Archive for the ‘money matters’ Category

Bring on the Smaller World

I’ve recently finished reading  Why Your World is About to Get a Whole Lot Smaller. The author, Jeff Rubin, is a former Chief Economist at a major Canadian bank and an expert in the global economics of oil. In his book, he provides convincing evidence that the price of oil (and therefore gasoline, diesel, etc) is going to continue to climb over the next few years because of growing demand and decreasing supply. Now I’ve heard of peak oil and I’ve read everything from “technology will save us” to “get ready for the Apocolypse” but my own position had been somewhat undecided. Until now. In this article I will bring up some of the points raised in the book, and add my own musings on what this may all mean.

I really liked the way Rubin explained the problem, simply and clearly, in a way that is easy to follow and very thorough. He deals with the usual criticisms of peak oil and dismisses them with facts – not from the musings of obscure academic journals, but basic statistics from sources well-recognized by any reader. By the end of the first half of the book, I’m convinced that oil is going to continue its upward climb. And it is going to significantly change the way we live.

Despite what some Internet sources will have you believe, Rubin argues that these changes aren’t going to happen overnight; it’s not going to be like the disaster movies where one day a resource just disappears and everybody goes Mad Max trying to secure enough for themselves and their families.  Oil prices flow through a predictable cycle of ups and downs (though with an ever-increasing upward trend), so we will have time to adjust to the rising prices of oil – not time enough some may argue, but enough that one isn’t going to go to sleep with gas at $1.20/L and wake up to $5.00/L. Think about how quickly the Big Box store appeared in cities and towns everywhere – they weren’t deposited there by a freak storm, but to many of us it did seem like it all happened rather fast. That’s the sort of speed we’re talking about here.

Rubin’s first predication is that manufacturing will return to North America and become an increasingly local industry. It’s hard to argue with the logic behind this: at some critical price for fuel, the low wages and manufacturing costs of overseas plants will no longer be enough to provide an economic advantage due to the great distances over which these products must be shipped. (Just one example of the ridiculous extent to which cheap oil has shaped things: in my home province of BC we harvest wood, which is then shipped to China and other countries to be milled and processed, and then shipped back to Canada for export). I can imagine many out-of-work tradespeople who will welcome this new world – although I do hope we can rebuild our industries with a great deal more concern and respect for the environment than we had in the former glory days.

Another prediction made in the book is an end to the suburbs. The current version of “suburb” leaves a lot to be desired, and I might not be the only one to cheer the end of its current incarnation. Suburbs are a product of cheap fuel that people are all too willing to burn in exchange for perfect lawns, air-conditioning oversized houses, and hour-plus commutes in the private vehicle. Not to mention conformity to homeowner association rules that outlaw backyard poultry and hanging laundry as garish descents into peasantry that will lower property values (do members of these associations get how snobbish and elitist such rules are?). At a certain price for gas, people will not only shun the suburbs as a bedroom community, but my guess is that such real estate will be hard to even give away.  We in Canada may witness scenes like those from the US showing entire housing developments abandoned mid-construction.

On the bright side, however, not all suburbs will become ghost towns. Those whose municipal councils can look ahead to a new future will be successful in turning their bedroom communities into thriving, self-contained villages where the residents can work, play, and buy what they need locally. I’ve often thought that, while large cities have their wonders and treasures, there is something lost when human beings live in groups of such high numbers. We aren’t designed to do so, and it seems to lead to the “elevator syndrome” where people stand in close proximity without ever looking at or talking to each other. In smaller communities you know your neighbour. Sure, you may have only one pet food store to choose from – but because of that they know you on a first name basis, and will front you the $5 for kibble when you realize you left your wallet at home. And if someone passes by Old Lady Smith lying on the sidewalk they’ll immediately know that she’s suffered another seizure and the ambulance will be sent for, rather than assuming she’s some old homeless drunk/addict sleeping off a hangover. I hope what we’ll end up with is all the health and value of a small community but – thanks to the Internet* – with a global awareness. Think “Middle Ages”, but without the isolation and lack of information-sharing that kept people ignorant.

The transformation to smaller hubs will provide greater diversity in our products and foods. A piece of Ikea furniture is the same whether bought at a Vancouver store or one in Ottawa. But perhaps in the near future one will live in a community with a characteristic style of furniture, hand-crafted by local artisans from locally harvested or salvaged wood. Rather than travelling to a foreign country, one may only need to visit a neighbouring town to find a different style, using different woods and with a different flair for utility. On our small-ish Island we have many unique microclimates that are capable of specializing in different plant foods, and I can foresee a local economy where seafood from the West Coast is traded for fruits and honey from the Valley, for example.

It is these aspects of the post-peak oil world that really appeal to me, probably because I live in an area where community spirit is already high, where local food and art flourishes, and where self-sufficiency has been a goal for some time. I love that I can grow my own food, and that what I can’t grow myself can be obtained from my neighbours. Sea salt, tea, honey, flour, milk, and eggs are just some of the foodstuffs we buy locally. Local food will become much more desirable when the cost of food transportation breaks the bottom line. And I will join in the chorus of Hallelujah’s to witness the slow death of industrial farming and its oil-hungry monocropping culture of maximum yield at all cost. I will similarly raise a cheer for the passage into extinction of cheap, plastic, useless crap that falls apart quickly and is not worth repairing.

Rubin’s book doesn’t paint it all as a rosy picture, however. He notes that millions of people will suffer as we make the transition from global to local economies. There will be a Grand Reshuffling, and it will hurt many. Those in the developing world who have been robbed of their farming traditions and cultural stores of knowledge by foreign “aid” that has rendered them dependent on crops that don’t grow locally without huge inputs of fuel-dependent resources (see Raj Patel’s Stuffed and Starved), are particularly going to suffer. I also wonder about the future of the MegaTropolis. Places like New York and Tokyo with their populations of millions living in concrete jungles and not enough green space to grow food. I imagine we’ll see some great historic reversal where, instead of peasants fleeing to the cities, cities will be abandoned as flocks of people move out to the country. Not such a bad idea from where I sit, though there is much culturally to admire and cherish when it comes to the world’s great cities. Some places will have a hard time of this, but countries like Canada, where we have vast tracts of uninhabited land, will likely do well.

There’s no doubt that the transition to a world without cheap oil (for there will always be oil, it will just be too expensive for most of its current uses) will be a difficult one for many. Each of us must look to our own situation to determine how much we have placed ourselves at risk, and what we should do about it in the few years we have left before driving a car moves from necessity to expensive luxury. Are you able to grow at least some of your own food, with enough extra to barter for other necessities? Are you a slave to your mortgage? Can you weather significant increases in interest rates, can you survive on far less an income than you currently enjoy? Has your municipal or district council put forward resolutions to increase self-sustainability and decrease dependence on cheap oil? What are the transportation options in your community? All of us must think about these things as the price of oil continues its inexorable climb upwards. Because one thing seems certain: cheap oil is soon to be a thing of the past.

 

it is reasonable to argue that peak oil would affect electricity as well as the manufacture of computer devices, and that the Internet may become as outpriced as driving a vehicle; I would not hesitate in giving up pretty much every other oil-based system we rely on if it meant keeping the Internet and I’m certain many other people assign the same importance to it, especially in a world where old skills will need to be relearned, so I remain optimistic that the Internet is here to stay


 

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The Tax Man Cometh

It’s that time of year again. In our family I do the taxes. We tried using a professional but really didn’t find it worth the money, so this year I am back to doing it myself (I actually enjoy it; they don’t call me the Spreadsheet Queen for nothing). Because my business is a “sole proprietorship” the taxes are made easy: myself and my business are one and the same, more or less. As for Husband, this year was his first year as a completely self-employed person, which really just meant a bit less paperwork I had to shuffle through.

Completing the return was fairly simple, but the end result was sobering. I knew I’d been slacking off when it came to setting aside money each month for taxes – one of the hardest parts of being self-employed, I’d say. It was too easy to think “oh, I’ll do it next month” because I am so loathe to leave any credit card balances unpaid beyond the 30 day interest-free period. But 12 months sneaks up on you faster than you think, and when I calculated our total owing I was a bit shocked to see how poorly we (okay, *I*) had done at preparing for this.

Perhaps it was fate that had just a day or two before brought me to the Man vs. Debt website. I enjoyed perusing the site; it reminded me of 3 years ago when Husband and I decided we were going to move to the country and instituted a strict budget and debt-elimination plan. In two years we had paid off a significant amount of debt, saved up enough for a downpayment, and moved in here debt-free (except for the new mortgage).

You’d think after working so hard to get rid of debt that we would be especially loathe to get into it again. But this experience has shown us that it’s not always that easy. Along with my slice of humble pie is the recognition that I slipped back into that old habit of using my “gut feeling” to guide my spending. You know, you figure you have a good idea of how much you have to spend on stuff and you mentally add it up and it all seems good. But that sort of financial management is exactly how we got into debt in the first place years ago. And it’s what happened this time, too. Credit cards paid off every month? – no problem. Couldn’t be spending more than we earn now, could we? Turns out you can when you’re not withholding sufficient tax from your income!

So, the bottom line is that we’ve managed to get ourselves back into debt. It’s not at a level we can’t handle; it’s not the sort of debt to threaten anything we own or require some massive change in lifestyle. But it is definitely going to cramp our style. We are back to a strict budget (meaning we keep track of spending throughout the month, rather than tallying it up at the end) and, other than withholding our own income taxes, every extra cent will go towards debt reduction. It shouldn’t take us too long to be back in the black, but long enough that a whole growing season will have passed on the farm.

And that’s the real sad part of all this. A number of projects are going to be put on hold this year, including perimeter fencing, permanent pig paddocks, planting large numbers of fruit trees, earthmoving (swales and ponds) and other things on our list. It also means the new distillery building is on hold, though I think we are going to be able to make do with our garage for now. It’s a real bummer, but of course it could be a lot worse. We’re looking at a lifetime here, and having to wait a year is not going to make much difference in the long run. Meanwhile, our disappointment and frustration will be put to good use as we re-commit to keeping a budget (even when debt-free) and of course, withholding the right amount of income tax!

So, that’s our sad tale. I debated posting this because frankly it’s embarrassing. Especially after all the posts I wrote about financial health back when we were still dreaming about rural life. But I decided in the end to do so, because I think its important that we all talk about money and debt to keep us on the right track. My generation grew up with the notion that buying on credit was normal, and that is a hard thing to shake off in our consumer-driven culture. I hope by putting it out there I can inspire others to keep a close eye on their finances, even when things are going well.

 

Earning our Keep

As long as we’ve had the dream of moving to a small acreage and creating a homestead, making a living off the farm has never been part of that dream. The truth is, trying to support a family on a farm’s products is labour-intensive, highly competitive, and not all that lucrative. If we weren’t blessed with careers that can be molded to fit our circumstances perhaps we’d be entertaining thoughts of being farmers. But we’re middle-aged, not cut out for heavy work over long hours, and are able to earn a good living doing other things that take up far less time and allow us to get outside whenever possible, not to mention being with our homeschooled children. There’s lots to do in order to turn this place into a homestead, but it’s about providing good food for our family, a healthy environment around us, and a connection to the land. It’s not about earning a living.

For the last several years I’ve been running a small consulting business out of my home. It’s very part-time, the hours are flexible, I enjoy the work very much, and it pays well. About a year ago Husband found a job that fit him perfectly, too. He and his sole partner get along very well, he works almost entirely from home, and his hours are mostly flexible. His partner had already established the business some years before and there’s a steady influx of clients for the foreseeable future. And the pay is good, so he doesn’t need to work long hours to provide an income that keeps us quite comfortable. We’re both very proud of what we’ve built for ourselves, and although we recognize that the socioeconomic situations we were born into certainly helped get us where we are today, we’ve definitely chosen a road less travelled when it comes to the direction in which we took our careers. Husband could be earning a lot more money with a big firm, but he’d also be in an environment he loathes (big business), working long hours, and with little control over his future. We also would not be living here, in this smallish town. We’d be on the outskirts of a major city centre, with a long commute every day and a whole lot less land for a whole lot more money. For me, were I to seek out full employment I’d be earning ten times what I make now, but I too would be working long hours, would have missed out on the vast majority of my children’s lives, and also would not be living in this town. For us, maximizing our earning potential is not part of The Dream. We’ve pared back and chosen a more simple lifestyle, and we haven’t regretted it for one minute.

I’m writing this post because there are two things going on for us right now related to work and income, both of which I’m quite excited about. I’m in the process of re-branding my company. The name I started with is rather generic, as I wasn’t really sure what it would all look like once I got going. As with many entrepreneurial journeys, I found out along the way that there were niches I could fill, ones I didn’t know existed, and the focus of my work shifted and moved until I found my groove. I’m ready to move my business to the next level and work on promoting myself more. Virtually all my business comes via the Internet, so I’m having my website revamped and reworked to up my search engine rankings and include a way to promote those services in which I specialize. I’ve spent countless hours trying to come up with a new name, and I don’t go anywhere now without my scrap paper lists and a pen –  you never know when inspiration will hit you! I’ve found a wonderful woman to work on my website – she’s an old friend from my university and club-hopping days whom I recently reconnected with. Now she’s a stay-home mum with a home-based business and her work demonstrates that she is very talented and creative. It’s not my intention for this to become a full-time job, but I do have room for an increased caseload and I’m hoping this process will result in some more new clients.

The other thing going on is that Husband has begun working on a long-standing dream of his to produce artisan spirits. He spent his teen and young adult years on his family’s winery learning the art and science of distillation, but never really thought anything would come of it professionally. Fast-forward a couple of decades and things have really changed. On a whim he recently looked into the idea again and found that the trend in local eating and artisan food products has cleared the way for artisan distillers. While putting together a business plan we discovered that we can house the facility on our property (gotta love rural zoning) and have planned to build a small barn-style structure for this purpose (we picked the plans out of a book; it’s gorgeous and rustic and exactly what you’d expect on a homestead). What’s so great about it is there are no waste products other than water (which, as the product of distillation, is as pure as it gets) and mash (which the pigs will love). We finalized the incorporation process a few weeks ago and are now making plans to clear some of the property (which we’d planned to do anyway) and put up the barn (using the lumber we recently had milled*) this spring. We’ll be spending the first several months trying out different recipes and working to develop a unique formula and process using locally-sourced ingredients (of course!). Our goal is to produce small batches of a quality artisan product that reflects the unique flavours of our region (which is a haven for locavores). Because of the flexibility of our work schedules (and the fact that our kids are quite independent at home now) we have the time to devote to this side-business. While neither one of us is giving up our “day jobs”, who knows where this might take us? In the meantime, the cash layout is relatively small and we’re sure to have lots of fun along the way.

What’s so funny is that I don’t even drink hard liquor (I’m a lightweight when it comes to alcohol). But what I’ve learned so far is that making spirits is the perfect blend of art and science. Husband excels at the art aspect of things and the scientist in me is rather excited about taking on some lab work again. Although the setting will be much different than the labs I used to work in, such tasks as performing batch experiments and keeping pristine notes of all processes and variables is right up my alley (they don’t call me the Spreadsheet Queen for nothing). Mostly it just all sounds like a good deal of fun, something Hubby and I can bond over (like having kids isn’t enough), not to mention the source of some fabulous homeschool experiments for the kids. I’m very excited about what lies ahead for us, and immensely grateful and happy that we have managed to craft such a good life for ourselves.

* in searching for a link here I discovered I never posted about our milled lumber; pictures coming soon, I promise!

Work-Life Balance

work-life-balanceThe good news is that, over the last few months, my consulting business has started to take off. Financially this has really been a life-saver since Husband has not found work since he was laid off last July. The income I’m bringing in has made the difference between getting by each month on our own, versus dipping into our savings (reserved for buying that dream acreage!). I’m grateful for that; and the truth is I really enjoy the work I do – especially since I can do it almost all from home and on my own time, and it’s interesting.

The not-so-good news is that this month things have been so busy that I have not been able to fulfill my duties as Number One homemaker. Husband has been taking great care of the kids, but pretty much everything else has fallen by the wayside. Laundry has piled up, there has been no meal plan this month and the kids have been surviving on foods that I’d rather they not be eating so often. We’ve already spent too much on takeout, and I’m starting to get really sick of eating cereal two or three times a day. The house is a total mess and the plastic bag holder which I have managed to keep practically empty has now filled up (Hubby forgets to use the cloth bags most of the time). The kids’ bedsheets need to be changed…should I go on? 

Now it may be that this month is just a fluke and things will be quiet again for another many weeks to come. But it also may be that business is going to keep going or even build up further, and this has caused me to do some thinking about what I’m going to have to let go of should I find myself more engaged in paid work. I thought I’d share that thought process with you, since my guiding values are those I consider to define Simple Living.

First and foremost, I will not give up so much time with my kids that I can’t be the primary caregiver and homeschooling parent. At MOST I want to work part-time (maybe 50 hours per month). Son will be joining Daughter’s homeschooling program this fall which means more reporting and greater activity on that front. I’m so excited about it and no amount of money is going to take me away from that. I’ve already decided that, when and if I am lucky enough to get to that point, I will hire an assistant to take over the daily managing of the business. I earn very good money for my time, but for me no amount is worth losing full-time status with my kids.

I will also not give up my volunteering with La Leche League. I think volunteering is so important and I get so much out of working with new mothers and helping them along in their breastfeeding and mothering journey. I am thinking of taking over an administrative position in our provincial chapter and I’d like to take a comprehensive breastfeeding course some time in the next year or so (taught by my co-leader, an amazing mentor and role model). It doesn’t take up that much of my time, but it is time away from family so it eats into what’s left after working.

And so I’m left with my one other role: homemaker. I love being a homemaker and I take great pride in the way I run my household. I love that we buy  wholesome, healthy foods that are produced ethically and locally whenever possible. I love that we use only 1/4 of our allotted waste volume each week, and that we compost. I love keeping things orderly and running smoothly. But that in itself is pretty much a full-time job. Whenever I’ve taken a day off here or there to work, I almost always come home (or come out of my home office) to a house that needs a good day’s worth of organizing and tidying to get back to an acceptable (to me) state. As much as I love my domestic duties, they are very different from parenting, volunteering, and consulting in one very important regard: the latter three are jobs only I can do.

And so I’m entertaining the idea of bringing someone in every now and then to help me with the general housework. Up until last fall when we moved to this house we had a cleaning service come every other week – I decided I didn’t really care all that much about how clean things were – wiping down a toilet doesn’t take much time when a guest is on the way. What gets to me is when things aren’t tidy, when things aren’t in their rightful place. And of course certain things like laundry and taking out the recycling/garbage also need to be done fairly regularly otherwise the system starts to break down. If I brought in someone once or twice a week to do those tasks it would leave me more time with the children. I’d still be able to enjoy plenty of time to bake, hang laundry, and tend to my vegetable garden. I’d be a part time homemaker and my hired help would still be doing things my way, so overall the house would be running the way I like it.

I have struggled with the notion that someone who is being true to the concepts of Simple Living doesn’t hire domestic help. It seems rather elitist. So I began to think about what Vicki Robins wrote in her book Your Money or Your Life: calculate the true cost of your job and purchases. So I estimated the cost of having a housekeeper come twice a week for six hours each time and that amount is less than I charge for 2 hours of consulting. So it seems to me a pretty darn good trade, don’t you think? I work 2 extra hours in one week and I get 12 hours of housework done; that’s 10 extra hours with the kids. 

Of course, this may all be premature. The above calculation also depends on how many hours I bill each month – the less I bill, the more of my income is being taken up by hired help. If things stay at their current pace and Husband starts bringing in some money  it will be worth it, if I’m lucky enough to see business grow further it will definitely be worth it. On the other hand, things might slow down a bit now and that would be just fine with me, too! It’s nice to feel like I have options, and some control over my choices in life. And while I hate to sound preachy, that comes from being debt-free, y’all (props to Dave Ramsey)! So perhaps I am being true to Simple Living after all. 🙂

The Debt Economy: can we stop the madness?

I don’t know about the rest of you, but I personally did not fully appreciate how much our economy is dependent on consumer spending until I read books like Affluenza, or watched movies like Maxed Out . I’d never heard anybody in the mainstream media come out and say “by the way, you the consumer need to buy ever-increasing amounts of stuff each year or else our economy will fail”. But I’ve noticed that since the economic crisis hit mainstream media they’re not even trying to hide that fact. Witness the intense coverage of retail sales over the Christmas holidays, as the media desperately hoped we’d all spend more money than last year, even while broadcasting daily reports of how bad the financial situation is and how it’s only going to get worse. Did nobody see the contradiction in this? We’re headed for tough financial times, so go out there and spend, spend, spend…?

It’s crazy, but true: our economy apparently depends on people buying more stuff each year than they did the year before. How does anybody say this with a straight face? You don’t have to be a genius to realize it isn’t the least bit sustainable. I mean, how can growth continue indefinitely? For one thing, our planet has a finite amount of resources (see The Story of Stuff for a good illustration of how this relates to consumerism).

But what’s even more crazy about using consumer spending to determine our economic health is that we apparently don’t take into account whether the consumer is spending money they have earned or money they have borrowed. As it turns out, borrowing money is considered to be a consumer purchase because you pay interest to the lender. Thus, buying with borrowed money produces more economic growth than buying with your own money, and don’t think the system hasn’t figured that one out yet. If you doubt this connection, consider that we’re coming out of several years of booming economic times and yet consumer debt is at record highs and personal savings at record lows.

When you are a single consumer and you overextend yourself the result is personal bankruptcy. But when you are a government, what happens when you effectively do the same thing? The United States is carrying a frighteningly high amount of debt, and this is after years of boom times. Now they are arguing over how many billions to give to the auto industry but where are they getting this money from? They are borrowing it (they sell bonds, mostly to foreigners)! Isn’t this “solution” the equivalent of trying to pay your overdue bills with credit cards? 

It begs the question: how is the US government ever going to get out of this debt, and how much more debt can they possibly take on? I’m beginning to feel like the United States is one of those folks you read about in debt counseling books who rack up credit card debt, pay the minimum balances, and kid themselves into thinking they’ll be okay until that one day when it all comes crashing down. It doesn’t seem any different than the sudden, almost-overnight collapse of multibillion-dollar companies like Citibank and Lehman Brothers. Is it a stretch to predict that the government could wake up one day and discover that it’s broke?

While the tone of this post may seem negative, I was actually inspired to write on this subject today because of some positive things I read and heard recently. First, I came across this blog post and I’ll quote the part that made me feel hopeful that not everybody is crazy:

 

I couldn’t understand how I, who was making about the median wage for the area in which I was living, couldn’t even come close to comfortably purchasing a home, while families (not individuals, but families) whose gross net income could not have been much higher than mine at the time, were out purchasing four-bedroom McMansions so that they could park their two cars–one of which was obligatorily an SUV–in the driveway…That’s when I found the one-word answer to the dilemma: Debt. In fact, it was insane, “you’ve never seen anything like it” levels of debt that individuals/families were taking on without seemingly the littlest regard for a strategy of how they were going to ever pay it back. Everyone (and his two-year-old son and pet cat Wheezer) was going into debt at a rate that I just knew was not sustainable. 

And then I stumbled across this YouTube video that introduced me to Peter Schiff. Finally, someone in the mainstream media who is talking sense! (forgive me if this guy is a well-known character; I don’t have cable and I rarely ever see programming like this, I just liked what he had to say here)…

I probably don’t need to remind you, dear readers, that the sensible thing to do in both good and bad economic times is live frugally, don’t spend more than you earn, and make sure to put aside some savings. Let’s just hope the governments will figure this out before it’s too late.

edited to add: I’ve just rung in the New Year watching Peter Schiff videos on YouTube. I can’t tell you how refreshing it is to hear someone tell the simple truth. I would highly encourage anybody who is frustrated with the current economical system to take some time to watch… It’ll cheer you up!

Keepin’ it Real at Xmas

giftbasket

This year I tried to cut down on the holiday spending. One way I achieved this was by making gift baskets for several of the folks on my list. Here are the contents, as shown in the photo above:

1 jar homemade blueberry jam from local berries (this was my first attempt at jam making and I loved it – so easy!)

1 bottle U-brew wine (we make a big batch every year, though I confess I’m not sure if the grapes used in this batch were local; the wine is really good – my former winery-resident DH agrees, and it works out to about $4 per bottle)

1 box of homemade christmas cookies (thank you, Martha Stewart: one dough recipe makes a variety of cookies)

1 handmade knit ball-band washcloth (note for knitters: this looks great if you pair a solid colour for the “mortar” with a wild variegated yarn for the “bricks”, like a pink/yellow/purple variegated with a solid turquoise blue)

1 sample of natural soap (I didn’t make it, but it’s from a local soapmaker – Pacific Coast Soapworks in Victoria, BC); I bought their sample pack for about $10 and divided it up among the gift baskets

The baskets were filled with shredded christmas flyers from the newspaper; I saved them because they were coloured red and green and I just put them through my shredder. I decided to cover that with a sheet of tissue paper so the stuff didn’t fly around. The only thing I felt guilty about were the baskets themselves – I bought them from a dollar store. But they aren’t plastic and they are reusable! I made little boxes for the cookies from old christmas gift bags that I save, and I wrapped the soap and the dishcloths with raffia.

Each gift basket cost me very little to put together since I already had the jam and the wine, having paid for it long ago. The cotton yarn I used to make the dishcloths is $1.69/ball and I use half of each colour for one cloth. The cookie ingredients were inexpensive and I used some apricot jam for filling and some glace cherries leftover from last year’s baking, so I didn’t have to buy any fancy decorating stuff for them. The tissue paper was also a leftover from previous gift wrapping purchases. 

I feel really good giving these as gifts because I know I put alot of work and thought into them, they represent local and handmade items, and everything in them is recyclable, reusable, or (in the case of the soap and dishcloths) biodegradable. 

I haven’t added up this month’s budget tally yet, but I’m very sure I spent at least a couple hundred dollars less on gifts this year than I did last year. I hope to do even better next year: planning ahead would greatly facilitate this! I think that will be one of my New Year’s Resolutions.

SALE is a four-letter word

saless08_m

I was listening to a story on the radio the other day about yet another large chain-store retail business that has succumbed to the “global economic crisis”. They’d put their various outlets on “liquidation sale” status and were advertising prices reduced up to %75 off. But when some customers were tearing off the price labels after bringing their purchases home, they discovered that the original price was not much different than the sale price and, in some cases, was even less. The journalist reminded us that “liquidation” does not mean “get rid of stuff at a loss”, it means “make as much money as you can in as short a time as you can”.

The whole story got me thinking about the retail magic of the word “Sale”. Everybody loves a sale, right? Why? – Because we think we are “getting a deal”. We think that we are paying less for something than we should be. But the reality is that we are often being suckered into parting with our money while at the same time being made to feel as though we came out ahead. As the above news story points out: 50% off an already over-inflated price is no bargain, and yet many people will snatch up an item that is 50% off, thinking they are getting good value for their money. In other words, the percent discount becomes such a central focus in the consumer’s mind that whether the actual price constitutes good value for the product is barely considered.

A hefty discount is also usually enough to convince a consumer to purchase something they don’t need, didn’t even know they wanted until they saw it, just because they think the price is so good. The thinking becomes focussed on how much was saved, as if buying it at the original price were a given. Which, of course, it usually wasn’t.

When it comes to sales, the consumer thought process goes like this: “This item is usually $100, if I get it for $50 then I’ve saved myself $50!”. 

Why doesn’t it go like this: “That item costs $50, and if I buy it that is $50 less that I have to spend on necessities or put into my savings account”?

Getting a 50% discount is not saving money, it is spending money. We should always remember that.

I think that a good habit for consumers to develop is to decide beforehand what an item is worth to them, and how much of their budget they are willing to devote to the acquisition of that product. Then go find it. That may mean hitting Home Depot on the way back from grocery shopping, or it may mean scanning the weekly flyers for a sale that brings your price into range, or it may mean hunting through thrift stores and garage sales. But having decided ahead of time that 1) this is something you actually have a need (or a strong desire) for, and 2) how much value that item holds for you and your budget, I think that truly does shift the balance of power to you, the consumer.

With the holiday season approaching, a time when consumerism tends to run rampant, let’s all try to keep in mind the potential pitfalls of that four letter word.