Cheap-O Economic Returns

Cheap-O Economic Returns

It has been a year since my last post. During that time a lot has happened. In Feb. Of 2011 I suffered a heart attack, and had quad bypass surgery in May 2011. It took all that summer and fall to recover and get back to being able to function. The good news is that I am doing great and the surgeon tells me my heart is better then it was 20 years ago. For that I am very greatful.

Now I am going full strength and ready to pick up where I left off. I have a list of projects left over from last summer plus ideas and plans for new projects, more then enough to keep me busy for the whole summer.

I trust that everyone is doing great and that the economic climate is encouraging you to take the steps to necessary to regain control of your money and your economic future.


Gas Prices and Mortgage Rates Creeping Up

Every time I pull into a gas station it costs a little bit more to fill up. A few cents a liter or a gallon adds up by the tank full. We have seen gas prices at the pumps go up by more then 10 %. With the average family already spending $6000.00 per year on gas that extra 10 %, means they will have $600.00 less to spend each year on things like food and clothing. Given that the forecast is for gas prices to keep moving upward, there will be less and less money available for other purposes.

Don't forget that with increased transportation cost, businesses will pass the increase cost of doing business on to the consumer, which translates to everything will cost more.

Morgage rates are moving up as well. Royal Bank and TD Bank both raised there 5 year rates .20 percent and that trend is upward as well. The fact is that at some point interest rates have to return to a "normal" level.

Business analyst ate telling us that even a 2 % increase in mortgage rates would result in a significant number of consumers having to spend greater than 40 percent of their paycheck just for debt service. Add that to the increase in gas expenses and you can see that there is trouble on the horizon.

So how do you adjust to cope with this onslot. First DO NOT incur any additional debt, if you feel you have to have that new High Definition 54 inch LCD TV, wait to buy it until you have the cash to pay for it, don't put it on the credit card. Make a concerted effort to pay off your debts, starting with the debt with the highest interest rate.

Next drive less, I know that is easier said then done, but there are things you can do to cut down on the number of miles you drive. Walk or ride a bike, if that is not practical then organize your trips so that you are combing several trips into one.

A lot of money advisors would suggest getting a car that gets better milage, and that is a good idea, BUT not if you have to borrow thousands of dollars to save a few hundred on your gas bill. I own a. 1984 Dodge that I paid $500 for, I can buy a lot of gas, even expensive gas for less then making car payments. So make sure you are looking at the total picture when making decisions.

Automotive experts tell us you can save a lot of gas by following some simple rules. Don't let your car idle for any length of time, check the air pressure on your tires, slow down, keep your car tuned up, check your air filter often and keep it clean or replace it should it need to be changed.


Don't be like those people that have a bumper sticker that says, "I owe I owe it's off to work I go". Start now staking your claim to economic freedom. You should always be striving to reduce your debt, and reduce your cost of living. It can be done.

Cheap-O Economics

If you think there is more month left at the end of the paycheck you are right.

If you think there is more month left at the end of the paycheck you are right.

If you are starting to feel like you are working harder and have less to spend you are not alone. In fact wages have been flat, in some sectors of the economy even going down, while prices for food, gas, heating oil and other must have things is going up and up and up.

With 13.5 million americans out of work and the average workweek running just over 34 hours a week, that paycheck is not going to be getting larger anytime soon.

So what are your options?

Find a way to live on less. Yes it takes work but it is worth it in the long run.

First, work hard at getting out of debt and not taking on anymore debt. The less you have to pay in payments the more money there is left over for food and gas and to enjoy life. That may mean driving your car another year or two, rather then trading it in and buying a new one. It might mean downsizing your home to reduce your monthly payment. It will for sure mean putting away or better yet cutting up your credit cards and their 19.8% interest rates.

Second, adjust your expectations, No you do not need that new outfit, No you do not need a new LCD HD TV, No you do not need...well the list goes on and on. Find a way to do with out and you will need less money to live.

Third, change the way you shop for food, work out a menu and stick to it. Buy the food that is on sale, buy in bulk. Stop eating out, you can eat at home for a fraction of the price and eat better.

Fourth, don't go shopping, that is the best way to not spend money. It is in fact that simple, in you aren't in the store you won't be spending the money.

You can in fact beat the paycheck game, you just have to be playing it smart.

Cheap-O Economics

2011 - The Year Ahead

2011 we are all wondering what the year ahead has in store for us. We look back over 2010 and some of us are better off then we were a year ago, for a lot that is not the case. So what does the year ahead hold in store for us.

That is the Zillion Dollar Question. I have been reading the predictions of the political pundits and the Economists from the Right, the Left, the Center and some that are so far out they are not even in the ballfield, The one thing I notice, not a one of them has a clue, oh don't get me wrong, they can show projections, and charts, case histories, trends, but when it comes down to it, they don't have a clue, Even the best guessers are making less then good guesses.

So are interest rates going up, YES, they can't go down any further or they will be paying people to borrow. So once you hit bottom no place to go but up. The question is not if rates are going up,, but HOW much are they going up by. For a lot of home owners a 2% increase in interest rates would be devastating, a 4% increase would wipe them out. But you say, rates can't go up that much or that high, OH yea they can and have, check out the 19% mortgages that we around in the 1990's and how people walked away from their homes after their payment doubled, tripled or even quadrupled. My uninformed dumb luck worst guess, an increase in mortgage rates of about 2% by end of 2011.

The value of the Dollar??? Well the Canadian Dollar is a par with the US buck, and likely to be worth more as the year progresses. The US Greenback will suffer against other major currencies, BUT that could all change if one or more of the EU countries have a major meltdown and the Euro takes a hit.

Cost of Food and Fuel. Well given that China added 25 Million new cars last year and will add that many again this year and that India now has Middle Class population of 350 Million (roughly the same as the total population of the USA), the competition for quality food and protein will increase, and with more and more cars on the roads in Asia, the cost to the consumer of Food and Fuel is going to likely keep raising. Add to that weird weather, snow in Florida, floods here there and everywhere, who can even guess at how crop land and food production is going to be effected.

So plan on spending more at the service station and at Safeway, But, stores will have great specials once people are buying less, they have to keep their product moving and there are going to be some deals to be had. But you need cash on hand to grab those deals.

On that note, if you happen to have some extra money just laying around, there are going to be some great deals as stores dump inventory, as businesses go down the drain, as homes remain unsold (in 2010 there were more then a Million homes foreclosed on in the US those have to be resold to someone.), as luxury items are sold off by people reducing their debt and lowering their payments.

Employment outlook. Well in the US it is going to stay at the 10%+ unemployment range, and the longer it stays there the more and more people that won't be able to find a job. If you are a grad from college and you don't find a job in a year, guess what, next years grads are now looking for the same job you are. Statistically, the longer you are out of a job the less likely you are to get a job. Now there are a few Bright spots out there. Western Canada (not counting BC) is healthy and Saskatchewan has lots of jobs available. The clean up in the Gulf is going to create jobs. Major urban areas of the US, well don't hold your breath.

Then of course what are the political leaders in Washington, London, Ottawa, Mexico City and the other capitals going to do? Mess things up, of course. Do the worst possible thing, of course. Make matters worse, for sure. The one thing political leaders and their advisers forget is that all the theory and all the great plans won't work if no one can figure them out, and people are going to do what is in their best interest.

My suggestion, the same as it has been for the past couple of years. REDUCE, Reduce your monthly cost of living, reduce your debt, pay everything off, spend less, buy less. Reduce your dependence on a job.

DO grow your own food or at least some part of it, DO stock up on food when it is on sale, DO evaluate if you really need that gym membership, cable TV, Cell phones for everyone, 2 or 3 cars, a house that big.

Don't spend money you don't have, Don't use your Credit Cards for everyday living expenses, Don't incur any more debt, put off buying that new car or truck and NO you do not need or have to have that new wide screen LCD HDTV, or that new IPhone or that new whiz bang toy, Don't pay other people to do things you can do.

Oh and by the way, I don't have a clue, anymore then the rest of the people making predictions, my best guess is bases solely on what I see out the window and from making up my own mind after perusing the vast array of options expressed out there, BUT I do know that having taken the steps we have I can ride out things a lot better then most people.

Happy New Year
Cheap-O Economics

Can You Make Your Payments?

Recently there has been much talk among governments and economists about the household debt to disposable income level in both Canada and the USA. The latest numbers show that in the USA household debt is 147.2 per cent and in Canada it is slightly higher at 148.1 per cent. That means that for dollar earned the household is caring about a buck and a half of debt. So a 2 income family earning $65,000.00 a year would have debt of almost one hundred thousand dollars.

They go on to break this down saying it is not so bad when you look at good debt vs. bad debt, and when you look at what was purchased. One economist was pointing out that it is not so bad if you did not go out and buy speed boats or motorhomes but cars and house.

A lot of talk about how things are not so bad when you look at net worth which has been going up of late.

All those discussions are totally mute in my option. The only thing that matters is CAN YOU MAKE THE PAYMENTS? It doesn't matter if your net worth is high if you can't afford to make the payments.

The scary thing is a lot of people are right on the edge, they are making the payments but just barely. If anything was to happen to decrease income, like getting laid off or downsized or have to take a pay cut, or if the cost of debt / payments was to go up, then things would not be so good. The governor of the Bank of Canada recently warned that one of these days interest rates are going to be going up. They can't go any lower, and are only being kept this low to try to spar on business investment. His comments were “When the reckoning comes, it could be swift and brutal.”

So my advise, get out of debt and stay out of debt. Keep your payments as low as you can by not spending money on things you don't need and can't afford. With Christmas just around the corner it is extra critical that you keep an eye on what you spend.

Have a very Merry Christmas and a Happy New Year, but watch what you spend and put those credit cards away.

Cheap-O Economics.

Nothing Is Ever Simple

There has been a lot of discussion lately about the 100 mile diet and shop locally. That to be environmentally responsible one has to buy there food from the surrounding area and save all that fuel and greenhouse gases from trucking produce thousands of miles from the grower to your stores shelves.

As usual nothing is as simple as it sounds. I recently listened to an analyst talking about the fact that over half the greenhouse gases and fuel used was not the usage of the trucks, planes or ships that were used to transport the products, but, rather it was the 5 and 6 miles traveled from home to the supermarket that used the fuel and added so much to the greenhouse gases.

Additionally the land use issues were in favor of growing products where it was best suited. For example wheat grows best in the “wheat belt” area of the prairies in Canada and the USA, were it would take 2 or 3 or 4 or more times as much land to grow the same amount in other places. Things like lettuce and strawberries ect take a fraction of the land in California to grow as they would in places like Vermont or Colorado.

All in all a very good argument for going ahead and buying without guilt the things that have been shipped halfway across the nation. BUT only if you peddle your bike to the store and leave the car at home (not going to happen here, this morning it was -27C or 14 below Zero F) and NO WAY am I not taking the car to the store.

Like I said nothing is ever simple.

However the buy local people do have a point. Take that package of hamburger that is sitting in my freezer. The cattlemen here in our area ship cattle just over a 600 KM (400 miles) to the slaughter house, from there it is shipped another 1000KM to the distribution center and warehouse, then shipped another 1000KM back to the store that is less then 20 miles from the cattle operation where the cow started its journey. I agree that in that case far better to get to know the rancher and the local meat cutter and enjoy that fine hamburger or steak. BUT like I said nothing is simple. If we all did that, then the truck driver would be out of a job, and hundreds of people at the packing plant would be out of a job, and 100s in the warehouse would be looking for a new job and the clerk at the store would get a lot less hours.

The point I want to make is less about how far things are shipped (and something only grow in the tropics or in the middle of the ocean, some things have to be shipped if we are going to enjoy them at all) but that we know where they come from, how they are grown and under what conditions are they being grown. This would be the spot where the Free Trade coffee people, and the Rain Forest Alliance people would put an Ad.

I strongly suggest that yes you support your local Farmers Market where you can buy the best locally grown produce right from the people that grew it, in season, but in January in Canada the lettuce comes from California or Texas as the gardens here are under a couple of feet of snow. Just like the Wheat used in that dish of pasta likely came from my neighbors field.

It is the lack of awareness of where produces come from and how they get to market that is my issue. When you hear people talking about milk, bread and hamburger like they are produced in a factory and not on a farm, that just shows how far removed people are from the reality of life. When it is traumatic for a child to learn that their running shoes are the hide of a cow. When there is no connection between where it was produced or grown and the end user, we have gotten to far removed.

Cheap-O Economics.

New Wind Generator Installed

At the end of last winter we had a major blizzard with winds gusting over 100 MPH and my small wind generator was ripped apart and smashed. I then went all summer without a wind generator.

This fall I installed a new Malard 800 Watt low wind unit. This is designed to start in a fairly low wind but to handle the higher winds as well. So far so good. The folks at Mike's Wind Mill Shop (http://mikeswindmillshop.com) know what they are doing. I have also purchased inverters from them. They are great to deal with.

They say the blades have been tested to 0 degrees F, so far I have field tested the unit down to -27C or about 18 degrees F below zero. I am sure by the end of the winter we will have tested the blades to 40 below zero. Will keep you posted as to how the unit holds up in sub zero temps.

Having a wind generator sure changes the way you feel about wind. Now you enjoy the wind as it is putting power into the battery bank.

Cheap-O Economics

Credit Card - what not to do if you have one.

Credit Card - What not to do if you have one. Do you really need one?

Recently Marcia Frellick, CreditCards.com wrote on Yahoo fiance about 15 times you should not use your Credit Card, you can view the complete article here It is important that all Credit Card users read this. However I want to highlight a couple that I think are extra important.

You should not be using your Credit Card, If you're paying off one card with another, and it's a habit. I have seen bumper stickers that say “What do you mean I can't pay off my MasterCard with my Visa Card” If that is your thinking it is time to step back and take a long hard look at your spending habits.

You should not be using your Credit Card, If you don't have a plan for paying it off this is something a lot of people do not take into consideration. NO thought is given to how to pay off the Credit Card bill for that impulse purchase of a wide screen TV.

You should not be using your Credit Card, If you're charging things that you used to pay cash for. This should set the alarm bells to ringing, This is a sure sign that there are some issues that need to be looked at closely. This would include groceries even if you are getting reward points or even 2% cash back.

These are just three of his 15 times not to use a Credit Card. I would add to his list.

If you are just making the minimum payments on your Credit Card then it is time to put it away and not run up anymore debt. As it is it is going to take you years and years to pay off that Credit Card debt and cost several times what your original debt was.

Credit Card debt is unsecured debt, meaning that you can not sell an item to pay it off. With secured debt you can sell the item. like a house or car, and pay it off. You can not sell that restaurant meal you just eat, to pay it off, you can not sell that clothing or shoes and pay off the debt. Credit Card debt is bad debt with high interest.

I have heard all the reasons to have a Credit Card, for emergencies - I saw a sign in a business the other day that said “a lack of planning on your part, does NOT constitute an emergency on our part” the same can be said about a lot of so called emergencies, the car needs tires every 80k miles, so plan for that. The car is going to need repairs, so build that into your budget ahead of time rather then pay off the Credit Card after the fact.

For convenience, use a debit card rather then a Credit Card and when you run out of money stop spending, It is really amazing how simple that is.

There are just some things you have to have a Credit Card. - That is very true, but maybe a hard look at life style choices is needed at this point. I know you can not rent a car with out a Credit Card, but I have not needed to rent a car in the last 20 years so that is a pretty mute issue.

You have to have a Credit Card to reserve a motel room. That is can true and as well I have run across motels that won't even register you without a Credit Card, but you know what, the motel across the street will be glad to take your debit card, and yes I do have to give a deposit sometimes, but I can get by without the Credit Card,

It is possible to manage without a Credit Card, and if you can't keep a handle on your Credit Card usage then you might need to go to straight cash for a while. This is especially relevant with Christmas season just around the corner. You can't spend what you don't have if you are not carrying a Credit Card in your wallet.

Cheap-O Economics