.
Forgoe your daily coffee from the coffee shop- do you know how expensive Timmies
& Starbucks are? Learn to brew coffee or tea yourself - I'm told it really isn't
all that hard - and you will save a TON of money. Some people spend more on coffee
per week that it costs to go out to a nice restaraunt. And many of these people
are ones I hear complain that they never have enough money or complain that people like me are lucky. $1.50 to $3.00 at a
time is a LOT of money, when it is spent several times a week, or worse, a couple
times a day. $3.00 20x's a month is $60. If you are at the 50% tax bracket - you
have to earn $120 to pay for that habit. And if you are not at the 50% tax bracket -
and you have bothered to read down this far - you know you shouldn't be
wasting that much. I have to admit however, I do buy one about every 2 months, so I can't say I'm perfect in this department.
Buy in bulk. Buy items that you already use when they are on sale. You may say "I
can't afford to, I can barely afford to buy the food we eat now". Well - when there
is a good sale on, say Ketchup, buy 12 bottles of ketchup. Then, when there is a
sale on pasta, buy pasta. Eventually, you'll have a full larder, and then you just
buy when you run out of one item - always watching for sales to replenish.
Buy half a cow (instead of individual cuts.) For this you obviously need a freezer.
A chest freezer is typically cheaper to operate because the cold doesn't leak out every time
you open the door.
Eat in season. Buy corn in August, buy apples in September, buy mandarin oranges
in December and so on. Adjust your meal planning based on what foods are in season.
Don't try to eat raspberries in March. You can get them (I saw them yesterday in
the store) but wow, what a price. In a similar way - don't eat beef in Mexico - eat fish, don't eat fish in Calgary - eat beef. Buy the foods that are locally cost effective. And besides, the fish in Calgary don't taste very good after waddling over the Rocky mountains.
Buy on sale. As long as you are careful not to buy the more expensive items,
buying on sale is a great way to menu plan. If tomatoes are really cheap this week
- base your menu on tomatoes, if celery next week, then base it on celery. This
means you have to be creative and flexible on your meal planning, but again, it
can save a lot of money.
Buy nearly stale dated. I love hot crossed buns, but I typically only buy them when
they are 50% off. The trick is, you have to eat them that day or the next because
they are close to their stale date. But if you can - you save 50% on the cost. Great
way to buy bananas for making delicious banana bread too!
Grow a garden. This one may or may not be for you. The biggest 'problem' with this,
is that your potatoes are ready at the same time that potatoes are cheapest in the
store. So I prefer to do this for items that I really like fresh, like lettuce,
radishes, beets and tomatoes, where, while it is clearly cheaper than the stores,
the biggest benefit is the better taste.
We use our bread maker, slow cooker and rice cooker for all kinds of meals. Speaking
of which - rice, potatoes and pasta, in that order, are some of the cheapest meal
bases you can have. For several years my wife fed our family of 6 spending less
money that the Alberta Government indicated that it cost to feed a family of 2.
This means we were able to feed ourselves fine (I am and was significantly overweight) at
a level that was way below the so called poverty line. And we didn't suffer
- we enjoyed those meals!
Buy a Vitamix (no I'm not paid to say this). It 'pulverizes' food rather than chopping
it. This lets you put in apples with the core, oranges with most of the white. You
can create delicious, nutritious fruit smoothies for extremely cheap - and the labour
is tiny too with the Vitamix. (I used to use blenders, but they chop the seeds,
the don't pulverize them, and the seeds stick in my teeth.) You can quickly make
low cost, healthy fruit juices, soups, gravy and more. Note that my $3 smoothie
is equivalent to three $6 fruit smoothies ($18), at a popular fruit juice bar (hit:
Jugo is the Spanish word for fruit.)
Here's a counter intuitive one: Buy a gas guzzler, don't waste your money on a hybrid
or highly fuel efficient car. None of the hybrids or highly fuel efficient cars
at the time of this writing are cheap. I have done various calculations through
the years. One I took the difference in price between the really fuel efficient
car and the second hand gas guzzler I was considering buying. I then looked at the
cost of the interest on the difference in the price (interest I would have to pay,
or if I bought the car with cash - which I always do, the lost income that I wasn't
going to generate with that money.) The lost income/interest I was going to have
to pay was MORE per year than the amount of money I was spending buying gas at $1.10
per litre. That meant I was going to have to drive twice as much to save money!
Also look at the capital depreciation per year and the higher maintenance (including
battery replacement) for hybrids, makes the gas guzzler look even better. So, my
better plan: Find a job closer to home, or take transit and drive the cheaper car
when you need to.
Never ever have a running balance on your credit card. Ever. I'm not going to go
over
the detailed calculations, but suffice it to say, that paying even 1 day late is
extremely expensive. If you can't pay in time - don't buy it.
Never ever buy anything with a loan unless it is EARNING you money. Yes I make an exception for a house, but I do
so begrudgingly and only if renting is more expensive than ownership - run the numbers with your calculator, not with your heart.
If you can't afford it today - wait. And don't be fooled by once
in a lifetime sales. When you have put the money away for your purchase, if you
are willing to buy sometime in a 3-6 month window - your item will once again be
on sale for a once in a lifetime pricing, and now you can buy it with cash.
Buy (on ebay) a big white roll down screen and a projector and watch movies at home. Or if that
is too much cost for you, just watch them on your TV. If that doesn't cut it - go to
matinees, if you live in a big city, see if there are movie houses in a town next
to you, you may only have to drive 20 minutes to save half or more of the cost of
a movie. Yes, this means you may have to watch the new releases 2 or 3 weeks after
they came out. But if you aren't a movie critic - what does it matter if you see
it 2 or 3 weeks late instead of on the 1st day, if it saves you half the cost? (OK,
I know I've lost a lot of people on this one, but if you've followed all my other
advice, I guess you can waste a little money - I wouldn't, but that's me.)
If you are going to spend time and effort trying to find the ways to save money.
Here are some suggestions:
1. Look at expenses that you spend month after month. Like heat, water, telephone
(do you really need all those options?), food, vacations, insurance, vehicle gas.
It may not seem worth spending the time figuring out how to save $6, but if you
save $6/week that is over $300 per year and you have to earn somewhere between $450
and $600 to pay for that $300. Is it worth $450 of your time? Yes! And that is,
in some cases, $450 every year for the rest of your life!
2. Spend time on the big expenses, like buying a car or a house. Some people will
spend more time deciding what to eat at a restaurant then they will in deciding
what is the best house for them! They get "tired" of looking and buy out of frustration.
They don't want to "waste the realtors time". But this is your money you
are spending.
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© COPYRIGHT 1996-2009 ALL RIGHTS RESERVED Peter Horwood |