Category: mindset

Family Planning and Frugality, or Why I’m in Love with my Mirena

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FP and frugality

One of the best things I have done in recent memory is get an IUD. I am almost embarrassed to admit it, but a pretty significant part of deciding to get the Mirena was because my doctor made a strong case about how much financial sense it makes to get an IUD.

Damn, doc. You’re making a financial argument? He really knew his audience.

I would never advocate that anyone select a family planning method based on frugality. My friends, family members, and I have all gone through countless switches of birth control pill brands, migrated over to the ring or the patch when faced with unholy side effects, and yea some of that shit is expensive. If ever there were a part of life where I think it is okay to splurge, I would argue it is contraception. Like buy the good condoms. Really.tumblr_ntx3u7lhrT1qk7scno1_500.gif

That being said, I was a grad student of limited means when my doctor made this financial argument. I also knew that my health insurance would be lapsing once I defended my thesis and I had no idea when I would have health insurance again. Don’t misunderstand me, there were many other compelling reasons for me to get an IUD. It was a decision that made a lot of sense for me. I won’t delve into those reasons in great detail but if you’re curious, the financial argument went something like this:

The Mirena costs about $410 in Ontario.

My student health insurance paid half. Okay we are down to $205.

All doctors’ appointments including the insertion and the follow-up visit were free of charge. Thank you, Canada.

It should be noted that the Mirena lasts a minimum of five years. Doc pointed out that even with insurance, I was currently spending about $10/month on the most generic garbage birth control pills on the market, accompanied by a host of horrifying side effects.  Being a woman is awesome.

Using that method of contraception, assuming I had insurance coverage the entire time (which I wouldn’t) would bring me to a grand total of $600 over five years. That’s also assuming I didn’t break down along the way and switch to a better (*ahem* more expensive) method along the way, which I absolutely would have.  So $600 is a very conservative estimate of what five years of hormonal contraception actually costs.

Also, periods are expensive. Doc informed me that half of women with Mirena do not get their periods anymore. I know that it is bizarre-o and maybe a little scary for many a woman, but I cannot tell you what a joy it is to live sans period. It has also effectively stalled my need for tampons for five years. I don’t hate that, and money is just one small reason. But since we’re talking numbers, the Huffington Post estimated that Canadian women spend about $65 per year on tampons and pads (also conservative, me thinks). Over five years, this totals $329. So let’s break this down:

Scenario A Scenario B
Method of Contraception Birth control pills Mirena hormonal IUD
5-Year Contraception Expenses $600 $205
5-Year Period Expenses $329 $0
Grand Total $929 $205
Monthly Cost $15.48 $3.50

In Scenario A where I continued to use my same nonsense birth control pills with the added fun of still getting my period, the grand total for five years of maintaining my highly desired childfree status would have cost $929. Never a cost more worth it, in my opinion, but hey, that’s still some cash. It breaks down to a monthly reproductive health cost of $15.48.

In Scenario B, where I got the Mirena, the grand total for five years of sweet childfree living is $205. All of this cost is front-loaded, which can make it a pretty big expense at the time of insertion. Also, the insertion is not exactly a walk in the park. BUT you are then worry-free for five or more years, and the monthly cost of my reproductive health needs is now averaging $3.50 per month.

An added bonus: Doc tells me that the scientific literature is now suggesting Mirena is good for 6 years, which would bring the cost down to a cool $2.84 per month.

Back to the bottom line. We are talking about a difference in roughly $12 per month and I know that. This is not the make or break line in my budget. But as with many other things, the value added shines through in other, more subtle ways.

For instance, the Mirena has reduced my chances of experiencing an unintended pregnancy in the next five years. You cannot put a price tag on peace of mind. The sheer peace the IUD has afforded me by making it less likely that I will have to deal with the emotional, psychological, and physical tolls of becoming pregnant when I don’t want to be is pretty wonderful.  

And suppose I were faced with an unplanned pregnancy. I am proud to say that abortion is a covered procedure in Canada and women do not have to pay out-of-pocket for it, so there would not be direct financial impacts associated with that decision for me. But I am privileged to say that. The average cost of a first-trimester abortion in the US is about 470 USD – and that was back in 2009. It is even more expensive in other parts of the world.

And while about half of all unplanned pregnancies will be terminated, half of all women who encounter an unintended pregnancy will carry the pregnancy to term.  Many of these women will decide to parent.  That comes with massive financial implications. You know, to the tune of a quarter of a million dollars.

So while getting the Mirena was kind of about frugality initially, that has just been a small bonus. It has actually provided so much value to my life in other ways. It is providing great confidence and comfort when it comes to some of the biggest financial decisions I will ever make – if and when to have children.

So, thanks Mirena. I initially got you to help me save a few bucks a month, but you have done a whole lot more for me.

Have any of you made a decision based on frugality, and ended up getting a whole lot more out of that decision than you even hoped? Or have you made a frugal decision and ended up totally regretting it?  Let me know in the comments!

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Why I haven’t automated my finances

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automation

Nearly every personal finance book or blog will advocate a handful of golden rules to build wealth.

Among them: automate your finances.

Most personal finances experts are big fans of this approach, and I can see why. I first learned about automation from Ramit Sethi in “I Will Teach You to be Rich.” The concept is simple: set up your financial life so that everything is going where it’s supposed to be going automatically as soon as your paycheque hits your bank account. You do not even really see the money available to spend and you don’t have to lift a finger.

Arrange automatic bill payments, student loan payments, and contributions to your RRSP/401K.

Set up a biweekly or monthly transfer into your investment account.

Have specific savings goals, like a down payment or a wedding? Make a designated savings account and automate contributions into those accounts, too.

You will be saving without even really realizing you are saving. No effort required. No time spent talking yourself out of contributing to your retirement fund if you are running short on funds after an online shopping binge. And the money just starts to accumulate.

I get how wildly appealing that is. Saving money can be a weird combination of boring and hard – at least that is how I felt about saving until recently. Humans function via the path of least resistance on most things that are good for us.

You will only eat healthy or work out if you remove as many barriers as possible that keep you from doing those things. Like sleeping in your workout clothes. Like meal prepping and stashing containers of healthy food in the freezer so you don’t eat an entire pizza when you get home from work.

Automating your finances is the equivalent to that. It removes barriers to saving and investing. That can be a beautiful thing.

Yet I have maintained the majority of my finances as a manual activity. This includes my student loan payment, most of my retirement and TFSA contributions, and saving for ma big goals.

The only real exceptions are my rent, which automatically gets withdrawn every 1st of the month and the 5% of my biweekly paycheque that automatically gets put toward my work pension plan.

That begs the question: Why have I kept everything so…unautomated?

Here are five reasons why I like keeping my finances at the press of my own button.

 

1. Saving is a privilege and I want to appreciate it.

Having an extra $50 per month to put towards your student loan balance? Or trimming your budget to find another $100 you can send toward your retirement?

That is a privilege, my friends.

I am fortunate that I can find the money in my budget to build up my emergency fund, finally start funding my retirement, and yes, save up for the fun stuff, too. Not everybody is well positioned to do that.  Many people work two jobs and cannot save for retirement.

All of this means that part of me likes taking the moment out of my day, out of my week, to sit down with my finances and set up the transfer myself. It has helped me to realize and appreciate how much I really have.  It has helped me recognize how privileged I am. Being mindful of this has also helped me visualize how and where I want to give money when I have more of it.

 

2. I want to be intentional about my savings right now.

 There are so many daily activities we automate now (check out this awesome post from Ms. ONL recently about convenience services and gadgets).

Some of them I find borderline obscene (like really, humans need these things?)

Some are downright amazing.

Exhibit A: dishwashers.

Exhibit B: GPS.

But I was bad with money for 28 years and I am still trying to un-learn a lot of ingrained money habits and behaviours.

Maintaining control over every bill payment, every transfer into my savings has been a good way to actively participate in putting my financial life back together.  I am still tracking every penny I spend. I want to be in the driver’s seat right now. This may change in the future when my financial habits have improved and I just want to set it and forget it.

This point may sound counterintuitive – I suck with money so I do not want to automate. A common argument is that automation can help people who are traditionally poor savers. But I am a control freak and now that I know what to do with my money (more or less), I like doing it myself. To each their own.

 

3. It does not take much time.

Going back to my earlier point about how awesome dishwashers are – so much yes. As a person living sans dishwasher right now, I can vouch for how much some automation is totally and completely worth it. Some automation saves you hours of mind numbing and possibly soul destroying work every week or month (I really hate doing dishes). Sold.

But paying my bills online? Sending money to my investment account? This takes five minutes out of my week. For some people, that’s too much. Cool. I am down for spending those five minutes though.

 

4. My side hustles ARE my savings money.

I earn a reasonable income and I usually have a small gap between my salary and my spending. My student loan payments alone take up about 31% of my monthly take-home salary. That’s huge.

Right now, the only way I have really been able to save for my goals at all is through my side hustles. And side hustle money, my friends, is unpredictable income.

In January 2017, I earned $0 in side income.

In June 2017, I earned $1863.95 in side income.

The idea of setting up automatic transfers when my side hustle money varies so wildly from month to month just doesn’t make sense right now.

 

5. I am a huge nerd and I like doing it.

Money is fun! Is there not some kind of strange satisfaction in moving a ton of cash into your investment accounts? Tell me there isn’t, I dare you.

 

So those are my five reasons why I haven’t gotten fully automatic yet.  Have you fully automated your finances? Tell me why or why not in the comments – I would love to chat!

How to pay off $7,000 of student loans in 7 months

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loans1

I hit an important financial milestone about a month ago. In early May I made a hefty transfer of $1000 toward my student loan, and this payment pushed my student loan balance comfortably below $10,000.  That means I have paid off $7,041 of debt in 7 months.

While getting my loan balance into 4-digit territory is an important milestone, I almost didn’t feel like it was totally worthy of celebration because I have totally been here before.

Let’s rewind three years.  By early 2014, I had spent the last four years working overseas and, even though I was making it rain just about everywhere except my savings accounts, I was still smart enough to be throwing money at my student loans.

I managed to get the balance of my student loans from my undergraduate degree to around $3,000. I was this close to getting it paid off in its entirety…

…and then I went to grad school. And guess who took out more student loans? This girl.

It has been crazy frustrating to be shackled with piles of debt again, but I am coming at it with a few more years of financial mistakes wisdom under my belt this time.

And I am paying back my loans on a pretty normal income. I do make a good living. Full disclosure, it is higher than the median individual income in Canada. But I do not have the luxury of earning six figures (or let’s be honest, anywhere remotely close to that). I do not have the benefit of having a high-earning partner, or living at home with my partners, or one of myriad factors that often help people destroy massive, intimidating sums of debt super quickly.

I toyed with my budget so many times, trying to figure out how to find hundreds of extra dollars that just didn’t seem to exist. I simply did not have the disposable income to make huge payments toward my debt every month.

Or so I thought. Since going into repayment last November, I have averaged just over $1000 per month toward my debt. Seem crazy? It might be, but I think it can be replicated if you are tenacious and have sexy dreams about getting rid of these monthly payments for good.

Let’s walk through a few of the ways I did it.

HOW I DID IT

Upped my minimum monthly payment immediately.

In Canada, the federal and provincial government wants you to pay back your loan for the next 9.5 years. No freaking way. I am getting this thing gone in a couple years, and you can too.

Go up your monthly minimum payment, even if it’s only by $20. Pay a little more than you have to. Your framework of how much you can really manage to pay back every month will slowly start to shift, and you may find that you can even throw a little extra at it every now and then. When I changed my monthly payment to $500, it was a stretch for my budget. I really wondered whether I would be able to make it work for more than a couple months, and I thought I would have to lower it back down again to $400 or less. As it turns out, I have not only been able to put $500 toward my debt every month but way more. Rock on.

Side-hustled my face off.

Side hustling is an effin grind. I know some people love their side hustles. I do not. I have about four of them, and they are all okay. I freelance write, I grade standardized exams, I write standardized test exam questions, and I also do contract-based research. P.S. I also spend about ten hours a day getting to and working at my day job. Suffice it to say, I do not have a lot of free time. This is not my first choice, but this is a compromise I am willing to make for right now to get this debt gone. With my side hustle funds coming in at $2,824 in 2017 thus far, they are a huge part of the reason I have been so successful with my debt repayment.

Did not buy a car.

This one was a killer. In case you had any illusions about Canadian winters, walking and taking public transportation to work through a six-month-long Ottawa winter is no joke. It involved multiple layers of pants and navigating over mountain-like snowbanks. It also means that what could be a 15-minute commute in a car is a 45-60 minute commute by public transit.

Needless to say, there were many moments I was desperate to buy a car. That bus ride to and from work certainly gave me plenty of time to daydream about car ownership.

But not buying a car is the reason that my transportation expenses average a mere 6.6% of my monthly expenses. That frees up a lot of extra room that would simply not be possible as a car owner.

Used my money for other things, too.

We all know the story about so-and-so who paid off a bazillion dollars of debt in 17 seconds, but that’s just not my jam. Those stories are amazing and inspiring and have played a major role in my personal debt repayment journey. But there are so many other things I want to be doing with my money right now, too. Listen, I haven’t just been paying off my loans and buying boxed wine over the last seven months. I have also:

-Contributed to my retirement fund.That’s right, I’ve transferred about $1,500 to my retirement account in seven months. This is less than impressive to many folks. For someone who did not HAVE a retirement account until seven months ago, I am unreasonably happy with myself about this.

-Built up my emergency fund. Yes, I have all the mixed feelings about my emergency fund. But there are some possibly imminent changes coming up in my life, including a potentially expensive move to Vancouver…and mother of God, I am so glad I have suffocated my spendy side for the last seven months and not run off to Cuba with this money. My current and future self, especially any future version of me living in Vancouver, are already thanking me.

-Built up a travel fund of $800. To appease my aforementioned travel beast, I have also been tossing some extra moolah into a travel fund. There are lots of potential trips on the horizon and it feels so awesome to know that when the time comes to charge a plane ticket or a hotel stay, I’ve got it covered.

-Saved $700 toward a new laptop. The one I am currently tapping away on makes legitimate crunching noises. If anyone else has had this happen with a 6.5-year-old Macbook, please let me know what my future holds. In any case, my baby is hanging on for now but it’s just a matter of time.

-Traveled.  I have lived in a bunch of different countries, and traveled to even more. Traveling is a huge part of my life and I knew it would be integral to continue prioritizing this even as I paid down debt. In the last seven months, I have covered Washington DC, Kuala Lumpur, Malaysia, and also made the rounds to the more local but lovely cities of Toronto, Winnipeg, and Quebec City.

–Indulged in good beer, cottage weekends, and nights out. Cause you gotta enjoy life.  Nobody here is saying that you have to live like a recluse to pay down debt quickly.

 

Taking charge and paying down my student loans has been difficult. It has been all-consuming at times; I even went so far as to say that it has affected my relationship with my partner. So I hope you take my last point to heart and are using your money for other stuff, too.  Be kind to yourself, your family, your partner on your debt repayment journey. It will get paid off eventually.  

gotye

How are you doing with your debt repayment? Have you been able to pay it down quicker than you imagined or is slow and steady winning the race? Let me know what’s working for you in the comments!

My scarcity mindset is eroding my relationship

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scarcity mindset relationship

My scarcity mindset is deeply internalized.

So deeply internalized that I did not realize the extent of it until I woke up to the damage it has been doing to my relationship.

I do not know exactly where my scarcity mindset comes from. It does not come from growing up in poverty. My family was decidedly middle-class. We did not want for food, or clothes, or school supplies, or Christmas presents. My upbringing came with economic stability and privilege.

My scarcity mindset might come from being in debt for all of my adult life.

It might come from witnessing the realities of our economy and job market, personally and among friends and families.  From watching talented and smart people battle bouts of unemployment or face long stretches of precarious employment characterized by contract work with no job security and no benefits.

Mindset is complex, and I suspect that my scarcity mindset comes from many of these places.

Regardless of its roots, my scarcity mindset is insidious and ever present.

As I draw closer to my 30th birthday, still paying off student loans and starting a brand new career, I feel totally lost. I feel frustrated. I feel angry with myself for taking on more debt in my late 20s. I feel so much fear and anxiety about every cent of debt I owe and an unhealthy attachment to every cent in my bank account.

That’s messed up.

Because I got woke to my financial mistakes almost a year ago and I am now making great decisions. I have a steady job and I finally got the ball rolling with my side hustles. I am paying down my debt aggressively, all while building a healthy emergency fund, investing a small amount, and contributing the 18% maximum toward my retirement fund.

My student debt should be completely gone in about 18 months.

Yet I can’t sleep. I check my balances obsessively. I am torn between sending every last dollar toward my debt and aggressively tucking my paycheques away like a squirrel stockpiling nuts for the winter. I reluctantly fall somewhere in between, and am still deeply miserable.

That’s the thing with a scarcity mindset. When you do not have a lot of something, you fixate on it.

“When you really want something, you start to focus on it obsessively. When you’re hungry, it’s hard to think of anything other than food, when you’re desperately poor, you constantly worry about making ends meet. Scarcity produces a kind of tunnel vision, and it explains why, when we’re in a hole, we often lose sight of long-term priorities and dig ourselves even deeper.” -Shankar Vedantham (NPR)

With debt, it feels like every dollar I have is going to this invisible place and I do not get to use it for what I want, or even what I need sometimes. On some level, I knew my psyche was being affected in strange ways by being in debt, but I thought I was handling it. I thought I was coping, and it turns out I’m just not.

And this all came out in the subtlest of ways with my partner.

My partner is currently facing a stretch of underemployment. He is brilliant and well educated, armed with a PhD in his field, a creative mind, and a tough work ethic.

In the seven months he has been underemployed, he has been freelancing and teaching a class at the local university. He has pursued multiple different job opportunities, going on numerous interviews, completing language assessments, personality tests, and a myriad of other screening tasks.

None of those opportunities has yet come through.

And he is okay with that. He planned exceedingly well for this stretch of his life after defending his doctoral dissertation, knowing full well that work may be hard to come by. He diligently saved during his PhD and has a plentiful emergency fund to cover many months of expenses, freelancing all the while to bridge the gap.

Yes, he has been anxious and worried dealing with this uncertainty. But do you want to know who this has most dramatically impacted?

Me.

I have spent every day of the last seven months deeply conflicted and anxious about what is happening to him. I hate to admit it, but I hate that he is underemployed. Let me be very clear, I do not value him less.  But this dynamic surrounding his job status has created an underlying anxiety in our relationship that has become hard to ignore. Here are just a few things that have made up my emotional portfolio over the last several months.  Let me preface this by saying that some of these are fleeting, some are more ingrained, and just about all of them are completely unfair.

Resentment. I am a little resentful.  I am resentful that I am the only one really making an income right now.  I am resentful that he would not really be able to provide for me if something happens with my job.  It is not fair to use somebody else as your emergency fund, but the reality is that many of us do lean on our partners financially and it is scary to know you do not really have that safety net.

Fear. I am afraid of so many things right now. The unknown is terrifying. We talk about our future together, all while having no idea when or where his next paycheque will come from.  That is scary to me in ways I cannot adequately express.

Sadness. It has taken me some time to fully process this, but I am sad about how this employment situation has significantly impacted some of our life plans. I know we will get there, but there is definitely some mourning involved. Building a life and starting a family already feel like insurmountable financial challenges – with two solid incomes. Right now, it feels straight-up impossible and like we’ll never get there.

Anxiety. Plain and simple. It stresses the bejesus out of me to think that the economic wellbeing of our coupledom is falling pretty squarely on my shoulders right now. What if this continues for X amount of time? When we have children? What if, what if, what if?

Bitterness. It is hard to work three jobs to pay down student loans after graduating with an undervalued degree (or three) into a precarious and part-time work-based economy and wondering how we would ever eventually pay a $1200/month daycare bill without feeling a tinyyyy dose of bitter that we are operating under way different circumstances than our parents were when they were building their lives.

Plus ten thousand other feelings all day long.

As you can see, I have a lot of work to do. The scarcity mindset is real, and it has caused emotions to run high over the last six months. The result? Lots of tears and lots of little arguments.  I am so very lucky that my partner and I have a fantastic line of communication about most things, money included, and that having tough conversations is something we have gotten better at over time.  I am really lucky to have a partner who loves and trusts me enough to wade through these fears with me.  But I would be lying if I said that it has been easy, and I am guilty of letting my scarcity mindset slowly eat away at small pieces of our relationship.

We have had many brutally honest conversations about this. He is rightly confused why I do not have enough confidence or trust in him that he will find work, and soon. Why I do not have the faith that things will eventually work out. Why I do not see that we have both always managed to earn money and find jobs, and we will again.

On an intellectual level, I know these things to be true. I trust him implicitly in every other way as my partner in life. And I have great confidence in myself and my overall career path.

But believing these things in a real, emotional way? In a way that will calm the sinking feeling I get every time I look at my debt balance? Or in a way that will keep me from frantically checking my bank account every other Friday to make sure my salary was actually deposited (even though it always is)?

I should have faith in us and our ability to work things out. I should know that we are two highly-educated and resourceful people with multiple income streams and a ton of potential for lucrative and solid careers.

But I just can’t seem to get there yet.

Is anyone else struggling with a scarcity mindset when it comes to your money or any other resource in your life?  How has it impacted your relationships?  I would love to hear from you in the comments.