If you are a fan of Gail Vaz-Oxlade and her shows,
Money Moron, She’s a Princess, and ‘Till Debt Do Us Part, three TV shows about
people who spend foolishly, you already know about the difference between fixed
and variable expenses. A fixed expense
is one that does not change from month to month, and therefore over which you
do not have much control. Tuition fees,
rent, utilities are pretty much fixed expenses.
However, most of the rest is variable expenses: food; clothing;
transportation; entertainment, etc. Not
that these do not exist, but they can be trimmed; usually, there is lots of
wiggle room between what we spend in each of these categories and what we need
to spend.
Assuming you cannot change the budget of your fixed
expenses, you need to look at your variable expenses to bring them down. First step: write down everything you spend
for a week. Whenever you get home, pull
out your receipts and write down what you spent since the last time you were
home (home refers to wherever you are staying while at university). An easy way to do so is to have a pad of
paper at the corner of your desk or dresser where you’d typically ‘unload’ your
purchases and wallet. You’ll probably
trim your expenses that first week as the week develops and you see on paper
how much you are spending and on what – this is the affect I get anyway!
After a week of spending, put items into categories:
food; clothes and gifts; entertainment (bars, movies, etc.). Look at your spending and see if there is an
area that is outrageous: do you spend money on restaurants many times a week? Do
you use shopping as a hobby instead of when you need something? Is your
entertainment spending larger than your share of the rent? If any part of your
spending seems unless you have a category which is extremely low on spending
(like $5 on gifts), trim it by 20 % and use that as a budget for the following
week. Twenty percent is normally do-able
unless you are already very frugal.
Twenty percent is only reducing your food spending from $50 to $40. For most people, it means reducing some
restaurant expenses or fancy coffees.
Many people in Ms. Vaz-Oxlade’s show find that it is
not difficult to live on less when they try.
Yes, they miss the shopping and the going out at first, but these are
quickly replaced by much cheaper or free activities: you like clothes? Try
designing your own on paper, or learn to sew; you like a night of drinking and
music? Try it at home and make it BYOB.
Stop eating out; only buy what you can use and need.
And if you have not seen the show (available on Slice
cable TV and http://www.slice.ca/til-debt-do-us-part/ ), you
may want to watch a couple of episodes.
A few things that Ms. Vaz-Oxlade says in most of her shows:
- There are fixed and variable expenses: you can
reduce the variable ones
- If you can’t afford it, don’t buy it
- You should not have consumer debt: the only debt to
have is a mortgage (and maybe student loans)
- Shopping is not a hobby
- Make a budget that balances
- If you can’t handle credit and debit cards, learn to
live on cash.
Sure, it may be easy to laugh at the mistakes people
on her show make, but often we find that we make at least some of the same
mistakes. It’s worth a look at!
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