Most frugal people try and avoid lifestyle inflation for as long as possible. They bank their raises, live on a single income, and try and save money wherever they can. Keeping up with the Joneses doesn’t even enter their vocabulary.
But what happens when they receive a gift that forces them to upgrade their lifestyle, whether it’s through recurring monthly charges, purchasing accessories, or taking up a new habit? Let’s look at a few examples:
7 Gifts That Keep On Taking
- HD Receiver – Congratulations and welcome to the wonderful world of high-definition television. Oh by the way, to access any of these new HD channels you’re going to need to cough up at least an extra $10 per month on your cable bill. You’re welcome.
- Blu-Ray Player – Technology is great isn’t it? You just finished replacing your massive VHS movie collection with the latest DVD’s, and now here comes the Blu-Ray. And at $34.99 per movie those frugal date nights at home aren’t looking so cheap after all.
- Home Brewing System – Really? That’s what a coffee pot is called now? There’s the Tassimo or the Keurig system, which brew delicious single cups of your favorite hot beverage. At $12.99 for 18 cups, I hope you enjoy your new latte factor.
- iPad – Apple comes out with the products that you didn’t know you could live without until you see them. If you’re lucky enough to receive this neat little time waster for a gift, make sure to say thanks for the extra $15 – $35 per month data plan that comes with it.
- E-Reader – Ok I get it, newspapers get your fingers dirty, staring at your computer screen hurts your eyes, and it’s tough to lug around 10 hard cover books with you on your beach vacation. So someone buys you a Kindle. Great, now get started on that e-book collection at $10 a pop.
- Satellite Radio – Your local morning radio isn’t as funny as it used to be. And who wants to listen to all of those ads anyways? Satellite radio lets you pick the stations you like and listen to commercial free radio all the time. Win-win right? But at $7 – $20 per month you might be better off giving the gift of music through a thoughtful mix tape.
- $20 Gift Card to Chez La-De-Da Bistro – Your heart was in the right place, my wife and I needed a nice evening out at a fancy restaurant. But come on, $20 won’t even pay for the tip let alone the escargot, steak & lobster, and bottle of wine. By the way, I hope you’re babysitting too because your $20 won’t even cover that for us.
Before you decide to get one of these fine gifts for someone you care about, think of the extra costs that the recipient will have to incur because of your generosity.
If your adult children are struggling to make ends meet, springing for a Blu-Ray player isn’t going to help them.
And if your friends are staying home and eating Kraft Dinner every night, maybe they can’t afford to be going out to a fancy restaurant.
These gadgets are fun and all, but for the most part they are luxury items that should stay on your wish list.
This is a guest post by Helen, an avid online shopper who prides herself on finding the best deals.
Every New Year is a new chance to break some bad habits. For me, right after nail biting and procrastinating I think my worst habits involve my finances. That’s why this year, instead of making an empty vow to go to the gym, I’m going to set some realistic goals to improve my finances this year.
Take advantage of Sales, Discounts, and Coupons
All the women in my family did it, and it’s time I quit being lazy and become my mom. At least when it comes to clipping coupons. We get coupon circulars all the time and I usually just chalk them up to junk mail. But I really should pay more attention. I generally buy things on sale anyway, but I imagine if I took the time and effort to routinely clip the coupons for products I need then I could save even more money. 30 or 50 cents off of anything may not seem like a lot, but it does add up. It always just seems like too much of a hassle to cut along the dotted line. But hours spent with idle hands in front of the TV could easily be passed with a pair of scissors and a stack of flyers. This year, I’m going to turn my time into money.
I’m also going to take better advantage of online discount codes and seasonal deals (like after Christmas sales). These are not my mother’s coupons. I generally make it a rule never to buy anything online without searching for a discount code, but maybe I should start my internet coupon recon before I buy anything. The truth is there are tons of online coupons that can be printed out and taken to the store. It’s time I merged my cyber shopping savvy, with my real life.
Commit To My Savings
For the several years, I’ve kept thinking to myself that I really ought to put more money into my savings. I can’t help but feel like I’m not alone. 43% of working people have less than $10,000 in savings. I’m a pessimist; I always assume that when anything goes wrong it’s all going to happen at once. Like I’m going to need a new roof, a new car and get a speeding ticket all in the same month. And when everything does come crashing down for most of us, we’re going to be wiped out, or worse. Instead of waiting for the rainy season to come and our bank accounts to go under, maybe while the sun is still shining we should start building an umbrella.
There are some small things we can do that can really add up. Putting aside a little bit every month isn’t an original idea, but it feels so hard to part with even a few dollars, when money is tight. That’s why it’s a good idea to set it up automatically so that you won’t even think about it. Whether you set it up by talking to a person at your bank or pay bills online the result is the same. A tiny amount will be taken from your pay cheque or chequing account each week or month and transferred to your savings. If you never see the money you’re putting away, you may discover that you don’t even miss it. Another good way to make a few extra dollars is to take the money in your savings and put it to work. Short term GIC’s won’t make you rich, but they give you the safety of knowing your money isn’t tied up for years and you can make a few extra bucks.
Refocus On Retirement
My dad used to say that his dream job was retirement. After working for a while, I get it. The magic words for any working stiff are “early retirement” and for me it’s time I start thinking less about what I want to do someday and what I can do right now. The same CNN article talks a lot about how many people are unprepared to retire, and that the majority of us haven’t even tried to wrap our brains around what it’s going to take to maintain our current standard of living.
While I have some semblance of an RRSP, it’s certainly not where I want it and odds are social security is going to fail us all when the time comes. The real squeeze is how to improve a savings account while simultaneously growing my retirement plan? If it’s tough to put $50 month aside for an emergency, how can you put a greater percentage of a pay cheque towards your RRSP? The easy answer is you just suck it up and do it. Eat one meal less a month at a restaurant and buy a few more generic brands at the grocery store, using coupons of course. The harder answer, it’s different for everyone. Maybe it’s holding an annual yard or garage sale and committing all profits to your retirement account. Maybe it’s finding a way to save on auto insurance, or taking up an extra job. Maybe it’s just becoming more aggressive with your investments.
The fact is, the younger you are the more risks you can afford to take. If your retirement is a few decades away then you have more than enough time to ride out the rough years. If you haven’t talked to a financial planner about how you want to retire, then maybe this is the year you have that conversation. It’s not going to get you yachting off the coast of Couzumel at 65, but it’s a step in the right direction.
My wife and I are both fairly active people and when we went to school together we frequently worked out at the fitness centre on campus. But after moving into the work-force full-time we found ourselves lacking the dedication to continue. Just after we got engaged, about a year before our wedding date, we decided to get a gym membership at a local fitness centre. We wanted to look our best for our big day.
Is A Gym Membership Worth The Money?
One of my biggest pet peeves was that to get a new gym membership you typically had to pay a sign-up fee (around $100). This seemed ridiculous to me considering we’d be paying a monthly fee to work out there. This particular fitness centre had an offer to waive the sign-up fee if we chose a 5-year gym membership, which also had a low rate of $25/month.
Related: 10 Fees You Can Avoid Paying
So off we went to the gym each morning, committed to getting into shape before our wedding. And it worked, we both lost weight and found ourselves in pretty close to the best shape of our lives.
We got married 4 years ago in mid-October, and after our honeymoon was over we were determined to get back into our morning fitness routine.
Anyone who goes to the gym in the morning before work can attest to the fact that it is even harder than it sounds, especially in the middle of winter. It’s dark, cold, and depressing to be out of bed so early, and now that we didn’t have a clear goal to motivate us, we quickly lost focus.
Why We Cancelled Our Gym Membership
By the end of that winter we stopped going all together. But the $52.50 kept coming out of my account every month, and because of the “great deal” I got on the gym membership we would have to pay this monthly fee for the next 3.5 years. Talk about depressing.
Don’t get me wrong, we were still motivated to lose weight and stay active. It just became more difficult to get ourselves up in the morning to drive to the gym.
When the weather turned nicer we decided to run in the mornings, and this became our new routine to keep ourselves in shape. We also started eating healthier by creating a meal plan and cooking more at home.
I almost forgot about the monthly fees that continued to come out of my account. I thought I was stuck with this monthly fee until the contract expired, or else I would be faced with a huge penalty for cancelling our gym membership.
I quickly learned that you should never assume anything and I simply called the fitness centre to discuss my options. I was surprised to hear some great advice from a staff member who recommended that I transfer my memberships to another couple who is looking to join the gym.
She said that our low $25/month rate wasn’t even offered to new members anymore, so someone would surely snap up our gym memberships. I placed an ad on Kijiji, and within a day or two had a couple ready to take over our contract. They were so excited about the low monthly rate that I was able to convince them to pay for the $100 transfer fee as well.
After our daughter was born, we were again pressed for the time and motivation to stay active. Not to mention we were trying to find ways to save money.
With so many free or inexpensive activities out there we still found ways to keep fit without forking out monthly payments for a gym membership. How many of you out there have a Nintendo Wii? Try the Wii Fit, or Wii Sports, or even a good session of Rock Band and you will get a great workout in your own living room. And now that we have a toddler on our hands, it’s a workout just to keep up with her every day 🙂
Do you think a gym membership is worth the money?