Created: 2000.07.05 | Last updated: 2020.05.27
My wife and I have had several years where, because I was doing everything I could to get one or more companies going or because of a change around us I had no control over, we had to live personally 'on the cheap'. And then, when we did have significant disposable income, we wanted to donate a very large portion of it to charitable causes that we volunteer for. (Please note: Do not call me to add your charity to the list we donate to. We choose to donate to a small number - less than 20, and donate heavily to them. And we do not add any more to our giving unless we first have volunteered there for some time and have gotten to know the organization very well and trust it. If you want your charity to be considered, you may send us a letter or an email, but all phone solicitations will be turned down without exception. and indeed, ones that phone us are less likely to be ever put on the list than ones that email (cost effective) us. Ones that mail us are in the middle, we are concerned that they are wasting money by doing a mailing, but at least they are not disturbing us while we are trying to eat or have family time/dinner, so we'll consider them.)
Whether you are trying to live on the cheap so that you can donate the rest, or whether you are trying to live on the cheap because your income is low, or whether you are trying to live on the cheap so that you can build up a nest egg to last you through your retirement years, these are some tips that may assist you. If you think that there is no reason to live on the cheap - please don't waste my time by emailing me and telling me I'm wrong to try to live on the cheap (Yes, people have actually done that, I just erase their emails). Instead, just grin at how much smarter you are than me and enjoy spending your money. (Of course, if you need to later, come back and read this page.)
These are all tips that we (my family) do use now, with a few exceptions which are tips that we can't use anymore but can still work for other people in the right circumstances. Some will work for you, others (like buying suits etc.., in China) probably won't. But if a few help you, that would be great! Consider donating half of your savings to your favorite charity, and keep the other half for yourself, that would be a great way to repay me for the free advice. (Note that, because you will get a tax receipt, you will actually get to keep more than half for yourself this way.)
I buy almost all my clothing and many household goods in two ways:
Between the first two, we probably save 80-90% on our clothing. Yes, we spend only 10-20% what other people pay, and we don't look like we are live in poverty.
In addition, think I have only once bought a suit in North America. When I was on a business trip to China (Paid for by the company that had me providing my expertise to), they wanted me to dress better for some meetings, so I picked up a couple suits there each for less than the price of a dress shirt at Walmart.
Buy things in downturns for use in the upturn. Buy low...sell high. Or, just, buy low and enjoy!
Buy with discounts. Buy your gas from Superstore or similar, where you get cents back on your gas, use your Airmiles card, use your loyalty card (but make sure that the items at the loyalty store, with the discount, are actually cheaper than at your alternate purchase location). To be clear, here is how I use them: I shop where I was going to shop anyway, then I use whatever loyalty card they accept to get the points. I have seen offers of "Get 1000 points" (worth at most $1) if you buy blah blah - but the item was $2 more than where I normally shop so right off the bad I lost. But then ... when I go to redeem points, if I consider 1000 points to be worth $1 ... I find that the items in the points catalogue are worth less than $1 for every 1000 points I'm going to have to pay. So I would have lost on both ends of the transaction. On the other hand, if my buying habits stay the same, then the points cost me nothing to get, so really, whatever I get from their points catalogue, cost me nothing - so just get whatever maximum (to you) value you can get for your points.
Note: The PC Financial points are often quite a bit better than most others. First because the points can be redeemed for cash - it means I can get 100% of the value for the points. Sometimes I see a big ad that really says - you'll get 5 to 10 cents in ultimate value if you accept this offer.
But other times my personalized 'offers' are things like: Get enough points to be worth $3 for every $5 of such and such that you buy. Now ... as long as I wanted to buy such at such at a $2 or higher value - then this is an excellent offer. It also may mean that I will change my purchase decision that week - as elsewhere in this document, we will make our mean planning based on what is currently in season (lower cost.) So this is consistent with that line of thinking.
Use your loyalty cards whenever you shop - but don't buy just because you have points. 1000 points sounds like a lot - but on one I have it is worth $1 (and another worth AT MOST $1), so when they offer me 10 points, they are offering me only 1 cent. Similarly, when you have points to spend - spend them on things you were going to buy anyway - treat it like 'after tax income' - the most valuable type.
Buy generic brands wherever you can. 9 times out of 10 the generic food items taste just as good as, or better than, the brand names. Figure out which are are the 9 for you, and buy those. Then, for the 1 in 10 that you really don't like the generic - buy the brand name you like. I like Heinz ketchup on hot dogs! I like Mars bars and Kellogg's frosted flakes. (though we don't buy those last two things very often, not the best value for money.)
Look ot the items on the top and bottom shelves. Typically the highest profit margin items are at eye level and the best value items are up high or down high or down low. Simple marketing techniques, but now that you know, you can at least take the effort to look up or down to see if they are better.
Grow your own veggies. Especially if you find gardening 'relaxing'. Grow your own quail (even in a city) or other poultry allowed in your municipality. There is lots written on this so I won't go into detail. I'll just share one downside to consider ... if you grow the wrong crops, at the time they come in cheap at the store - is when you have an abundance in your garden. But things like Rhubarb are great (if you love rhubarb), and cherry tomatoes? Yum!
Wash clothing in cold water. Don't pay for unnecessary gas or electricity. Air dry your clothing as much as possible, cheaper than paying for the heat. When buying or building a house be aware that gas for cooking, drying clothing and water heaters is much cheaper than electricity. In the Calgary/Airdrie area, our local ELECTRICAL company says that gas costs 15% of electricity for those purposes- and the gas supplier agrees. Retrofitting an existing house with gas unfortunately is not usually practical.
Wash your car at home, instead of paying for a carwash.
When your kids are the right age - encourage them to get a job at a location that you already shop at and spend a lot of money at and that you can get a significant discount at. For example, if one of your children works at Walmart - you can save 10% on virtually all purchases - including groceries. I wanted one of my kids to work at Home Depot until I found out they were only given a discount on one purchase a year and that purchase had a limit as to how much it could be - I got a greater benefit by getting a home depot card, no need having one of my children work there!
Don't eat out often. This is a major expense. Learn the art of cooking! There are many quick and easy recipes. When you do eat out - use a coupon book and go to the restaurants that give you 50% off. Or eat on on Tuesdays at a restaurant that gives a discount on Tuesdays. Eat out at lunch time, often you can get nearly the same sized meal for less at lunch. Go to buffets on weekdays at lunch (Sunday at lunch is often the same price as Weekdays at dinner.)
Brown bag it to work. The cost of buying lunch every day, even a "cheap" lunch, is extremely expensive. In the more than 30 years (as of 2017) I've been in the work force, I've brown bagged it all except for maybe 50 days. And I feel guilty for having wasted the money half of those 50 days. The time to eat out is when your company is paying for it, or another company is paying for it.
Invites friends over for a movie, cheaper (even if you buy the DVD) and I find it is a lot more fun. It also has the advantage that you are less likely to go out to eat before or go to the bar after.
Since I own the company I tend to avoid even that (it costs me just as much in the long run), but for most reading, that won't be a factor. Since I own the company: I love, when travelling, to get my hotel within easy walking distance of a Costco or Safeway etc.., That way I can brown bag it when I'm on the road. If you have an expense allowance - don't waste it - brown bag it wherever possible when travelling and pocket the allowance. If you are paid based on direct expenses, well, I guess then you eat out on the road and get your need to eat out out of your system. Just don't get used to it such that, when you are back home, you are in the habit of always eating out. Or, brown bag it and gain favor with your boss!
Don't buy packaged foods (like TV dinners etc..,) While this is more cost effective than eating out - it is still a very expensive way to eat and, with few exceptions, it really isn't that good tasting. Learn the art of cooking. It is easy, doesn't take much time and, as I said above - there are many quick and easy (and low cost) recipes.
Forgo your daily coffee from the coffee shop- do you know how expensive Timmies & Starbucks are? Learn to brew coffee or tea yourself - I'm told it really isn't all that hard - and you will save a TON of money. Some people spend more on coffee per week than it costs to go out to a nice restaurant. And many of these people are ones I hear complain that they never have enough money or complain that people like me are lucky. $1.50 to $3.00 at a time is a LOT of money, when it is spent several times a week, or worse, a couple times a day. $3.00 20x's a month is $60. If you are at the 50% tax bracket - you have to earn $120 to pay for that habit. And if you are not at the 50% tax bracket - and you have bothered to read down this far - you know you shouldn't be wasting that much. I have to admit however, I do buy one about every 2 months, so I can't say I'm perfect in this department.
Buy in bulk. Buy items that you already use when they are on sale. You may say "I can't afford to, I can barely afford to buy the food we eat now". Well - when there is a good sale on, say Ketchup, buy 12 bottles of ketchup. Then, when there is a sale on pasta, buy pasta. Eventually, you'll have a full larder, and then you just buy when you run out of one item - always watching for sales to replenish. In other words, build up a bit at a time until you have a reasonable larder.
Buy half a cow (instead of individual cuts.) For this you obviously need a freezer. A chest freezer is typically cheaper to operate because the cold doesn't leak out every time you open the door.
Eat in season. Buy corn in August, buy apples in September, buy mandarin oranges in December and so on. Adjust your meal planning based on what foods are in season. Don't try to eat raspberries in March. You can get them (I saw them yesterday in the store) but wow, what a price. In a similar way - don't eat beef in Mexico - eat fish, don't eat fish in Calgary - eat beef. Buy the foods that are locally cost effective. And besides, the fish in Calgary don't taste very good after waddling over the Rocky mountains.
Buy on sale. As long as you are careful not to buy the more expensive items, buying on sale is a great way to menu plan. If tomatoes are really cheap this week - base your menu on tomatoes, if celery next week, then base it on celery. This means you have to be creative and flexible on your meal planning, but again, it can save a lot of money.
Buy nearly stale dated. I love hot crossed buns, but I typically only buy them when they are 50% off. The trick is, you have to eat them that day or the next because they are close to their stale date. But if you can - you save 50% on the cost. Great way to buy bananas for making delicious banana bread too!
Grow a garden. This one may or may not be for you. The biggest 'problem' with this, is that your potatoes are ready at the same time that potatoes are cheapest in the store. So I prefer to do this for items that I really like fresh, like lettuce, radishes, beets and tomatoes, where, while it is clearly cheaper than the stores, the biggest benefit is the better taste.
We use our bread maker, slow cooker and rice cooker for all kinds of meals. Speaking of which - rice, potatoes and pasta, in that order, are some of the cheapest meal bases you can have. For several years my wife fed our family of 6 spending less money that the Alberta Government indicated that it cost to feed a family of 2. This means we were able to feed ourselves fine (I am and was significantly overweight) at a level that was way below the so called poverty line. And we didn't suffer - we enjoyed those meals!
Buy a Vitamix (no I'm not paid to say this). It 'pulverizes' food rather than chopping it. This lets you put in apples with the core, oranges with most of the white. You can create delicious, nutritious fruit smoothies for extremely cheap - and the labour is tiny too with the Vitamix. (I used to use blenders, but they chop the seeds, the don't pulverize them, and the seeds stick in my teeth.) You can quickly make low cost, healthy fruit juices, soups, gravy and more. Note that my $3 smoothie is equivalent to three $6 fruit smoothies ($18), at a popular fruit juice bar (hint: Jugo is the Latin American Spanish word for juice.)
Here's a counter intuitive one: Buy a gas guzzler, don't waste your money on a hybrid or highly fuel efficient car. None of the hybrids or highly fuel efficient cars at the time of this writing (rechecked last in 2016) are cheap. I have done various calculations through the years. One I took the difference in price between the really fuel efficient car and the second hand gas guzzler I was considering buying. I then looked at the cost of the interest on the difference in the price (interest I would have to pay, or if I bought the car with cash - which I always do, the lost income that I wasn't going to generate with that money.) The lost income/interest I was going to have to pay was MORE per year than the amount of money I was spending buying gas at $1.10 per litre. That meant I was going to have to drive twice as much to save money! Also look at the capital depreciation per year and the higher maintenance (including battery replacement) for hybrids and pure electric cars like Teslas, makes the gas guzzler look even better. So, my better plan: Find a job closer to home, or take transit and drive the cheaper car when you need to. Update 2020.05.27 - Teslas are looking interesting. Lower repair bills, much cheaper cost per mile for fuel (and repairs) but still, my calculations above are holding. Too bad, I admit, I'd really like to get a 7 passenger Tesla, and I love the look of their proposed truck (my sons hate the look.)
Never ever have a running balance on your credit card. Ever. I'm not going to go over the detailed calculations, but suffice it to say, that paying even 1 day late is extremely expensive. If you can't pay in time - don't buy it.
Never ever buy anything with a loan unless it is EARNING you money. Yes I make an exception for a house, but I do so begrudgingly and only if renting is more expensive than ownership - run the numbers with your calculator, not with your heart. If you can't afford it today - wait. And don't be fooled by once in a lifetime sales. When you have put the money away for your purchase, if you are willing to buy sometime in a 3-6 month window - your item will once again be on sale for a once in a lifetime pricing, and now you can buy it with cash.
Here's how my wife and I have only had a mortgage in the early part of our marriage: If you can, wait until you can pay cash to buy a SMALL house, the lowest cost you can get away with. Then, pay off the mortgage. Then put money aside for your next house - and don't upgrade until you can do with cash. If you follow this advice, you can upgrade the NEXT time sooner and your cost of living (no mortgage) will be fantastic. This is probably the #1 tip in this list.
Buy (on ebay) a big white roll down screen and a projector and watch movies at home. (2015 update: Paint the wall white - cheaper and better!) Or if that is too much cost for you, just watch them on your TV. If that doesn't cut it - go to matinees, if you live in a big city, see if there are movie houses in a town next to you, you may only have to drive 20 minutes to save half or more of the cost of a movie. Yes, this means you may have to watch the new releases 2 or 3 weeks after they came out. But if you aren't a movie critic - what does it matter if you see it 2 or 3 weeks late instead of on the 1st day, if it saves you half the cost? (OK, I know I've lost a lot of people on this on, the bragging rights of being able to act superior to other people around you because you saw it before they did - I'm sure they will love you more and be so much more impressed that you are able to make them look bad (sarcasm - in case you missed it), but if you've followed all my other advice, I guess you can waste a little money - I wouldn't, but that's me.)
Some house buying suggestions
If you are going to spend time and effort trying to find the ways to save money. Here are some suggestions:
For those of you who know Jesus Christ as your personal savior ... Tithe! I know it's counter intuitive - but God can keep your clothing from wearing out, fridge from breaking down and overcome ANYTHING you can do to preserve what you have - or he can make it last longer and better. So check out his promise in Malachi. (Short book - read the whole thing.) Related comment, you know how, when the Israelites left Egypt, God kept their clothing from wearing out for 40 years? Now you might say 'yuck, the SAME rough clothing for 40 years?' but remember, the Egyptians gave them the finest of the land when they left. When you see movies about the Exodus, they are shown in rough clothing, but that is not what the Bible says. No, they were wearing the finest clothing, silks, fine fabrics that Egypt had to offer! Just think about what they looked like as they marched around Jericho 40 years later: The people of Jericho looking out saw a million people dressed better than anyone inside of Jericho other than maybe their king, they were parading around Jericho in the finest clothing in the world - clothing they had been wearing for 40 years, and the Jerichonians knew they had been 'out there' in the desert for 40 years. For those that don't know Jesus that way, those two simple paragraphs are not trying to give a detailed theological understanding of the reality - just a quick, slightly humorous, version of the reality. The reality is not a direct "if you tithe you will personally always prosper right here right now right away". So don't think I am saying that. Read it as a humorous comment on a reality that isn't quite what I am saying. But God DID say you can test him on this. I have and have tried to always tithe, and when I realized I hadn't, I tried to immediately repair the mistake. By donating far more than 10%, a tithe, I almost never make an error, by my definition is such that by the rules I set for myself I'm not doing it perfectly and have to 'pay up' sometimes.