Most of us are trying to figure out how to live frugally these days due to the ongoing recession that seems to be affecting everyone, not just the poor, but even the well to do that have to cut back on some of their luxury lifestyles.

No matter how frugally you have to live, there are certain basic necessities you just cannot afford to forget. There are those who don’t spend on what they need but some how or other, manage to spend on what they want whether it is really necessary or not. However, when learning how to live frugally it is best never to overlook the basic needs in life and set aside some money for that, before you can think of the extras.

Can one even think of doing without food, shelter, clothing, medicine, and if there are children of school going age, schooling for them? I should think, not. These are essentials in life and even with frugal living; one has to first and foremost take those into consideration when balancing household finances.

Saving on Food
The most basic necessity in life, living frugally or not, we all need to eat. That does not mean you have to order pizza every night or buy everything at the supermarket every week. You can cut down on the pricy but unhealthy fast food and stop ordering from outside. Instead, prepare meals at home and eat sensibly. If you have enough space, why not try to plant some vegetable and herbs in your back yard? That could save you a lot. Do your food shopping when there are give away offers and use coupons whenever possible. Remember that every cent counts at the end of the day.

Saving on Shelter
Shelter, you cannot do without. However, that does not mean you have to live in the priciest area in the city or go for the most modern looking house. If things are really bad, you can opt to live even in a caravan until your circumstances change. If possible, move to an area where the cost of living is not too high or share a larger house with another family. Water, electricity and gas also count. Use these utilities sparingly and without waste for frugal living.

Saving on Clothing
This is one are we can really cut down on but don’t. Especially women feel that they simply have to buy the pair of shoes they saw or the amazing looking scarf displayed in the window; even when they can’t afford it. Isn’t it much better to buy two pairs of shoes from a thrift shop or a second hand shop? You can find some really great bargains at these places and even at garage sales; if you only take the time to look around. Cut down on unessential clothing as much as possible. No one will die for the want of the latest Gucci hand bag, I’m sure.

Saving on Health & Medicine
Cut down on unnecessary medical expenses by living healthily. Living frugally will certainly not harm your health. In fact, eating a balanced diet without too much sugar and fat can only be good for you. Exercise at home; you don’t always have to go to the gym for that. If you have to take medicine for some ailment… do it. Don’t ever cut back on your blood pressure pills or other life saving medications. Living frugally does not mean cutting back on your health needs.

As you can see there are any number of ways of learning how to live frugally without putting your life on hold. Live frugally but sensibly and before long your new life style will not only make you feel free of stress but healthier as a result.

How to live frugally

How to live frugally and sensibly is a post from: Saving money tips - frugal living tips

RRSP TFSA Choices

Canadians have never properly utilized registered Retirement Savings Plans (RRSP). Essentially, you can contribute up to 18% of your gross income each year. That contribution reduces your taxable income. Therefore, if you make $30 thousand a year gross income, and contribute 18%, $5400, your taxable income becomes $24 600. Great! Too bad you can’t afford to give up that much of your paycheque for retirement savings.

Enter, the Tax Free Savings Account (TFSA). Until now, any interest earned on savings was considered income, and therefore taxable. With the TFSA, you can contribute up to $5000 annually and the interest will not be taxable. Ever. Remember our friend, compound interest? Not taxable. Capital gains? Not taxable. Need to withdraw it – still not taxable. Hooray!

The focus of both of these programs is encouraging Canadians to save. Both have benefits and both have drawbacks.

Contribution Amounts: TFSA contributions are capped at $5000 for 2009. This limit is subject to change, as it’s indexed by the inflation rate. RRSP contributions are capped at about 18% of gross income.

Unused Contributions: Both allow unused contributions to be carried over to following years. Both contribution limits will be updated on your NOA (those blue pages you get back from your tax return).

Over Contributions: Yes, sigh, both have nasty penalties if you contribute too much. Put your NOA in your sock drawer so you’ll always have it for reference.

Tax Deduction: TFSA contributions are not tax deductible. RRSP contributions are.
Withdrawals: It’s your money. Of-course you can withdraw it. Since you did not get a tax break on your TFSA contribution, there’s no tax due when you take it out. Regular RRSP withdrawals are taxable though.

“Clawbacks”: Many Canadians avoid RRSP contributions because they are worried about “clawbacks”. Since RRSP’s are really deferring your income, they are considered income when withdrawn, reducing what you receive for certain government pension programs etc. TFSA’s, are not considered income when withdrawn, and for the most part, don’t hurt eligibility for other programs, including EI (employment insurance).

This is only a short list of highlights for TFSA’s and RRSP’s. Both products are available in multiple savings forms; savings accounts, GIC’s, mutual funds etc. Both are registered, meaning your financial institution notifies CRA to earmark your funds under the applicable plan.

What it really comes down to is choice. Whether you’re saving for a home, vacation, retirement, or property taxes, the more choices we have, the more control we have over our financial well being.

RRSP’s + TFSA’s = More Choice is a post from: Saving money tips - frugal living tips

Debt settlement companies charge service charges to set up a borrower’s debt settlement savings account in addition to an initial administration fee/charge. The terms and standards of different debt settlement companies vary and their charges usually depend on the amount that the borrower stands to pay back to his/her creditor. In short, debt settlement means relieving a borrower’s debt for a minimum possible amount over the shortest span of time without filing for bankruptcy. What debt settlement actually does is to reduce the amount of the loan to a size that is manageable for the borrower to repay. The borrower on his/her part needs to understand certain things about debt settlement.

The following are a few ‘must know’ points of debt settlement.

• Every worthwhile debt settlement company must be able negotiate with a creditor to bring down the borrower’s debt to including its own fees to around 50% of the original debt amount. For example, if you obtained a loan for $30,000 and at sometime during the repayment find yourself unable to cope with repayments and fall in a debt trap and seek debt settlement services through a good debt settlement company it should be able to get your debt settled at approx $16,000 to $17,000 including its own charges.

• It is advisable for borrowers not to be in a hurry to sign a contract with any debt settlement company.

• When looking for a debt settlement solution it is best to look for an IAPDA certified professional. IAPDA stands for International Association of Professional Debt Arbitrators. They are specially qualified to deal with all aspects of debt settlement and possess an in-depth knowledge of debt settlement laws. They are also trained to understand the financial conditions of borrowers. They are able to help borrowers to liquidate their dues within 2 to 3 years of entering a debt settlement program.

• It is necessary to know the service charges related to the debt settlement in advance so that any confusion at a later date is avoided.

• Any debt settlement company that appropriates the initial payment towards its fees should be avoided. The major portion of this should be directed towards the debt settlement. A borrower should check with the IAPDA professional about the ways his money is going to be used.

• The savings of the borrower should be used towards paying off the outstanding debt within the stipulated time

• Reputed debt settlement companies do not report to credit reporting companies. It is therefore important for borrowers to select a debt settlement company carefully so that their credit reports do not reflect negative remarks or low credit ratings

• It is important that a debt settlement company gives a service guarantee. The contract between the borrower and the debt settlement company should specifically state that in case the company is unable to settle the debts of the borrower then all or part of the service fee charged by the company will be refunded.

• The debt settlement company should have a Better Business Bureau membership.

• Debt settlement is meant to provide debt relief to a borrower to prevent him from filing for bankruptcy. It is therefore important for borrowers to select a debt settlement company that can guarantee debt relief.

How To Select A Debt Settlement Company is a post from: Saving money tips - frugal living tips

1. Do not buy anything on credit that I don’t have the cast for. I only use my credit card for health care costs like the dentist. I will pay with the card, then pay off the card once my insurance company sends me a cheque. I also use it for gas/coffee if I forget any other forms of payment. I will not use it to buy a new tv or anything like that.

2. No new credit cards. I have one mastercard. I will not be getting any more no matter how tempting. Store credit cards are evil and a new stereo or big screen tv is not worth going into debt for.

3. No credit increases. My credit card had a limit of $1000. That might seem small, but it keeps me from making a silly purchase and I have never been in an emergency where I needed more that that right away.

4. Keep being frugal! I am still always going to buy on sale, and look for the best deal or way to save money.

5. Generate more income. I am going to find a part time thing to do to generate a little more income this year.

6. Post more often. This last one might not fit into this category, but it is something I really want to focus on this year. I really like writing for this blog, hopefully I can keep up a nice pace this year.

So what about you? Have any new years resolutions to help all of us save or earn more money this year?

Financial New Years Resolution is a post from: Saving money tips - frugal living tips

Anyway, the reason I watch is because I am trying to get in shape myself. It is not a quick battle for me, but it is something I want to do and the show gives me a reason to workout. At the very least I workout during the show which is better than nothing. It is also helping with teaching me how to eat right and get some more energy out of my body. This helps with all my projects that I am doing or that I want to do.

Anyone else watch this show? I watched the last season as well.

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Also, if you have tried e-mailing over the past few weeks and have not gotten a response we are sorry and will get back to you this week.

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