Fixed vs. Variable Expenses and the Wisdom of Gail Vaz-Oxlade

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!

Use Less Products

Most of us buy many products: soap; detergent; hand cream, etc.  These come at a cost to you, most of the time, a direct cost (you go and buy the product).  Is it possible to use less of these?

For example, dish washing soap.  If you are lucky enough to have the use of a dishwasher in your place, try to see if using half the recommended detergent would work.  If found that in my dishwasher, I can use ½ of a tablet (the ones that are easy to break) does a great job; my cost for dishwasher detergent just got cut in half!

Try the same with laundry detergent.  If you go to a Laundromat and the soap is included in the cost of the wash, save a bit in a container - you can use it later to hand wash a few items.  Often, 30 to 50% less soap will not make a difference in how clean your clothes are.

So how do I go about this? I first reduce by consumption by ¼ (for those not so good at math, I use ¾ of what is recommended or what I normally use); I do this for about 3-4 times (smell may need to accumulate in clothing before we realize that it’s not being cleaned properly).  Then, I cut down again, for another 3-4 times.  I keep on doing that until I find a problem and then I move back up to the last ‘dose’ that worked.  That’s my minimum-working dose.

How about shampoo and conditioner? Do you need to wash your hair every day or is rinsing enough?  I have long hair and I like to wet it thoroughly every day so it looks fresh; however, I shampoo one day and condition the next.  I also use a very small amount of shampoo (if you find it hard to control the amount of shampoo you use, pour the shampoo in a pump bottle and go from X pumps per shower to a very small one.  This can probably be said of most beauty product; you can typically use less and be just as clean and healthy.

I also find that my regular spray detergent for wiping counter tops (essential when living with others – you don’t know what is growing on there!) does just as good a job when diluted half-and-half with water (I keep a spare bottle and label it well) – again, the cost of that bottle was just cut in half.   Also, beware of super-concentrated-product-that-uses-less-packaging-but-cost-the-same-as-the-regular-product; yes, the concentrated product uses less packaging, but is it a ploy to make you pay more for less product, knowing that even if it is more concentrated you will use the same amount as before? You’ve got to wonder…

Also, beware of marketing and the goal of a soap company: they want you to like their product and buy more as often as possible.  Doesn’t it make sense then that they want you to use large quantities of their product for every wash you do (whether it’s shampoo or laundry soap)? So they are more likely to suggest a large amount of their product for every use.

Of course there are places where you should not use less: prescription medication is an important example.  It is important that you take the full dose your physician has recommended.  As well, I would not skimp on hand soap; clean hands are an important way to stay healthy and avoid colds and more serious illnesses during your studies and if you need lots of soap to do so, use it!  I also need lots of paper (yes, physical paper) when I study, so I use as much as I need without worrying about the cost.  This helps me reduce the anxiety before exams and increase my grades.  Well worth it!

The bottom line: use your brain to determine how much product you need, not the manufacturer’s suggestion.

The no-spending challenge

Once a while, when I see that I spend too much, I will challenge myself to a zero dollar week.  My challenge is to not spend any money (unless absolutely necessary – like paying for a photocopy) during 7 days (or course feel free to make the challenge longer).

This means no shopping, eating from the cupboard and the fridge, no going out, etc.  I cut down my spending to only essentials for one week. But if I’m doing the challenge for only one week, am I not going to simply delay my spending by a few days and not change anything overall in my annual spending? Actually, no.

This challenge makes me realize that I can live quite well without spending money.  I may have to be a little more creative at finding gifts, going out, eating, and designing outfits from my own closet.  It forces me to enjoy other things than purchasing new items.  This helps me have a mindset of not spending.  If I repeat the challenge every so often, my mindset is geared more and more towards not spending.  After doing the same challenge 4-6 times, I end up not enjoying spending money that much (really; I’ve done it!).

A ban of spending, even temporary, makes me appreciate how much I already have.  I do have food in the pantry and clothes in my closet.  I have activities that I enjoy that do not involve me spending money.  This, again, resets my thoughts towards not spending money.

It is possible that I may need to delay purchases during my no spending challenge week.  A few things can happen with this: 1. I simply purchase the item after my challenge is over; 2. I realize that I don’t need the item and change my mind about purchasing it; or 3, I go back to spending in my original way, but not having a ‘catch up ‘ period for my lack of restaurant meals for a week (i.e., I can go back to restaurant meals twice a week, but I won’t have 4 restaurant meals the week after my challenge to make up for the challenge week).  In two out of three of these options, I end up saving money overall (options 2 and 3). 

You also do not have to do the challenge perfectly: if you are planning on going to the movies on Saturday, you can plan on not spending until Saturday morning.  If not spending for 7 days seem too easy, try 10 or 12 days.  You can also alter the challenge so that it excludes food from the grocery store – especially if you are ‘due’ for grocery shopping.  If you are buying a gourmet coffee and your lunch out every day, a day without spending may be the best way for you to start.

The no-spending week challenge is an effective way to change your view on spending money.

The (Too) High Price of Beauty

I once knew a first year engineering student who had a monthly beauty budget of $200.  Two hundred dollars a month?! That was my entire food budget and I ate well!  Most of us can’t afford $2000+/year on our beauty.  But we still want to look good.  Here are a few tips.

Hair:

• Choose a haircut that grows well so you don’t need a trim more than once every 3 months
• Or enjoy a buzz cut by purchasing your own clippers at about $30-75.
• Color your own hair – and buy your hair color when on sale
• Learn to trim bangs so you can do your own and your friends’
• Find a training program and hairstylists – for a fraction of the price (or just tip), you can get a professional haircut since the students are under the supervision of a qualified teacher stylist (look at collage and private schools and call for their schedule).
• Find generic version of your favorite hair products
• Find simple styles to deal with a bad hair day so you do not waste money and effort when your hair is not to your taste.

Makeup and skin

• Buy generic – since we lose makeup and/or replace it often, there is no need to pay designer prices
• Do your own makeup, even for formal events; or, enlist a talented friend to help out
• Buy a skin/acne cleaner that is suitable for your skin and use it – it won’t work if you don’t use it.  Use it on your back and your chest if you are prone to acne and sweat a lot.

Body and facial hair

• Dry your disposable razor ASAP after using it: first on a dry towel and then air-dry it for a few minutes before putting the protective cover back on.  It will last much longer; I don’t use more than one per month!
• Use a mixture of cheap hair conditioner and water to lather your legs – they will be smooth and well moisturized after you shave!
• Shaving (any body part) in the shower may save you time, but it is expensive if you pay for water and/or hot water.  Shave before going into the shower.

General

• Prevent rather than treat: wear sunscreen to avoid sunburns (and skin cancer), wear flip-flops in communal showers to avoid warts and athlete’s foot
• Before throwing out the ‘empty’ bottle of hand lotion or shampoo, add a bit of water to the bottle and use the diluted product
• If you have a tube of ointment/body cream, cut it in half before throwing it out – you will be amazed at (or horrified) at how much left there is.  Use it all before discarding it.
• Close all bottles, tubes, and jars when not using, to avoid spillage and drying out
• Find new use for products you don’t use anymore: don’t like the job the conditioner does on your hair? Use it as a body moisturizer; Sunscreen lotion expired? It’s a great hand lotion.
• If you can’t use it, give it away; being generous is always paid back one way or another.
• If you enjoy spa treatment, massages, and nail treatment, prepare a session with friends when you take care of one another

Overall, be as wise with your beauty budget as you are with the other parts of your budget.  Be frugal and beautiful!

Do NOT live your parents’ lifestyle

Many students have this idea that when they leave home to go to university, they are entitled to the same lifestyle that they just left: a nicely decorated and comfortable home with all the high tech devices they had at home, going out to restaurants on a regular basis, buying brand name clothing, etc..  What they don’t realize is that this is their parents’ lifestyle – NOT theirs; they just got to tag along as part of the family!

When living on your own for the first time, if this happens in college or university, your income will be close to nil.  This entitles you to … nil in terms of lifestyle (or very little) since you cannot afford any of it.  Your parents worked hard to EARN their lifestyle.  They worked hard to deserve the fruits of their labour.  You are just starting out on your own, and until you become a contributing member of society, as define by a society who decides that what you do should deserve a salary, you should not try to live your parents’ lifestyle.

This is a mistake I have seen hundreds of students make.  They arrive at university and think nothing of dropping $5-10 every day in coffee shops and going out to eat several times a week.  I understand that this is the way they were raised, but again, when their parents are doing it, it is with their own EARNED money – not someone else’s money.

I think that most parents need to have a serious talk with their teenager before the said teenager goes to university.  As a young adult with no real income, the student is living on his or her parents’ money and need to respect the budgetary constraints imposed by the high cost of education.

In order to attend college or university without digging too deep a financial hole, one has to radically scale back one’s lifestyle to the minimum for a number of years.  This is the plight of a number of students and one should not feel alone in this situation.  This is also a very good reason to search friends amongst the more frugal students at your educational institution… and this will be the topic of an upcoming posting!

Three skills to master BEFORE going to university

There are three basic skills, that, in my books, are almost essential to reducing expenses at university, whether you live at home or not.  If you are already in university, it is not too late; if you have finished university and are now working, these three skills are still important and will save you money for the rest of your life.  Here there are:
 
1. cooking: cooking, even if just basic cooking, will reduce your food bill, while increasing your health (by avoiding to eat fast food and other processed food), and decreasing your dating budget if you can host at home.

2. sewing: I'm not talking about being able to make clothing from scratch, but being able to sew a button, hem pants and skirts, repair a small tear or an undone seam, etc.  If you need to get rid of your clothes every time there is a small defect with it, that means replacing it and that can be costly.

3. cutting hair: obviously, cutting your own hair is difficult, even for a hairdresser.  However, being able to trim your own hair will save you many trips to the salon or barber and if you can find a like-skilled student, you can exchange hair cutting services.  This is one skill that will serve you well in the future when and if you have children.

One thing you will find these three skills to have in common is that they are all about being self-reliant; in the same idea, if you can fix and tune-up your own bicycle or car, and do your own computer repairs, you will also save money.  However, the three skills listed above and useful for all students, regardless of their mode of transportation or electronic use.