Loyalty Programs for Groceries...

In an earlier post, I mentioned that loyalty programs are are great way to stretch your budget via earning rewards on everyday purchases. In this post I'd like to touch upon those ones we would use for our weekly grocery shopping list in Edmonton stores; comparing them to see which offers the best return for our patronage and hard earned money.

Superstore offers PC points via PC (President's Choice) Financial Mastercard- when used at Superstore or anywhere else, you receive 10 points for every dollar you spent. Points are redeemed when you have accumulated 20,000 points for $20 in savings on groceries bought at Superstore and, 10,000 points there after. So, 30,000 points gets you $30 and 40,000 gets you $40 and so on. So PCF Mastercard would get you a return of 1% for your purchases.

Additional promotions for earning more points are occasionally offered such as gas savings, etc. Opening a PC Financial bank account and using their debit card gets you some bonus points and 5 points for every dollar spent at Superstore. Same redemption value as above.

Costco offers their Executive membership for an annual $100 fee. This gives you 2% annual cash back on your Costco purchases including membership fee if you so choose up to $500 max per year. There are certain items listed here that are not eligible for the 2% reward. In addition, American Express offers a Costco TrueEarnings credit card which offers 0.25% cash back on your first $1000 spent; 0.50% on the next $2000 spent; and 1% on any amount over $3000; plus 2% cash back on gas purchases up to $3000 annually and 1% thereafter. After some research, I see AMEX doesn't offer the Costco Platinum Rebate card anymore which gave the consumers 0.25% on the first $2000; 0.50% on the next $3000; and 1.5% on amounts over $5000; and if you carry a balance another 0.5% rebate can be earned.

Sobey's offers 1 point per every dollar spent on groceries with Club Sobey's. Points can be redeemed for in-store savings as such:

Club Sobey's points can also be redeemed for Aeroplan miles or other items via their catalog. BMO offers a Club Sobey's Mastercard that rewards customers with double Club Sobey's points (2) with purchases in store and 1 point per dollar spent elsewhere.

Save-On Foods offers 1 point per $1 spent at their stores with their Save-On-More Rewards card. Save-On Foods offers a catalog of items one can get when they redeem their rewards in-store or online; there is also instant rebates in-store but they are not explicitly clarified anywhere until you are at the till. Redemption rates according to their website is 6000 points for $10 gift card or $25 gift card for 16,000 points with various partners such as Starbucks and Futureshop.

The MBNA Save-On-More Mastercard gets you an extra 3 points for every dollar spent at a Save-On Foods store for a total of 4 points when showing your More Rewards loyalty card also; and 3 points for everyday purchases elsewhere.

Walmart offers only the Walmart Rewards Mastercard for 1.25% cash back on Walmart purchases and 1% rebate for purchases anywhere else.

Safeway offers there the Safeway Club Card. It is only good for current in-store promotions and sales. What is nice is if you forget your Club Card, you can enter your telephone number at the cashier and still receive the discounts available. They also offer Airmiles of 1 airmile for every $20 spent in a Safeway store.

Last but not least, we have Shopper's Drug Mart. They do not offer the selection that the above grocers where you can do all your weekly one-stop shopping but they have entered the fray offering miscellaneous items, etc. that one would get a good deal on and could add as one of their stops in their weekly shopping outings. I mention Shopper's because their Optimum program offers some of the most competitive and highest loyalty points in Canada. You get 10 points for every dollar spent at Shopper's Drug Mart. Rewards are redeemed as such:

When using a Shoppers Optimum Mastercard, you get an additional 15 points on top of your 10 points earned for every dollar spent at a Shoppers (must present both cards at cashier).

And so the comparison goes as such... if one were to spend $500 per week at any one of the above listed stores and was signed up for their loyalty program, not including any introductory offers and current special promotions to earn more points, we would accumulate how many points which represents the cash value of those points after one month (so $2000 spent).

Loyalty Pts

Most loyalty program credit cards offered do not have any annual fees but interest rates on balances vary from card to card.

Also, Costco may seem like it is the best loyalty program in terms of cash value returned, keep in mind you must pay for an annual membership and must spend more for the returns to be worthwhile.

My Pricebook: Edmonton Grocery Comparison Feb 21, 2011

In the honour of the late Max Satanove, the man who wrote a weekly Edmonton Examiner column, "Max's Edmonton Food Basket", that compared grocery prices in the Edmonton area for 18 years, and in my quest to find more savings in our household monthly spending, I've created my own "Pricebook" that compares items that my family would have in our own shopping cart at any given time during the year.I've added Costco and Walmart to the store list for the sake of comparison and any loyalty points in dollars value that would be given for the amount spent on the shopping list.

Please note all items and prices in the cart were adjusted accordingly to the same per unit size as indicated on the chart. Items were selected to be the same brand in all the stores to the best of my ability or the cheapest one or sales tag I could find at the time. Keep in mind these are prices for this given date and include price savings from current sales promotions, coupons, and membership programs. All items were priced at Edmonton west-end locations; hence eliminating issues with prices varying at different chain- store locations and the question of more time spent driving to or gas expenditures used driving to a farther store would be only mere pennies for the trip.

The best deal was at Costco, where the entire cart amounted to $189.91.

The same goods were bought at Walmart for $238.93

At Superstore, they were $192.85 to my surprise. Superstore has always been the clear winner in this comparison even when Mr. Satanove was still writing... But, a head to head with Costco and Walmart has never been done... until now.

And, the most expensive was Save-On Foods where the entire cart cost $250.23

Best buys were Huggies Pull-ups 40 count for $12.50 at Superstore and Safeway; Sobey's had the cheapest soda pop- Pepsi 24 can cube for $5.99 (ends today); and potatoes at superstore were at blowout prices— $4.88 for a 20lb bag of Russets and $5.97 for a 10lb bag of yellow potatoes.

edm grocery list 2-21-2011

Ranking the stores from cheapest cart price to most expensive, we have Costco, Superstore, Sobey's, Walmart, Safeway, and last Save-On Foods. So as expected, and what Mr. Satanove's weekly comparison showed also, Superstore and Costco came out the clear winners in this comparison while the others jostled around each week for third place and under. Keep in mind, this ONLY shows the consumer getting the best bang for his buck or value on a per unit basis NOT overall savings per week spent. As anyone who has shopped at Costco knows, one cannot buy such small quantities as shown above; surely your weekly food bill would be substantially higher in real money terms just on sheer size of the portions Costco sells. That is why when shopping at Costco, we know each individual item we look at on the shelves is a great deal for that price, so we throw it into our shopping carts. But, we are always agape in shock when we get our receipt at the till.—doesn't fail; does it to me every time. Heck, I'm in awe when I spent UNDER $100 on a weekly trip to Costco!

What is impressive about Costco is these prices are their everyday prices for all the items listed. The other retailers' prices include many of the items currently being on limited time specials or in the case of Superstore, limited quantities of one or two.

Everyone knows if one to drive to each retailer and buy their cheapest items and time each sale correctly, they would be guaranteed to get the best possible deals and come out further ahead in terms of savings. It would prove interesting to see if one were to buy the same bulk quantities as Costco's portions, if one would really save as much money per unit since prices tend to increase dramatically when you buy over the maximum allowable limits Superstore has set out. And as with the other grocery stores, if one were to go shopping on customer appreciation days such as the first Tuesday of every month with Safeway and Save-On Foods and get an additional 15% off their total bill, one would also see the gap between savings per store narrowed.

And of course, as we all know, when picking up a couple of items only such as milk and eggs, it would be a waste driving all the way to Costco, only to try to find parking and then fighting the long lineups at the till; it would be definitely more cost efficient buying milk and eggs only at your local Safeway for the few pennies more it would cost at the till.

The Case for Shopping at Superstore...

As mentioned in an earlier post, I used to go more often to Superstore for my weekly groceries, but have found the Superstore nearest my house had gone down in quality of their products especially fresh produce and meats, customer service has always been the worst of the major grocery stores, and the discounts weren't as good as they used to be. But, after looking at the last flyer, there were some deals there that could not be beat; so we did our most recent grocery stint there.

An article from Pennysaverblog.com:

I like to shop at Superstore for the majority of my groceries. Although shopping at Superstore can at times be inconvenient due to large crowds, if I go on weekday evenings I find it much more relaxing and simple to shop there. I have saved hundreds of dollars each year by shopping there and I highly recommend it if you are looking for ways to decrease your grocery bill without having to buy less.

Below are a few of the major reasons why I choose to shop at Superstore:

*They have cheaper food prices than most grocery stores. I have compared grocery prices with Sobey’s, Safeway, and a few smaller grocery store chains and have found that for the most part, Superstore is the cheapest. Costco’s prices are similar to Superstore’s, but Superstore has the advantage of offering different types of brands rather than just one or two brands for each item.

*They have a wide variety of products and a nice selection of produce that is usually fresh. We like to eat a lot of different types of ethnic foods. Superstore often has a whole aisle devoted to imported foods that can’t be found at most regular grocery stores.

*You can earn points every time you shop at Superstore if you use a President’s Choice Mastercard or debit card. After earning 20,000 points, you can redeem the points to get $20 off your grocery bill. You can earn extra points by bringing your own bags and bins instead of using disposable plastic bags. Just be sure to remind the clerks when they ring through your groceries. You need to be proactive at Superstore.

*If you buy your gas at Superstore, you get Superbucks that you can use towards your groceries. If you have a PC Mastercard or debit card, you will get more points than if you use another form of payment. My husband and I use a lot of gas, so we usually end up getting about $10.00 off our grocery bill every time we shop by using Superbucks. If you fill your prescriptions at the Superstore pharmacy, they will also give you Superbucks that you can use towards your groceries.

So, by shopping at Superstore you can take advantage of points, Superbucks, and inexpensive food costs. If you live near a Superstore, I would definitely encourage you to check it out the next time you go grocery shopping.

Shopping At Costco: The Lazy Way To Save Money On Almost Everything

After writing my posts on our monthly expenses, many have asked "Why do I shop at Costco?" "You have that fee to pay.." "I can get a better deal elsewhere..." IMHO: Costco- a great balance of quality and price...lazy way to save? Perhaps. But, I've done the running around to find the best deals..Costco is still in the top 2 for savings. Add the Costco points from the Executive membership with AMEX points and voila! I'm fast becoming quite the Costco addict...perhaps buying some $COST shares are in order... An article from HowToSaveMoney.ca explains my choice to shop at Costco well:

February 8, 2011 by SavingMentor

When it comes to everyday shopping value, Costco truly is the cream of the crop and it is very hard for them to be beat in regards to value because they have great prices on above average quality products. Most people have shopped at Costco at one time or another, so I may be preaching to the choir here, but there has to be at least one person out there that still hasn’t given them a chance!

What do I mean when I say it is the lazy way to save money? Well, you definitely aren’t going to get the absolute lowest price when shopping at Costco. If you look out for amazing loss leader sales, you will often be able to beat Costco’s prices just by doing that. Then, if you combine a good manufacturer’s coupon with said sales, you are practically guaranteed to get a better deal elsewhere. However, finding cheap prices that way requires vigilance and dedication as well as potential trips to several stores with a lot of time wasted and money spent on gas!

When you shop at Costco, you are almost always guaranteed a more than competitive price and a selection of products that is heavily screened for quality. It is very rare to find an inferiour product at Costco as it seems every product has been hand picked to the highest quality and even products you see in other stores often come with an added feature or bonus to make them just a little bit better. But more importantly you will save yourself a whole lot of research and time making Costco the perfect choice for busy people focused on advancing their career (i.e. making more money) and their family or even those just looking to maximize their efficiency and free time while still saving money.

Shopping at Costco is actually almost too easy as you always find so many great products that you never knew existed before, so you may end up spending much more than you originally intended to. To stay on budget, it is important to go in with a list of things you need and then stick to it religiously. Don’t say I didn’t warn you!

Costco Pros

• Prices that are as good or better than typical sale prices you will see elsewhere all day everyday.
• An amazing selection of products that typically exude both quality and value.
• A return policy that is the best in the business.
  • Most items can be returned indefinitely even without the receipt or packaging for almost any reason.
  • Computers and most electronics now have a 90 day return policy as the previous unlimited return policy was being severely abused on these items.
• Free extended warranty on TVs, projectors, and computers up to 2 years from the date of purchase.
• Free technical support provided by Costco themselves on many electronic devices and computers by calling 1-866-231-9731.
• Extra large parking spots and shopping carts so you always have lots of room and space!
• In store coupons and coupon books for added savings on some of their more popular products.
• Cheap and good fast food restaurant located in the store if you feel like binging on some junk food.
• Free food samples handed out at a multitude of stations as you walk throughout the aisles, especially on weekends.
  • People have been known to go to Costco for dates and outings just to sample the free food!
  • I may have done this once or twice myself, but shhh – don’t tell anyone!

Costco Cons

• Required annual membership fee costing a minimum of $55 that can be shared amongst family.
• Manufacturer’s coupons may not be used at Costco; Only store coupons they issue themselves are permitted.
• Potential for large crowds and long lines because Costco is a very popular and is usually quite packed.
  • This gets even worse on the weekends.
  • Fortunately they employ a lot of checkout workers to keep lines moving quickly.
• No shopping bags or bins are provided at the checkout, but they might give you a recycled box if you're lucky!
• Large sizes can lead to waste if you aren’t careful to freeze excess food items or share them with others.
• Potential for increased driving time and gas used to get there because each city usually only has one Costco.
• Good possibility of spending extra money because of how effective the store is at displaying and selling products.
• Their range of products isn’t quite as good as Walmart and large grocery stores, so you may need to do some shopping elsewhere on occasion.
• Credit cards, other than American Express, are not accepted.

Good Things To Buy At Costco

Not everything at Costco is a fantastic buy, but most things are at least decent. Here is a collection of a few things that I think provide exceptional value when bought at Costco:

Mattresses – These are always cheap at Costco and you don’t have to wade through the overpriced jungle that is your local mattress gallery or department store. At Costco you are bound to get a great mattress at a fantastic price without needing an 80% off sale or doing a lot of intense haggling; No high pressure sales tactics either!

Furniture – The selection is limited but you can find a variety of furniture at Costco ranging from dining rooms tables and living room furniture to computer desks and bookshelves. The quality is usually far superiour and the price is often much cheaper than you will find at your local department or office store.

Food – This is one of the best things you can buy at Costco as long as you have a family large enough to eat it all or the means to store it or freeze it until it can be eaten. Some grocery items that are much cheaper than elsewhere include meat (great cuts, good selection, and convenient packaging), cheese (so much cheaper, it isn’t funny), bread (traditional loafs as well as other varieties), and spices (containers 5 or 10 times the size for the same price).

Entertainment / Restaurant Certificates – Costco sells a variety of gift cards and certificates for various local entertainment and restaurants. For instance, my store has a night out movie package that I think costs just over $20 and includes two admissions, two large popcorns, and 2 large soft drinks. That would cost you at least $40 on the weekend if you were to buy everything directly at the cinema. Restaurant gift cards are also typically sold at a 20% discount, which is a significant savings.

Driveway Salt – This is a necessity for Canadian winters and I’ve noticed that the 20kg bags typically sell at about half the price of other stores.

Kitchen Stuff – Great selection of knives, dinnerware, cookware, tupperware, small appliances, and various other useful kitchen items at great prices.

Car Stuff – Car batteries and winter rims are both priced very well.

Clothes – They may not have all the latest styles, but it is hard to argue with $15 for a good pair of quality name brand jeans or full baby outfits for less than $10 each.

Electronics – The extended warranty, free concierge technical support, and the lengthy return period that is six times longer than the standard 14 days are all compelling reasons to shop at Costco for electronics.. The prices are also quite good, but you will almost always do better on electronics price-wise when shopping online.

Office Supplies – They offer a great selection of quality name brands and the prices are always less. Hanging file folders is one of my favourite office products to buy at Costco.

Digital Prints – Getting your home photos developed at Costco is usually cheaper than elsewhere unless there is a good sale happening somewhere else. The quality of the prints and photo paper is only average by my estimation, but it will still save you some money and gets the job done.

Tips For Shopping At Costco

There are a few somewhat lesser known tips for shopping at Costco that I would like to share with you to help you save a bit more money.

• You can often get a discount on your membership by purchasing it online through Costco.ca and using a coupon code to either get a $10-$25 gift card in the mail or some other bonus like certificates for 2 free movies.
  • These coupon codes come and go but you can usually find one by doing a forum search over at Redflagdeals for “Costco membership coupon”.
  • If you aren’t a member at RFD, you can also search Google for “Redflagdeals Costco membership coupon” instead.
• Right now you can also get a $10 gift card for having another Costco member bring you to sign you up for a membership. They will also be given a $10 gift card as well for the referral.
• You can buy items at Costco, even without a membership, if you are using a Costco cash card (gift card) given to you by someone else.
  • You can even purchase Costco cash cards online (no membership required), have them shipped to you, and then buy stuff at Costco without a membership that way.
  • Keep in mind you may not get the other added benefits of membership like extended warranty, tech support, and so on.
  • This is a great way to try out Costco if you are uncertain about joining.
• If you consolidate all your purchases at Costco, getting the Executive membership that costs $100 and gives you 2% back on all your purchases may make sense.
  • If you spend $5000 annually at Costco then your membership will be essentially free.
• You should use a good American Express rewards credit card to earn rewards on all your Costco purchases.
  • The Starwood Preferred Guest Amex, Amex Blue Sky, or an Air Miles Amex are all popular choices.

2011 Monthly Expenses Assessment... Part 3... Groceries, Gas, and Reward Points

So in my last post, I found reviewing our monthly household basic expenses excluding groceries and gasoline, I was unable to really make a dent in saving more money unless I changed up the services and packages or completely eliminating the service altogether.

I did manage to eke out a few dollars updating existing packages in cable and phone services just by cancelling some items we do not find we are using to justify paying for it monthly. From Shaw Cable, I saved $27.95 per month by eliminating movie channels, misc. channels, and time change channels; with Telus, I saved $30.00 per month by updating my high speed internet service and cancelling add-on features like voice messaging and long distance minutes. An annual savings of $695.40 just by eliminating services we were not using much of anyways!

Hardly the $643.80 PER MONTH I was looking for... but a further look at the monthly bills and some research on the Net, I noticed was paying what everyone else was paying on most of my bills taking in account for the increases over the years; and finding more savings out of these bills would involve cancelling the service altogether.

Because of inflation and the increase of more services being used, the budgeting will now have to come out of the groceries and gasoline portion of expenses. I look at these as separate from the other expenses as these two are variable: the prices fluctuate monthly due to market conditions and /or consumption levels. I am able to spend more or less on any given week..ie. stocking up on something when it is in season or on sale; or hold off buying altogether when the paycheque doesn't allow for the spending.

In researching this area of expenditure, I discovered Max Satanove's Edmonton Food Basket- a weekly comparison of locals grocers in the Edmonton area that appeared in the Edmonton Examiner for 18 years is now gone! Mr. Satenove passed away January 27, 2009 and ended his column when he stopped driving at 90 years old... for years my wife and I used that weekly column to glance where the best deals or cheapest grocery prices were... He provided a really valuable service for us consumers especially when we were spending in the $1000 range every month! And from his weekly chart, he showed that Superstore, week after week, was the clear winner in terms of price for a cart compared to Save-On Foods, Sobey's, and Safeway in the Edmonton area. RIP Mr. Satanove. I miss you already.

Following in his tradition, I have found, CTV Calgary does a monthly segment comparing prices at major Calgary grocery stores, Superstore, Sobey's, Safeway, and Co-op. Calgary, according to various websites like Numbeo.com suggest Edmonton is on par with Calgary when it comes to grocery prices.. some may vary but it balances out when it is items are compared by the cart.

See this month's grocery comparison chart here.

As with Max's Food Basket column in the weekly Edmonton Examiner, we see Superstore topping the other grocers by price comparison in CTV's Calgary grocery comparison. But, what about comparisons with Costco and Walmart?

From our own experience over the years, we too have found you get more of a cart-full of groceries at Superstore than anywhere else. Fresh produce is better quality at Save-on and Safeway while prices do reflect that. Superstore is still the king for non-perishables. Costco and Sobey's and IGA (when on sale) is better for meat purchases. Diapers and other baby necessities, condiments, snacks at Walmart are comparable to Superstore's prices. Though, I've found though Walmart may seem cheaper in price, quality and portion sizing is greatly reduced compared to Costco. Safeway always seems to be the most expensive but time to time they have some good flyer specials and customer appreciation Tuesdays (15% off 1st Tuesday of every month).

Over the past year, we have spent more time at Costco: the Superstore near we live, since their store renovations, had lowered their quality and the coupons are not as good as they were 2 years prior. We had always gone to Superstore for its free $25 gift card for spending $200; now it's a free $25 gift card for spending $250... Costco's pricing is pretty much on par with Superstore when buying meat, cleaning supplies, and other food staples and the return policy is second to none! Plus, the bulk sizing at Costco saves the consumer big time in terms of price per unit comparisons.

In our search to find more savings every week to cut back on our monthly expenses, we've found it is best to shop at different grocers and watch the flyers every week- something we have not done consistently in the last 2 years out of convenience of Costco— your one-stop shop to get most groceries, get gasoline and feed your kids with samples! Caution: Costco is not a good place to pick up only a couple of items...for some reason though prices are on par or cheaper with everywhere else on a per unit basis, one finds himself spending a lot more than planned... ie. went into Costco for peanut butter; came out with $350 worth of other stuff..and who can eat that much peanut butter??

When buying gasoline in Edmonton, it is best to shop around too. Using EdmontonGasPrices.com is a great way to find out who has the cheapest gas in our city. You will find Costco also tops the list for gas savings too- usually a 5 cent per litre difference in prices than anywhere else! Finding additional savings would have to involve taking more public transportation or alternative means of transport.

How about loyalty cards such as PC points at superstore or Costco Executive memberships? Earning rewards on everyday purchases is a great way to stretch household budgets during a recession. Canadaloyalty.com is a good database that describes the different rewards that can be earned with loyalty cards from different retailers.

The most popular reward cards seem to be: Shoppers Optimum, Airmiles, Canadian Tire money, PC Financial Pts at Superstore, and Costco Executive membership and Costco American Express, Aeroplan, Esso Extra, HBC Rewards, and PetroCanada Petro-points.

The top -rated points cards when I started collecting points were the BMO Airmiles Mosaic Mastercard, the Airmiles American Express, the Costco American Express, PC Financial Mastercard, and MNBA Shoppers Optimum Mastercard.

I have heard PC Financial points and the Costco American Express Card are the best and most popular for collecting points for everyday grocery purchases (assuming you shop at Superstore and Costco mostly as I do).

PC Financial Mastercard rewards are as such : Earn 10 points for every $1 spent; redeem at 20,000 points for $20 in groceries at Superstore and 10,000 points thereafter (so 30,000 pts for $30 of groceries). So for my weekly average grocery spending of $400, I would get 16,000 points every month plus additional specials and introductory 5000 points for signing up..estimate of 200,000 points per year equalling about $200 worth of free groceries if I were only to use the credit card for Superstore grocery purchases for example.

Costco Cash rebate American Express offers as such: 0.25% cash back on all card spending on the first $1000; 0.50% on the next $2000; and 1.0% cash back on spending over $3000 plus bonus 0.5% for balances carried over each month. Plus 2% on gas purchases up to $3000 annually and 1% on gas purchases over $3000. Using the example above of spending $400 per week, I would get about a little less than $200 per year for getting groceries but add gas at Costco- and it pretty much on par or better than the PC Financial card for yearly spending totals. The PCF Mastercard is better for lower spending levels as the Costco Amex gets better if you spend more.

But, adding the Costco Executive membership- annual 2% return up to a maximum of $500 on all Costco purchases excluding tobacco, food court, postage stamps, etc. (list here.) and you get an additional $384.00 for the same dollar amount spent on groceries; which also pays for the Costco Executive membership of $100. So, going with Costco will earn you an annual net of $517.00 compared to PC Financial's $200 for the same $400 spent per week.

I use Airmiles and Airmiles American Express and the Executive membership at Costco. Using the above example again I get 1 airmile for every $15 spent (on avg. some retailers offer 1 airmile per $10 spent) - giving me 1280 airmiles annually. Based on a redemption rate of 1125 points for a $150 Best Western Hotel gift certificate, I receive $171.00 for my annual grocery spending at Costco- much less than the PC Financial CC but add the executive membership, it works out.

With collecting airmiles, I find it helps reduce costs on our annual vacations. I did notice there is greater value for your points with airmiles when they are used for travel purchases like flights, hotels, or car rentals. A loophole I found years ago with airmiles is ordering hotel gift cards worth $100-$150, then finding the best internet pricing for hotels in lieu of ordering direct hotel stays from airmiles saved me 100's of points every year (avg. 400 points!). And using my Airmiles American Express alongside having a Costco Executive membership, what I do like is I get both airmiles and Costco points for the SAME purchases at once! It's like getting airmiles at Safeway using an Airmiles credit card- you can easily double your miles on the same purchase.

Back on the topic of finding more savings in our monthly grocery spending, I may have to switch my Airmiles Amex for the Costco rewards card.... and apply for the PC Financial Mastercard to replace the BMO Airmiles Matercard... further examination will be in order including how much I really save on hotels, etc. with the airmiles compared to cash value of free groceries.

Groceries by far and wide seems to be the most flexible way to find that extra money to save every year for our household. Yet, if one does not do his homework via clipping coupons, watching the weekly flyer, creating your own 'pricebook', weekly grocery spending can get out of hand quickly.

Other areas of cutting our monthly spending would have to come from entertainment, extra-curricular activities for the kids, eating out, and spur of the moment spending... all of which will have to be analyzed further this year in order to accomplish any of the financial goals I have set this year.... there's always Ft.McMurray.... ugh.

2011 Monthly Expenses Assessment... Part.2... Bills, Bills, and More Bills...

Why am I doing this? Personal finances can be torture on one's ego and mental health... as I have learnt over the years, the path to financial independence, one must learn all facets of money to be able to control it. Personal finances is not only focusing on investment but the other half of the equation: budgeting and saving. In fact, budget and savings should encompass most of the topic... the biggest reason being most people do not have the financial resources with which to invest. Many live paycheque to paycheque; while most according to the Vanier Institute of the Family only have average household savings of $2500 for 2010!

In part 1, I broke down what our household expenses were going to be for 2011 based on January/ February 2011 bills and discovered to my dismay we were spending a total of $1073.93 per month for basic necessities not including food or gasoline! With a comparison to 1997 spending of $910.13, an increase of $163.80 per month... BUT, considering we have no mortgage payment of $480.00 per month anymore, actual spending increased $643.80 per month or a 249.6% increase since 1997; that's an additional $7725.60 per year more than we spent in 1997 for basic living expenses! How much of this is inflation or standard of living increases or just wasteful keeping up with our peers? According to historical CPI growth rates annual average inflation from 1997 to 2010 is 2.4%; meaning $1 of spending power in 1997 now is worth $1.36 in buying power in 2010. A dollar definitely not what it used to be.

I use the year 1997 because at that point in our lives we purchased our home and vowed to keep our spending limited so that one of us could manage and afford all the bills by ourself just in case one loses his/her job, etc. In 1997 my earnings from collecting unemployment insurance was on par with the wife's earnings with her full-time job in retail. So, we based our spending on this: approximately $1600.00 per month income.

It is obvious we could probably eke by with no savings and no changes in our spending with income from Employment Insurance (payout remained consistent over 14 years) if we absolutely needed to today using only $600 for groceries ($100 per week) and gasoline ($200 per month). But, doing this assessment is good to see if we could do any cutbacks now in excess spending and perhaps put more towards our short term financial goals.

Our 2011 bills:

Enmax- avg. $245 per month for electricity and natural gas. In 1997, that bill was $34.00 avg for water and drainage and $37.00 for natural gas totalling $71.00. Over 300% increase over 14 years!!! Not much I can do about the gouging going on as natural gas is near historical lows ($4/GJ) and electricity is on contract with Enmax for $0.07/kWh. Floating rates are averaging $0.0789/kWh in Alberta and contracts cost over 8 cents... probably the best pkg I can get at this time. Which means more diligence will be needed shutting off lights, electronic goods, etc. within our home. Perhaps an investment in installing solar panels and a 'pre-warmer' water tank is worth looking into since natural gas prices have been creeping up and it looks as these bills will only increase from here.

Epcor- avg. $82.00 per month for water and drainage. In 1997, this cost $28 per month. Another 300% increase!! Over the years the city has added costs to our bills such as waste services (garbage) and additional service charges in sewage. Going with an Energy-star compliant front-load washing machine and dryer helped reduce our water tab by 50% over the last 5 years.

Shaw- $78.70 per month for cable services. In 1997, cable was $27.47. For the same pkg we had in 1997, it would cost $62.95 today (same approx. number of channels- Digital TV pkg); we recently cancelled a few channels we weren't watching that often to save a few bucks and really would cut the entire service if we needed to. Only reality shows and HGTV DIY for the wife and hockey games for myself and kids' channels are the only things we watch on TV these days. Services like Netflix, etc could easily replace our TV viewing. Competitors like TelusTV are entering the market and we will be looking out for any introductory pkgs available.

Telus- $86.87 per month for phone and long distance services. Pkg. includes call display, call waiting, and voice messaging and 200 minutes free per month long distance calling and high speed internet ($40.00 for 16Mbps). In 1997, home phone cost $21.00 per month for the basic package and additional $4-7 per month in long distance when used. Phone service by itself costs us $42.55 per month now: a 100% increase? Six months ago, I was told to look at my current high speed internet package with Telus from a sales dude at Memory Express: he told me Telus doesn't tell its customers about any new packages that may save us money and keeps us paying status quo at lower speeds. I checked it out and found I was paying the same price for a slower speed of internet service as their highest speed service; I called customer service and was instantly upgraded from 6Mbps to 16Mbps for $5.00 LESS per month, with no questions asked or any argument!! Today, I called Telus to knock down any home phone services we do not use.. they offered me to keep my existing package and it would only cost me $36.00 per month: 15% off just for calling customer service!! I opted to take a new pkg. with only basic phone and call display as we do not use voice messaging much and call waiting is now free! $21.00 starting next month..plus 4 cents per minute long distance only when we use it! Savings of almost $25 per month!

Property Taxes- $213.21 per month... $2558.52 for 2011; $136.04, $1632.48 in 1997: A 56.7% increase in property tax includes sewer and sidewalk improvements 2 years ago. Not too awful bad considering a property value increase of 349% (city assessment); or 300% avg market value vs. purchase price from 1997.

Home Insurance- $78.25 per month or $939.00 annual.. $1million replacement and all perils liability; in 1997, it cost a premium of $362.04 per year with same coverage. A 259% increase.. coverage for sewer backup and roof damage increased significantly. A shop-around was done two years ago...I still got the best price sticking with TD Insurance (University of Alberta discount).

Life Insurance- $29.87 constant for last 10 years. Replaced the bank offered mortgage insurance for life insurance; rates with mortgage insurance are misleading- premiums stay the same while the insurer's liability constantly decreases as principle is being paid off. Not much bang for your buck... better with life insurance which also covers much more than default of mortgage via death.

Auto insurance- the only thing that has decreased per vehicle over the years ...no accidents or tickets help. May cancel one vehicle as here is only one household driver at the time. Two vehicles being insured is a waste.

Bank Fees- $32.90 with the birth of our children our free safety deposit box was upgraded in size. Plus, bank service fees has increased significantly over the years. Shop around for your bank's best deals... they now offer less fees via ATM transactions and online bill payments for a monthly set fee.

Cellular services: $68.25 for my iPhone4 (6Gb Data for $30 plus Student My10Voice with Rogers), $10.05 for the wife's Telus Pay N Talk phone; $15.75 for 3G on my iPad. Staying connected via cellular is not a necessity but convenience especially when trying to panic sell one's stocks... iPhone contract due this August; the unit is unlocked and I will negotiate a better contract.

Gym Membership- $41.98 per month multi-club membership at World Health (formerly Club fit locations); this has increased $5 per year every year for the last 3 years...very annoying because they offer better deals for new members. Will look for better options including maybe purchasing a Fitness Trainer for the basement ($2500 Fitness Depot) or different gym.

So there we have it... our 2011 basic monthly spending taking out groceries and gasoline. In comprising this look, I was able to instantly save some money like my phone bill and cable service. But, it has also shown me there is not much else other than cancelling certain services such as cable or gym membership that I can do to save on these basic monthly expenses.

Our mortgage payments of $480.00 per month in 1997, which should give us an increase in savings per month when we paid the home off, have instead completely been absorbed into the increased cost of utilities, property taxes, and home insurance; and the addition of new services like Internet, HDTV, and cellular phones. Also, the 300% increase to our primary utilities due to provincial deregulation shows more diligence is going to be required in other areas of spending. Circa 2003, at least we were able to counter rising natural gas prices with investment in Oil/Gas royalty trusts paying up to 25-30% monthly yields. In 2011, most trusts have been forced by the Government of Canada to convert back to corporate structures making everyday life much more expensive now.

Unemployment Insurance increased minimally from $413 per week before taxes to ONLY $468... a 13.3% increase in 14 years... not much compared to how much our cost of living has increased.

Doing this study also has shown me that current CPI stats can be misleading when it comes to calculating our own expenses. Local media suggests there is not much inflation and prices have increased very little over the years except for food and gas which are taken out because of their volatility and will unlikely increase very much in the future. HA! The figures the media uses are skewed to show only slight month to month increases or year to year and blame inflationary expenses are due to food price and gasoline increases. The "core" CPI, like interest, compounds making real figures like our bills show the increases to be astronomical. Yes, goods such as electronics and computers are cheaper in price these days but we replace them more often now. We use more utilities now with increased computer usage, etc. but also replaced things like light bulbs and appliances with more energy efficient ones... the real price increases come with the extra service charges now present in our bills. So when the news says prices are NOT going up, don't believe it! Look at your monthly statements and see for yourself, there is INFLATION and wages have not kept up. Just something to keep in mind if you're thinking of throwing that extra $100K into that new home in the next few months....

In Part 3, I will look at our grocery bills to see if any savings can be had there; and if there are any savings going to Superstore, Costco, or Walmart; if loyalty cards such as Airmiles or PC points are worth the hassle.

2011 Monthly Expenses Assessment... Part 1... Where's all the Money going??

Only seven more days of RRSP season left... a time to assess our finances and plan for the upcoming year...

Today, the Vanier Institute of the Family released a report indicating the Canadian household debt has hit the six- figure mark: an average at the end of 2010 of $100,879. Also, a debt to income ratio at a record 1.50! That means for every tax free dollar a Canadian household earns, they spend a $1.50. The big 3 monkeys: mortgage, personal loans, and credit cards. For those with mortgages, the average debt came in at $171,500.

This news got me thinking about where our household money was going and with noticing our utilities were on the rise yet again as were our taxes, it is time to take another look at our monthly expenses and where we might have to cut back as we haven't assessed it in detail since 2003.

In 1997, my fiancee and I decided when we purchased our home, we had to be frugal; because of the instability of my steamfitter trade (seasonal construction or maintenance), we had planned to keep our monthly costs down enough so that my would-be spouse could afford all the bills by herself or I can afford all bills while collecting Unemployment Insurance payments until I found another job which pretty much was the same amount as her gross pay in 1997.

In 1997:

Mortgage- $480 per month conventional; no CMHC with over 25% down payment.

Northwestern Utilities- bills fluctuated between $11.00 to $88.00 (winter); $37.00 average for natural gas.

Edmonton Power/ Aqualta- $62.00 average for electricity, water and drainage.

Videotron- $27.47 for cable- basic plus and multi-service plan.

Telus- $21.00 for phone services not including long distance.

Property Tax- $136.04

Home Insurance- $30.17 same exact plan I have now.

Life Insurance- $18.00 for the bank's pay your mortgage off if someone dies insurance.

Bank Fees- $9.00

Car Insurance- $75.00 for 1 vehicle PLPD.

Cellular- NIL

Alberta Health Care- $34.00 per month for family plan

Gym Membership- $22.45 at Club Fit.

Groceries- $75 per week including gasoline. There was only 2 of us back then and price at the pump was 29.9 cents per litre!

Grand total in 1997: $910.13 without groceries. $1210.13 +/- $200 with groceries and gasoline as we did grocery shopping less often and ate out more. Back then, mortgage payments and all bills came to around $1000 per month. The $413 per week pre-tax from UI more than covered those costs plus groceries which we to this day have an unlimited budget for and saving up for a wedding!

It will be interesting to see if we could afford to live today on that same budget just in case I was to be suddenly unemployed for any length of time.

And so: 2011 bills...

Mortgage- NIL

Enmax (Jan.) $295.22 electricity and natural gas. On the high side as December had a good cold spell; average $245.00 with more gas in winters and more electricity used in summer to balance out.

Epcor (Jan.) $117.75 water and waste mgmt. drainage; on the high side again. Average is $82.00...

Shaw (same monthly) $78.70 digital cable plus HD pkg.

Telus (same mthly) $86.87 telephone pkg with High Speed ADSL; Telus has announced a $2.00 increase coming in March...

Property Taxes- $213.21 no interest paid directly to the City.

Home Insurance-$78.25

Life insurance- $29.87

Auto Insurance- Morgex- 2 vehicles $89.90; $million liability on both.

Car Payments -NIL

Bank Fees- $32.90 incl. Safety Deposit Box

Cellular Phone service- $93.25 iPhone plus wife's phone plus iPad 3G

AHC- NIL no more Albera Health Care Premiums!!!

Gym Membership- $41.98 at World Health Club

Groceries- Averages about $400 per week including gasoline. $1600 per month.

Misc.- Hockey, tuition, sports activities for the boys- approximately $2000 per year.

Grand Total: $1073.93 +/- $100 for cost fluctuations without groceries. $2673.93 with a good cart-full at Costco or Superstore and weekly gas. +/- $100 for stocking up weeks or don't need much this time weeks....

The maximum EI benefit in 2011 is $468 per week pre-tax. After taxes, every 2 weeks, I would probably get just over $800; hence that wouldn't go very far with the bills we have today without cutting at least $1000 per month out of our monthly expenses. YIKES!!

Luckily I still have a job and it is good to see where the money is going... if the economy turns for the worst, cable would go, replacing phone service with VOIP, gym membership gone, halving of car insurance to 1 vehicle, and a closer look what's in our shopping cart would whittle that $1000 away hopefully.

2011 GOALS:

First Priority: We are spending $1922.80 more per month now than we did 14 years ago! $643.80 not including groceries and gas and taking into account we have no mortgage payment anymore. Getting some of that back will be the first priority. If we keep spending the way we are now, it costs us $32,087.16 plus $2000.00 for sports. Add annual vacation at $5000.00...totalling $39,087.16 without going out, ordering in,etc. Something's gotta give!

Second Priority: taking a good look at our grocery list... it will grow over time with 3 boys in the house so now's the time to analyze the necessity of the items in our cart and collect receipts for outside expenses like eating out, entertainment, etc. Thing is, when has anyone walked into Costco and walked out without a $300.00 tab???

Third Priority: 2012 TFSAs, RESPs, RRSPs, and savings... to maximize these, I would need $10,000 for the TFSAs, $7500 for the RESPs, and $5000 for the RRSP: totalling $22,500 per year. And personal savings goal of $10,000 this year...

Misc: Need new shingles and outside doors with screens...expecting costs to be $10,000.00; flooring for bedrooms and new drawers..$2000.00

$83,587.16 of already taxed money needed for 2011 if we don't adjust some spending habits...

Not looking good in accomplishing these goals unless I head to Ft. McMurray.... may have to opt out on maximizing the RESPs and installing new doors.... and the wife was asking for a kitchen reno soon... okay..I'm a wee bit taken back by the number now considering we have no long term debt like credit cards and personal loans... looking for the defibrillator...

In part 2, I will take a closer look at our monthly bills excluding groceries and gasoline like those Statscan guys do with their monthly CPI looks... to see how much of the increased spending since 1997 is actually inflation or additions to our standard of living or just wasteful spending we're not aware of... TO BE CONTINUED...

RESPs, TFSAs, and RRSPs... What to do...

So as my eldest son turned 10 years of age this past week, I figured it was time we started really planning ahead in terms of his education, etc. Over the past 10 years, all 3 kids have accumulated just over $4000 in birthday money, Chinese New Years gifts, and Christmas money... finally enough to maybe buy a GIC or a bond rather than let it sit in a savings account and earn next to nil.

When the eldest was born, we had looked into perhaps opening a RESP account for him. At the time, the Government of Canada was offering a 20% grant up to annual max of $400 towards an RESP (so a $2000 contribution). All the rules and exceptions involved at the time swayed my decision to start an RESP: Back then, only 4 year university programs and a handful of technical school (NAIT, SAIT) programs qualified as post-secondary schooling that an RESP could be put towards; trade school certification courses were not included nor was community college programs. So, instead we decided to focus on paying down our mortgage and maximize our RRSP contributions.

Currently the rules have changed: now the maximum grant has increased from $400 to $500 (still 20% of annual contribution); lower income earners can receive a larger grant (up to $600 annually for incomes lower than $40, 970 and $550 on incomes less than $81,941); and more post secondary schools can be paid with an RESP including trade certification programs. Hence, a lifetime maximum of $7200 per child can be received through the Canada Education Savings Grant (CESG). Not bad. Details here...

And, with the additional Alberta Centennial Education Savings Grant added towards the RESP, suddenly opening an RESP is worthwhile. The ACESG deposits $500 into an RESP for every child born to Alberta residents in 2005 and after; additional grants of $100 is available for those children who turn 8, 11, and 14 in 2005 or later (an extra $300) with a minimum contribution by Alberta residents of $100 to their RESP. Details here.

With the introduction of the TFSA - Tax Free Savings Account in 2009, we figured this was THE way I could get the wife some sort of pension and because the rules are much more flexible in a TFSA, it provided a great way to pay for our children's education too! A maximum contribution of $5000 is allowed in a TFSA but the amount can be withdrawn without penalty or taxation and be put back in future years without losing any contribution room!!

So... what to do? RRSP, TFSA, or RESP? So here's my plan: do them all! Being mortgage and debt free has its benefits... if you are swimming in debt or have a large mortgage, maximizing any of these would seem next to impossible.. but if you prioritize in the same order and contribute what you can, it's not all that bad.

First priority is to maximize contributions to my RRSP for the tax deduction. Since the wife is a stay at home parent, there is no real need to contribute to her RRSP as she has no income or taxes to pay. If you have a corporate pension and your wife stays home, buy a spousal RRSP for her for the tax deduction.

Next priority would be to maximize both TFSAs every year. As I have a union pension, the RRSP contribution room will be minimal and enable me to do this. A TFSA for a stay at home parent is a great way to 'income split' and a glorious way to save for a spouse's retirement. Using the additional tax refund from contributing to your RRSP is the best way to come up with the funds for a TFSA.

RESPs will be the last priority for contributions... with extra effort to maximize contributions in the years the kids each turn 8, 11, and 14 in order to qualify for the ACESG. I put this as the last priority because of the rules the RESP has.. If finding the funds are low, my advice would be to contribute to the RRSP and TFSA first and only put in $100 in the RESP to qualify for the Alberta resident grant in those particular years.

So this year, all 3 kids got RESPs with maximum contributions from their own savings and a top off from my tax return from last year: $2500 in each account. Each will receive $500 from the Government of Canada. The second eldest will get an additional $100 for turning 8 years old this year and the youngest hit the jackpot with an additional ACESG of $500. So the original $7500 contribution now totals $9600: a 28% return without investing in one single instrument! Free money is always nice.

Only problem now is if I wanted to maximize all those above accounts annually, I will have to come up with $17500 for the TFSAs and RESPs and an additional $3000- $6000 for the RRSP annually. And since it's already taxed money being contributed, that works out to coming up with $47,000 of annual income specifically for our family's futures. YIKES!!