When it comes to vehicle financing, you probably already know that a down payment is a great way of securing a better approval. The problem is that, while Canada has undergone two recessions, eight consecutive budget deficits, and the largest trade deficit throughout the country’s history, it is difficult for many to score reliable employment and put savings aside.This turns saving for a down payment into a swim upstream, where disposable income is hard to come by. Here is a list of tips that will help you save without you having to radically change your lifestyle
1) Turn off the TV
We know that it isn’t likely that your television is a significant contributor to your electricity bill (if it is, turn it off and get outside!). However, because televisions have become an integral source of entertainment in Canadian homes for the past fifty-some-odd years, it is easy to forget that they are your greatest source for mass-exposure to advertisements that encourage you to drop bills like you’re P Diddy. This is why it is a great idea to cut back on your cable by resorting to a basic plan, or cancelling it entirely (Netflix is cheaper anyway). This will drastically reduce your bill, and leave you with more time to work on tip #2.
2) Sell your collections
Did you ever have a collection that you loved to hoard when you were younger (ahem, beanie babies)? Is this collection stored somewhere in your home where, instead of accumulating value, it is wasting space? Unless the value of these assets is increasing with time, selling your collections through middle man sites like Kijiji is a great way to acquire funds that you wouldn’t be in possession of otherwise.
3) Quit your vices
Ok, we appreciate that, if you smoke, it is likely that you have been told that smoking kills and that quitting will help you save a ton of money. But have you ever tried cutting back on your habits and putting that money aside to watch it multiply? It’s a terrific way to save in the short-term. This is true of any lifestyle vice. Buying coffee, getting your nails done, buying food everyday, etc. The first step to saving is to make yourself aware of what your vices are. Next, it is important to make a plan that outlines specific ways for you to reduce the amount that you are spending on them (ex. most offices, like Canada Drives’, offer coffee to employees so that you don’t need to purchase any). You will then be able to allocate more money towards your downpayment.
4) Always eat breakfast…At home!
If you’re anything like our VP Technology, you’ll know that it can be hard to resist an A&W breakfast special in the morning. As you likely already know, this is an expensive habit. But let’s calculate it out anyway.
If you are spending $7 on a breakfast every day plus $2 for a coffee, then that is almost $200 a month that you are dedicating towards breakfast expenses alone. Try eating at home where cheaper (and healthier) options are readily available. Do this for a few months and you will have a significant portion saved for a downpayment.
5) Rethink your phone bill
Have a land line? Do you use it? No? Cancel it!
Next, take a look at your cell phone bill. Figure out which parts of it are costing you the most. Are you making a lot of long distance calls? If so, consider switching to a Canada-wide plan. Are you going over your monthly data limit? Purchase a plan that has more space, or download an app that monitors your data usage so that you can know when you are nearing your limit. This will help you cut back on your phone bill and dedicate a greater amount to your savings account.
6) Open a TFSA
A TFSA is beneficial in that, unlike an RRSP, your contributions aren’t tax deductible. Another perk is that, while contributions to your RRSP are considered to be a part of your income (and are taxed at current rates as a result), the growth that occurs within your TFSA is not included in your income and remains tax-free. This makes it much more reasonable to make withdrawals from your TFSA if you are in a volatile financial circumstance, but would like to proceed with a significant investment such as a vehicle purchase.
7) Sign up for rewards programs and offers
Any company that employs digital marketing techniques (which, let’s face it, is almost every company these days) will often offer rewards programs and deals through their online outreach. From groceries to your morning coffee, it is easy to find ways to save big when you sign up for rewards programs for products and services that you use frequently.
8) Buy used, not new
We aren’t simply referring to vehicles here. Clothes, furniture, appliances, anything! With sites like Kijiji and Craigslist that help you save money by finding a second hand version of whatever purchase you are trying to make, it is easy to make purchases for significantly less than you would if they were brand new. Then, calculate the difference in price and dedicate the money you saved towards your downpayment.
9) Avoid (all) late fees
It’s easy to forget when bills are due every month, especially when their pay dates are spread far away from one another. However, if you pay these bills late, it only increases your personal costs. If you are someone who is always losing track of the days when payments are due, start using a calendar to keep track of when your bills are due. Gmail offers an easy-to-use one that is free through their email accounts. Keeping track of payments is a great way to avoid additional expenses and ensuring that your credit report reflects a positive score.
10) Split your paycheque
There is a high chance that you will be able to submit a request asking for your work’s payroll to automatically deposit a portion of your pay cheque into your savings account. This is a great way of ensuring that you are contributing to your savings without detracting from your time.
Of course, these tips are only useful when you are making sure that you are allocating the money you save into a space where it will not be touched until you are ready to make a vehicle purchase. When you apply with Canada Drives, we are often able to connect you with a partner that can find you an approval with or without a downpayment. Contact us today to find out your options.