How To Save Money On Gas : Money Infographic

Barrie Personal Finances : Gas

In today’s day, many are doing their best to pinch their pennies, and avoid personal bankruptcy. There are some things that take from our wallet more than others. In this blog post I want to touch on a subject that steals from most of us on a regular basis – GAS. Here are a few small and simple ways to make the most of your gasoline, and save money in the long run!

Plan Ahead

  • Look into the gas providers in your area and try to find the best rates that fall on your regular routes. This way you are not driving around town to find the best prices.
  • Plan your trips before you leave. If you have several errands or stops to make, choose to complete them in one go. Plan out the best order and route to take before even leaving the house or office.

While Driving

  • Use Cruise Control
  • Avoid using brakes to slow down. Rather let off the gas well in advance and keep your distance to the vehicles in front of you. Especially on the highway.
  • Accelerate slowly and avoid revving your engine too high and try to keep in a habit of allowing your vehicle to switch gears at a lower RPM.
  • Use air conditioning wisely. If you are on the highway, roll the windows up and use the air conditioning. This helps with air resistance, although when you are in town driving, choose to roll down the windows instead of using the air conditioning.

Avoid Evaporation

  • Keep your gas cap tightly fastened
  • Do not park your vehicle in the hot sun, rather park it in the shade

General Maintenance

  • Continue to keep up the general maintenance on your vehicle. Making sure all of the fuel efficiency factors are in good working condition.
  • Make sure your tires are always pumped up fully with air.
  • Change your air filters on a regular basis
  • Keep a clean vehicle. At all times, try to avoid any extra weight. This means cleaning out the trunk and backseats on a regular basis.

While there are many tips that can help us save money on gas, and other areas, our personal finances can really get the best of us. Don Allen & Associates deal with debt assistance in Barrie, Collingwood, Toronto and Owen Sound. They can help with budgeting and personal finances including personal bankruptcy.

Change your routine and SAVE DOLLARS

We look briefly at three of many ways to reduce your costs and save…

We all know that eating out is costly, but lots of us still do not make our lunch and take it to work. Buying lunch at work and eating out frequently at night, including drinks, can add up to hundreds of dollars per month. So change your routine. Make enough lunches for the week on the weekend and drink more water at meals and you will save lots of money.

Coupons – Although couponing is not as active in Canada as it is in the U.S.A., you can still save between 10% and 30% or thousands of dollars a year for a family. How often have we experienced free savings being sent to our door and we fail to take advantage of them. For example, a fast food coupon dropped off we might tend to throw out, convincing ourselves it is not healthy or we won’t use it. Yet, we find ourselves there in the next week or two and without the coupon to use. Take advantage of them by reviewing the flyers dropped off at your door. Sign up for coupons directly from manufacturers. Create meal plans based on coupons available. There are websites devoted to couponing which can point you to further sources (eg. GroceryAlerts.ca; Flyerland.ca; Save.ca).

Look for the cheapest gas even if you have to go a little out of your way to get it (if the extra distance makes sense). Carpooling can save you hundreds of dollars a year by sharing the drive to work with someone else.

Cars and Increasing Debt

The average Canadian non-mortgage debt reached $26,211 this year, the highest level since 2004 and 2.4% higher than a year ago. A large portion of this increase was an increase in car loan debt, which is up 13.2% over a year ago. Credit card debt and lines of credit remained virtually unchanged.

Canadians are continuing to take on debt faster than incomes are growing. Disposable income grew at an annual rate of 2.3% in May but households are taking on debts at a rate of increase of 5.7%.

Household debt is at a record high of 150% of GDP, which is higher than in the USA.  People are thinking that low interest rates will continue to be with us for a while and therefore they are getting more into debt.

The Bank of Canada has done some studies and estimates that “highly indebted” households (those that spend 40% or more of income on servicing debt) could rise to 10% in 2016 from 6% in 2011 if interest rates reach 4.25%.

In addition to the cost of buying a car, there is the maintenance, insurance and ever increasing gas cost. A 2006 study estimated the average vehicle costs $8,003 per year to own and operate – $3,421 for purchasing costs, $2,227 for gas and oil and $2,355 in other vehicle-related costs. Other studies have estimated that the gas, maintenance, license, registration, loan finance and depreciation for a small sedan model is $.50 per mile if you average 10,000 miles, $.41 if 15,000 miles and $.37 if 20,000 miles. This does not include parking costs.

Consider reducing your costs of this expensive asset by; taking more public transportation, car pooling, alternate driving with friends, drive as small and fuel efficient 4 cylinder car as possible, ride a bike or walk more for errands and consolidate your trips.

Learning to Live Off CASH

Learning to live off cash, without credit cards, can be a challenge initially if you have been used to living with the help of credit cards.  We help all of the people we see with budgeting, to show them how to budget and live off cash, without the use of any credit cards.

First, buy a small notebook to use as your spending journal. To really understand where you have been spending, you have to go back over at least the last 6 months of bank statements and credit card bills to see what you have been doing with your money. You need to know this to change your behaviour and cut your spending. Come up with average weekly amounts spent in each major category of expenses.

Get your last year’s tax return or assessment or your most recent pay stub and calculate the average monthly net take home pay you are making.

Summarize your expenditures under the major expense categories eg. Food/Personal Care, Transportation, Rent, Utilities, Entertainment/Gifts; Clothing and Other. You will have to adjust the numbers you have been spending to match the net income received.

For unexpected emergencies, you need to set aside a small amount whenever you can to contribute toward these. Take the change out of your pocket each day and put it aside to deposit weekly into this savings account so it will build up and be available when needed. Automatic pay deductions of 5 or 10% off each pay directly deposited into this account are good and you will learn to live without this money until the emergency.

Take clean jars and some envelopes and label them for the expense categories above.  Load each jar with what you determine is a week’s worth of cash for each expense category. When you go out to spend, take what you need in the appropriate envelopes. Then, it is very important to keep receipts and record in your notebook what you spent on the same day you spent it so you will remember accurately.  Review this each week to ensure you are staying on track.

Doing this will become easier and will give you amazing peace of mind, not having to deal with the stress of credit card bills and hounding creditors.

What is Surplus Income?

I know you are saying – there is no way I have ANY surplus income! However, when you file for bankruptcy, the regulatory body that oversees bankruptcy has established levels of income that, if you make over these amounts, a portion of your income has to be paid to the trustee toward the creditors in your bankruptcy estate.

The Superintendent of Bankruptcy has established that the amount you are required to pay if you are bankrupt is based on your family income, and that amount is adjusted for inflation each year by the government. The limits this year increased by about 2.8% from last year.

If you, combined with net earnings (if any) of any other family member who live with you, earn more than the limit allowed by the government (based on the number of family members in the household), you pay half of the amount you are over the limit each month during your bankruptcy. Also, the time of your bankruptcy is extended by twelve months.

For example, if there are two family members in the household, the combined net monthly income (after taxes) can be up to $2,597 before you have surplus income.

If the surplus income you have to pay it too much, we can review with you the alternative of a consumer proposal to deal with your debt problems. Surplus income is not required to be calculated or paid with these.

The surplus income rules are complicated over and above what is shown above – we suggest you read our detailed explanation of surplus income

Please call us at 416-504-1511 or 888-504-1511 or 05-443-4473 to review your situation and options – our consultation will be free.

Bankruptcy Rate in 2011 and 2012

The Office of the Superintendent of Bankruptcy recently released bankruptcy statistics for the last quarter of 2011 and for the
first three months of 2012. Here is a quick summary:

In Canada in 2011 personal bankruptcies dropped by 16%, while
consumer proposals increased by 6.4%. Overall, there were 77,993 personal
bankruptcy filings, and 45,006 consumer proposals filed, for a total of 122,999
filings, the lowest number since 2008.

In Ontario in 2011 personal bankruptcy filings dropped by 22.6%,
while consumer proposals increased by 5.6%. Overall there were 25,529 personal
bankruptcies, and 24,931 consumer proposals, for a total of 50,460 filings, the
lowest number since 2008.

A reduction in the number of bankruptcy filings is generally good news;
it usually implies that consumers are more able to handle their debts.

The only troubling signs are that the number of monthly filings in
Ontario are increasing. In Ontario the total number of filings by consumers
were:

  • 3,496 in January 2012
  • 4,140 in February 2012
  • 4,333 in March 2012

At Don Allen & Associates Inc., our May and June were very busy so we predict that when the numbers for the spring are released, there will  continue to be an increase in the number of filings.

If you are experiencing financial problems, you are not alone. We
help people who have experienced a job loss, marriage break up, or medical
issues that have caused debt problems, so if you are unable to manage your
debt, call us at 800-504-1511 or email us at info@allentrustee.ca and we will review with you your options at no charge.

 

New Barrie office opened

In July 2011 we opened our Barrie office 60 Collier Street, beside City Hall, serving Barrie and the surrounding communities (see Contact Us). We are pleased to have Kirsten Bradley join us, working out of the Barrie office. She assists with initial contact with clients, gathering information and helping process and administer estates. She brings years of experiencing helping people of all ages deal with life challenges.  See Our Team for more.

Welcome to Our New Web Site

We have completely re-designed our website to highlight our personal and corporate restructuring practice. We hope it is informative for you and answers some of your questions.  Please contact us by phone or email for a FREE discussion of your personal situation on a confidential basis.  We will be frequently adding news items to this Blog and new features to the website.  As always, we welcome your reaction and suggestions for improving the website.

Low interest rates are luring us into borrowing with equity loans

Catherine and her husband tapped into their first home equity line of credit 15 years ago to borrow $15,000 to buy a car at low interest rates.

A few years later they needed another car so the bank raised the loan to $70,000.
Then Catherine unexpectedly lost her job and it took her over a year to get another job with much lower pay.

Now the line of credit is just around the maximum level.

“We try to put in $1,000 per month to pay it down and we just end up taking it right back out. The money is just too accessible.”

Catherine would like to boost their line of credit by another $40,000, use that to pay for another kitchen she badly wants and then repackage all of their debts into a mortgage, which they would eliminate though structured monthly payments.”

Their story is a common one. Lured by very low interest rates, Canadians are taking on record debt.

A recent Statistics Canada report showed that household debt rose to a new high in the second quarter of 2011, surpassing U.S. levels.

TransUnion credit bureau states that the average Canadian has more than $25,000 in consumer debt including credit cards, lines of credit, student debt and car loans but excluding mortgages. The bulk of it is from lines of credit with low interest rates.

Consumer spending accounts for 64% of our economy.

People sometimes take out a line of credit to pay down more expensive credit card debt. You then lose track of the increased loan amount you owe and the credit card spending levels start to creep back up.

Lines of credit balances have increased 95 fold since 1985, compared to incomes and economic output having increased only 3 times. Some of this has gone into investments but a lot has gone into financing second cars, vacations and other non- appreciating goods.

You should ask yourself the following questions:

  • How much debt do you have? 
  • Will you be debt free at retirement? Take your total family debt and divide it by the years to retirement. Say it is $200,000 and you want to retire in 10 years. Can you handle repaying an average of $20,000 per year compared to your family after tax income?
  • What is the ratio of debt to your family income? The average Canadian household has a debt-to-personal disposable income ratio of 151%. Calculate this by your total family debt divided by your family’s annual after tax income. If you are below this level, you are in a better position.
  • What type of debt is it? If most of your debt is consumer debt (credit cards, lines of credit) to buy consumer debt, this is more risky that mortgage debt to buy the home you live in.
  • What interest rate will you pay? Credit card debt is especially high. If you are going to add debt, obviously it is better to add lower interest type of debt.
  • Will a fixed-rate mortgage protect me? Many people have mortgages and lines of credit at variable interest rates tied to the prime rate, which is currently 3%. When the interest rates rise (likely we are told, starting in 2012), the resulting increased monthly payments may be too much for many to handle.