When the sole provider of the house loses their job

job loss unemployedBE ONE STEP AHEAD OF THE GAME

 

When you are the sole provider of the house and you lose your job you’re now faced with a bigger reality that I hope you are prepared for.

I enjoy getting emails from my fans and just this weekend I received one that really was unique and it’s a situation many people fear.

I’ve talked about strategies to survive unemployment, job loss and disability when it comes to work and covered everything from emotional well-being, budgeting to emergency savings.

A Canadian Budget Binder fan sent me an email the other day telling me her husband who is the sole provider for the family lost his job.

She was thankful that she was ahead with the bills and had some savings to get them by but she was not sure where to turn next.

They are not Canadians rather live in the USA and so they both took on the only jobs they could find which are commission based.

The reality is that no matter where you live this could happen to you. This could happen to a single person, or a single parent with only one income.

 

Losing your job

 

How will you manage this situation? Not everyone is entitled to employment benefits in Canada so you must be prepared at any given moment for that pink slip.

Even if you are entitled to EI benefits in Canada you still have to wait to get them if approved and that could take weeks. You still need to eat and although most cities have food banks living on the edge can rock the financial boat and put you in a tight spot.

Investing is a great way to stash money away for the future but it’s not always savvy to cash in your RRSP’s to pay off debt. Some people are left with no other options but this option also depends on many factors.

Many people have been there, many have failed but many have survived. I’m sure there are people reading this post right now that would love to share their story to help others learn from their mistakes and fortunes with losing a job, not having savings, too much debt and so on.

I don’t know may people who don’t have debt so it’s a rat race we are all playing and the finish line is when we are buried and in the ground. Even then, money and debt lingers on in your name.

 

Decision-making

 

It’s not an easy place to be in living day-to-day not knowing whether you will wake up to having a job or not but sometimes we have to make decisions that may change the course of our life.

Not everyone likes to make decisions that will entail drastic changes possibly for the good because we fear the inevitable.

We fear giving up what we have worked so hard for whether it be a house, a car or stuff we have acquired over the years.

What we fail to understand at times is that may be the golden ticket to get you where you are to where you want to be.

Whether you want to go back to school, downsize or find another job but don’t want the hassle of being a homeowner with all the extras to pay for.

Instead you may opt to rent a smaller place which is easier on your budget so you can not only save money in an emergency savings but look for a new job or go back to school.

When we step outside of our comfort zone it can be a scary place and that’s why so many people would rather go into debt by maxing out credit card after credit card just to stay afloat because they fear the unknown.

No one wants to have to think about bankruptcy but for some people it was a wake-up call and for others it was the start of a new life for them.

Others are happy it didn’t get to the point of bankruptcy because they made some serious changes to their lifestyle to compliment the situation they were in.

Nothing in life is meant to be easy and for those that do have it easy remember what goes around comes around so we all need to be prepared.

The emergency savings fund in my opinion is critical to everyone because if you have no back-up plan you have the weight of stress on your shoulders every single day if you are in any of the above situations.

 

Debt is real

 

Why put yourself and your family in that position? Being miserable about money can linger on and on and for some put them in a deep depression because they don’t know where to turn.

One of my Facebook and blog fans from the USA had this to say and its true not only in America but all over the world.

Many people here are still diving into credit. I have none by choice. If anyone watches the news would be afraid to add any debt.

Everything is going up. Home fuel, car fuel & people fuel. It is as bad in many ways as the depression. They just change the names.

Medical is sky rocketing and insurance is a big iffy! People have got to wake up. We have to learn to take care of ourselves. Save, save and save.

No more 20 pairs of shoes & jeans in the top brand. Get down to needs. When these are met and you have a nice nest egg then a few luxuries are OK. Key word being a few

They may know the answers but are too scared to make that change but to be honest waiting until the walls come tumbling down isn’t always the smartest option.

 

Grab your dreams

 

Taking control of our lives like this fan is trying to do now is important but I’m sure it will teach them both a valuable lesson.

They don’t want to be in this position again and just that she came to me for help tells me that moving forward they will make a financial plan that will support some sort of savings plan for rainy days like this.

The problem is they have to wait to earn some money if at all to get themselves back on the financial track.

In the meantime she is applying for state aid but there’s no point waiting to hear if you are going to get money or not because the bills still need to get paid.

They have 2 vehicles which are needed to get back and forth to work and apparently nothing left to sell in the house.

 

Reader question

 

Here is her email to me…

Dear Mr.CBB and Fans,

A week ago my husband came home with the news that he lost his job, our only income. Thankfully I had already budgeted for the next two weeks and paid the bills.

We had a little saving since we were working on building a fund to start a debt free snowball. We had two weeks to find income or lose the house and many other things.

Thankfully we were blessed with help that saves us from being late on payments for things in the house (they are now paid off and it’s nothing we can’t sell) and we now have a month of expenses to live from.

The job market is so poor here that we have both accepted commission only jobs but they come with a month of training and state restrictions before we can earn income.

That uses our one month expense reserve. We’d like to avoid bankruptcy but are unsure it’s possible given the timeline to bring in income.

Our only debts are two car payments (at the moment we still need two cars) and the house.

Update: They are applying for State Aid on Monday Feb 24, 2014.

Do you or your readers have any advice?

As you can see from the above post she is desperate to hear from others who may have been in their position that could offer some words of encouragement.

 

The fans speak out

 

I can tell her what not to do in order to get into that spot the next time but moving forward I’m sure she knows what she needs to do.

I posted this question at her request to my fans on Facebook and here are some of the answers from the fans.

Keep in mind we were not initially aware that she is from the USA. I had updated my fans after I posted the question to let them know so some of the answers may seem Canadian based.

Even so if any Canadians are in the same type of position some of the fans may have some great tips for them. My team of fans come together to help others in need and it certainly shows.

  • If you NEED 2 cars to earn the income so be it but is there any way that one car would do? I dropped hubby off at work and picked him up after work before/after I put in my own work day for over ten years. It allowed us to stay with one vehicle and that saves oodles on gas, insurance, repairs etc. If it is truly a MUST because you are travelling hours in opposite directions, the house can be let go if need be. You can live in the cars in order to get to and from where you can start earning again and you get back on your feet. You use the showers at a local community center or the YMCA and a laundromat for laundry as long as you have at least one vehicle. Good luck!
  • Do you have an education/jobs centre nearby? Our area has what’s called an Employment and Education Centre. They have counsellors on site that help people get jobs, credit counselling, computer courses and more (free of charge services funded locally and by the government). Many of the jobs that go through this place are unadvertised and only filled by that agency. Are there any temp agencies near you that you could be on call for work? There are three in our city of less than 30,000. It may not be the most fulfilling work, but it will put food on the table or get some bills paid. From factory work to desk jobs the temp agencies do a lot. Again, these temp positions are never filled with advertisements online or in newspapers. If you are from Ontario, check out Employment Ontario website.
  • Check with your church. Many will help. There are food banks. Living in a car would be the very last resort. I would choose anywhere besides that. Been there done that. Putting up with your worse relative beats that. Sometimes you just have no choice but to start over from scratch. So many are losing jobs and homes. Many consider getting a travel trailer & going bankrupt. Then think smaller. Smaller home with less frills. We have all gotten bigger and thought we had to have so much stuff. Now you see how fast it can be gone. Way too much stress. Living within our means is something we all need to do. Things will get worse before they get better. You can get some great ideas from minimalist blogs. They have great advice. Wishing the best for your family. God bless.
  • If they could stay with someone they might rent their house out to make payments until they got back on their feet. That way they could keep their home.
  • If they have room they could take on boarders and pay the mortgage that way, with maybe enough for increased bills (just don’t include food)
  • My long-term look at their situation would include… what state are they in? Some states are in worse shape than others as a result of the recession and have poorer outlooks for recovery any time soon. The getting back on firm financial footing is likely not going to be a single step process. Is it time to consider changing states? What skills to they have and where are those skills needed at this time?? What age are these folks and how is their health? Seasonal farm work is not far off in some states. You don’t get rich with farm labor but if they are both working, it may be a slow but doable recovery while you continue to look for work in your chosen fields. Have either of them volunteered in the past? Can they tap into those “connections” for a few paid hours on the side? This is going to be all about no job too small and no amount too little in order to get back on your feet. When my hubby lost his position and went back to school to re-train… I worked two full-time jobs (70-80 hours a week not including travel time and very little sleep) for that year. He had an overnight shift a couple of times a week in the bakery of our local grocery. He also cut grass and shoveled snow for a fee. It was an awakening how lucky we were when we were both employed full-time with benefits.
  • Same author as above ^- My mistake… the writer did not indicate whether the house payment is rent or a mortgage. I would fight to get the house sold if there is any equity built up but many folks the mortgage is still more than the current market value. We know many folks that walked away from their home as their home had turned into a money pit that didn’t hold any hope of a large enough market value increase before the mortgage was up for renewal. They were throwing good money after bad. It’s tough but sometimes you really have to hit rock bottom before you can start building again. I moved in with my parents when my first marriage hit the bricks, I moved right across the country too… but one step at a time, my finances got better. I was lucky to have no little mouths to feed at the time.
  • I would have to suggest looking into a Temp Agency for a short-term solution on an employment solution.

When you have nothing left but the roof over your head and the home you live in the sad reality is you may be faced with having to let something go or hope to find another job that has a regular pay cheque to get you by.

If you have any tips for her please share in the comment section of this post. If you have been in a similar position and can offer words of encouragement remember we all need to smile and have hope. When you believe that you can make your dreams come true, they will flourish. Have faith.

Mr.CBB

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Reader Question: Homemade or Store Bought~ Which is Cheaper?

rolling dough

Mr. CBB has paid me the compliment of inviting me to help answer a reader’s question:

A question I would love to have feedback on from you and your fans is: How do you know when it’s less expensive to make homemade baked goods or buy it pre-made at the store? I’m on a tight budget and I hesitate to try recipes only to find out it’s more expensive with the ingredients and electricity amongst other things. I am sure it’s more nutritious to make my own but right now it’s financial.

The short answer is that bakery goods have among the highest mark up in the grocery store, so home baking is almost always more affordable than an equivalent purchase from the store.

In reality, though, there are some factors that need to be considered, especially if you’re on a tight budget. If you are not already a baker, you’ll need to have some basic equipment on hand to bake and you’ll also need the ingredients called for in the recipe.

My advice?

Do bake at home and make homemade. You’ll recoup your initial investment in ingredients and equipment very quickly.

Tips on getting started with home baking inexpensively

  • Keep your equipment purchases to a minimum, buying only the pans you’ll need.  If your initial plan is to make granola bars and cookies, purchase only a cookie sheet and a rectangular baking pan (if you need it for the bars).  Do spend the money to buy good quality pans.  You’ll be using them again and again. You’ll always need measuring spoons, and measuring cups so do spend money to buy them too but check inexpensive outlets like the dollar store to find them at the lowest price.
  • For the rest of the equipment, make do with what you might already have on hand. If you don’t have a large enough mixing bowl on hand, look around for another item you can use in its place. Do you have a large saucepan?  If you don’t have a wooden spoon, use a serving spoon instead.
  • Begin with a couple of recipes that you know your family will enjoy and that share several common ingredients.  For example, if you’re planning to bake granola bars then oatmeal cookies of some sort would be a good second recipe.
  • If you have no baking ingredients on hand, begin by purchasing small amounts of ingredients until you’ve figured out which recipes your family likes and which recipes you’ll be making over and over.  You can minimize the expense involved in getting started with your first recipe by taking measuring cups and spoons to the store and portioning only the exact amount of ingredients you’ll need from the bulk bins. If the ingredients you need aren’t available in bulk, purchase small packages (unless they are things you know you’ll use for purposes other than baking).
  • If a recipe calls for an expensive ingredient or one that you don’t often use, consider a substitution.  For example, I have several recipes that call for pine nuts. Pine nuts are very expensive so I use sunflower seeds instead.

TIP: If a recipe calls for an expensive ingredient and you can’t make a less expensive substitution, don’t make the recipe.

Once you’re into the swing of homemade baking and have some idea about what your family likes – and what you like to make – begin buying your ingredients in larger quantities. Once you begin stocking up on flour, sugar, baking soda, baking powder, salt, spices, raisins, etc. you’ll start to see an even greater savings.

Good luck and have fun. You’ll love baking homemade in your kitchen once you get started along with saving money.

Guest Post Bio:  Aunt B’s family jokes that she started writing because she just doesn’t know when to be quiet!  In truth, her blogs grew out of a long illness and helped her to keep in touch with the world around her.  She’s interested in everything, and shares her interests at Aunt B on a BudgetA Word from Aunt BB on Balance  and B-Attitude.

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Reader Question:Is It Savvy To Cash In My RRSP’s To Pay Off Debt?

A Reader Question about whether it was savvy to cash in an RRSP to pay off Debt was submitted to Canadian Budget Binders Ask Mr.CBB. He forwarded it to me to share my opinion on this topic with all of you.

My short answer is that it depends.

There are several factors to consider:

  • The age of the person
  • The withholding tax on the funds withdrawn on the RRSP
  • The amount of debt and its’ interest rate
  • The type of investment held in the RRSP
  • The opportunity cost of the withdrawal

To keep things simple let me say if you are doing this and are under 30 then it might not be a bad thing. At older ages you have a shorter accumulation period and time and the magic of compound interest work against you.

I have always maintained that paying off debt is one of the best investments someone can make.

Let’s say you’re carrying a credit-card balance of $1,000 with 18 percent simple annual interest. That’s $180 a year in charges. Pay off that debt and you’ve saved $180. That’s the same as investing $1,000 in something that earns an 18 percent return after tax.

Tax Withholding Rates

When you withdraw funds from an RRSP there is a tax withholding. This is a credit due for taxes payable on 100% of the withdrawal and is to be paid by April 30th in the year following the withdrawal. You may indeed owe more than the rate withheld if you have a high income.

Withdrawal Amount Tax Withholding
From $0 to $5,000 10%
From $5,001 to $15,000 20%
Greater than $15,000 30%

So let’s assume you have $10,000 in debt. You are paying the minimum of 3% per month to carry the debt or $300 per month. The debt carries an interest rate of 18%.

Approximately $14,300 needs to be withdrawn to net the $10,000 to pay off the debt. Your savings, the cash flow of $300 per month after the debt is eliminated.

However the real cost may be much greater.

What would the $14,300 be worth at age 65 at 6% yield if it had never been withdrawn?

If you were 35 when you did this, the monies would be worth at 65, $83,281 so you are giving up potential growth on this money in addition to the withholding tax.

Ok, I hear the question already: What if we withdraw, pay off the debt, and invest the $300 a month every month to age 65?

If you indeed did do this, your deposits would be worth $294,354. In this example provided you have the discipline to save the $300/mo. it indeed might work out to eliminate the debt first.

What if our client was able to find savings through budgeting etc. and find an additional $300 per month?

In 19 months he/she would be debt free, their RRSP would be intact, and now they can save even more toward their future.

This Calculator is a handy tool. First enter $10,000, then 18%, then monthly payment of $300.

Under step 2, choose minimum payments. This shows the real cost of paying credit cards on a minimum payment basis.

On page 2, change the monthly payment to $600. See the result? You may want to bookmark this calculator.

Ideally this would be the preferred course of action.

If your RRSP’s are earning low rates of return, such as 2% or 3% it makes it easier to withdraw monies and eliminate the debt.

Your opportunity cost (Put another way, the benefits you could have received by taking an alternative action.) is not very great because of the low yield on the investment.

So there you have my analysis on whether you should cash in your RRSP’s to Pay Off Debt!

What is your opinion?

Would you pay off the debt first?

Look for the savings through budgeting and keep the RRSP intact?

Comments and opinions are welcomed below.

Gary B. Gorr, CHFC

About Gary Gorr: What kind of written plan do you have for retirement that ensures you won’t outlive your money? I help people answer that question CONTACT INFORMATION: (905) 202-8430 ext.626 ggorr@ifcg.com or you can follow my blog at Gary’s $$$ and Sense 

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Straight Talk About Fees and Penalties on Mutual Funds

Mr. Canadian Budget Binder received a question from one of his readers and asked me to craft a guest post to answer it.

QuestionCan you explain MER Fees and Penalties regarding investments?

 What Does MER stand for?

MER means Management Expense Ratio. There are a variety of expenses that make up MER.

Some are:

  • The fee paid to the fund managers for managing and investing your money
  • Legal and audit fees of the fund
  • Advisor sales compensation and trailer fees (ongoing service fees)
  • Advertising expenses that promote the fund
  • The cost of buying and selling the stocks the fund holds

How does this impact my investing return?

All published returns for a fund are net returns, after the MER has been deducted. In simple terms Fund A has a return of 10%. Its MER is 2.5%. The net return to the investor is 7.5% Fund B has the same 10% return but has an MER of 2%. The net is now 8%.

The lesson we can learn from this is that lower MER’s usually mean more money for the investor all other things being equal.

Some investors have focused exclusively on buying investments with the lowest cost. There are investments like ETF’s (exchange traded funds) that have very low-cost factors. Some range from 0.15% to 1.40%.  I will comment more on this later.

Sales Commissions, Fees and You

 There are three main ways advisor’s are compensated.

  1. Commission based
  2. Fee- Based
  3. Fee Only

Commission Based

Sales commissions are embedded in the MER to compensate advisors. This can take one of three forms and each has an impact on the investor.

The three commission based options are:

  1. Front End Load
  2. Deferred Sales Charge (DSC)
  3. Low Load Sales Charge (LL)

In the Front-End Load option, the client and the advisor negotiate a percentage of the deposits as a sale commission, usually from 0% to 5%. This percentage is deducted from the investment right upfront. In the long run this is not a good thing for the investor. In addition the advisor would receive a portion of an ongoing trailer fee of 1%. The other portion belongs to the dealer where the advisor does business.

The client, however, can move his/her funds to another fund company at any time without any sales penalties or charges.

In the Deferred Sales Charge (DSC) option, nothing is deducted from the investment. The Mutual fund company pays the Dealer/Advisor an upfront commission. Because they advance the commission they have a penalty if the client leaves the funds from the current company to another company. This is based upon a percentage of the original deposit not the current fair Market Value.

The percentage is on a declining scale and lasts for 6 or 7 years depending upon the fund company. After this time period the investor is free to do what he/she wants without any penalty.

Here is a sample of the Deferred Sales Charge:

An advisor will receive an ongoing trailer commission of 0.5% under this fee option. Again this is shared with the advisor’s dealer.

An investor purchasing funds under this option has 2 relief options. One is he/she can withdraw 10% of the funds value in a given year. The 10% is non-cumulative. In essence if you didn’t use it in years 1 and 2, you can’t withdraw 30% in year 3, just 10%.

Some clients annually move the 10% fee free amount to the same mutual fund but on a zero commission basis. In this way you can indeed accumulate the 10% over time.

The sales charge only applies if you sell some or all of your funds and purchase with another mutual fund company other funds.

The second relief option to the DSC charge is that many fund companies have large numbers of fund options and a move or switch from one fund to another within the same fund family does not incur the DSC penalty.

The low-load sales charge  (LLSC) works similar to the DSC option. However the restriction is limited to 3 years versus the 6 or 7 on the DSC option and the penalty percentages for withdrawals are roughly half of the DSC option.

Traditionally the commission option has been the main way advisors have been paid for their efforts.

Many people argue that the advisor’s compensation should be upfront, known, and factored out of the MER. It should be transparent versus embedded.

This has led to some advisors who charge a fixed percentage of your assets like 1.5% to 2% for smaller amounts of money and a lower percentage for bigger amounts (usually over $250,000) These advisors are known as Fee-Based Advisors.

The cost of advisor compensation is stripped out of the MER and the investor will have MER’s that are about 1% less than before. The investor in turn pays the advisor the fee, which in the past has been paid by the mutual fund company.

Using this type of advisor allows a client to freely move monies from one company to another as they are sold on a 0% front-end load. (A note of caution, this freedom to move at anytime isn’t always a good thing). The only compensation besides the upfront fee they charge is the ongoing trailer fee paid by the fund company.

There are no penalties or charges if a client moves their money to another fund company, other than maybe an account closeout fee that is fairly nominal, usually less than $125.

Fee based advisors if they are licensed for other products such as life insurance etc. can still earn commissions from the sale of those products. The fee-based refers to the investment component.

Fee-Only Advisors

Another variation is that some advisors charge a fee for doing the planning and advising on investments and perhaps life insurance, estate planning etc. This fee can be based upon the nature of work being performed. Some charge hourly, work on an annual retainer, or again as a percentage of your account size. They receive no compensation on the products being purchased. These advisors are known as fee-only.

The investor pays the fee and a client has no penalties if they move their funds to another institution, except for the closeout fee.

Which Option Is Right For You?

I am sure by now you all have an opinion. Let me say there is no perfect answer.

If you have less than $100,000 many advisors will not work with you on a fee only or fee based option, as the earnings don’t properly compensate them for their time and effort. That is why many advisors have an advertised account minimum.

Many investors don’t like the thought of writing a cheque for the fee. If they have $200,000 and the fee is 2% then the cost is $4,000. They could buy under the LLSC and the advisor is properly compensated and there is no fee payable by the client.

All advisors worth their salt will explain in simple English the various compensation options a client has. Then the advisor and client can settle on a mutually acceptable basis of dealing.

What Is More Important Than Costs and Commissions?

MER is important!  Understanding how an advisor is paid and its impact on your investment is important!

However in my 37 years of advising Canadians I think there are two more important factors.

  1. The absence of a financial plan
  2. The biggest determinant of financial failure is behaviour, specifically bad behaviour. It is not the cost of an investment, the commission or fee option being chosen, or the products selected.

Products like Mutual Funds, ETF’s, etc. are just tools to accomplish a goal. In 37 years I find people don’t plan to fail, they fail to plan.

What product solutions you buy should be in the context of an overall plan. However, I have too often seen Canadians buying the product of the month, or the one with the latest high returns published in the newspaper.

The axiom we have all heard is buy low, sell high but because of our own behaviour we buy high and sell low.

 Our behaviour looks like this:

 

Dalbar every year does a survey on Investor Behaviour. There are many factors they discuss in their Quantitative Assessment of Investor Behaviour (QAIB).

The results consistently show that the average investor earns less – in many cases, much less – than mutual fund performance reports would suggest.

  • Fact: Since 1991 to the end of 2010 the S&P 500 index had increased by 9.14% annually.
  • Fact: The average investor only made 3.83% ignoring taxes and inflation in the same time period.

One point that caught my attention was the average length of time an investor held an investment fund. (This is a 20-year study)

  • For equity funds it was 3.27 years
  • For fixed income it was 3.17 years
  • For asset allocation funds it was 4.29 years

Implicit in these numbers is the investor chasing the next new big thing.

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I point out these factors to show that yes costs matter but what matters more is managing you own bad behaviour.

My one true value as an advisor to my clients is to prevent them from making emotional decisions that are very costly. I have lived and advised through a long arc of history and I have witnessed many clients make emotionally based investment decisions to their financial detriment.

My job is to act as a sober second opinion and help them take a more reasoned approached to what they do, remind them of history, and that this too shall pass. This is what clients pay me for, to help prevent them from making costly emotional mistakes.

So now you know about MER’s, Costs, How Advisors are paid. I hope you focus on the more important factor in your financial success, Managing Your Own Behaviour.

I am an investment advisor employing behavioural finance principles in my advice giving and a licensed life insurance broker with 36 years of experience helping Canadians achieve financial security. CONTACT INFORMATION: (905) 202-8430 ext.626 ggorr@ifcg.com

You can read more about personal finance at my blog at Gary’s $$$ and Sense

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Reader Question: Meal Planning For The Budget

Meal planning and budgets go hand in hand but not everyone takes the time to do them. Although meal planning is a weekly chore the more you do it the easier it will get for you. For people who want to stick to a grocery budget creating a simple meal plan helps them to be creative in the kitchen while saving money in their wallets.

This week’s reader question pertains to my nightly “What’s For Dinner” post on my Facebook fan page. If you follow the blog regularly you know that we have a Grocery Budget of $190 a month.

We work with this number to create healthy, quick, frugal meals whilst trying to get the best bang for our buck. We often have people ask us how to grocery shop because they want to learn how to save money in their budget. It all starts with a commitment otherwise you may make it through the first week and return to your old ways.

You also know that we like to use coupons but only on items that we know we will use in our meals. We have gone back to basics and have saved so much just by cutting out the “wants” and replacing them only with the “needs”. Planning takes time so don’t give up if you feel overwhelmed start slow and work your way up to a full weeks meal plan.

Here is our reader question… 

How do you feed 5 people for $5 and have a complete meal? I’m single and I can’t eat for $5. Even if I buy a pizza slice and pop that costs me $5.50.

What am I doing wrong?

Signed,

Dude, Please Help me

Once a week we like to splurge on something that we want to eat that we wouldn’t normally prepare. I don’t believe in depriving the human body of its desires, especially food. We aim for $5 meals or less but sometimes we spend more but that’s OK  The last thing you want to do is be a Meal Drill Sargent and stress over not creating a $5 meal every night. Cut yourself some slack until you build up a recipe stash that holds all your favourite frugal meals.

Cost Breakdown Of A Meal

I don’t calculate every spice I use to a “T” but I believe I have a good estimate in price. Pasta with a Sauce made with sausages, onions, mushrooms, peppers… will feed 7 people. This is our cost using coupons and flyer sales.

Cost: $5.25 approximately 

  • 2 boxes of pasta sale $1.00-$0.75 coupon=$0.25 each
  • Sausages sale $1.88
  • cans of  Aylmer tomatoes  sale with coupon $0.50 x 2
  • can tomato paste $0.59
  • onion $0.15
  • 1 carrot $0.09
  • fresh mushrooms Sale $0.99
  • 6 cloves of garlic free from father-laws garden
  • 1 tablespoon extra virgin olive oil Approx $0.25 = $5.45 as I forgot the oil in the original post at approximately $5.25
  • I also tossed in some herbs from the garden, fresh basil and parsley.
Meal Planning For The Budget

Not all our meals are this frugal as it really depends on our meal for the night and how much the ingredients cost us out of pocket. We like to eat quality food so sometimes we have to bite the bullet and deal with paying a higher price. We have worked hard this year creating new recipes and cooking homemade meals.

It’s been fun but we also realized how much convenience foods cost us in the grocery budget. We started posting our shops in The Grocery Game Challenge to help us to be accountable for our grocery budget for 2 and to motivate others to stick to theirs. I hope you will join us and post your weekly shop and save along with us.

We are not full-fledged weekly meal planners but we are working on it slowly and so far so good. Some weeks we have the entire week completed and others we simply throw together using what we have on hand. I print out our free weekly  MEAL PLANNER and sit down with Mrs. CBB to see what meals we can create using our stockpile in the  Pantry and Freezer  and by reviewing our Pantry and Freezer inventory lists.

Once we know what we have to work with we look at the weekly flyer specials and try to match up coupons if we can. Sometimes we just want to try something new so we put the ingredients we need on the shopping list.

My friend Dennis makes a weekly meal plan with his wife and I have learned quite a bit from Dennis who blogs at What to cook?. They cook nutritious meals that don’t compromise on flavour and easy on the budget. We also check out Aunt B on a Budget out of Duncan, British Columbia who always has some great recipes up her sleeve.

Meal planning takes time but after a while I know we will get the hang of it. Eating out vs eating in like the reader suggests they have done will always cost you more money. When someone does the work for you, your pocket-book will pay as it’s no secret that convenience costs money. Learn to cook at home and eat out as a treat once in a while if you are hoping to stick to a grocery budget.

Frugal Meals 

Some of the frugal meals we’ve created and prepared are below. You can also find many other sweet treats and recipes from the CBB kitchen in the Mr.CBB’s Kitchen Category.

I can’t tell you what your budget should be or when you can and can’t eat out, only you can make that decision. When meal planning if you have to ask yourself, “How much should my grocery budget be?”, working out a personal budget first is probably a good place to start.

How do you meal plan in order to stick to your grocery budget?

Quote-Budget and Money

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