How many of you have been reading the new moneyville.ca site
posted by the Toronto Star? I know
Krystal over @ Give Me Back My Five Bucks posts on the blog there frequently,
however I tend to think she’s one of the few there with the experience and
know-how to post insightful blogs that people can utilize and learn from.
I’m not trying to negate the fact that moms who post don’t
know how to save a buck or stretch a family budget, I’m just simply noting that
their tips and experience doesn’t really relate to the younger, internet and
blog saavy readership that moneyville.ca attempts to capture.
Let’s dissect this post here from Adam Goodman. Have a read thru, and I’ll bet you’re hard
pressed to find any innovation whatsoever, or anything of true merit in his
post. It’s the same old dribble that we’re
used to hearing.
The post starts with the title ‘How I Saved $7,000
Painlessly’. Intriguing, no? Who wouldn’t like a list of ways to save
$7,000 without cramping their style too
much? WRONG. The premise of his whole post for ‘painlessly’
saving $7,000 is this: you should pay yourself first before paying your
debts.
Hrm? Come again now? He says in one of the last bits of his post
that his savings account is $7,000.
However, he had student debt when he first graduated which he struggled
to pay off. Now, I don’t know about you,
but I’d much rather maintain a small emergency fund and use any excess ‘reserves’
to pay down that debt. Unless my savings
account has 12% interest, it’s not worth the trade-off. That’s a few thousand {or even hundred…}
dollars that could have been much
better utilized.
He says it was painless to save the $7,000, but I think that
when you muse over debt and are up at night thinking about money issues, it
entirely negates the pain.
{Disclaimer: I’m all for an emergency fund, however I sure wasn’t
socking away $100 per month when I was in major debt and wanted to get
out. I did it in small increments and
stopped at $1,000.}
Let’s look at an example:
Using what Mr. Goodman professes, we’d be saving $100 per
month for a year. With a simple
calculation of compound interest, that means we’d be making roughly $188 per
year and growing our deposit to a mere $288.
I’m out of debt now, so $188 is great, but when I had big debts to pay,
that $188 would’ve gone a long way! It’s not much when you consider a debt of
$5,000 or more, where the monthly interest amounts to about half that total
yearly savings.
For example, let’s take a calculation of someone who’d be in
roughly $7,000 debt and it will take almost a year to pay off:
Without the $288 the debt payoff
would look somewhat as follows, using a roughly 7.5% interest rate on the debt
and it would be paid off at the beginning of June:
With the $288 {applied to the
last payment, considering it would take roughly a year to compound the interest
– I know, I know, it’s JUST an illustration of a point, not what would be
really earned in the time frame}, the debt is cleared almost an entire month
earlier. And this is without
consideration of any snowballed funds towards the debt. To me being clear of that debt a month
earlier means far more than the $288 opportunity cost:
Moral of the
story: Adam Goodman, your ideas idea sucks. Congratulations for being out of student
debt. But if you want to expand your horizons
a little, think outside the box and create real savings tips. Most normal people who are struggling on
limited incomes and wanting to payoff debt can think of way better things to do
with $100 per month. Moneyville.ca –
perhaps you should reconsider who you allow to blog on your site {not you,
Krystal – you’re great} and ensure the blog is a real PF blog and not just some
site where anyone with a savings account and a computer can post.
Feel free to share your opinions in the comments below. But note, please, that any hateful comments will not be approved :)
Hugs,
*Canadian Girl
