As someone who has been on both sides of a personal loan, I have seen both successful repayments and damaged relationships from unpaid debts.

Aside from simply lending them money, how else can we help our loved ones when they’re in a tough situation? Is it ever a good idea to lend them some money? If we choose to do so, how do we establish ground rules? Let’s explore some of our options.

How can you tell if a loved one is struggling financially? 

Identifying if someone close to you is struggling financially is not always an easy task. There can be a lot of shame attached to financial struggles, and therefore, we tend to keep them a secret. But, of course, that only makes it worse. As a result, the truth will often show up indirectly in the forms of self-isolation, moodiness, irritability, and frustration.

So what’s the best way to find out? Simply by asking and making it clear that you care about them. Show that you care by opening up the topic and constructively asking your loved one: “Hey, you seem to be a little off lately. Is there anything you want to talk about? Anything I can do to help?”

What are the best ways to support your friends and family?

If you’ve gotten to the stage where your loved one is ready to talk, the best thing you can do is to listen. Being behind on bills or deep in debt is an all-encompassing feeling which leads to a lot of stress, anxiety, shame, confusion, and overwhelm. Being able to speak openly about the situation will be a nice source of relief for your friend. 

Next up, we should aim to seek the source of their financial woes. There are likely feelings and behaviours that have led to this undesirable position that may be difficult (or impossible) for you to diagnose and diffuse – know your limitations. 

As with many of the challenges we encounter in our lives, opting for professional help will always yield the best and safest results. That said, if you’ve had a healthy conversation with your loved one and they’re asking for your help, you can certainly help them get off to a good start!

Step one is almost always going to be to escape the financial fog

Many of us who have failed to properly manage our money lack systems, tracking, and clarity. Until we know exactly how much money is coming in and where that money is going out every month, we will continue to struggle as we live above our means and fall deeper into the hole. When this is the case, it is very common to ignore the problem altogether. Unfortunately, this only makes things worse, and our understanding of our situation becomes increasingly murky. Helping your friend determine their current net worth and monthly cash flow position is a great place to start. 

Ask questions like: 

• Which habits are costing us more than we thought? 

• What are we going to have to go without to get ahead? 

This can be a scary process, but the act of going through it already shows that we’re starting to commit to the idea of changing our behaviour. So encourage your friends to continue on the path toward financial freedom. 

The best thing you can do in the early stages is to offer your emotional support. If they’ve come to you for help, they’re likely also looking for an external source of accountability. Don’t be afraid to check in on them and see how they’re progressing throughout their journey.

Should I lend a loved one money?

In her book, Financial Recovery, Karen McCall says, “chronic money problems are typically not isolated events but result from patterns of overspending, underearning, or chronic debting.”

It is imperative to know how they got themselves into this position and what actions they will take. It is both an integral part of their financial recovery and valuable information as you formulate your assessment of whether or not you should gift or loan this person your hard-earned money. 

Since the beginning of time, I can imagine how many unpaid or partially paid loans have poisoned relationships and business deals. Neither party desires this outcome, yet it is a very real possibility. Therefore, it is important to take care of the details before you lend money to a friend or family member.

Ground rules for personal loans 

Put the deal in writing

If this is a significant amount of money to either party, especially if it’s you loaning the moola, you should seriously consider drafting up a contract. Sure — depending on the nature of the agreement and the relationship between two people, this may seem like overkill. However, going through the process will create clarity and accountability. It is imperative that both parties fully understand the loan. 

Look at a typical lending contract for reference

As the loan amount’s significance increases, so should the resemblance to a traditional loan. There is a reason that banks have so much fine print in their agreements. Clarity is paramount. If both parties understand all of the terms and conditions, there will be less potential for ambiguity and excuses down the road. 

Make a plan (either together or separately)

Take into account the necessary steps that your loved ones will take to improve their financial situation. They may need to consolidate to stop the bleeding on high-interest debts. They could need to sell an asset to repay their debts. Perhaps they have an outstanding tax bill that is getting in the way of preferred lending rates. Whatever the challenges may be, draw out the to-do list for getting them back on their feet. Continue to encourage the process. 

Create milestones for the borrower

When a start-up business receives funding from venture capitalists, they go through a process in which more funds become available as they hit certain milestones. For example, a product may need to have (x) sales in its first year. Again, this is to ensure that future investments are contingent on performance. 

From the standpoint of a personal loan, a similar practice may be wise. This way, you’re awarding progress rather than handing over cash up-front which may enable the very behaviours that created the financial problem in the first place. Consider attaching instalments of your loan to stages of their financial recovery plan. 

Do you or don’t you?

As humans, it can feel really good to help those in need. After all — no one wants to see their friends and family in distress. 

At one point in your life, you have likely experienced the weight of financial difficulties and can relate to the crushing anxiety it can cause. But, although noble, lending money to anyone can be risky. For that reason, you need a clear understanding from both parties of the terms and conditions and a timeline for repayment. 

If you’re in a good financial position and are comfortable providing monetary support to a friend in need, it may be best to let the money go with zero expectation you’ll receive what you gave back.

Either way, the key is, to be honest about the reason for the loan. Remember — you do not need to enter into a financial agreement if you feel pressured. 

Hopefully, the guidelines above will help you objectively assess whether this is a good loan for you to make. Likely, the best thing you can do is provide emotional support, friendly advice, and a professional referral.  

The post How to Support Your Friend or Family Member That’s Struggling Financially appeared first on Mixed Up Money.

If you’re attempting to cut down on your spending, chances are the first place you’ll go is by limiting your non-essential spending. Less takeout, more home-cooked meals. Fewer Starbucks, more brewed coffee. But if you find that you’re still having trouble making ends meet or just want to find ways to save more money, negotiating is critical.

One way to help lower your monthly bills without changing too much of your life otherwise is to negotiate with your providers. If you didn’t know, you can (and should) negotiate nearly every single bill you pay. From credit card bills to cable bills, they’re all negotiable. 

What steps can you take to negotiate lower monthly bills?

#1. Research what other people pay

Before you call a provider, it’s best to do your research and determine averages from other companies and people. You can ask your friends, family and even your social media followers to see what other people pay for similar bills. 

For example, for a cell phone bill, how much do they pay and how much data do they get? Once you have this information, you can compare it with your own contract and see whether you think you have an argument for the wiggle room. Even if your bill is the lowest of them all, there may still be some way to negotiate a discount, even if it’s temporary. 

I’ve been able to lower my cable bill by $5/month and get free Netflix for a year just by asking. It’s not a lot, but it’s $60 a year, and that’s enough to buy two stocks in Air Canada or Manulife, so, not entirely bad. 

#2. Before you call, remember to be nice to the customer service agents

While speaking with people who work in customer service, it is super important to use your manners. Being polite will always go further than anger and petty remarks. This is important to remember because most of the time, the person you will be speaking with usually does not make the rules. They cannot always make decisions regarding lowering a bill, and most importantly, they also pay bills and works hard for their money. 

It’s possible to get what you want just by using your manners. As I often tell my two-year-old, we’re more likely to say yes if you say please and thank you. 

#3. Be persistent

Typically, the first time you ask for a lower monthly bill or hint that you’re looking for a financial break, the person on the other line may insist that there is nothing they can do. If this is the case, ask to speak with someone who can help you. 

If they say there is no one else, call back again. Each time you call, you will likely receive a different agent. Each person you speak to will probably give you a different answer. If you’re able to save yourself $50 plus dollars a year (or a month) by spending a couple of hours making phone calls, it’s likely still worth it. 

#4. Say you are cancelling your service

If all else fails, it might be best to imply you are thinking about cancelling your service. Most of the time, indicating you want to cancel will mean you are transferred to a different department, likely a loyalty or retention employee, whose goal is to convince you to stay. This means the ball is now in your court. 

These departments typically have the most negotiation ability and are the best people to speak to if you’d like to see a change in your service. Just be sure that you completely understand what changes you can expect before you agree to anything and that these cost changes are permanent. 

How do you start the conversation?

I’m sure you’re now thinking to yourself, that’s all great, Alyssa, but I hate talking on the phone, so how the hell am I supposed to navigate this conversation with confidence? Great question. One thing to keep in mind is that we don’t want to say outright that we wish to have a lower bill. Everyone wants a lower bill. If the solution were that simple, we would all negotiate regularly.

Therefore, we need to tell them about the problem without telling them about the problem. For example, I’ve started to notice that my bill is a lot more expensive than I can manage, and I’m wondering what offers you currently have that could help me lower my bill?

Acknowledge a deal you know they’re currently offering. Saying something like, I saw that you’re now offering a cable and cell phone combo deal, and I’d also love to take advantage of this deal. 

Lastly, be sure to show them your loyalty. Tell the agent how long you’ve been a customer, encourage them to keep you by showing why it’s worthwhile to stay. Say something like, I’ve been a loyal paying customer for over eight years now, and I would love for you to convince me to stay with your company.

You may not always hear what you want

Now that you’ve done everything you can to negotiate a more appropriate monthly payment, it can feel defeating to hear that you already have the best price available.

If you feel like you’re overpaying for your service after doing all of your research and spending the time chatting with customer service agents, cancelling might be the right decision for you after all. Do the math to see what your cancellation fee is and whether or not you’ll end up saving that money long term by switching to a new provider. 

Either way, just like we negotiate our salary, it never hurts to ask. The worst that can happen is they say no — and there are much worse things to hear than a two-letter word.

The post How to Negotiate Monthly Bills appeared first on Mixed Up Money.

Credit cards can be valuable financial tools if you use them correctly. But, on the flip side, if you don’t understand a tool before you begin to introduce it into your routine, it might not always work in your favour. That was my relationship with credit cards for most of my 20s. 

In college and university, I was the girl who would head to the mall every Friday after my classes – if I made it to my classes, that is. I always had plans to go out that night or the next day, and I certainly couldn’t be seen in anything I already owned. 

After all, if I could buy a new outfit at Forever 21 for $20, then why bother putting together an old one that I had already taken a photo in? Keep in mind; this was before Instagram blew up. So, if you’re out there, ‘girl who’s following in my footsteps,’ I totally know your mindset. But, I really insist you keep reading.

Why did I buy so many clothes?

Looking back, I can come up with many reasons why frivolous spending was an everyday part of my routine. I used to make most of my purchases to impress others, keep up with trends, and afford nights out that felt like an essential. 

Shopping and buying new clothing items felt like the one way to feel more confident in my own skin. Maybe I needed to spend to overcompensate for another emotional issue. Perhaps it’s because society pushed me to that shallow of a level. Maybe this, maybe that. 

The reality? I was full of excuses for why spending money I didn’t have was okay. Justification is the enemy of so many people battling debt – at least, it certainly was for me.

In my early 20s, I thought it was more important to look fashionable than pay my bills. My shopping problem got so bad I had over 40 pairs of jeans at one point. I had so many t-shirts and dresses that I didn’t even know if I’d worn them before. Some still had price tags attached. I wouldn’t think, “do I need this?” at the store. I wouldn’t even bother trying it on. If it was my size, it was in my closet.

When did I realize my clothing addiction had gotten out of control?

It happened quickly. The day everything changed with my shopping addiction. My then-boyfriend, now husband and I had to move to a small town outside of our city and share one bedroom to cut costs on rent. 

“Share a closet? You’re kidding, right?” were probably my exact words when I walked into our new living situation. I mean, where was I going to put all of my shoes, sweaters, and skirts? That day I had to sit down and sort through my clothes — something I hadn’t seriously done in over five years. If I had taken inventory on that day, I would have made a few of you sick thinking about my clothing collection. A collection that had almost become a hoarder’s dream.

Not only did I have high-fashion items and budget-friendly pieces, but I also had an unexplainable amount of workout clothes. My soccer wardrobe was more extensive than any other girl’s entire assortment of outfits. At that moment, I realized that it was time for me to purge almost everything.

Why did I have five white soccer shorts, four pairs of skinny black jeans, and six little black dresses? Only old Alyssa knows. And only old Alyssa knows why I made so many irresponsible financial decisions that still affect my current journey. Yes, still. 

Even though I’ve since repaid my five-figure consumer debt, I’ll never be able to buy back those years lost with no savings and no investing.

Since that day, I have cleaned out my clothing collection over ten times. I am continually removing pieces that I never wear and donating them to those in need. For one entire year following that day, I did not buy a new outfit (besides one bridesmaid dress and one new work skirt). 

Going to the mall used to be one of my favourite activities to pass the time – and now, I dread the days I have to pop in for even 20 minutes.

Why do we spend so much time at the mall?

Growing up, my mom always took my sister and me to the mall to treat us to something special if we hadn’t been together in a while. It felt good to reward myself by purchasing a new outfit. Now, it feels like the best times to buy myself new clothing are when it’s necessary. A hole in my jeans, a worn pair of socks. 

My thinking now is that if it’s not in my budget, why put myself in that position? Are you going to the mall to fulfill yourself emotionally, or do you truly need something?

I used to provide myself with multiple excuses regarding why I had to spend the money I was spending. But when it comes down to it, justifying your spending is never the answer. And if you have to explain it, you should automatically be aware that it might not be an appropriate purchase.

What are some old spending habits that you’ve kicked to the curb? How did you do it? Let me know in the comments.

The post My Clothing Addiction Was Killing My Credit appeared first on Mixed Up Money.

If I had kept track of the number of times I’d written content this year that read something along the lines of ‘2020 was hard’ or ‘given the current circumstances due to COVID-19,’ it would be overwhelmingly A LOT. It’s not news to you that this year has been a complete whirlwind of many emotions. It’s frustrating to read or watch so many TV series and news reports that act as if we aren’t experiencing what’s happening first-hand ourselves. 

In our household alone, we, fortunately, did not experience too significant of an impact. But, we still managed to overcome one furlough and one toddler who desperately misses social interaction. It was not how I envisioned my year to go. Things completely changed for me career-wise, and most of the plans I had for Mixed Up Money flipped in a few different directions. Regardless of these ups and downs, though, we are nearing the end of the weirdest year of our lives and moving forward into what I’m sure will be another odd year. 

Because I felt an overwhelming amount of pressure to keep my mind occupied and my family in good standing both mentally and financially, we didn’t do nearly as much as we typically do with our money. Instead, our mindset fell more under a ‘the bills are paid, and the savings are saved, and everything else is moo’ moment. 

Okay, okay, you get it. Unprecedented times, money is weird; just get by. Let’s look at the reality of 2020 based on my spending habits.

How much money did I spend, and what percentage of it went where?

Way back in 2017, I wrote an article exposing all of my spendings from 2016. Since then, I’ve avoided doing a full-year deep dive because I know that my lifestyle has inflated significantly. 

To put things in perspective, in 2016, I spent $35,425. In 2020, I spent around $66,368. In just four years, my spending has gone up by 87% and if you’re wondering, yes, my head is spinning. 

But, here is the thing. Four years ago, I was a renter and a newlywed. Today, I am a homeowner and a mom. Expenses tend to increase when you tack on a kid and a six-figure property to your budget. 

To put a percentage on my numbers, I chose to pull some exciting expenses while lumping together additional costs to keep the pie chart within reason. I tend to get carried away when I’m working with statistics, so bear with me. 

• Home includes my mortgage, property taxes, insurance, utilities, and repairs or updates

• My savings includes short and long-term

• Monthly bills include my subscription services, life insurance, phone and internet services, donations and my vehicle expenses

• Other non-essentials (aside from my takeout and coffee habit) include clothing, beauty, recreation, home decor, and, to be honest, purchases to keep my two-year-old entertained throughout the pandemic

The only two categories that matter to me are whether I’m saving enough and whether my housing costs are reasonable. 

Here is the breakdown: 

Where did my money go in 2020?

The always-exciting question to ask ourselves is ‘where did all my money go?’ because it comes hand in hand with anxiety and adrenaline. If I spent nearly 80% of my annual income in 2020 – where did it go? And even more so, am I surprised or concerned with any of the numbers? 

Let’s dive into some (not all) of my 2020 expenses.

#1. Starbucks coffee

People always ask me why I’m so obsessed with Starbucks and picking up a coffee. They always recommend I buy a nice coffee machine and make coffee and home and to that I say: I do! Even though I regularly go to Starbucks, I also have a Nespresso machine and a coffee machine at home that both get used quite frequently. I go to Starbucks of all places because, unfortunately, there are no local coffee shops near me, which I would much rather prefer. 

In previous years to 2020, I could justify Starbucks because it was a nice change of pace and work environment for someone who works remotely. It got me out of the house and gave me social interaction. In 2020, I could find a million and one reasons to justify the purchase – and I did. 

This year, I spent $875 at Starbucks.

In 2020, I apparently needed to have three to four Starbucks coffees every single week. I was beyond surprised, and honestly, for the first time, mad at myself. In what world did I need to be spending almost $75 a month or $20 a week on sugary (delicious) drinks? Oh right. It’s this world — the world of COVID-19. 

#2. Takeout (plus three months of dining out)

As I was writing down every single expense in 2020 by hand, I got really tired of seeing Skip the Dishes pop up on my bank statements. I felt like I could hear DJ Khaled screaming ‘Another One’ over and over again in my ear. It was painful. Food was an exceptional expense for me in 2020. We found every excuse to justify ordering in. If my daughter wasn’t sleeping or we had a long day at work – takeout. Suppose we wanted to celebrate a new job or making it through another week – takeout. In June, my daughter had surgery done, and it wasn’t exactly a good time. So, we took advantage of meal delivery as often as we could. 

This year, I spent $4500 on takeout. 

I’ll be honest with you when I say that this expense shocked me the most. I couldn’t believe we spent $375 a month on food ABOVE and beyond our grocery expenses. After all, $375 in a month used to be our grocery budget, bringing me to my next cost.

#3. Groceries

When I finally tallied up the numbers of our grocery spending in 2020, I was wide-eyed and overwhelmed. I couldn’t understand how it was possible. In past years, I had raved about our $300 grocery budget, and the many unique tactics I use to save money were unbeatable. Unbeatable until a global pandemic, apparently. In 2020, we more than doubled our grocery spending.

This year, I spent $8,000 on groceries.

For a family of three in Canada, the average grocery spending is around $200/person each month. So, we’re nearly on target there. But it’s still very unlike us – until I did some thinking. At the start of the pandemic, my husband and I (like most people) were fearful of going to many places. Instead of going to our usual grocery store with better deals about 20 minutes away, we opted for the closest grocery store to our house that typically charges a bit more for the foods we buy. That change started to make a significant difference. Not only that, but we were now feeding a toddler instead of a baby – and our toddler happened to eat more produce than the two of us combined. It was a weird year, but I’m not anticipating this cost to decrease anytime soon, so it might be the right time to readjust our budget for the New Year. 

#4. Dollarama 

If you’re confused about how on earth Dollarama cracked my list of exciting purchases, you won’t be when you find out how much I managed to spend at a store where everything you buy is typically less than $5. 

This year, I spent $380 at Dollarama. 

Now you’re thinking, how often do you go to the dollar store, girl? It’s not that often. But when I do go, I go big. And why would that be? It’s because they have the best ‘in a pinch’ toys and activities for tired and stressed out moms who need to entertain their kids while also staying on budget. Usually, I would never go to the dollar store more than a couple of times throughout the year to pick up tissue paper and some birthday cards. But this year was different – a running theme throughout this post.

#5. Homesense 

Although Homesense was only open for half the year in 2020, I still managed to go whenever I had some alone time to myself or wanted to make another update to our home. It’s one of my favourite places to shop because the prices are reasonable and the products are v cute. So, given that I wasn’t going anywhere other than the Homesense 15 minutes from my house, I figured it was worth the multiple trips.

This year, I spent $560 at Homesense. 

Most of the purchases I made at Homesense this year were on gifts or to prepare for the holiday seasons with new and fun decorations. As soon as Christmas products started to hit the shelves, I was on board and in line.

Although this year was challenging in many ways, and we spent a lot more money than we have in previous years, we still manage to live below our means and save what we can for retirement. If I’m able to stay out of consumer debt and consistently pay my bills without worry, there isn’t much more to worry about unless I want to do more investing – which is always on the back of my mind. 

Ultimately, spending money is always going to be there. So, taking the time to educate yourself on where that money is going and how you want to challenge those habits is more important than anything else. 

Thanks for continuing to read my blog and support me as a creator. In less than two weeks, I’ll be on vacation for the remainder of the year, and I’d say now is the perfect time to end off an incredibly wild year. See you in 2021, pals!

The post Where Did My Money Go in 2020? appeared first on Mixed Up Money.