Money is Power, Apparently

Money is Power, Apparently

About 8 weeks ago, some of you may recall that I made a date with cash, that is, to use strictly bank notes and change for a two-month period. Credit and debit cards were not to be used, if humanly possible (Yes, I slipped up a few times).

This challenge came about for two reasons: a) I had lost track of where I was spending my money, and b) I learned through the Occupy the Holidays movement that merchants pay the banks a 2% to 5% fee for each debit transaction. Hardly seems fair, right? Our local merchants fight to stay afloat financially among fierce competition from major corporations only to be nickled and dimed in transaction fees. No, I decided that banks already had enough of my money and everyone else`s.

And apparently I`m not the only one who feels this way. This International Women`s Day, Women Occupy will be staging a protest against the Bank of America. Interrupting business as usual, the group will be protesting the bank`s predatory economic policies that are destroying families and communities.

My date with cash, my own little protest, was anxiety-inducing in the beginning. And truth be told, I probably would have given up if I hadn`t opened my big mouth and blogged about it. But anyway,  I learned a lot.

Every Saturday, I calculated how much I needed for the entire week and took out a large sum on Sunday, grocery day. This is also the approach advocated by the Financial Consumer Agency of Canada. (The FCAC is a great site for banking tips and interest calculators to help you keep your debt in check.) In most cases, this lump sum approach worked, but I still had to run to the bank on more than a few occasions. (Readers from other countries: greedy bank principles are similar from country to country.)

Discoveries

1) The daily latté was a luxury I couldn`t afford. I opted for regular coffee, which amounted to a $2.00 savings a day. A latté still finds its way in, but only occasionally.

2) My closest branch ABM is at least a 15-minute walk away. Therefore, I did a lot more walking, and as a result, my clothes are looser now. Yes, cash only may also serve as a weight loss plan.

3) I also stopped buying things to eat when I felt hungry. Instead, I brought an apple or a V8 with me every day. Makes your bag heavier, but worth it.

4) I paid $13.00 in interest on my credit card in January, compared with only $2.00 in February.

5) My bank statement was half a page long, and I could actually remember the transactions (Eureka!).

6) Advanced planning helps you to organize a lot of other aspects of your life. I planned more meals and organized my time better.

7) I talked to a lot of people about how they kept track of their money. I was surprised to learn that most of them peruse their accounts online a few times a week.

8) I now have a small savings, and February will be the first month in a long time that I have not gone into my overdraft (no small miracle).

If you, too, are fed up with the uber rich banks taking your hard earned money in interest and monthly charges, then you may want to try cash only. Or you might just want to check out some of these user-friendly FCAC tools to help you make informed decisions about your finances:

Credit Card Payment Calculator: This tool shows you how long it will take you to pay off your credit card balance if you make 1) the minimum payment, 2) the minimum payment plus a little more, or 3) pay a fixed amount every month. But more importantly, it shows you just how much you will pay in interest (makes bankers salivate).

Banking Package Selector Tool (chequing): This tool shows you which bank offers the lowest monthly charges to accommodate your banking needs. It all comes down to how many transactions you make a month, and the monthly balance you maintain. It`s a good idea to have at least three previous bank statements on-hand to identify your own banking habits.

The Credit Card Quiz: If you think you know everything there is to know about credit cards, think again. Here are 10 questions to demystify some common credit card myths.

This was crossposted at kickaction.ca

Happy savings!


Related posts:
Occupy the Holidays
My Date with Cash

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My Date With Cash

My Date With Cash

This is the first time that I've written about personal finances, which makes everyone a little uncomfortable. We are all painfully aware of the shortcomings of our spending habits and we fear the judgement of others. But maybe our fear to disclose, like that of the abuse victim, lets someone else off the hook, ie the banks.

I try to hold off on my New Year's resolutions until my birthday, which is today, because this is usually when I have a better idea of where I stand (read: the bills have come in). I have a decent job, my husband works and we live relatively modestly. Because we have young children, we don't go out that often. Instead, we tend to stay in and read or work on our computers. In other words, we're not big consumers because we have everything we need. Yet, come bill time everything seems tight like when I was a student.

Unlike most of my fellow educatees at university, no parent was footing the bill. I paid for everything through summer employment and a part-time job during the school year. I applied for grants and loans and I lived a very simple existence, buying bulk food and used text books, and only splashing out on a daily cup of coffee. I watched my finances closely and kept a running tab on my desk of everything I spent. Clothes were bought either on sale or with small imperfections so  that I would get a discount. And let's not even talk about some of the living arrangements I endured for the sake of cheap rent. I also discovered the joy of haggling, which is not a common practice in Canada, but you'd be surprised how often people are willing to go down in price. Besides, the worst a retailer could say was no.

I was really proud of completing university with only a small amount of student debt, which I paid off two years into the repayment schedule. But what has happened since then?

I spent a considerable amount of time poring over my finances this month. I discovered that I pay at least $5.00 a month in interest on my credit card, and in those few ridiculous months when I've taken a small cash advance, I've paid in excess of $20 a month in interest. And this was just one of the problems. The other was using a debit card too often. I'd always worked on the premise that if I carried cash I'd spend it, so I opted for debit. But here lies the problem. Every time, I go into my overdraft I pay interest effective the day this transaction is posted. But I usually don't know that I've gone into my overdraft until after I receive my bank statement at the beginning of the next month.

I spoke to my husband about this, and he too had noticed something similar. We decided to stick to just using cash and writing the odd cheque for the next eight weeks to see how we fare. Will this forced use of cash make us more conscious of our spending habits or will we rack up ATM fees because we're never close to a bank machine at our bank branch? We'll be keeping tabs. At any rate, this will certainly be a test of strength. January is after-Christmas sale season. . . .

 I'll report back. Click here to see what I discovered about two months later.

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Trompe l'oeil

Trompe l'oeil

This is the Royal Bank of Canada building at the corner of Laurier and Park in the Mile End. I loved the idea of covering construction with cloth, a trompe l'oeil if you will that banks tend to be very skilled at.  At least we don't have to look at a construction site all summer.

Just a short announcement to say that I have a lot under construction at this time, my 200th post in particular. I will be back once the heat lets up, and I promise to rip away this cloth facade and show you what I have been working on. Enjoy the heat if that's your thing.

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