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.
January 17, 2013 at 10:37 am
The first and last writers resonate with me. We’ve seen our grocery budget balloon too and we try all sorts of ways to keep the costs in check (bulk purchases, sales, coupons, change the meal plan!).
In the summer, we have our own garden so that saves on the grocery bill itself but there are costs associated with growing a garden. In our case, it was our first garden at this house so building it took time and lots of soil, manure and mulch. This winter though we’ve noticed much higher prices on certain staples. So we adjust the rest of the budget as a result. Sigh.
As for getting great rates on investments, it’s very possible. We have a great financial advisor and we meet with him several times during the year to review what we are doing and adjust our strategy if necessary. We have money that we put aside for emergencies and know we need access to it so it tends to yield lower interest. We have a large percentage of what we save meant for long-term use so it’s in a much riskier mix of investments and that’s where we see great numbers. Even when we average our high risk with our low risk, we see a nice averaged return. It took time to learn about investments, how money works, and also to find someone we can work with. He provides advice and we still do our own homework and we make decisions we can sleep with – no laying awake at night doing sums in our heads, wondering how it will turn out.
January 17, 2013 at 10:45 am
I know how J feels; the grocery part is the most difficult part of the budget to control. Prices seem to be skyrocketing these days; I see prices on my regular stuff jump by $1.50 from one week to the next. However, $57.50/week is low for each person, and she may have to revamp the grocery line. Also, as the kids get older, they tend to eat more.
For E: there are restrictions on how much can be contributed to a RESP, so you can’t open one without letting the parents know. I will soon have a grandchild (the first) and I plan on giving my daughter an amount per year to deposit into the RESP; that way, she can control where it goes in the RESP and get the matching gov’t grant.
“Curveball” I like that designation; I also have a line for that; think I’ll change the name.
January 17, 2013 at 11:05 am
I can totally relate to the writer asking about investments – I’m so risk adverse that I wind up doing nothing other then socking money into a daily RRSP interest account…really need to do some work here and educate myself.
January 17, 2013 at 11:15 am
I was pleased to read Gail’s response to J who feels guilty about dining out. I’ve been quietly coaching myself to be relaxed about spending extra money. Once bills and savings are taken care of, there is no reason you should be a scrooge when you are young.
I don’t know others feel, but the debate about debt today has spilled over a little into making people feel guilty about all sorts of discretionary purchases. Personally, if you have things under control, you should be welcome to spend on whatever else you want with extra money, whether its lattes, or concerts, or dining out, or mountains or clothes or stereo equipment.
I also think nobody should worry about how much for any one of those things. It’s fine to get a full picture when are first budgeting, but if magazine subscriptions bore you and buying coffee in the street doesn’t, it shouldn’t matter if you buy a lot of coffee. Stope the comparisons. Those lead to more guilty feelings.
Just make sure your savings and fixed expenses are all taken care of, and don’t borrow.
January 17, 2013 at 11:25 am
Just about paid off one Visa Card and am looking at the second. Here is my dilemma. I have a 0% interest offer for 5 months. Should I use this to pay off the one card and work to clear the balance over the next 5 months. (Totally do able before the offer expires). I know it seems like a no brainer, but my problem is the 0% offer is with the same bank. The fine print says I can’t balance transfer. I was going to have my hubby write the cheque to me. Cash it and use the funds to clear off the second card. If the bank doesn’t accept the cheque at 0% I risk having the interest go from 11% to 19%. Anyone have any thoughts out there. Gail I love your books and follow you regularly. Hope you come to Victoria.
January 17, 2013 at 11:31 am
I love Gail’s overall message that many of these decisions about expenditures are personal and come down to prioritization. There is often no right answer, just what’s right for each person.
In terms of groceries, it’s really hard to give $ amounts given that costs vary so much from place to place. There are some great resources out there for getting your grocery costs down, and they all come back to shopping specials then planning meals, stocking up on specials that you use regularly, using what you buy, buying seasonal produce, and making meals from scratch. The difference can be astonishing. If you are growing a garden, I recommend Swiss Chard. It’s still growing – even after snowstorms (southern Ontario).
And finally, a great big thank-you to Gail, again, for that “must spend” account idea. Five years after you gave me that advice, I finally put it into practice.
January 17, 2013 at 12:22 pm
When are you coming to Ottawa, Ontario??? I would LOVE to meet you at a book signing or conference or or or or or
January 17, 2013 at 1:01 pm
I can relate to J’s comments on rising grocery prices.
We are a family of three adults and I am always looking at ways to cut back on food costs. Gardening has helped. Living on the West Coast, we have been able to grow lettuce, kale, swiss chard late into the fall and early winter.
Meal planning has helped control the amount of money we spend on food.
Nearing retirement, we are in a similar position as D. We are tracking our costs closely to live within our pension income.
January 17, 2013 at 2:51 pm
Lisa, From your message. Would your husband be writing the check from the new credit card, and then you would pay off the old credit card with the money? If that is the case would read the fine print, when using the cash advance checks for anything but paying off the balance of the credit card you usually null an void the promo rate, in fact the interest rate kicks in immediately and higher than standard rate.
January 17, 2013 at 10:58 pm
I’m glad that you explained where you get the 5-8% rates. People don’t really consider how much rates change over time. I save right now more for the habit than the interest.
January 18, 2013 at 12:04 am
I like it when individuals get together and share ideas.
Great website, continue the good work!
January 18, 2013 at 7:58 pm
@lisa – I do that often…or used to when we carried a balance. The cheques we got were from Rbc and you can write them to you to use for anything not just balance transfers. My husband would write it to me, I’d cash it and use the cash for whatever I wanted (to pay off anything I needed to). Hope that helps
January 18, 2013 at 10:18 pm
Gail, I especially enjoy these blogs, when you post and answer questions. What I wouldn’t do for swiss chard right now! It’s far too rainy here where I live, but there’s a new opportunity at work to get a share (or half share) of fresh, locally-grown producer once a month for either $19 or $29US. I was absolutely happy-dancing when the announcement came out; and the producers deliver to our job site!!!
I will be taking advantage, half-share at first because it’s just me and I don’t want to waste. Though I’m thinking I could always but a share and divide it with a friend. Just to have fresh, locally-produced, veggies and fruits in the middle of rainy winter here makes me happy!
And…it fits into my budget! Hooray all around!!!
January 21, 2013 at 4:06 pm
@ Crystal – I’m pretty sure as soon as you write a cheque off your credit card account it counts as a cash withdrawal, and starts accumulating interest immediately. Unless it stated otherwise, and pretty clearly, this is standard practice. Just like you don’t get points or reward miles for credit card cheques (as you’d just write it to yourself if you did).
January 22, 2013 at 12:26 am
@geoff, yes it is counted as cash advance and interest will start accumulating right away. however in this case, it is ok since it is a 0% offer.
@lisa make sure you read the fine print if there is an administration charge of 1% or the total amount, as they usually charge that nowadays.
April 28, 2013 at 10:40 am
$1150 a MONTH for a family of five, with three small children? That is a lot! I’m in Ontario and my grocery budget for 6 people (2 adults and 4 kids, ages 2, 4, 6, and
is $130 per week. And unless the “stock up” sales are really good, I tend to come in around $115-$120. This is shopping for ingredients to prepare meals but includes breakfast cereal, copious bags of milk, yogurt, fresh meat, produce, dairy and diapers, pull ups, H&B, paper products, cat food, litter – everything. Shop the sales, take advantage of stores that price match, use coupons where you can (if it will save you money) and cook at home – frozen dinners and the prepared items are NOT healthy for either your body or your wallet!
I’m not “holier-than-thou” about budgets or grocery shopping, but I’ve been there, done that, and now have the tools and experience to see how much can be saved by taking the time to do the prep work. We’re a one-income family so constantly re-working the budget and being flexible is a must to keep our household running semi-smoothly.
I know that grocery prices differ depending on what you buy, where you live and where you shop, but there are always ways to get creative and bring those costs down – I am there and doing that
April 28, 2013 at 10:41 am
Not sure what I did to get the cool smiley, but that should have been 8 – the kids are 2 4 6 and 8.
Sunday mornings are not made for thinking or typing, apparently!