For one reason or another today I saw this quick video that talked about what you must do in life to save money. While watching it there were the usual points such as tracking your budget and finding discounts. However, the list just kept going on to the point where it felt like if the question was how do you walk you are then bombarded by all these instructions on how first you need to wear socks, shoes, calculate the gravity and wind turbulence, etc.

To be fair, maybe they were trying to aim more for a “Ways to save money” approach. I then started to read some articles on the same topic and sure enough it seemed to follow the same theme. I was thinking too, is one of the reasons that we over complicate it so much is because the simple answer sounds too simple? For example, I would think the the biggest answer on how to save money is to simply not spend it. I’m sure that answer would usually generate a “but” response.

I still think the most important thing about saving money is your mindset first and foremost. For example, I’m pretty sure people would say things like “You have to spend money, otherwise you can’t eat.” Like in that case though, you could still say the main way to save money is to find ways to not spend it. Example, find a way to say grow your own food. The key point out of that is so that you develop the mentality that you are essentially spending money for the convenience in having someone else do it for you as opposed to it being something you have no choice over.

Another more straight forward tip that a lot of people use which makes perfect sense is that if you want to save money then stop buying stuff that you don’t really need. Similar in that case, is the concept of simply not spending too simple to accept? That would make more sense to me if you are truly in a position of wanting to save money. For example, instead of only trying to find ways to reduce the cost of that $200 pair of sunglasses that you can’t really afford maybe it’s wiser to not buy it all. It all starts with how you perceive money I think. If you can’t get past the notion of saying there is no way you can do anything with no money then that is a good first step to work on.

So today I was reading various strategies that people use to pay off their debt. More specifically, the two methods that were in discussion was the debt snowball or debt avalanche method where one was more focused on the psychological aspect of encouraging people to pay off their bills and the other was to get rid of it as efficient as possible.

In a nutshell, for the debt snowball method you are supposed to organize all of the debt you have and your goal is to essentially pay off the smallest debt first. An example would be if you had two credit cards with an outstanding balance where you have to pay interest on it each month. You would then first pay the minimum payment on both cards so that you don’t incur interest. Afterwards, any money that you have left over should go towards paying off whichever card has the least amount of balance on it. After you are done with that you then continue on to the next debt. So as you can tell, this is supposed to give people the motivation to continue to paying off their debt.

For the debt avalanche method it would start off the same where you would first organize all of your debt and begin by paying the minimum on all of your current liabilities. However, the priority in terms of which bill you should pay off first is the one that generates the most interest debt. Mathematically, with this method you would be paying less interest fees and will ultimately be debt free faster.

This is where the debate begins as some say while one method makes more sense on paper, realistically more people are more likely to succeed with the other method as you get the sense of accomplishment faster by getting rid of small debt with the snowball method. With the avalanche method some were saying because you won’t be able to pay off a bill as fast that people will usually lose motivation to keep at it.

For myself if I was to choose I would use the avalanche method as it makes more sense. The funny thing to me is that I would say a big factor in paying off debt is the whole notion of even looking at the numbers in the first place. For example, I usually find people that spend too much are the same people that don’t even track their spending. If you were to take the first step with both of these examples I’m sure just looking at the debt and knowing where all your money is going to is the real factor that makes you want to be smarter with your money. Essentially, regardless of which way you choose you just have to do something in constantly keeping yourself informed about your finances.

So today during my time on the show AM/BC I decided to talk about getting rewards and bonuses from using a credit card and how some people actually go out of their way to make purchases to build up reward points where I think it makes no financial sense. For example, someone may be like 200 points away from buying a plane ticket and without really thinking about it they just start spending. And since people are in the vacation planning mood usually around now it cringes me whenever I hear people say they need to buy something just to earn enough points to get an item.

So as an example I first used this fifty dollar gift-card that I saw on a rewards site as this way we can puts static dollar value as to how much a rewards point is worth in this case. As you can see, for this it mentions that this $50 gift-card is worth 475 points.

As well, since during this time people usually want to do some traveling I did try to find airline tickets offer too. This company used the airline Westjet and here you can see a list of destinations and as well the cost of it. For example purposes I just used the Vancouver to Toronto cost which is 2187 points.

In order to put an actual dollar value to it, I went to the Westjet site directly and did a quick search on how much a tick would cost between these two destinations. As you can see, the price is about $282.

With that I started to break down the numbers with actual credit card reward details here such as how much points you earn per dollar and as well annual fees that may be attached to it if you want to earn points faster. This was the numbers:

In general, I think most people would agree where if you are going out of your way to spend like $9500 just to get a $50 reward it simply doesn’t make sense. Same thing with the airline ticket. On top of that, you have to factor in the annual fee to see what the real number is.

Speaking for myself, I usually prefer the cash back cards and so with the same example I used a 1% and 2% cash back rate that people can commonly find here. Based on these reward values the numbers looked like this:

While like in this example you would be spending less to achieve essentially the same dollar value, I think the bottom line again is that if you are going out of your way to spend more just to earn the bonus/reward it can actually cost you more. I think this is one of those times too where you have to sit and actually see the numbers for it to click so that you don’t just emotionally buy into a rewards or bonus program.

Finally, on the show I was saying how like in these examples sometimes just doing some old fashion coupon and promotional code hunting can probably save you more. Like in this example, with a little bit of research I was able to drop the price of this ticket by like 20% just by finding a discount code. So instead of like $282 I was able to quickly drop the price to about $225 as you can see here:

As well, I’m sure everyone is aware that when it comes to plane tickets that different days can be cheaper. In this example, just changing the flight to like a day after and using the coupon I was able to drop the price to like $209.

I personally think like here if you are going to go out of your way to save some money then spending the time and energy to find discounts probably makes more sense than spending extra money that you wouldn’t have otherwise. One site that I mentioned which I even use to help you get started is http://www.retailmenot.com/ There, you can find a lot of discount and coupon codes for a lot of different businesses. Feel free to share your sites too if you know of any other good ones.

It’s very easy with the Internet to find these deals too I say. Bottom line, treat rewards and bonuses for what it is. Basically, a bonus for what you normally do anyways.

Today I watched a segment about a site called livebelowtheline.com where essentially people are trying to live on a mere budget of $1.75 a day as a way to create awareness about people who live in extreme poverty. From what I gather they try to challenge people to do this for about five days which means your total would be about $8.75.

While that sounds pretty extreme, I was thinking to myself for those people that are doing the challenge for longer than five days on why they aren’t opting to invest in like a plant that grows fruits or vegetables. For example, it seems like everyone is more caught up in trying to find the best deals from stores when growing the items yourself can be pretty straight forward and it will save you a ton of money. I remember for example my parents had these small plants in the backyard that grew cherry tomatoes and those things grew so darn fast.

I guess you could argue that for some plants they take weeks to grow anything which doesn’t do much good if you need the food today, but I guess like money it’s about investing in something that gives you constant returns on your investment. Like for those cherry tomatoes I believe buying a small pack of them would cost you around $2 to $3. If you bought one like every five days it wouldn’t be a bad idea to invest in like seeds or something where eventually your plant will start producing the tomatoes and you can start saving the $3 a week.

Ultimately I think the big takeaway in situations like this when it comes to food is that if you are on an extreme budget then one key is to find ways to take your dependency off a business as much as possible. I always saw things like going to a grocery store as essentially you paying for the convenience as opposed to it being the main way you must do things. Same thing when it comes to say hiring a professional in a lot of cases. It’s not that you have to necessarily use them but rather you are paying them for the convenience and efficiency of you not having to immensely study about a topic yourself.

Either way, interesting concept that if anything it should make you think that if you are one to always say you have no money for food maybe it’s time t see how others can do it with such a miniscule budget.

Since there is an election here soon, today was the day that all the main candidates did a live televised debate. For the most part I was expecting a a stereotypical political debate with people avoiding questions and trying to make others look bad. Since the economy and provincial debt was a big issue I was actually interested if people could actually learn any good financial management lessons from the government, so to speak.

If I was to try and relate the situation and answers that I heard compared to an average person’s financial challenges, it almost sounds like a person living in say a million dollar home with a mortgage that is way beyond their means while trying to raise a family. As a result, to me it feels like their solution to pay off that debt is to continually pay for various ways to try and give their kids resources and support that they feel would give them a competitive advantage in life where hopefully one day they will grow up and help them to pay off their debt.

How would you go about paying off that debt assuming the scenario is you cannot say move to a new home? Like in this case I highly doubt people would want to tell their kids for example that they can’t say go to a good school because of financial restraints. So they would instead rather incur the debt. Trying to think of a solution in this case, I think one obvious solution that many would do is make more money. That usually comes in the form of potentially doing side work or starting a part time home based business that requires very little investment if any.

What an interesting thought that was I thought. For example, instead of a government official trying to reduce a debt by being like a venture capitalist when they don’t have the money for it they need to literally find a way themselves to build something from ground up as would a regular person where the cost is more about their own labour and creativity. That is probably not plausible of course due to things like a conflict of interest that would probably arise. But that would be kind of neat I think.

While this is probably boring for many, I think stuff like this is a good way to learn from someone else’s experience even if they didn’t produce the desired result. It’s almost like an entrepreneur reading horror stories so that hopefully they can avoid the same mistakes.