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Live Well for Less
It can be done if you think outside the box. Here's how:

BY CAMILLA CORNELL

Most people think of budgeting as a painful process that’s all about doing without your morning Tim Hortons and giving up on that new coat you want. But that’s wrong, says financial-planning analyst Bruce Cohen. The point of good financial planning, he says, is not to squirrel away money for a great funeral but to set aside enough cash to buy the goods and services that can really bring you pleasure.

What’s more, if you think outside the box, there are numerous painless ways of lowering the cost of quality-of-life purchases you want now. Here are tips from financial planners and ordinary Canadians who know how to stretch a dollar.

Trade places. Luc Legendre and his wife, Geneviève, took their three children to Vancouver last summer, spending three weeks in an upscale neighbourhood overlooking the ocean, in a well-equipped four-storey home. The cost: airfare, plus $145 for membership in Vancouver-based HomeLink Canada, a house-swapping organization that allowed them to exchange their Québec City home for the one in Vancouver. Interested? Check out  www.homelink.ca.

Get away on the cheap. Take flight cheaply: If you’re flexible about date and location, there’s always a deal to be had on airfares, says Jonathan Carroll, president of itravel2000. To get the best price, book early, when there’s a seat sale on, or late, within seven to 14 days of departure for sell-offs. And fly out on a Tuesday, Wednesday or Thursday, when demand is lower.

Make maximum use of frequent-flier points: Pick a frequent-flier plan and stick to it—otherwise you could have points accumulating in small batches everywhere but never enough to book a flight. Keep in mind, too, that points can be used for hotel rooms, car rentals, bus tickets and admittance to special events. You might be better off driving to your destination and then cashing in your points for a free hotel room.

Buy the house you want and grow into it: “I see a lot of people who buy a small condo or townhouse and tell me it will only be for a year or two until they can afford something bigger or until they’re ready to raise a family,” says Andy MacDonald, president of MortgageBroker Inc. The downside is the cost of getting in and out of the market.

Although real-estate prices have risen dramatically, MacDonald says, we’re “likely at the top of the market,” and won’t see the same growth over the next few years. The additional fees you’ll incur for selling one home to buy another (including land-transfer taxes, legal fees and real-estate commissions), he points out, can easily total $30,000 or more, which could cancel out any growth in the value of your property. Instead, suggests MacDonald, if you’re in a high-demand area, buy a larger house and rent out a basement apartment, or opt for a larger fixer-upper or a home with potential for an addition, allowing you to grow into it.

And you don’t have to knock yourself out to find the best rate on a mortgage, says Cohen. Instead, get a broker. You don’t usually pay a fee for the service, and brokers have access to smaller banks and trust companies as well as mortgage companies that don’t deal with the public. Although a half- percent savings on your mortgage may not seem like a lot, it will save you over $700 a year on a $200,000 mortgage at current interest rates, says Lenore Davis, a registered financial planner in Victoria.

Home improvements for less. You can pay from $1,000 to upwards of $3,000 to have someone paint your house—and those are your after-tax dollars. If you’re in a 40-percent tax bracket, you’re actually forking out $1,400 to $4,200 for a fairly simple task. (See box, opposite page.) Do it yourself for the price of a couple of cans of paint. Intimidated because you’ve never done it before? Take advantage of free courses at local paint or home-improvement stores.

Need to upgrade your heating system? Check out the federal government’s EnerGuide for Houses program. For around $200, an EnerGuide advisor will assess your house for energy efficiency, inspecting heating and cooling systems, windows and insulation levels. Once you’ve made the improvements, you can call the advisor back in to assess whether the changes have improved your energy efficiency. If so, you’re eligible for government-issued rewards, ranging from $100 to over $3,000. Visit the EnerGuide website at www.energuidefor houses.gc.ca or call 1-800-387-2000 for a listing of energy evaluators who do the EnerGuide test.

Also, think about trading skills with friends and acquaintances. If you’ve got a truck for moving and your friend knows how to unclog a blocked drain, why not trade favours, suggests Cohen. “You get the job done and the only financial outlay is materials and beer, so you save yourself a lot of money.”

Score on your décor buys. Give old junk a new finish: Shannon and Guy Crittenden of Collingwood, Ont., cruise garage sales for good quality furniture that needs refurbishing.

“We bought a cabinet for our hallway for about $20,” Shannon says. “You wouldn’t have looked twice at it, but Guy gave it an antique finish and new hardware. Now everyone says, ÅeWow, that’s such a nice piece! Where did you get it?’” A new one at a furniture chain would likely have cost them several hundred dollars.

Check out furniture clearance centres: Often a tiny rip in fabric or an easily repaired chip in furniture is enough to knock the price down by half. Pamela Mandich of Stouffville, Ont., bought a brand-new couch at a clearance centre for $500, compared to the $800 it was selling for in stores. “I could never even figure out what was wrong with it,” she says.

Mandich also explores the damaged-goods section of large department stores for bargains. “I got a wardrobe at IKEA that was missing the handles. They had knocked $180 off the $300 price tag, and all I had to do was go to a hardware store and replace them,” she says. “It cost me $30 and a bit of time.”

Have an art attack: Wall decorations don’t have to cost a fortune to look great. Carla Johnston, a Port Hope, Ont., interior designer suggests:

• Keep an eye out for unique prints and artwork at flea markets and second-hand stores and then frame them yourself with the aid of books or courses at your local craft-supply centre.
• Travel or family photos provide a personal focal point for a room.
• Kids’ artwork looks great when it’s nicely framed and hung.
• Put together a collage of memorabilia, remnants of a trip or even an old set of skeleton keys under glass.
• Don’t be afraid to take paintbrush in hand yourself. Imitate an abstract artist you like, or get the children involved.

Get driven around town. Take a cab! Consider: A recent Canadian Automobile Association report indicates that it costs almost $10,000 to drive a 2004 Dodge Caravan 18,000 kilometres a year in Canada, including car payments, depreciation, insurance, gas and maintenance. Do without and you could spend almost $100 a week on cabs and still save $5,000 a year. Better yet, take the bus, says financial planner Lenore Davis. At a cost of about $1,000 a year, it will save you a small salary, and you can read or catch up on work while you ride.

Buy a luxury car - used. Cars depreciate in value dramatically the minute you drive them off the lot. Don Cuzzocrea, a Toronto actor with a wife, a child and a consistently tight budget, paid $2,500 recently for a 1994 Mercury Sable in good condition. “I try to pick high-end used vehicles with everything working—the kind that cost $35,000 brand new,” he says. “They last me three or four years and then I have to buy again, but I’m still only spending about $800 a year.”

Want an extra $2,500 a year in your pocket? A 2002 study by management-consulting firm Runzheimer International makes the case that trading a vehicle every eight years instead of every four can save $2,482 a year in the last four years, even taking into account repairs.

The key to making sure your car looks good and lasts longer is to choose well in the first place. Before you buy, check out the CAA website (www.caa.ca) for a list of the top-rated cars by owners.

Routine maintenance is also crucial, says George Iny, president of Montreal-based Automobile Protection Association. Low-cost or no-cost maintenance procedures that pay off big include regular oil and fluid changes, keeping tires properly inflated and washing your car to prevent rust. Rust-proofing by a reputable company costs about $120 a year, but can keep your baby gleaming and pay off in a higher resale value.

Consider also raising your insurance deductible. Check the savings from increasing your car-insurance deductible to $1,000 or $2,000, suggests Cohen. Would you really file a claim for less? Invest the savings in an emergency fund, so you build up an amount to cover the deduction if necessary.

Look like a million for far less. Buy timeless classics—previously loved. At a recent trip to her local Goodwill, Shannon Crittenden nabbed a down-filled European ski suit for $10. “It was priced at $15,” she says, “but it had a tiny stain on it, so the cashier dropped the price by $5.” Her tips for buying great pre-owned clothes: Pick a used-clothing store and go regularly (every two weeks) just to give the place a good once-over; check through the racks for quality fabrics and classic designs. When you have a pile of garments you like, look more closely for flaws. The result: Crittenden manages to dress elegantly at a fraction of the cost of brand-new, less-classic clothes.

Have a clothes-swapping party. Bring clothes to exchange with friends. “I got a great wool sweater that someone gave away because it was too itchy,” says Crittenden, who attended a clothes-swapping fete a few years ago.

“And I gave away a classic Ralph Lauren khaki skirt that was just too tight to wear.”

Get top-quality skin care at drug-store prices. Paula Begoun, the Seattle-based author of Don’t Go to the Cosmetics Counter Without Me (www. cosmeticscop.com), says you don’t have to spend a fortune to get great products. “I’ve seen cleansers for $65 that are virtually identical to ones for less than $10 from Neutrogena and Dove Essentials,” she says.

Eat well, save too. Shop at a no-frills grocer: If you have to buy the bags to pack your groceries, you’re probably getting a good deal, says Toronto actor Cuzzocrea, who estimates he saves at least $20 on each weekly shopping bill by frequenting his local Food Basics store. “I’m not giving up anything in terms of the quality of the food,” he says, “but it’s a lot cheaper to buy it there.”

Before you go grocery shopping, advises Sydney, N.S., dietitian Debbie Madore, come up with a menu plan and then shop specifically for the ingredients you’ll need. The result: You’ll be more apt to dine on healthy fare rather than convenience foods, and you’ll save a bundle. Also, use coupons for the things you buy regularly: You can save a fair bit of cash by clipping coupons, says Madore, but make sure you’re not purchasing faddish convenience foods. Even if you save just $20 a week, you and hubby can splurge on a filet mignon come Saturday night.

Another idea: Have dinner parties regularly. “It’s wonderful entertainment, and it’s cheap,” points out Cuzzocrea.

“You can spend $80 for dinner out for two, or feed a crowd for the same amount.”

Extend that warranty—free! In most cases it’s not worth it to buy the extended warranties offered in stores on everything from cameras to telephones, says Cohen. But, if you pay off your credit card every month (as you should), it pays to have a platinum or gold credit card with purchase-protection insurance. “That typically doubles the warranty that comes with purchases,” he says. “When I bought a laptop, it came with a one-year warranty and the guy tried selling me an extended warranty for another year. Because I paid for it with my Platinum Visa card, I already have that coverage and it didn’t cost me anything.”

Yes, you really can live well for less! It may take a little more planning before you make a purchase or use a service, but isn’t your quality of life worth it?