I’ve been known to be rather “careful” with my money, which is a polite way to say that I can be cheap at times. One of the drawbacks of tracking every penny that you spend is that when something comes up that you didn’t plan for, you have to make a decision whether to stick to your budget or to loosen your purse-strings.
Tracking Every Penny
When planning a monthly budget, you take into account your large monthly expenses such as your mortgage payment, RRSP contributions, car payment, groceries, monthly utilities, and insurance. But not every expense is fixed. And unless you know exactly to the day that you will run out of household staples like toilet paper or cleaning supplies, some unplanned purchases can sneak their way onto your shopping list.
Not only that, variable expenses come up in other ways too. Pitching in for an office retirement party or fundraiser, catching up with a friend over lunch, or grabbing an ice cream with your family are all spontaneous activities that are most likely not accounted for in your budget.
And making a habit out of living in the moment with no regard for your budget can wreak havoc on your finances if not kept in check.
Related: Why Budgeting Is Not A Waste Of Time
So how do you avoid financial misery without becoming a miser yourself?
In your budget you should set aside some petty cash for any of those unexpected expenses that do inevitably come up throughout the month. Decide what you can afford that amount to be and then take this cash out from the bank right after you get paid and keep it in your wallet.
If you spend it all, that’s fine…it was accounted for. But if you don’t spend it all, throw the left over cash in a jar and save it for a rainy day.
How about the readers, are you also “careful” with your money? Do you track every penny and sweat the small stuff?
As I have mentioned in previous posts, my wife and I have been house hunting. One of my medium term goals is to upgrade our house, and if you’ve been keeping an eye on the news, you would have noticed that this is an interesting time in the Canadian real estate market.
Not only is there talk of a real estate bubble bursting, but now the Competition Bureau has successfully challenged the Canadian Real Estate Association (CREA) practices of forcing consumers to opt for an entire slate of services in order to list their property on the MLS.
This settlement could save consumers thousands of dollars when selling their homes, as a home seller can now pay a nominal fee to have their house listed on the MLS without having to use the full services of their real estate broker.
So with all of this to think about, we’ve already decided on a floor plan for a house that we want to build. We are currently in the process of aggressively paying down our mortgage, which is prudent in this low interest rate environment.
House Hunting: When to buy?
What we need to decide now is what the best time will be to start building a house and when to put our existing house up for sale.
This particular builder will take between 4-5 months to complete the house. Given the fact that there are currently 120 houses for sale in the price range of our house, I’m thinking we will have to put our house on the market as soon as we start the building process.
We will also be using our existing home equity as our down payment for the new house, so we will need to figure out how that process works.
The home builder will require deposits at 3 different stages of construction (initial, framing, and completion). We will be meeting with our mortgage representative soon to determine what our time line will look like to get started.
Related: My Biggest Home Buying Regret
This will be an exciting time for our family, and I plan to keep you posted on the progression of our new housing adventure.
Are any of you actively house hunting right now?
Thanks to Larry MacDonald for contacting me and conducting the interview for Me & My Money, which was posted in Saturday’s edition of the Globe & Mail. As a relatively new personal finance blog, it’s great to receive this kind of attention from the media. Look for a follow up article on Boomer later this year.
For any new visitors who decided to check out the Boomer & Echo website after reading the Globe & Mail article, here is some further information about my dividend growth investing strategy. You can also take a look at some of my financial goals:
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Some of you may be wondering why I chose to give up my anonymity to do the Me & My Money article. When my mom and I started this website, we didn’t really have a reason to use our real names…and the “Boomer” and “Echo” handles obviously fit with the concept of what we were writing about.
When Larry contacted us to do the interviews, we decided that it would be a great opportunity for us to gain additional exposure for our website. We also felt comfortable enough that what we were disclosing about ourselves financially on this blog wouldn’t have any negative impact if we chose to reveal our true identities.
So once again thanks to Larry MacDonald for taking the time to do this interview, and stay tuned for Boomer’s Me & My Money profile in the near future.