Gails Blog

Every week I work with families who are spending too much money. Too much money on clothes. Too much money on entertainment. Too much money on food. And I regularly get emails from people who what to know how much they should be spending on food. I don’t know. It depends on how much you make, how many people you’re feeding, and what you like to eat. I’m just working with one family right now how are mad for organics. Buying organics means your grocery bill could be 40-50% higher than with conventional foods. And if those organics are being shipped from some far-away far, then the whole “better for the environment” question is moot.

Not that I have anything against organics. Nope. It’s your belly so you get to decide what you put into it. But if you’re going to shop organic, you should at least know when you’re getting your money’s worth; not all foods need to be organic. Bananas don’t have to be organic. Not with that thick peel. Ditto avocados and pineapples. A big surprise for me was when I saw that broccoli doesn’t have to be either. Apparently, regular broccoli doesn’t have a lot of bad gunk attached, so the organic version isn’t putting you much further ahead.

With food prices going through the ceiling, people are looking for ways to keep their budgets in line while still being able to eat well. Probably the best to do this is to meal plan and shop with a list. Over and over I’ve give this as a challenge on the show, and over and over the couples have LOVED it. Since they have to do it for me, their resistance goes down. And once they’ve done it, they’re totally convinced it’s the best thing since sliced bread.

Planning menus a week in advance lets you see just what you’ll need to buy – eliminating overbuying and waste. It’ll also let you “shop the fliers” so you can centre your meals around what’s on special.

One of the ways we drive our food costs way up is by buying too much. Buying in volume only to have to throw out part of it saves no money. If you’re buying in bulk and storing food in a freezer, you should divide your buys into individual servings so you can take out what you need whether you are feeding a brood or just a couple of people.

If you do have leftovers, use them for lunches and save the eating out money for special occasions. And consider bulk cooking so that you have stuff at the ready in the freezer to pull out and warm up when time just gets away from you. That’ll save ordering in when your get to the end of the day and are just too beat to cook.

When I make soup, spaghetti sauce, tomato sauce… or even roast a big piece of beef, I always put at least one serving – usually more – away in the freezer for those days I just can’t face the kitchen. Since I live in the bush, there’s no ordering in. This has also given my kids, particularly Alex, some extra independence. With her favorite home-made roasted garlic/basil/tomato sauce in the freezer, she can make pasta for herself when she doesn’t like what I’ve whipped up.

I’m a big believer in buying in bulk. But not everyone has the extra money or the space to store lots of extra stuff. The solution: get together with family or friends and split whatever you’re buying into thirds, quarters or fifths. You’ll each get a cut of the savings but you want have to manage too much inventory at once.

In my house we keep a running list of what we’ve used up so that we automatically restock our larder. When stuff goes on sale, I buy four or six. Most grocery items are discounted once every three months or so. Seasonal items (think barbecue sauce in summer, soup in winter) have big “sell off” discounts at the end of the season. Of course, if you have stuff in your pantry that you never use, that’s a waste. So, at least once a year, I run the larder down to next to nothing, using up old stock, and saving the money I’m not spending to do a restock.

This year I’m also planning a big party, and the food costs will be significant. I cashed in my Airmiles points for grocery coupons so the big shop won’t throw our budget out of whack. That’s thinking outside the box.

While you’re shopping, watch for shrinking product packages. While manufacturers are sensitive to the increased costs they’re having to deal with, and in response to the recession, instead of putting the price of a package of OJ up, they’re reducing the size of the OJ container. So you’re paying the same amount of money for less product. Don’t assume because the package looks the same, that the amount you’re buying is the same.

Be sure to check your cash register receipt before leaving the store parking lot. Cashiers can make honest mistakes that end up costing you money. If you have been overcharged for an item, you are more likely to return for a refund (and more likely to receive it) if you are still just outside the door.

I grew up listening to adages like, “Money doesn’t make you happy.” When I was married to my first husband and trying to figure out where I was going to get the money to go to work the following week, I figure all that stuff I heard was a load of b.s. Over time, I’ve worked hard, traded-in husbands, and discovered that money – more and more money – doesn’t make you happier. Yes, too little money can make you miserable, but once you have enough to meet your needs, more money doesn’t increase your sense of wellbeing.

Lots of people think if they could just get their hands on a couple of million bucks, everything would be GREAT! Not-so-much. Loads of people who have won lotteries have found themselves back in the financial toilet in no time flat.

So let’s turn the equation around for a minute. If we’re willing to accept that money doesn’t make you happy, is it possible that sadness makes you spend more?

Yup. A study by researchers from Harvard, Carnegie Mellon, Stanford and Pittsburgh universities found that when people are sad, they spend more money… way more money. The researchers concluded that when people are sad, this sadness could trigger extravagant tendencies. Nicknamed the Misery-is-not-miserly phenomenon, it’s clear that having access to credit when you’re bummed out can end up costing you big time.

Maybe the most disturbing part of the study was the fact that the sad people – who were made sad by watching a sad movie – spent more that 4 times what the not-sad people spent, they had not a clue that it was their sadness which prompted them to splurge. They were completely unaware of how their own emotions were feeding into their consumerism.

That’s us: bummed out and dumb about it, so we go Cheer-Me-Up Shopping. Argggg.

So what’s a body to do? It would seem that if you’re feeling sad you should stay out of the stores, leave your credit cards locked in your freezer, and carry the minimum amount of cash. Or you could do something nice for someone else, and that’ll make you feel better and won’t cost a cent. Offer to cook a meal for a harried neighbour. Water someone’s garden. Put a dollar in someone’s meter. Little things that take your focus off YOU and your misery and move your focus outward.

It would also seem an investment in getting happy might just pay dividends on the financial front. Happiness isn’t always about getting what we want. Nope. In my experience, happiness is about wanting what we have. So instead of making lists of all the things we want or wish we had – even silent lists in our heads – maybe we should be making lists of all the things we have that we want. An inventory. Then we can focus on what’s there instead of what’s missing the next time we see a tear-jerker movie, break up with friend, bang the car, yell at our kids, fail to get the promotion… whatever it is that’s triggering our sadness.

So, what are you going to do the next time you feel sad and are battling the urge to splurge? You better make a plan now, since one won’t come easily once you’re in the dumper. And if you don’t have a plan, you’re only going to be sadder when the credit card bill arrives!

In the pilot of Til Debt Do Us Part, we worked with a couple named Bill and Tasia – a lovely couple who were having some trouble coping with all the changes that families have to go through as they grow and change. One of the big questions they were grappling with was whether Tasia, home with two children, would go back to work since they were clearly in a financial mess. She wanted to stay home with the kids. And they’d agreed to that when they’d gotten together. But Bill was feeling a lot of pressure being the only breadwinner and was losing his resolve.

I’m about to begin working with another couple facing this dilemma. Lots of people face it. You’ve heard me say it makes no sense to go into pregnancy with your eyes closed, clueless as to how you’ll cope financially. Well, the same goes for making the decision to stay home with the kids or go back to work. It shouldn’t be a guess. It should be based on the black and red of your situation.

I am NOT making a case for or against staying home with the kids. I’m telling you to make your own best case based on having thought it out ON PAPER based on the numbers. Yup. Another math lesson.

So what numbers will you be working with? Hmmm. Let’s see…

TAXES. A lot of the income you will make will be eaten up by taxes. If you’re returning to an existing job, you need only look at an old pay stub or last year’s tax return. If you’re looking for a new job, you’ll need to figure how just how much tax you’ll pay. Here is a terrific and easy-to-use calculator.

CHILD CARE. The next biggie is paying someone to do at least part of the job you’d be doing if you stayed home. You can hire a nanny, pay for out-of-home childcare or, if you’re really lucky, rope your parents into being all things to your kids while you’re off in the mines. There’s a cost to it all, and you’ve got to figure out what that cost will be for your family.

TRANSPORTATION. You’ll have to be able to get to and from work. If you live further than walking distance to where you work, it could be as inexpensive as public transportation, or as expensive as a plane-ride. (I know a woman who lived on the west coast and commuted to Toronto to work for two years!) If you’re driving, you’ll have to not only figure out the cost of gas, but the additional wear and tear on the car, resulting in a higher maintenance costs. Don’t forget the additional trips to and from your childcare provider.

CLOTHES. If you have to maintain a “professional” appearance at work, what’s it going to cost to keep you shod? If you’re carrying a lot of baby-weight, are you going to need a whole new work wardrobe? After I had Alex, I went from being a size 8 to a 14. My feet grew two sizes, my head grew two sizes. NOTHING fit. And I took no pleasure from having to spend a ton of money to have a new set of clothes in my cupboard.

DRYCLEANING. Yup, if you’re wearing a Power Suit to work, it’ll have to be cleaned once in a while.

FOOD. I know, I know, you’ll take your lunch to work. But you should also budget for the occasional lunch out, the occasional coffee with the chicks at work, the occasional birthday celebration. That stuff happens. If you pretend it doesn’t, it’ll bite you in the budget.

GIFTS. Speaking of birthdays, let’s not forget the presents you’ll be chipping in on, or the charitable donations you may be expected to make as part of belonging to that work community.

HOUSEKEEPING. If you’re both back to work full time with a new s’mebody to look after, will you need to hire someone to do the vacuuming? Even if it’s twice a month, it’s an expense for which you need to budget.

LOST WAGES. If you’re both working, someone’s going to have to take time off if baby gets sick. Will one or the other of you get docked if you have to take the occasional day off to stay home with a sick child?

Okay, that’s the money. But there’s another equation you have to think about… the happiness equation. If you love the work you do, that’ll go in the pro column. If you’re doing a job just for the money, your motivation to leave your baby will be very low. If you’ve worked out the money thang, and it says GO BACK but you hate your job, you hate your boss, you hate your commute, you hate… well, you get my drift, it may be time to think about making money some other way.

There are lots of people who change careers, develop new skills (while off with baby in that first year), upgrade their skills. There are people who find ways to work a full week in three days, so they’re home four days with baby. There are couples who work off-shift, so one or the other parent is home with the kids. There are tons of ways to have the life you want. But you have to think about it. You have to plan.

When I had my kids I hired a nanny to come into my home. Miss Sharon was FABULOUS. My kids loved her to death and she stayed with us for seven years while I worked from home. When the kids were in school, she’d help around the house. She made my life very comfortable. But there were times when I was working only to pay Miss Sharon… there wasn’t much else left. Since I knew I couldn’t be completely out of the workforce and ever hope to work again, this was the price I paid. Willingly. With foreknowledge and a plan for the future.

That’s what you want to do… create the foreknoweldge so whatever you do, you do willingly and with a plan for the future. It’s a big decision. Good luck with it.

On Tuesday I was interviewed for a TV spot on “vacations.” With the soaring costs associated with fuel, and airlines laying people off to try and keep fares from going through the roof, vacations may become more of a luxury than many can afford.

So I’m talking to my husband Ken – I try to wake him up when I’m on the road so we can spend the first few minutes of the day together – and I tell him about my interview, when he names my strategy “Staycations.” He’s got a catchy phrase for everything! Wish I’d talked to him before I did the TV interview.

Okay, so here’s the gist of my spiel.

People have come to believe that vacations are a right, not a privilege. Why a privilege? Because you have to earn it. You have to have enough money set aside to go on vacation without coming back to a hangover … debt that continues to eat away at your financial security. If you’re actually worried about how much the trip is going to cost, you probably shouldn’t take it.

So what exactly is a Staycation? That’s when you stay home and pretend you’re on vacation. I’m just about to do this with a family I’m working with this month. They’ve been on loads of vacations and have the debt to prove it.

What do you like to do when you’re on vacation? Whatever it is, when this year’s vacation time rolls around, plan to do it from home. Even if it includes one or two nights in a hotel, you’ll save tons of money and have a great time, with the right attitude and a little planning.

Go and see the sights. So have you seen everything in your community? Been to the train museum? The art gallery? The local pow wow? If you haven’t been to your city’s museum in the past two years, it’s time to go and see what’s new. If you haven’t taken a tour of the local art galleries, hey, they’re there for the seeing. Pretend you’re in a foreign city, and drum up the same excitement as you would if you were seeing these things in a place you had to pay thousands of dollars to get to.

See some theatre. Communities everywhere have productions ranging from the high-school musical to community theatre to professional theatre. Plan to take in a night at the theatre, or go to the symphony, the opera, or a rock concert. With all the money you’re not spending on accommodation, you can have a ball.

Swim, splash and play. Want to spend a quiet day sipping margaritas while the kids swim their hearts out? Find a local hotel with a fabulous swimming pool and book in for the day. You can do this once every two months, having lunch on site and taking a break with the kids for far less than it costs to zoom away to the tropics.

Eat out to your heart’s desire. This is one of my favorite parts of going on vacation: no cooking, no cleaning up. So, hey, if you love to eat out, plan to do it during your week of Staycation. Try new restaurants you’ve never tried before. If you want to go with a theme, decide you’ll only eat in Spanish restaurants and eat your way through a good cross-section. There, almost like being in Spain.

Indulge in luxury. Love to have a massage, a pedicure, a facial. Hey, have one on Staycation. Whether it’s part of your hotel stay (lots of hotels offer this service now) or a day-long self-indulgence, do it.

Pick a start and end date for your Staycation to make it official. Declare a choratorium – no one has to make their bed, do the dishes, sweep (hiring a cleaning service for mid-week to whip the house back into shape). And pack your schedule full of fun and fabulous things to do. Leave a little time for that book you’ve been longing to read. Rent a mountain of videos for the evenings you do stay home. And don’t forget to take lots of pictures of your Staycation. After all, without photos to flip through, you might forget what a GREAT time you had sticking close to home and doing all the things you love to do.

Okay, your turn. If you were to go on Staycation, what would you do to make your week special?

BTW, there’s some heavy-duty site maintenance coming on June 24-26. There’ll be no posts, no way to comment. I will post on the 23, but then we won’t be able to commune again until the 27th. Miss me!

One of the issues I run into often when dealing with my fams is the arrival of a new babe and the income loss associated with taking maternity leave. In Canada, new moms can take up to 52 weeks off from their jobs and have those jobs protected for their return to work. However, all that time off doesn’t necessarily come with a full paycheque. Yes, there are companies that offer a “top up”, but it hardly ever is for the full amount of your before-baby pay, and it seldom lasts for the full year.

For people who do not receive a top-up, employment insurance (EI) benefits will provide an income. EI benefits are calculated as 55% of your normal earnings up to a maximum salary of $40,000.  So if you’re earning $40,000 a year, which translates into $3333 before taxes a month, or $769 gross a week, you’ll be entitled to 55% of that or about $423 a week, before taxes. Ouch!

On top of that pain is the fact that the first two weeks of mat leave are unpaid, so your income calculation won’t start until the third week. And since it’ll take between four to six weeks to get your first EI benefit deposited into your bank account, you shouldn’t be counting on that money to make your mortgage payment or buy food.

Moms aren’t the only ones who can take time off with your new Mini-Me. Dads can take up to 35 weeks of parental leave; however EI benefits have to be shared between the mother and father so they can’t both collect EI at the same time.

Adoptive parents also get to take parental benefits and fall under the same rules as dads.

So, now that you know you’ll only be getting a fraction of the income you’ve become used to, how are you going to cope?

Some of my fams have resorted to using their credit cards or lines of credit to see them through. Dumb! With a new long-term expense – that’s the baby - adding gobs of interest to the equation is no way to secure your financial future. I meet them when they’ve fallen further and further behind, becoming almost desperate at the hole they’ve dug themselves. And if another baby arrives soon after, OMG!

First, I’m going to say something that may not be very popular: just because we are guaranteed a year of mat leave doesn’t mean we have the right to take it. We only have that right if we’ve taken the time to plan for it, and have the money we’ll need to make ends meet without going into debt.

The best way I’ve come up with for people to see the implication of the mat leave income drop-off is to have them live on their mat leave income for the duration of the pregnancy. Yup. Live on less, and put the rest away for emergencies, to buy the stuff you’ll need for baby, or to start an education savings plan. If you can’t swing it for the months that you’re preggers, you might want to reconsider taking the full year’s mat leave.

The other thing you have to consider is which member of the family should take the most time with the baby. While, traditionally, women have done this, when the woman is the primary breadwinner in the family – and I’m seeing more and more of this - then the income loss to the family is felt doubly. You really do have to do the math to see who should take time off and how much, and how that will impact on the family’s financial situation.

And, of course, you have to make a budget that balances while you’re off, including a whole bunch of new categories that incorporate baby’s food, clothes, personal care (diapers, shampoo, cream), medical, toys, activities, and savings.

Don’t forget the costs associated with actually getting the baby here: hospital rooms and parking. If you have a health plan through work, you may be covered for semi-private room. If not, you may have to settle for sharing a room with a lot of other crying babies. And don’t bank on being in hospital for only one day. I had to have a c-section TWICE and they want to keep you longer. And if there’s any complication with baby, you’ll be “living” at the hospital until baby can come home. Don’t add financial stress to your already over-stressed life.

The arrival of your newest family member should be a time full of joy and excitement. But you can’t expect things to run smoothly if you’re a dope and don’t do some planning. People like to say they didn’t have any time to plan… that they were “surprised” by baby’s arrival. You’re kidding me, right? Nine (I actually think of it as ten) months isn’t enough time to figure out how you’re going to cope? Or maybe it’s that you don’t want to have to face some hard truths. Well, you have a baby to consider now, so it’s time to wake up and smell the poop!

I can’t believe the number of people who pay outrageous fees, or settle for next-to-no interest, on their bank accounts. Whazzup with that? Many of us keep our money in a Big Six Bank, earning a pittance in interest and paying liberally for service. And then we make matters worse by not managing our money properly, so we’re in overdraft, bouncing cheques, or using banking machines that not our own and paying BIGTIME for it.

One of the main reasons people won’t switch accounts is laziness. Yup, plain and simple. It takes work. And not a small amount of work either. If you have pre-authorized debits, it can feel like torture trying to get them all switched over. But if all that’s standing between you and an account that pays decent interest without exorbitant fees is laziness, you need to give your head a shake.

Start by making a list of the things you actually need on your account. Do you write cheques anymore? How often do you go to the banking machine? (If you’re going more than once a week, you’re using the ATM as a wallet. Stop.) How many swipes of your debit card do you do in a month? Do you travel a lot requiring easy, cheap access to your money when you’re on the road?

Once you know the services you need, it’s time to go shopping to compare prices and features. You can hit the pavement, let your fingers do the walking, or head on over to the Financial Consumer Agency of Canada’s website and use the interactive tool to narrow down the alternatives

Here are five easy steps to make the switch once you’ve found your new account home

Step 1. Open the new account and get all the information you’ll need like the account number, your branch number, and the like. If you’re using cheques, order some.

Step 2. List your auto-transactions. What’s being automatically deposited or withdrawn from your old account? Look over your past few statements and make your list

Step 3. Reconcile your account. You have to account for every penny so you don’t have any nasty surprises during the transition. Those six post-dated cheques to the music teacher will bounce sky high if you close the account without telling her and replacing her cheques.

Step 4. First switch over all deposits and then switch over the withdrawals. That way there will be money in the new account when withdrawals start.

Step 5. Leave the old account open for about two months with some money in it to catch any missing deposits or withdrawals. Don’t worry about the balance in the old account is just sitting there wasting time. It’s protecting you from the aggravation caused by a poor memory. Be patient and when there’s been no activity for a month, consider yourself in the clear and close the old account.

I received two questions this week on very different topics that dovetail quite nicely. The first was from a young investor who wanted to know what types of safe investments were available that could return a rate greater than the 3% or so available on a GIC to grow retirement assets at a decent pace. The second came from someone who said:

You said to a couple in one of your shows if they save 500$ a month they will have 700,000$ for their retirement. The couple was around 30. How is this possible? My banker told me it’s not. It doesn’t matter what you do.

Ah, yes. Another case of The Banker! Hmmm.

I’m going to answer question number 2 first.

You can most certainly have $700,000 in assets if you start investing in your retirement plan early enough, earn an average return of 7%, and (this is important) reinvest your tax benefit.

A $500/month RRSP contribution adds up to $6,000 a year, resulting in a refund of about $1,800 (at a marginal tax rate of 30%) which then increases your contribution to $7,800. Iin each subsequent year, your refund is slightly larger, pushing up your overall contribution.

I do use an average rate of return of 7% for these calculations, which you should be able to achieve over the long term, with a balanced investment portfolio.

How, when GIC rates are at a pathetic 3%, barely beating inflation? Well, a GIC would be considered a very conservative investment. Remember the investment pyramid? (If you didn’t read these articles, go find them in the retirement section.)

As you move up the investment pyramid, you’re taking more risk, but earning a higher rate of return.

Which brings me to the first question. If you want to earn more than you can get on a GIC, you must look beyond a GIC, and it’s safety, to do so. And even if you decide to stick with a GIC, you’ve got to be more selective about WHERE you buy your GIC. While The Banker may only be offering 3%, there are alternatives today offering as much as 4.7% for the same level of security.

However, the rate of return is only one aspect. The other is how long the money will have to grow. Start investing in your 20s or early 30s and even with a fairly low rate of return, you’ll have a very handsome amount when you’re ready to retire because your return will have had time to compound — earn a return on your return. And — like the idea of using your tax-refund to boost your RRSP contribution each year –this painless growth of your assets can mean BIG BUCKS over the very long term.

Ready to try something new? You need to learn about various alternative investment options - things like bonds, preferred shares, and balanced mutual funds.

I will tell you that using 7% as a rate of return over 35 years (some years will be higher, some lower, this would be the average), $500 invested a month, with tax refunds reinvested, would grow to:

• $107,000 in 10 years
• $204,000 in 15 years
• $338,000 in 20 years
• $528,000 in 25 years
• $793,000 in 30 years

So, yes, it can be done.

Okay, the news on the recession front is that we’re in one and we better start doing things a little differently. And while the lenders of the world would like us to keep borrowing - more in a minute - the University of Toronto’s Institute for Policy Analysis says that Ontario’s economy contracted .4% in the first quarter of 2008, and is in the midst of shrinking again. Since Ontario makes up almost 40% of Canada’s economy, an Ontario downturn, no matter how mild, is going to be felt everywhere. So maybe it’s time to step cautiously.

The new head of domestic banking at the Royal Bank, Dave McKay, doesn’t agree. He says that the Canadian consumer is very healthy right now, and being in such good shape could probably afford to borrow even more. Really? Course, Mr. McKay is praying that Canadians keep borrowing because the investment banking business - the other big money-maker - sucks. So lenders have to pick up the slack so the banks’ profits don’t drop off.

Bankruptcy professionals have already begun to sound the alarm. All that go-go spending on credit has put many people precariously close to the edge. Hopefully, we’re waking up to the reality that we’ve spent money we won’t earn for the next two, three or even four years - if we’re lucky enough to have a job!

There are pundits who believe this “waking up” doesn’t bode well for the economy as a whole, since when people stop spending money that just makes the whole thing come crashing down. But I’d argue that we haven’t been spending money in our last mad dash to the mall, we’ve been spending credit - money we haven’t made yet - and so all we’ve really done by shopping ourselves silly using our credit cards is delay the inevitable in the cycle of the economy.

Like the seasons, the economy has a cycle. We can’t change that. As much as we try to wish it away with dumb terms like, (said in a deep voice with a very serious face) “the fundamentals have changed,” that’s a load of rot. Fundamentals don’t change. That’s why they’re called “fundamentals.” What changes is our willingness to follow the basic common-sense rules.

Rules like: You don’t spend money you don’t have. Why is that rocket science? If we don’t have the money to pay for the furniture, the new dress, the vacation now, why do we thing this money is going to magically appear in 30 days, 6 months or a year. And why - if we’re having trouble making ends meet now - would we add the extra cost of interest to our outlay? Are we dopes?

I started working with a new couple yesterday - lovely people. I have high hopes. But when I took her credit cards away, she looked like she was going to toss her cookies. “Suppose I need something?” she said, a look of utter panic on her face.
“Need something like what?” I asked.
“Well, suppose I see something that’s a really good deal that I need?” she queried sincerely.
“Need or want?” I asked.
She paused. He laughed. She was stuck.

We can’t even tell the differences between things we NEED and things we WANT. We’ve been so busy satisfying our every whim RIGHT NOW, that we’ve totally lost perspective. Hell, we’ve totally lost our senses.

What did people do before there was a Starbucks on every corner? Do you NEED to have a cup of coffee that costs three bucks? Really?

How often did your parents eat out when they were raising you? Every second day as many of us do? Really?

And they took you on exotic vacations every year too, right? Hmmm.

So when did we begin to think that nice-to-haves are have-to-haves?

I’ll tell you when. We began to spend indiscriminately when we were introduced to the idea that we could have whatever we wanted right now and would only have to pay a fraction of what it would cost - somewhere between 2-3% — in monthly payments. That 2-3% minimum payment feels painless, and so we got in the habit of spending without thinking. We want it, we buy it. No money in the bank, no problem. We can whip out our credit card, or take a cash advance, and we’ve got it. No harm, no foul. Really?

We’ve swapped poker night with friends for a trip to Vegas. We exchanged fixing the car for buying a new car. We’ve substituted borrowing for saving. And with all these changes we have been doing ourselves harm, and we’re about to find out how much.

It’s time to prioritize where our money goes. Video games aren’t a necessity. Nor are new clothes, furniture or eating out. And as much as you think you could never survive without that coffee in the morning or that glass of wine in the evening, I’m here to tell you those aren’t priorities either. They are nice-to-haves. If you’ve got so much as a dollar of debt, you’ve got to put the brakes on the nice-to-haves until you’re out of the hole.

It’s also time to go back to bargain shopping. I don’t want to hear the yada yada on quality versus price. Bargain shopping doesn’t mean buying crap. It means buying quality at the best price going. And it means only buying what you NEED.

And it’s a time to lower our expectations about what life should be like. Since when does a trip to the amusement park beat a day playing baseball, volleyball or soccer at the local (free) park with friends?

While you’re at it, consider what skills you have to offer in exchange for things you need done so you can help someone else save some money too. Consider swapping what you have for what you need. There are people out there who are car mechanics, contractors, home-care providers, sewers, bakers, cabinet-makers. Figure out what you have to swap and do the deal to save some money.

Of course, you can’t say you’ve SAVED anything if you immediately turn around and spend the money. Nope. You’re just deluding yourself. Instead, every time you SAVE a dollar, immediately apply it to your debt. You can keep a simple chart on the wall to keep track of how you’re doing. Get some momentum and you’ll be shocked to see how quickly you can get out of debt.

Hey, you can believe me or you can believe The Banker. You decide.

Answer me this: You’re standing in the bookstore holding a copy of a book you’ve been dying to read when the woman next to you says, “I saw it just down the street for $18.” Would you head off to the store that’s 15 minutes away to save $7?

I would. Yup, the walk would be good for me, and I just can’t pass up a good book.

Everyone has stuff they can’t pass up. For some it’s that fine cup of coffee. For others, a great handbag. Some guys love browsing the aisles of Crappy Tire, looking for the perfect tool that will make that job at home worth doing.

But how many of the things you buy come as a complete surprise to you? You don’t set off to buy a new set of glasses, but there you are standing in the store, paying for them. Sure, they’re great looking glasses, and you can always come up with a good reason or three why you need them, but they’re an impulse purchase.

Could it be that you can’t stay focused on what you DO want? You want to be debt free, want to save money for a home, want to have a big, fat emergency fund, or want to have a baby, but that’s such a far-off goal. It may be wonderful to be debt free, but giving up your day-to-day indulgences just doesn’t feel like it’s worth it. After all, it’s going to take months, even years, to get out of debt, and who wants to spend all that time denying all those small pleasures?

You can feel the pleasure of the coffee as the warmth moves through your mouth and down your throat. You can smell the pleasure of the next sip. And when you throw out the cup, the memory of having spent the $3.45 is gone.

So how do you make your goal feel satisfying when you’re skipping all that coffee, not buying that purse, forgoing the walk around the tool department, to make it a reality? How do you pass up dinner with friends, a movie with the kids or that fabulous cruise you’ve been dying to go on with your honey?

Here’s what I suggest parents do with their children when they’re trying to keep the kids focused on a goal they are saving for:

Cut out a picture of whatever your child wants to acquire and paste it on a page with the price beside it.

Find out how much your child wants to save each week, and divide that into the price of the item. So if item costs $20 and your child plans to save 50¢ a week, that would be a total of 40 weeks.

Draw 40 small boxes on the page with the picture on it.

Each week, as your child sets aside the 50¢ she’s saving, she gets to check off one of her boxes.

Charity drives use a version of this when they draw what looks like a big thermometer and then fill in the amount they’ve raised toward their total goal, raising the mercury each time they get another contribution. You can do the same thing with your goals.

Here’s another question about saving money. Let’s say there’s a new computer you’ve been saving to buy. You’ve done your research and you can get exactly what you want for $789. The man beside you turns to you and says, “That exact computer is on sale down the street for $782.” Would you take the 15-minute walk to save $7?

If you said “yes” to my first example of the book that was $25, down to $18, but said “no” to the computer alternative, my next question is “why?”

After all, $7 is $7, whether it represents a 28% savings or a less-than-1% savings, it’s still seven bucks and gets you $7 closer to your goal, whatever that may be.

Maybe it isn’t that you just can’t commit to saving, paying down your debt, or whatever else you wish you could do. Maybe it’s that you’re focusing on the wrong thing. Like the shopping example, if you’re focusing on the percentage you’re saving, you lose track of the value of the dollars themselves. It’s all very nice to save 50%, but a buck is a buck, whichever way you cut it.

And getting $1, $10, $100, $1,000, $10,000 closer to your goal has to be as satisfying as buying another cup of coffee, purse or tool. It just requires having the right perspective.

It’s a race against the clock. From the moment we sign on the dotted line, some of us spend every waking moment thinking about how to get rid of our mortgages. Some people are so focused on their mortgages that they do some pretty weird stuff; I’ve had fams who have ramped up their mortgage payments, and then been pushed to their lines of credit or, worse, their credit cards to make ends meets. They’ve effectively moved their debt from their cheapest to their most expensive lender. Whazzup with that?

Above the 49th parallel, our mortgage interest isn’t tax-deductible, and that makes our mortgages very expensive. On a $100,000 at 7% amortized over 25 years, we’ll pay more than $110,000 in interest. That’s right. The cost of your home more than doubles. And that’s in after tax dollars. Amortize using one of their new 40-year plans, and the cost of your house triples.

Here are five sensible ways to get to your mortgage burning party faster:

1.     Increase the frequency of your payments

If you use the accelerated weekly or bi-weekly payments options, you end up making one extra monthly payment a year that goes directly to pay off your principal. On a $100,000 mortgage at 7%, that extra monthly payment will save you $24,000 in interest and have you celebrating in just over 20 years. And since that extra payment is spread over the whole year, your cash flow never feels pinched.

2.     Round your payments up

This is another relatively painless way to get mortgage-free faster. By adding even a nominal amount to each payment, you’ll reduce the amount of interest you pay over the long term. Add $25 a month - that’s just five fewer lattés - to your monthly mortgage payment and you’ll save over $10,000 in interest.

3.     Pre-pay your mortgage to save big-time

Anything you throw against your mortgage above and beyond your regular payments will make a huge impact, particularly in the very early years. Put one extra $1,000 prepayment against your mortgage principal, and over the life of your $100,000 mortgage you’ll save $4,000 in interest. Do it every year and you’re in the money to the tune of almost $29,000. So where do you find an extra $1,000 a year?

4.      Contribute to an RRSP and use your refund to pay down your mortgage

Yes, contrary to all those clichés your mother filled your head with, you can have your cake and eat it too. If you’re in the 30 per cent tax bracket and you make a $3000 contribution to an RRSP, the taxman will refund you $900 you can use to pre-pay your mortgage. This is one of the smartest strategies you can use to achieve two objectives - retirement and mortgage-free home-ownership - with one pool of cash.

5.     Increase your payment annually to the most you can afford

Whether you just got a raise or just finished paying off a whack of debt, if you’ve got some extra money in your cash flow, it’s time to increase your mortgage payment. No, I’m not talking about refinancing. I’m referring to the feature on many mortgages that allows you to up the amount you pay monthly, with the entire increase going to pay off your principal. If you’re holding off because you’re not sure you’ll be able to sustain the increase, don’t. Just make sure your mortgage will let you go back to your previous level if your circumstances change.