One of the main concepts
at the basis of the 12-Minute Approach
is improvement. In most cases and in most domains, it’s easy to get to ball
rolling with only 12-Minute a day or 12-Minute here and there. It’s no
different for your finances. Your family’s financial situation can be greatly
improved by investing just a little time, 12 minutes, on it. The idea is to
start with 12-Minute and build up from there.
Consequently, today we
will try to present a bunch of ideas on how to quickly improve your dealings
with money. Note that our intention is not to present an exhaustive list. If
you have a minute or even better, a dozen, pick one of these and try to
implement it.
Debt
Get rid of extra credit cards
No one needs a zillion
credit cards, but many wallets still get filled with a lot of them for various
reasons. Sometimes, it seems impossible to get away from all those enticing rewards
and offers.
The problem is that all
those credit cards allow you to spend more easily and could negatively affect
your credit rating.
One or two cards with reasonable
limits should be enough for most people. So, think of cancelling all the
others.
Even though it can be an
effective way to prevent you from using them, cutting your cards is not enough.
You need to actually cancel each card with your financial institution or credit
card company. Stay patient as the process can sometimes be voluntarily complicated
and tedious.
Transfer balance and cancel high-interest credit card
After administration
and late fees that should be avoided altogether, interest charges are your next
worst enemy in regard to credit cards.
If you really can’t get
away from carrying credit cards balances, at least look for less
interest-hungry options.
As last resort, we
prefer to only use our relatively low-interest home equity credit line. It may
not be a possibility for everyone.
Lower interest credit
cards may be your only recourse. You should find interesting offers is you look
and research a little. Only take your business to reputable institutions and as
mentioned above, make sure to thoroughly cancel your old card if you opt to
take that route.
Consolidate your monthly credit card statements
Most people never do
this but consolidating a credit card statement only takes a few minutes. It can
allow to spot and correct errors or overcharges. We prefer not to accumulate
and do it more frequently (almost every week) but a monthly checkup should be
just fine.
It’s simple to do it
online. Reviewing your credit card statements can also help you realize how
much and where you spend your hard-earned money. Because spending money is now so
easy, make it a point to at least minimally track your expenses. Use the many
tools already available out there or if you prefer, put up your own system.
Make a list of your liabilities
The first important
step to tackle debt is to assess the situation. Making a list of each of your
liabilities should not take you that long and will give you a better idea of
the extent of the damage.
That detailed inventory
of your debts can allow you to easily spot where things can be improved. Your
liability list should include basic information for each item like total amount
of debt, interest rate, frequency and amount of payments.
Put up a plan to get out of debt
Don’t feel guilty about
crumbling under debt, many suffer from the same financial burden. The only
thing you can really do is to find a way to get out of it.
Severe situations may
require more than that, but in most cases, it’s often just a matter of getting
things started in the right direction.
You could take the most
efficient path by tackling the highest interest debt first. On the other hand,
getting rid of the smallest balance debt first can be more psychologically encouraging.
Putting up a plan to
get out of debt within a couple years is most likely realistic and will also
provide you extra motivation.
Investing
Set up an automatic investment plan
This one is a classic personal
finance tip. It really works for most people because it’s often much easier to
invest regularly without noticing it thru automatic payments. The alternative
to invest a big chunk once or twice a year can be much more psychologically
painful.
You know the usual drill
to synchronize transfers just after you get your paychecks. So, take a few
minutes to set it up!
Try to reduce investing fees and transaction costs
Apart from emotions,
excessive fees are probably an investor’s worst enemy. They can have a lasting
ill effect on investment return and could even chew on capital.
To control your
investing fees, review the financial products you are using. Try to avoid
administration fees and stay away from costly management fees. Look for
low-cost investment products out there, the really exist!
For DIY investors,
transaction costs are also a game-changer. Paying lower commissions on each
transaction is one way to go about it. But making less transactions is probably
even more effective as it will also help keep your emotions in check.
Explore ways to reduce your tax bill
Being tax efficient is
also one of the keys of successful investing. Not paying too much tax will
leave you more money to invest.
We will point out a few
ideas here but make sure to explore on your own as in the fiscal realm,
possibilities are almost endless and depend a lot on your situation.
For Canadians, Tax Free
Savings Accounts (TFSAs) are a no-brainer. To some extent, they allow you save
and invest tax free. Consider transferring funds from taxable accounts.
Registered Retirement
Saving Plans (RRSPs) benefits depend on your level of income. They don’t have
to exclusively be used for retirement. We like to contribute (or now even
withdraw) to keep our taxable income just under the lower 40K$ish tax bracket.
On top of paying less
tax, keeping US stocks in RRSPs can allow to simplify fiscal implications.
Be sure to know about contribution
deadlines and limits. Sometimes just adjusting the timing of your transactions
can have significant impact on taxes you will have to pay.
Verify fiscal
implications before your make any financial move and not just when you file
your taxes. Also consider long-term fiscal pitfalls as saving a small (or big) tax
amount now may have a much heftier price in the long haul.
Explore income
splitting strategies like spousal RRSPs to reduce the overall tax bill of your
family.
Review your retirement plan
Some people don’t like
to talk retirement and rely on life to take care of those matters. At the other
extreme, others obsessively plan for it and even dream of early retirement. For
most, reality will settle right in between.
After all, your
retirement lifestyle should be a personal decision. Planning won’t necessarily
make it perfect, but it certainly can make it better. Only relying on faith may
seriously impact your family’s situation and limit your choices in the end.
To some extent, we
believe you have to respect the freedom you have to make these choices and give
it a little consideration in advance.
So, take some time to analyse
your retirement possibilities and refine a plan to get to the most convenient
for you, not anybody else. Bear in mind that some minor adjustments today may
have remarkable impact on your retirement future.
There is a ton a web
resources available out there If you need a little inspiration or help
calculating estimations.
Consumption
Call to ask better cable or telecom deal
Back in July, we posted
12 Suggestions to Reduce Telecom Expenses. Without a doubt, the
most popular tip is simply to call for a better deal.
We first talked about
it here after we realized that Just Asking for a Telecom Reduction was quite easy. It was still a
breeze to repeat the process according to This Post from a Few Months Back.
When it comes down to
cable or telecom, just a little time over the phone or on the web could
literally save you several hundred dollars. Definitely time invested very well!
Review subscriptions
Many of us one day
subscribed to a magazine that we still receive but never read. For those,
automatic renewal can be exasperating. You end up continually paying for
something you don’t use anymore.
So, take a few moments
to review and cancel unused subscriptions. In this era, this is also true for online
subscriptions. As we already said before, a few bucks each month can really add
up in the long run. You could deeply regret those few costly clicks you
carelessly made a couple years back.
Shop around to get better prices
This habit may be a
given for some, but many just don’t take time to look for better prices.
It’s even easier to
shop around these days as information is accessible from the web after just a
few clicks. So, you could potentially do it from anywhere.
Know the typical prices
of items you often buy. If possible, stock up on them when you get good
rebates.
The same goes for
big-ticket items you really need, do some research and determine a target
price. Be patient and wait to obtain that price before you buy. Look for
seasonal rebates. Although we hate this part, don’t be shy to negotiate, you
will feel wonderful if you get an even better price.
Find ideas to slash out 12% of your spending
If it’s your first time
cutting back on your expenses, a 12% reduction can be a perfect target,
ambitious enough yet attainable, like any
12-Minute objective.
If your spending
already has been trimmed down, be a little more modest in your ambitions to
take it further. Being too aggressive and unrealistic won’t do any good.
Invest a predetermined
amount of time, like 12-Minute a week or a day, to research and review
your spending. Also give yourself a precise period, like
12-week, to improve and attain a precise quantifiable objective.
Recurring expenses
should be your main focus. Their impact is more significant. Transpose your
spending or savings over your lifetime like we talked about Here.
For instance, you’ll notice that saving just a few bucks every week may have a
bigger impact than saving a couple hundred bucks only once.
Don’t disregard
potential savings on big-ticket items as their influence on your finances could
be substantial. Just realize that smaller but recurrent spending could impede
your long-term financial progression just as much.
Make a grocery shopping list
Planning your weekly
meals according to specials can save you a lot of money. To some extent, it
will also force you into a certain level of variety, which is marvelous for
your general health.
Making and sticking to a
grocery list can you save you both time and money. It can make groceries a much
more efficient process.
In many stores, price
matching has been quite in vogue lately. Unfortunately, we personally don’t
always take advantage of it. We think the process can be too time consuming
unless you find an effective app to simplify it for you.
Negotiate a better insurance deal
Home and auto insurance
rates depend on experience. That’s why your premiums will probably go up at
renewal after you made claims. They also can go up if your insurance company
had bad experience with customers in your area or in a similar situation to
yours.
Contrary to what many
believe, insurance companies don’t usually reward customers loyalty. They won’t
necessarily past up good experience to existing customers and lower their
prices.
On the other hand, they
will often give great deals to new customers. They will also try to retain your
business or gain it back if you mingle with competitors.
It won’t take you that
long to ask around for quotes. Don’t hesitate to switch if your insurance
provider doesn’t match a better deal. Personally, we’ve been switching from the
same two rival companies every two to five years for the last two decades.
That process saves us
several hundred dollars each and every year. That’s why we make it a point to
negotiate and review our coverage at least at renewal.
Look for cheaper life insurance options
If your family depends
on your ability to earn money, you need life insurance. This should be quite
obvious and simple.
Unfortunately, many
people who don’t need life insurance like singles and seniors often have a lot.
And the other way around, many people who really need life insurance like young
providing parents don’t have a lot. Most of the time, it’s because they think
they can’t afford it. Reality is that they can’t afford not to have any as
financial repercussions could be catastrophic for their family.
That’s why young
parents should look and know about the cheapest life insurance options. The two
quick answers to that fundamental personal finances question again are obvious:
it’s group insurance and term insurance.
Look in to it. Group
life insurance usually available thru your working conditions is your best bet.
Because group insurance is not accessible to everyone and its limited coverage
may not be enough for all your insurance needs, complement it with low-cost
term life insurance.
Take time to do some
research and be wary about those salespersons only looking to make a big fat
commission at your expense.
Review your daily commute to work
Use app or practical
websites like Google Maps to review your daily ride to work. Alternative routes
may allow you to use less time and save on gasoline, which can be good for your
pocket and the environment.
You could be surprised
and find out that the highway may not necessarily be the best way. In my case,
the highway route is a little faster with no traffic but is a few klicks
longer. It becomes quite variable with circulation and can become a nightmare
in a flash.
In the end, the city
road is much more economical for me. It usually is also a lot less stressful,
depending on how many wackos (not always car drivers but often cyclists or
pedestrians) I encounter along the way. Indirectly, searching for my optimal
commute, I discovered viable options for when traffic really gets jammed.
Budgeting
Use bank and credit card statements to start up a budget
Without any references,
starting a budget from scratch can be a hassle. Many will never get to it
because they are simply too discouraged about the enormity of the task.
We have a great idea to
make it easier for you. Because nearly all financial transactions are now
digital, you can use you online bank and credit card statements to almost
instantaneously give you a great approximation of your earnings and expenses
for the last few months.
A few tweaks here and
there should allow you to establish a realistic budget. With a few more clicks,
you could even link these figures to a budgeting app or software. Voilà! An effective
budget to help you take back control of your finances. All of it set up with
virtually no time!
Put up a simple plan to pay your bills on time
Paying you bills on
time is a basic concept everyone should get around to master. We know some
situation may be more difficult than others.
But in the bill payment
realm, penalties, administration and interest fees are the cardinal sin. You
should have a method to avoid them at all costs. Don’t fall into the trap of
thinking you can improvise and only manage bills as they come along.
We like to do it on a
weekly basis but in most cases, a solid monthly plan should suffice. Bill
payment will often be tied to how you manage your budget. Sometimes, the trick
will be to adjust how you have access to liquidities.
Reduce your banking fees
Most people are not
interested in talking about banking fees, let’s face it, it’s boring! For them,
banking fees are inevitable and a necessary evil.
But in the expense
world, recurring occurrences like banking fees can do a lot of damage. A few
years back, we posted about The Substantial Impact of Recurring Expenses Over a Lifetime. The
good news is that your can fight back and reduce your banking fees. You can
even expect to eliminate them!
For instance, you could
achieve it by taking the minimum balance avenue or the online banking avenue.
Maintaining the
required minimum balance so your bank waves your transaction fees is quite
simple. Yet, you may not consider that approach entirely free of charge as you
could easily make a little interest if you put your money elsewhere.
Nevertheless, forfeiting 1-3% on the minimum balance is still a lot cheaper
than paying the full fees or the so-called preferred package every month. We like
to consider that minimum-balance chequing account as part of our emergency
fund.
To avoid banking fees,
the best way may come to you via the internet as many online banking accounts can
be used without monthly fees. Just make sure to check all related conditions.
It can also be a great
idea to ask your present financial institution to match better offers. Except
for a little time, asking won’t cost you anything. With a little patience, you
should at least be able to find a cheaper banking package suited to your needs.
Learn about personal finance basic principles
When it comes to personal
finance, there sure is a lot of information out there. Before taking on more
complex concepts, there’s no way around it, you have to start by learning about
basic principles.
So, take time to do
some research and find an adequate reference you like. Many sites or blogs do
an outstanding job talking about and vulgarising financial notions.
After a while, you
should be able to translate these fundamentals to apply the ones who could be
beneficial in your own situation.
Projects
Make a list of your projects and dreams
Writing down your
projects and dreams can be a great way to motivate yourself. A concrete list
can officialise it in your mind and can be the first step to realizing many of
them. It can also be a good incentive to keep going on rainier days.
It also can be a
fantastic idea to list your financial goals. Making a list and sharing your
goals will make you more accountable. It will also increase your odds of
success in fulfilling them.
Set up separate savings account for each project
An effective way to make
sure you have enough money to realize a project is to put money aside in a
separate savings account for that specific project.
We personally have some
of our TFSA accounts with Tangerine and their web interface easily allows to
create several sub-accounts associated with a main account. It only takes a few
types and clicks to create sub-accounts labeled “Summer Trip”, “New Car”, etc.
It’s kind of a modern
way to replicate the good old jar method.
Note down steps to realize a project
Within a dozen minutes,
thinking about a specific project, you should be able to break it down into
smaller steps. Make a record of these more attainable stages.
They can provide extra
motivation as you complete some of them and gradually get closer to your
ultimate objective. Taking smaller bites usually makes it easier to get to the
end of the process faster.
Choose projects
especially meaningful to you and your family. After that, don’t hesitate to
joyfully take down one of those steps. Oftentimes, taking that initial baby step
will give you wings!
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