Give Me Back My Five Bucks

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?

It’s not how much you make, it’s how much you save

2013-05-03 09.09.21Recently a friend and I were chatting over coffee about a mutual acquaintance who just got married. “She’s so rich now – combined her and her husband make over $240,000 a year,” my friend told me.

This bothered me. Not because I was jealous of our acquaintance’s healthy household income, but because my friend automatically assumed that because of the salary they were making, they were automatically rich. If there’s one thing I’ve learned since I started this personal finance journey, is that when it comes to money, you can’t judge how financially savvy someone is by their salary or their appearance.

The definition of the word “rich” means to have a great deal of money or assets. Well, if our acquaintance is making $240,000, but also spending $240,000, then she isn’t rich – she’s just living a $240,000 lifestyle. A big pay cheque doesn’t mean a thing if you have nothing to show for it, and we just didn’t know what their financial situation is to know if they are actually “rich.”

From 2006 to 2011 (5 years) I grew my net worth from -$20,000 to +$63,000. That’s a difference of $83,000 (or an average of $16,600 per year)! And I did that all on an average annual salary of $44,000. My salary was quite low, but my savings rate made me feel rich.

Now that my income is higher (I’ll earn around $85,000 to 90,000 this year), I’m trying really hard to curb lifestyle inflation. Because let’s be real, the more money you make, the more you have to spend (and the more you likely will spend). More money equals upgrading your housing, buying nicer clothing, more frequent Starbucks trips, and more vacations. I’m guilty of some of those things, but I’m trying the best I can. :)

Below is a chart based on an average month of spending for me in 2007, 2013, and 2016:

lifestyle_inflation2016

Related: Can lifestyle inflation be avoided?

Let me be the first to tell you that I’m not rich. I do not earn large pay cheques, and my net worth is only about $120,000. But my monthly expenses (as shown above) aren’t that much different than they were 9 or 10 years ago. My rent has only gone up by $100, and I feel like my groceries and entertainment budget have increased by a normal amount.

So while my $120,000 net worth isn’t much to celebrate now, that number will continue to increase every month. And 2016 could turn out to be a great year for me, as I have the ability to save nearly $40,000 if I stick to my budget.

I’ve blogged about it before, but I no longer aspire to earn more money. If it happens, it’ll be due to working hard at my full-time job or becoming more strategic with my freelancing. But I’m not going to sacrifice my lifestyle in pursuit of more dollars. :) So that means I’m never going to have a enviable salary that my friends can talk about behind my back. I’ll never wear high fashion brand name clothes, or fly first class, or hire house cleaners (but actually that’s mostly because RD refuses to let me). I just want to be comfortable.

My method of getting rich is by being smart with the money that I already earn. I want to save at least 50% of my net income this year, curb lifestyle inflation as best I can, and grow my wealth in a healthy and sustainable way. To me, this seems like a way better plan than trying to figure out a way to earn millions of dollars, or buying Lotto Max tickets in the hope of striking rich. :)

So whenever you hear of someone who earns the kind of salary you could only dream of, just remember that comparing yourself to others (while tempting to do) is never a good idea. There are always going to be people who make more money than you, but you can live a fulfilling life on your own terms by keeping lifestyle inflation in check and saving your money.

What are your savings goals for 2016?

Keeping travel local this year

10399796_161454925247_6688913_nI really wanted to do a big trip this year – somewhere fun and exotic! Last year I went to Cuba, the year before was Hawaii, and the year before that was France & Morocco. But with the weak Canadian dollar (and my goal to save 50% of my income this year), it just didn’t make financial sense to go anywhere too crazy … so I’m making a conscious effort to travel locally this year. Or at least within Canada and the PNW region. :)

With that in mind, RD and I just booked our first vacation of the year! Next month we’ll be taking off to beautiful Tofino on Vancouver Island. It just so happens that a couple of good friends and their kid will be up there at that time too, so will be nice to hang out with them. After Tofino, we’ll be hopping on a ferry up to Powell River to visit a few of his friends and family.

This is still going to be an expensive trip. Tofino is not cheap – but we booked accommodation through VRBO.com with a full kitchen so we can cook most of our meals. And in Powell River we’ll be able to stay for free. Still though, I anticipate the week will cost us around $1,000 each.

Other vacation happenings for the year include my family’s annual trip to Seattle for the Blue Jays series (will be pricey!), at least one or two trips to Toronto for freelance work, and I’ll be taking some time off at Christmas. We’ve also talked about going up north to RD’s hometown for a visit at some point this year. Ideally I’d like to carry some vacation forward to 2017, but it looks pretty unlikely as I only get 4 weeks off.

What are your vacation plans for the year?

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