Most of us think of our daily coffee or muffin as a small insignificant expense, not even worth thinking about; but at Credit Canada Debt Solutions we know our clients' situations can often be significantly improved by calling their attention to expenses of which they may not be aware. Here is an excerpt from a sample credit counselling session.
Counsellor (C): So Janet, what do you spend each month on restaurants?
Janet (J): Oh we only go to those on special occasions.
C: What about fast food, or take out?
J: We usually take the kids for a burger at least twice a month, $30 each time. We usually order pizza every two weeks for $30 each.
C: That comes to $120 per month for burgers and pizza. Do you bring a lunch to work?
J: Usually. Sometimes I don't have the time to make one. I buy lunch three times a week for $6 each time.
C: So $6 times 3 equals $18, $18 over 4 weeks equals $72 for the month. Does your husband bring his lunch?
J: He usually gets something from his cafeteria at work and spends about $30 per week.
CO: So he spends $120 per month on lunches. Do you buy coffee?
J: Of course. I've got to have my morning caffeine fix.
CO: How often do you get one and how much do you spend?
J: A coffee is $1.50 and I get one every day. Oh and I often get a muffin twice a week at $1.75 each one.
CO: And your husband?
J: He does the same.
CO: So for coffee you pay $7.50, and muffins $3.50, for a total of $11 per week, which is $44 per month. If your husband does the same that comes to $88 you both spend on coffee.
So you spend $120 on burgers & pizza, $72 on your lunch, $120 on your husband's, and $88 on coffee. That adds up to $400 that you spend per month on restaurants and coffee.
J: Wow, I never looked at it that way. I think we need to cut back on our spending.
The above conversation illustrates the lack of awareness most people have regarding their daily spending. As life gets more hectic there is little time to reflect on what you spend each day on seemingly small incidentals. However, those incidentals can be costly and as we have seen here at Credit Canada credit counselling can help show those costs clearly.
Now Janet can make a conscious effort to reduce the amount she spends on coffee and fast food. She will only buy coffee occasionally, and drink the free coffee she gets at work. For lunches she will bring her own and eat out occasionally. This is Janet's first step to easily control her expenses. She and her husband will set a goal of spending no more than $200 per month on restaurants; eventually reducing that over time. Next they will look at incidentals like alcohol, entertainment, and gifts, and plan to reduce their spending on those items. After completing Janet's spending plan, she was amazed at the savings by making these cuts. Both Janet and her husband can use our Credit Canada monthly budget tracker to track their spending.
Janet may need to look for a second job, or finding a better paying one. She may have to look for cheaper housing. She may get rid of her car and take the bus. Although it is tempting to buy coffee in the morning or a burger on the way home, the costs do add up. The money could be put towards saving for a vacation for example.
So Janet will think twice before ordering her daily cappuccino and would rather enjoy one on a warm beach in the Caribbean in her future.