Give Me Back My Five Bucks

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4 lies we tell ourselves to continue spending

The last handbag I bought was in 2009, and it cost me $275. It was an expensive purchase for sure, but 7 years later, it continues to be my everyday purse. It still looks great, and I will keep using it as long as I can. However, a few days ago I decided that I wanted a new purse. The one I have is pretty big and not super practical anymore now that I don’t carry as much stuff around with me like I used to. Plus it’s pretty casual and not very professional to carry into meetings.

So I went online and started looking at purses. There were a couple that I liked, and after about an hour of reading reviews and looking at pictures, I finally decided on one that was $268. But if I was going to spend that much on a purse, I would qualify for free shipping. So obviously I should look at the sale items, right? Twenty minutes later, I had a cart full of stuff and my credit card in my hand. I could afford this purchase – and I deserved it! Plus, it’s not often this store has a sale, I should buy while I can. Wait. What? I snapped out of it right then, put my card away, and very quickly closed my laptop.

Related: Consider the cost-per-use of each purchase

Not only was this purse going to be an impulse purchase, but I also found myself justifying a bigger spend just because there was a sale on. Even though I knew that a sale was not reason to buy things that I didn’t actually need.

No matter how good you think you are at managing your finances, we are all guilty of lying to ourselves from time to time in order to justify indulgent spending. Luckily I caught myself before I spent nearly $500 on stuff I didn’t need! Because while splurging on occasion is healthy, one of the keys to financial independence is to stop making poor spending decisions and unnecessary purchases. I didn’t need a new handbag, and I certainly didn’t need the sale items I had gleefully added to my shopping cart.

Here are four common lies we often tell ourselves in order to justify unnecessary spending:

I work hard, so I deserve it

When I lived in Europe, I traveled a lot. And when traveling, I was often times surrounded by tourists. I’ve overheard countless conversations about money, once-in-a-lifetime opportunities, traveling to escape obligations, and travel debt.

There’s one conversation that has always stuck with me: Nic and I were in Prague waiting in line to take a tram ride up to a viewpoint. We were standing behind two 20-something women who were discussing how they couldn’t really afford the six-week European vacation they were on, but they were happy they did it because they “deserved it after a hard semester.” They each financed their trip with a credit card, and fretted for a few moments about how they planned on paying it back. “We’re young, we need to enjoy ourselves,” one of the women exclaimed. “We only live once!” the other woman agreed.

Luxuries like vacations are definitely something we should indulge in from time to time – but only if we can afford them. If you can’t pay for your trip in cash, you cannot afford to go. I can’t stress that enough. It is so much better to wait and save up for a big trip, or scale back and take a less expensive vacation. The last thing you want to do is stress about your money when you’re supposed to be having fun, coming back home to a huge credit card bill, or having to work hard into your retirement years in order to pay off all of the things you thought you “deserved” along the way.

The savings isn’t worth it

Most of my friends don’t do much comparison shopping. They don’t clip coupons, they don’t ask for better rates, and they don’t bring back receipts for price adjustments because “the savings isn’t worth the hassle.”

I don’t know if I should be repeating this story on my blog, but I remember when RD and I were first dating, he confessed that he sometimes didn’t submit his receipts for contact lenses to his health care provider. It wasn’t very much money, and he just felt like it wasn’t worth his time. So he kept putting it off until he eventually forgot about it. I was shocked. Not just because he wasn’t using his extended health care benefits, but because I claim every little expense I can. My blog is called Give Me Back My Five Bucks, after all. :)

A few years ago, I was chatting with a friend who had about $4,000 in a “savings” account with a big bank that offered 0.05% interest. That’s right. 0.05% interest. On top of the low interest rate (if you can even call it an interest rate!), she was also paying a monthly fee for her chequing account. I asked why she didn’t move her money to a bank with free chequing accounts and a higher interest rate (at that time, PC Financial was offering 4%). She replied by saying, “its not worth the hassle, and I don’t need the extra money.” Even though she was in debt and paying her bank to keep her money for her, she wasn’t willing to trade a few hours of her time in exchange for saving $12/month in account fees, and a higher interest rate on her savings.

Maybe $12/month didn’t seem like a lot to my friend, but it’s a lot to me. Especially when you consider evaluating all of your expenses to make sure you’re getting the best prices on the items and services you pay for. It all adds up, and you could potentially save hundreds of dollars each year.

It’s an investment

Sure, you might need new clothing and shoes when you land your first job out of school; looking professional truly is an investment in your career. However, buying a $500 pair of shoes is not an investment. If you want to buy a pair of $500 shoes, and can afford to do so, then go ahead. But buying them with the idea that you are somehow going to financially benefit from them is a lie. A true investment is something that will make you money over time, not plummet in value the moment you leave the store.

It’s a once-in-a-lifetime opportunity

If I indulged in every “once-in-a-lifetime” opportunity that has come my way, I would be in some serious, serious debt. :) I get it – when something fun and unique comes along, it’s hard to say no – but very few things are truly only once-in-a-lifetime experiences.

In my early twenties, a friend asked me to go backpacking in Asia for the summer. “We’ll never get to do something like this again,” she had said. I remember thinking to myself, why can’t we do this trip later when we are both out of debt? Asia will still be there, and we’d be able to enjoy ourselves more if we didn’t have to put our trip on credit. So even though I wanted to go, I knew I couldn’t. Plus, if I could have somehow come up with the money to fund a trip to Asia, that cash would have been better off put towards my debt. Spending money to increase my debt load (while decreasing my net worth) didn’t make a lot of sense to me.

It can be so easy to fool ourselves into thinking it’s okay to spend on things that we can’t afford. That’s what got me into debt in the first place, and I count myself lucky that I figured that out before I spent myself deeper into the red.

What other lies do we tell ourselves in order to justify spending?

Starbucks rewards are changing

photo(4)My most recent trip to a coffee shop was when I went to Starbucks on January 13th, and it may have been my last … because if you haven’t heard already, the Starbucks rewards program is changing.

With the current rewards program, you earn one star for each transaction – regardless of how much you spend. Once you reach 12 stars, you earn a free drink or food item of your choice. I’m a plain coffee drinker, so each trip to Starbucks only cost me $2 for a tall coffee. And after 12 trips, I’d typical spend my reward on a more expensive drink – like a latte or frappuccino – or even a breakfast sandwich when I wanted a little treat.

With the new changes, the amount of stars you earn is determined by how much money you spend – so for every $1 spent you’ll be getting 2 stars. And you will need to collect 125 stars to earn a free item.  That means it would cost about $62 to earn a free Starbucks reward that previously cost me $24. Not cool.

If you’re consistently spending $5 each time you go to Starbucks, then the changes don’t affect you much (because you were already spending $5 x 12 = $60). And if you were buying $7 sandwiches or anything else with a bigger price tag, then you’ll get your freebie even sooner than before.

Related: Would you tip your Starbucks barista?

I get that Starbucks rewards program will benefit people who spend a lot each time they go. But that’s not me. So now there’s really no incentive to go to there over another coffee shop anymore. And actually, it kind of makes my 2016 goal of not going to coffee shops (for anything other than socializing) a lot easier. So, see ya Starbucks. It was fun while it lasted.

What do you think of the changes to the rewards program?

Friday ramblings

Last night I went with a friend to the PNE. It was VanCity night, and as a member, we both got in for just $5! :) Our goal was to watch the free Boys II Men concert, but apparently that seemed to be the goal of every other 30-something person in Vancouver. The venue was filled up by the time we got there, so we had to watch the show from the beer garden. It was really fun watching the crowd lose their minds when they sang their hit songs. :)

Tomorrow I’ll be headed home for the long weekend. It’s been a couple months since I’ve seen my friends and family, so am looking forward to watching ball games with my dad, brunching with my friends, and going on a hike or two.

Recently with my thoughts on renting vs. owning (and selling my home), I’ve made a few noticable changes. Mostly I’ve been getting on board with the minimalist and shopping ban movement. I’ve recently gotten rid of a lot of things I no longer use in my house (decluttering, but also in preparation of moving – whenever that might be), and have cut down on shopping for clothes, books, and household items. Now, I’m not in a position to go on a shopping ban right now like some of my other PF friends, but perhaps in the future. This exercise has definitely been helping to become more aware of the things that I need versus what I actually want.

This has freed up some room in my budget to save a little more, as well as attend a bunch of great events over the next few weeks:

  • Pecha Kucha Night Vancouver – ($10) they’ll be chatting about sustainability and the green future of the City of Vancouver.
  • Vancouver Art Gallery: Art Makes Us – ($12.50) the event where they will finally unveil the concept design of the new Vancouver Art Gallery. This interests me because I love the art gallery and all things design/architecture, but also because the company I work for is in this industry.
  • Vancouver International Film Festival – (?) one of my favourite events of the year. :) I took a quick look at the schedule, and there are already 4 or 5 documentaries that have caught my eye.

It also looks like aside from my little vacation to Vegas in October (and a couple of visits to Toronto for work), I won’t be going on any other trips this year. This means I can carry my vacation time and savings over to next year. I want to plan a really fun trip for next year. Tops on my list would be China (to see where my dad grew up), explore the UK, or head over to Turkey again.

There’s also lots of work to be done on the Canadian Personal Finance Conference – we are just over one month away – can you believe it!? I’ll be booking my flights soon, and cannot wait to meet those of you that will be attending. :)

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