This & That: Life’s Little Questions Edition
Posted by Gail | Filed under This & That
J Wrote: My budget balances but I’m struggling with the grocery budget. We are family of 5 (2 adults and 3 children (3-5-7 years old). Last year we were spending $900 per month but this years $1150. I was wondering are we eating too much or has the price of groceries really increased? Do you have information on what’s a realistic budget for grocery?
Gail Says: Food is one of the areas where we have seen substantial increases in costs. I don’t have any numbers for “realistic grocery budgets” because every family and every part of the country is different. If you are conscious about how you’re spending your money, that’s #1. When you break it down your $1150 works out to $57.50 per person per week. That doesn’t seem like a huge number to me, particularly if your “grocery budget” includes things like laundry soap and shampoo (and everything else in those categories). As for if you’re eating too much, only you and your scales can answer that question.
N Wrote: Currently I own a big house that I am planning to sell it and buy instead a smaller house. Is it wiser to sell first or the other way around? I am getting a lot of conflicting advice from friends alike. Your prompt and professional advice is much appreciated.
Gail Says: If you buy before you sell what will you use as a downpayment? If you have to carry two homes because your home takes longer to sell than you thought, could you manage on your current cash flow? If neither of these things makes a difference, buying first means a smoother move. If either of these things puts you at financial risk or makes you pay more in interest, you have your answer.
S Wrote: Gail, wondering if you have time for a bit of advice since my crystal ball isn’t working. We bought a big new home before we had our daughter and as having kids tend to make you do, we have adjusted our priorities. In order to get ahead with our retirement fund AND be able to enjoy ourselves with current priorities (travel, not living cash strapped) do you ever recommend downsizing your home as a well as living expenses and debt? I have friends who have done it and it made all the difference in the world to them. It is really hard to let go as this was the house we bought to raise our family in. Appreciate any advice!!!!
Gail Says: Life is about making choices. You choose a big house, you forgo some other stuff. You want that other stuff, you forgo the big house. Since it’s your money and you get to choose what you do with it, I would never presume to tell you, as long as you’re not going into consumer debt because you’re dumb enough to spend money you haven’t yet earned. So now you have to decide what’s more important and what YOU will CHOOSE.
E Wrote: I am considering starting investing in an RESP for my 1 year old nephew so I have been reading up on the basics regarding this savings plan. I’m not sure if I should tell my brother and sister-in-law about this or not. On one hand, it may be a terrific surprise in 17 years and that would be exciting. On the other hand, they may benefit knowing this because it may take away the financial burden of struggling to save for their child’s future education and they could use the money for other things! I am 40 yrs old, have no kids and no debt and would just like to invest money creatively and smart and could use your advice.
Gail Says: You can’t surprise them, sorry. First, you need his social insurance number. Second, as soon as you make the contribution, they’ll be notified since the government wants to avoid “overcontributions.” It’s a lovely thought and you’re a wonderful aunt. Share the news with them. Keep in mind that the money is technically yours until the day it’s converted to use by your nephew.
L Wrote: When using your Jar Budget, should we strive to have a $0 in the line Income-Expenses, and if we don’t and it is a Plus, do we consider that savings? Thanks so much, this budget actually works so well and is fairly easy!!
Gail Says: If you have a positive you can allocate more to savings (build up that emergency fund faster), or start a Curveball Account to deal with those things that smack you in the face and wallet unexpectedly. I love me my Curveball Account. I keep it in my chequing account and eliminate the need for overdraft protection.
P Wrote: I purchased The Gail Way and I have completed the Spending Analysis and have now started to work on my budget. I just need to ask when entering our incomes do I put our total salaries under the Budgeted column and then enter under each month what we actually earned?
Gail Says: Yes. Since some people have fluctuating incomes, the budget worksheet let’s you adjust your income monthly. Let’s say, for example, that you were receiving a commission cheque next month, you would be able to put in the extra income. If your income is always the same, you can just copy the total income received from month to month so you don’t have to manually enter it every month.
D Wrote: My husband and I make $3,200 per month with our pensions. We have investments that we have never drawn on. We have no mortgage or car payments. On paper, we should be able to live comfortably on my husband’s pension of $2,000 monthly. My pensions are put away and used for larger expenses like car insurance, home insurance and property taxes and travel. However, although, on paper, it shows that we can do this, in practice, we can’t. More money would be a help, but that isn’t possible without drawing out monies from our investments and we don’t want to do that. What are we doing wrong?
Gail Says: Either you haven’t made a realistic budget or you’re not tracking what you’re spending so you’re over-spending. For the next month, write down every penny you spend. EVERY PENNY. Then look at where the money is going. What are you spending on that’s NOT in your budget? Is your budget realistic? What are you going to change?
J Wrote: Might be a strange question here. I am 40, no debt at all except for about 4 years left on my mortgage, good amount of savings and investments, some nice toys that are paid for, all the right moves have been made after screwing up in my 20s financially. I feel great about my life…good job and great credentials. Somehow though…I find myself feeling “guilty” for dining out once a week, or going out for a few drinks with friends. I can afford it and then some. I wonder if others who have pulled themselves together find that it’s difficult to get past the mistakes, and enjoy when it’s actually warranted? hmmmmm..
Gail Says: Being financially responsible means you’re always weighing what you’re spending your money on. Sometimes we take it too far because we just can’t shut our brains off. One way I combat this is to put a Pleasures line in my budget and allocate a specific amount I MUST SPEND every month on having fun or pleasing myself. I still think about how I’m spending this money but because it’s a MUST SPEND designation, I find I don’t get as blocked as I did before I had the line in my budget. Try that.
K Wrote: What are your thoughts on temporary work? I have been employed at a placement, through a temporary agency, for 3 years. I am considered an “elect to work” employee. Do you feel temporary work can be sufficient in society today, or do you feel the security of a permanent placement would be better? My husband and I have one son, we are working on our debt, we have a mortgage and two car payments. We are trying to prepare financially to have a second baby but between the debt, job situation, car payments, plus a second baby expenses I am feeling a bit unstable do to my temporary job.
Gail Says: Temporary, permanent, one job, two jobs, three jobs, the world has changed and so we have to change how we work. If the temporary work suits you, stick with it. If you’re wishing for more security (and, really, is there ever any security?) then look around for something that better suits your needs. This is a completely personal decision.
C Wrote: First: I think you’re awesome, I love you show and the way you teach! Second: I’m 26, just purchased my first home (20% down), paid off my student loan last year, own my car (bought with cash) and have no debt, and I have done this all with a modest salary. I listen to all that you say, and implement all your tips. I’ve been watching you for years. My question is this. I would like to start saving for retirement by starting an automatic RRSP contribution. For now I will be adding $100 bi-weekly (I’ve used your budget sheet to create this amount). I’ve scoured your site, read many of your RRSP posts and hear on your shows that you should be getting around 8% return. WHERE ON EARTH DO YOU FIND THESE RATES? I’ve never seen anything higher than 5% from banks and other savings institutions….am I missing something?
Gail Says: When I quote a number like 7 or 8% in a low interest rate environment, I’m not talking about a single investment’s performance over the short term, but rather the portfolio’s performance over the long term, assume a mix of fixed and growth investments. Starting with just $200 a month, you’ll have to decide on whether you want to pile some money up in a high-interest savings account (inside the RRSP) or whether you’re going to dollar cost average into a mutual fund. You must understand what you’re buying before you get involved in anything other than fixed investments. Don’t let anyone talk you into buying into something you can’t explain to a 12 year old.