Off to Work We Go
This morning, enroute to pick up a stranded co-worker as a result of the public transit strike, I pondered something. Why do so many citizens in Metro take public transit? I’m sure for a chosen few they base their rationale on environmental concerns. One less car polluting the air space will someday help with our carbon footprint and maybe stop that ever increasing hole in the ozone. For others perhaps, it’s a lifestyle choice. They live near their workplace and having a car doesn’t make sense. It could be due to the health benefits of walking to and from work or even to the bus stop. There is a percentage of the population that for medical reasons take transit as they are unable to drive. Many of us despise traffic and would probably prefer to leave the frustration of the merges and bumper to bumper traffic to someone else while engaging themselves in less stressful activity such as reading a book, listening to music or watching an eclectic mix of similar commuters.
But I bet if you polled most of the 96,000 Metro commuters, the decision to take transit is purely economic. The cost of maintaining a vehicle vs taking public transit is very significant. So I crunched the numbers from the perspective of a Dartmouth resident working a full time position in downtown Halifax.
Cost of transit: Metro Transit adult pass: 70 per month=$840 annually
Cost of Owing a Vehicle:
Average car payment: $450 per month =$5,400 annually
Average MacPass cost: $1.40 per day x 5 days a week x52 weeks =$364 annually
Average Auto Insurance: $1,200 annually
Average Monthly Parking Downtown: $140 monthly =$1680 annually
Average Cost of Repairs: $1,200 annually
Average price of Gas: $90 week x52 weeks= $4,680 annually
Total Average Cost to maintain a vehicle annually: $14,524
Vehicle costs such as gas, insurance and bridge passes are continuously rising while wages remain relatively unchanged. The cost benefit of using public transit allows many consumers to redirect those proceeds to pay a mortgage on a home they could otherwise not afford or pay for a child’s university education or afford other lifestyle choices. For many Metro residents, however, it simply allows them to live within their means without incurring debt to supplement their income.
There are many of us who truly need a vehicle as condition of our employment. For those that do not, perhaps they should pause and consider if the vehicle is truly a need or simply another desire. And if a want, what would you do with the annual savings of $13,684 by taking the bus? Can we afford not to take advantage of the savings?
Stigma of Bankruptcy
Unless you have been recently hiding under a rock, you’ve heard about the Bedford man arraigned last week on espionage charges. Media organizations are frothing at any personal information they can get their hands on. One piece of public information that has surfaced is that he filed for bankruptcy in 1998.
Unfortunately, society still regards filing for bankruptcy as a character flaw. If you can’t manage your money, what can you manage? A responsible person, we are told, should know how to manage their finances. The years pass, bankruptcy levels rise and yet societal values remain somewhat unchanged.
With recent studies reporting Canadians spending $1.50 of every dollar earned, the face of bankruptcy is also changing. Let’s call them the “working poor”. The face of bankruptcy today is your neighbour, your co-worker, your child’s teacher, the hospital nurse, even the bank employee. The list goes on and on. Debt affects everyone nowadays. We are quick to criticize people who seek bankruptcy protection, however, often the true causes of bankruptcy have nothing to do with over-spending or poor money management. Illness, marital breakdown, a series of unfortunate events, reduced household income as a result of the death of a spouse, cessation of child support, or even temporary job loss can cause a person who has been living just at their threshold to get behind the eight ball enough that they never recover.
Most individuals have already been to their banks requesting a consolidation of their debts and have been turned away for a multitude of reasons, such as debt-ratio being too high, seasonal income, no co-signers or poor credit score. Many consumers resort to high-interest payday loan companies to bridge the gap.
The federal Bankruptcy & Insolvency Act affords an honest but unfortunate insolvent individual protection from creditors. Granted, there are always a few bad apples that spoil the bunch, but very few people WANT to file for bankruptcy. It is usually out of necessity.
The fact that someone recognizes a debt problem and seeks assistance for their financial circumstances should not been seen as a sign of weakness but rather a sign of strength. It takes a much bigger person to admit to a debt problem rather than hide from it.
When, Where and Why Did My Money Disappear
We all succumb to wants. We walk past a Starbucks and order a $3.50 coffee as a pick me up. Guests invited for dinner and we don’t hesitate to buy a nice bottle of wine. We are too tired or lazy to cook so we order out. Why watch a movie “on demand” when we deserve a change of scenery and jump in the car and drive to the theater. We all do it. Spend needlessly and if you don’t think you do, I challenge you. I challenge you for 30 days to write down where your money goes. Don’t take a mental picture. No guessing. No receipts or on-line bank statements. Keep it simple. Every time your wallet makes an entrance or your debit card is smoking from use, jot down in a notebook, on your iphone or on a piece of paper when, where and why the purchase occurred. It’s not complicated but it does take effort. You must write down every purchase, no matter how insignificant. You know how much your mortgage payment is bi-weekly or your monthly car payment, but do you really know how much you are spending on coffee, lunches, or handouts to your teenagers each week (or day for that matter)? And more importantly, why. Why do we as consumers feel this pressure, this want, this need to spend? Why do we convince ourselves that we “deserve” all that life has to offer?
If you take my challenge, as so many of my transitioning debtors have done, I can promise you many things will happen.
You will notice patterns immerging. You buy a morning coffee on your way to work. You stop on the way home to pick up take out because you are tired. It’s easier to give the kids money for what they desire then argue about if they really need it.
You start to pay attention to your spending. Imagine someone stole $100 from your wallet. You would be upset and would want justice. Now imagine you take out $100 from an ATM on Saturday morning and head to the Farmers Market. Within one hour, poof, the money disappears but you have no sense of remorse or unjust feelings as it was your choice. Writing down purchases makes the spending real. We see it, we believe it. We acknowledge it and are either angered by our decision to spend or satisfied with our choice.
You begin to question needs vs wants. Life is expensive and most of what we desire in life is also expensive. Pausing for a moment to write down purchases makes us take the time to self-analyse and determine if the purchase really matters to us or can we let it go and still be happy.
You challenge yourself. After noticing that you spend daily, you play a game with yourself. You begin to see if you can go one day without spending anything or perhaps even two. You recognize your spending behaviour and try to modify it.
You value the dollars you earn. I love the slogan `you are richer than you think`. Saving for what really matters can happen even on a modest income if you pay attention and make even the simplest of daily choices.
I`ll let you in on a little secret about how to save money. SPEND LESS. It`s that simple.