Review: Money Rules by Gail Vaz-Oxlade

A review of Money Rules by Gail Vaz-Oxlade, a book of 261 rules about basic money management for Canadians.

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This weekend I am getting the amazing opportunity to meet one of my favourite t.v. personalities and financial guru, Gail Vaz-Oxlade! I've mentioned her before in several of my posts because I really value her advice. In fact her latest book which I will be reviewing today was the inspiration to start this blog. I will be seeing Gail speaking at the London Women's Lifestyle Show happening this weekend (March 23 and 24) in London, ON. She will be speaking on Sunday at 2:00 p.m. if anyone is interested in going. Tickets are only $10. So in honour of this event I thought I would take the opportunity to tell you guys what I thought of her latest book, Money Rules. 

For those of you who aren't familiar with Gail she is the host of popular reality t.v. programs, Til Debt Do Us Part and Princess. She is also the author of several hit books including Debt-Free Forever, Never Too Late, Money Smart Kids and It's Your Money: Becoming a Woman of Independent Means. In addition to all of this Gail is a regular columnist in newspapers and financial journals as well as guest on radio shows. She somehow also finds time to be a mom of two kids. All I can think if wow!

I was very lucky and my mother-in-law knowing my love of all thing Gail picked up her latest book for me when it came out. I read it and loved it. I've read three of her other books (Never Too Late and It's Your Money 1st and 2nd editions), and it was interesting to compare them.

After reading Gail's other books, I would say that Money Rules is actually her best one to start with. Rather than the tradition book format of chapters, this book is divided by 261 rules. The rules are short ranging from half to three pages in length, making it an easy read to pick up anytime. The purpose of these rules is not to provide in depth coverage, but rather the pertinent information. These rules cover a wide range of topics from budgets, to credit ratings and needs vs. wants. Some topics are simple and don't need further elaboration but for heavy topics such as retirement, getting out of debt and teaching your kids about money, she recommends doing further reading (starting of course from her own books, which she has conveniently written on those topics).

I would think that holding most people back from reading more books about finances is the misconception that because its about finances and economics, it must be boring. From my own experiences I would say this is not the case in general, but especially with Gail. If you have ever seen one of her shows you will know that she is a no nonsense, straight talking woman who won't take any bull. She loathes excuses about why you got into a financial mess and will make you do things that you do not want to do in order to correct the situation. Ultimately you realize she is a kind-hearted person with a knack for giving people the tools to help themselves. I think this is the best approach to finances because you cannot just expect people to clean up your messes for you, you have to learn so that you stay on the right track even after things seem better.

Her writing style really reflects her on screen personality, she is equally straight forward with a no nonsense approach. Her writing is light, while at the same time being informative. She does not go over complex economic theories that are only applicable to professionals. She gives plain and simple advice that the average person can use regardless of their age. She uses real life stories to back up her advice and often explains how she uses her own advice. I really like knowing that even though she is wildly successful she still follows a budget and does not know everything. As well as writing clearly, she is also very funny and I often found myself laughing out loud while reading her book.

The only downside I could say about this book is that a lot of the material was reiterated from other books of hers that I read. However I would not say that this makes the book any less valuable because the purpose of this book is to cover as many topics as possible about money management in a clear and concise manner. And as Gail often points out, you sometimes have to say something ten times before you get through to someone.

This book taught me many new things about finances that I had no clue about. This really humbles you, because no matter how much you think you know about money management you learn that there is always something new out there you should know. The world of finances is not stagnant, it changes frequently with new legislation regarding taxes and registered savings plans, interest rates, as well as possible forms of fraud.

Overall this was a great easy read, that would suit most people. I would give it a 9/10.

I hope that you pick up this book or one of her others' next time you're looking for something to read. It's never a bad idea to learn more about money management from good, reputable people, like Gail. The more you know, the more you'll save and to me that's worth the investment of the price of a book.

Spring Cleaning: Organize Your Finances!

A few thoughts on how to approach your financial spring cleaning.

You can tell that spring is just around the corner when the snow is melting, it's raining more, and people stop wearing heavy winter coats. Spring is a great time full of new life and exciting possibilities. It also means spring cleaning.

I'm sure most of you aren't fans of cleaning, especially intense spring cleaning, but it can be a great thing. Cleaning out your residence, vehicle, or work space gives you a better idea of what you have. You can then decide what you need and what you don't need. I find cleaning out a room very satisfying because when I'm done I feel so clear-headed. I know that it's organized and I don't have to think about it, so I can focus on other things. I also find purging my belongings a cathartic experience and one that teaches me I often buy too much. But once it's all clean I can breathe much easier and I feel like I've lost a mental weight just from getting rid of all those unnecessary items. 

And I also guarantee you that getting your finances in order will be just as rewarding a feeling as cleaning out your garage.

Organizing Your Computer

So first there is the obvious spring cleaning: that huge mess of boxes and junk in your garage; the piles and piles of clothing in your closet; the overflowing kitchen cupboards. But what about your finances? A lot of people, like myself, do most of their financial management online. This means that it's out of sight and it's harder to see what a mess they can be in. 

Maybe you have a lot of e-mails in your inbox regarding financial statements. Do you still need them sitting there? Or would it better to file them in their own folder or just delete them? Do you have e-receipts for purchases made online? Put them in a receipts folder. Have people e-mailed you charity receipts and T4's? Do you have them in a special folder marked taxes? No? Take 2 minutes, do it, and you'll be better off.

I would recommend taking a look at your e-mail and organizing everything into specific folders. If you get into the habit of sending them to the appropriate folder as soon as they arrive you won't need to do a big clean-up. It's also a good idea to look at any other financial documents sitting around on your computer? Anything in excel? Organize these documents with names clearly stating what they are and put them in the appropriate folder. 

Receipts

I like to keep my receipts super organized because it makes it a lot easier when I have to make a return. I used to just throw them out or toss them in my purse and curse when I really needed a receipt and couldn't find it. How many of you have lost out on money because you couldn't return something without a receipt? Think of organizing your receipts as an opportunity to save time and money in the long run. 

I keep my receipts in a small file folder I bought at Wal Mart for about $4.00. It has 13 spaces, so I use 12 of them for the months of the year and then the other one for various things, like receipts I need to be paid back for, business, etc... I try to put my receipts in the file folder as soon as I get them so that it doesn't become overwhelming. Filling 3 receipts is a lot quicker and less painful than filling 300 at one time. 

My receipts file folder

While doing my own spring cleaning I am going to find the oldest receipts and figure out whether to keep them or not. For tax reasons you should keep important documents/ receipts for six years. However, if you aren't claiming any of the receipts on your tax return, you often don't need to keep them that long. However, there are other reasons for keeping receipts longer, like for major purchases with a warranty. In order to claim most warranties you'll need to show proof of purchase. 

So even if you have your receipts super organized like me, there are still further opportunities to clean them up right now.

The Home Office

Most people have a space they do work from at home, be it an office, a desk, or even the kitchen table. Whatever the case, take the time to gather up all the loose papers there and file them away appropriately. 

I recently read a great book recommended to me by my husband called Getting Things Done by David Allen. David Allen is a professional management consultant and expert on improving productivity. His book is a great motivator for anyone looking to organize their work spaces and improve their productivity. He gives great practical tips including the "do-it, delegate-it, defer-it, or drop-it" rule to get your inbox empty. If you loved the book and are looking for more of David Allen's help, he has a great website that lists his services and upcoming seminars. He also has a blog where he posts articles regularly. A lot of the stuff on his blog and website relate to the business world and how to act in it, but he does have a lot on organizing as well, you'll just have to look for it. For best results, I recommend starting with the book. I read it, loved it, and am now implementing a lot of his suggestions.

Organizing your home office can also include updating the look of it. Do you have pictures of your kids hanging up? Are your kids now in their 20's, married, maybe even with their own kids? It could be time to update the pictures and the decor. 

Keeping your work space organized will hopefully help you streamline your work flow and improve your productivity. By keeping things in good working order you'll also ensure that things don't slip through the cracks. If you don't have a work space at home where you can work on your finances, you need to get one. Seriously, it is very important. 

If you're tight on space I would recommend getting an office in a box. If you watch 'Til Debt Do Us Part with Gail Vaz-Oxlade, you'll remember seeing her give them to show participants without an office. The office in a box is basically just a file folder where you can store all of your financial records. All the tools you'll need to work on them should also be in the box including some office supplies. It shouldn't be more than $20.00 and is definitely worth the money. Having one will mean that next time you need to pay a bill or check on your finances you'll know exactly where everything is. No more scrambling around!

Tax Season

Tax season is also just around the corner (more on this later), so this is a great opportunity to find all those documents and receipts you'll need for filing your taxes. Getting them all together beforehand will definitely save you a lot of aggravation and will make filling your taxes a quicker process.

And if deductions motivate you (like they do me), then just think of all those things you can claim once you have the receipts and papers in order. If you don't remember what you've spent money on, you'll likely forget to claim it. So get your stuff together and claim as much as you reasonably can. You'll also be all prepared in case the government decides to audit you.

It Can Be Fun-ish!

I know cleaning isn't everyone's favourite thing to do, but it's necessary. So take the time to do it right. There are ways to make it easier, like doing a little bit at a time. You could pick one room to start on and give yourself lots of time to get it done. That way it doesn't feel so daunting. I find cleaning doesn't require much mental power so I like to watch t.v. or listen to music while I'm doing it. It can be a great chance to do something you have to, while catching up on that show you just haven't had time for lately. Why not get the whole family involved? As the saying goes, "many hand make light work". So get everyone in your household involved in the process and it'll get done so much faster. Even children can organize and clean their rooms while you tackle the bigger projects. 

I hope this post has motivated you all to take a look at your finances and get them tidied up. Remember to keep yourself motivated by thinking of all the time and money you're saving yourself down the road.

Budgets: The How To Guide

An introductory guide to budgets. Learn how to make your first personal budget and stick with it. 

A lot of people have been asking me how I budget my money. In response to their questions I have decided to write a post about budgeting. This post will teach you how to start a budget if you don't have one or maybe give you some ideas for improvement if you already have one in place.

Why Budget?

You might think that you don't need to budget because you keep good track of your money anyways. You might also think that a budget would be too restrictive and stop you from doing the things you want to do. In my case I found this to be the opposite. Throughout university I lived without a budget because I thought I didn't need one. Whenever I needed more money I would just work more. In retrospect I realize that I could have done more with my money if I had just planned better. I did up my first budget when I was temporarily laid off from work. I had a limited budget to work with but I was able to make it work. I was still able to go out with my friends and buy things I wanted. Having a budget lets me know when I can do things and how much I can spend. Rather than just always thinking, "I don't have enough money to do that", I now know how much money I have every month and can plan how to use it wisely. Make a budget and feel the freedom I've experienced from having mine.

Where To Start

The first thing you need to do when making a budget is figure out how much money you make. Make sure you know you're actual take-home income, not your income before taxes. If you have a regular income this should be a lot easier for you, but if you have a variable income you'll have to figure out your average. I have a variable income and I always budget my income as being lower than it actually is just because it's easier to deal with extra money than not enough.

The next thing to do is figure out how much money you spend every month. This is the hard part. Before I started budgeting I thought I knew how much I spent every month, so  I made my first budget with those numbers. I realized quickly that I was generally off on what I thought I spent. It's fine if you're wrong at first because you'll learn through experience. With time you'll be able to make a solid budget you can easily work within.

Categories

When I first started my budget I used a sample one from Gail Vaz-Oxlade's website. It's a great start because it has almost every conceivable category of expenses. Choose the ones that apply to you. You might also find you want to add some categories of your own creation.

So once you have the categories that apply to you, you need to put in the amount you spend on each. It is easier to start with the fixed expenses, and then play around with what money you have left between the variable expenses.

Fixed and Variable Expenses

Everyone will have different categories for things they spend money on but they can all either be classified as fixed or variable expenses. Fixed expenses are things you can't change how much you pay a month. Examples of this would be rent, car loans and mortgage payments. Variable expenses are ones that fluctuate and you are able to control. Examples include groceries, gas and vacation.

It can sometimes be difficult to differentiate between fixed and variable expenses. I would consider a phone to be a variable expense because you can control what kind of plan you have. You might need a phone, but you decide how much you're willing to pay for it. Rent on the other hand you have no choice on, unless you move. I believe it's important to learn to distinguish between these terms because it will allow you be flexible when making a budget. 

The Life Pie

According to Gail Vaz-Oxlade, a healthy budget should be divided thus:

• 35% for housing (mortgage/taxes, rent, utilities, insurance, maintenance),

• 15% for transportation (car payments, gas, repairs, insurance, parking, transit),

• 10% for saving (long-term saving),

• 15% for debt repayment, and

• 25% for life (everything from groceries to entertainment, medical to childcare… In fact, everything that’s not in the other four categories.)

     (Vaz Oxlade, 2009)

The life pie is a good guideline to go by, but don't worry if your percentages are different from the ones Gail Vaz-Oxlade sets as guidelines. I like to use the pie to remind me that it's important to round out your expenses. Don't spend too much in any one category, otherwise it will take over all your other categories. For example does it make sense to spend 60% of your income on housing and have only 40% left for everything else? 


Sample Budget

Here is my own budget with percentages of income instead of dollar amounts. This is just a sample to show you how a budget could look. Everyone's budget will be different so make one just for you.

MONTHLY EXPENSES
Category	Percentage of Income
Rent	20.9
Hydro	1.0
Internet	1.6
Phones	2.5
Groceries	12.5
Household Supplies	6.3
Insurance-Apartment	0.8
Insurance-Car	4.1
Car Loan	7.5
Gas	4.0
Car Maintenance	1.9
Vacation	2.5
Family/ Gifts	2.0
Personal-Scott	6.3
Personal-Laura	6.3
Emergency Fund	3.8
Retirement-Laura	3.8
Retirement-Scott	3.8
House Savings	5.0
Medical	1.3
Cool Stuff	2.5
TOTAL	100.0

Some of the categories I use are pretty straight-forward, but let me explain a couple of the other ones:

Household supplies: This category includes anything related to running the household. Examples of this are toilet paper, vitamins and laundry. This category is a variable expense because the things we include in here change every month. 

Car Maintenance: I set aside money every month for car maintenance until it reaches a certain threshold, then I divert that money elsewhere. I think it's important to do this because a car can have a lot of unexpected expenses so it's best to be prepared for them. Oil changes, licence plate renewal and any other car maintenance would be included in this category. In order to decide how much money to put into this category, I would recommend figuring out how much all the regularly scheduled maintenance and assorted expenses are for your car yearly. Then add about 10-20% more for unexpected expenses. Divide that number by 12 and you should have the money you need to set aside every month. Remember that keeping your car in good working order will save you money down the road, so don't skimp in this category.

Family/ gifts: In our society there are so many occasions where gift giving is expected. These could be birthdays, weddings, retirement, holidays, etc... I prepare for this so that if we have a lot of commitments in one month and not that many in another it's not impossible to meet them all. I try to keep this category high as well because come Christmas you're going to be spending a lot in this category.

Personal-Scott/ Laura: Each month my husband and I get a set amount of money transferred to our personal accounts. What we do with that money is completely our own choice. We found this was the best system for separating personal and household expenses because each of us had different opinions on what it is important to spend money on. I value things like eating out, clothing and membership to clubs, whereas my husband places a high priority on technology. Rather than sharing a joint budget for these expenses, we leave it up to each other. For us personal is anything only the one person will enjoy, like a haircut, clothing or book. If we go on a date, then we can chose to split the bill or the one person can pay completely. We also use this category to buy gifts for each rather than the family/ gifts category so that they stay a surprise. Personally we love this system and find it works great for us. We don't argue about this money because we both agreed that what we do with our personal money is our own business. 

Medical: While we have some benefits through work and school, there are many medical expenses that are partially or not at all covered. I think most people will find they are in the same situation. Think about glasses, orthodontics and prescription footwear to name a few. We also allow over the counter medication to be included in this category rather than household supplies.

Cool Stuff: This category is one of my husband's favorites and he is always planning what we can do with it next. The purpose of this category is to purchase big ticket items that we want, but don't need. We set aside some money every month for it and then when we have enough we can buy that item. This works great because it gives to time to think about what you really want. You might want a big screen tv now, but in 4 months once you've saved enough money you might think it's not that important. In order to spend the money from this account we both have to agree. We periodically go over the list of things we want, roughly how much they will cost and a timeline for when we want them. We have a lot of fun with this category because we like thinking about what we might want and getting excited for when it arrives.

Excel

You might be wondering how best to keep track of your budget. Personally I use Excel for that purpose because I find it's super convenient. There are so many features like the ability to make pivot tables and graphs that make generating a budget quick and easy. 

Triple Paycheque Month

Like most people (I think) I base my monthly income on 2 paycheques. If you do this you'll find there are 2 months a year where you'll get 3 paycheques in those months. These are my favourite months because of all the extra money I get! I generally try to spend half the money on something necessary liking paying back loans or saving for retirement and the other half on something fun. It's important to plan in advance what you're going to spend the money on so you don't blow it on something you regret later.

Stick With It

You might be motivated to start your budget at first, but lose interest after awhile. Try your best to stick with it. The first few months are going to be hard and you'll probably be off budget a bit. That's ok though, because you'll learn what works for you. Once you get used to budgeting you'll find it easier to follow every month.

Reading Your Credit Report

A comprehensive look at the different elements included in a Canadian credit report: the credit rating and score. 

One of my first posts for this blog was about how important it is to get your credit report. I sent in for my credit report and got it back a while ago. I wanted to share with you what I learned from it. First of all, I was amazed by how detailed the thing was. It listed any instance where I applied for or got credit, how much the loan was for, and how much of it I paid off. It was incredible, I forgot about many of the things on there. I'm going to explain how to understand the different parts of it in more detail below.

What's In The Report?

The report you get will tell you any time you have applied for or received credit. This includes credit cards, car loans, student loans, mortgages, etc... For each instance of credit you received the report will tell you:

• when you opened the account
• how much you owe
• whether you make payments on time
• whether you've missed any payments
• whether you've gone over your credit limit

   (Financial Consumer Agency of Canada, 2012)

These things are important to creditors because it lets them know what kind of client you are. Are you trust-worthy to lend money to? Do you regularly pay-back your loans or do you let them slip? 

Credit Rating

You'll also get a credit rating for each instance of credit you received. Your score will be comprised of two parts; a letter and a number.

The letter will be either an I, O, or R.

• "I" means that you got credit on an installment plan, meaning you borrowed money and repaid it in fixed amounts on a regular basis on an agreed amount of time. Example: car loans.
• "O" means that you received an open amount of credit, where you borrowed up to a certain amount as you needed it. Example: lines of credit and students loans.
• "R" means that you make regular payments of differing amounts depending on your much you owe. Example: credit cards.

The number will range from 0 to 9. Here is the North American Standard Ratings guide:

• 0: Too new to rate; approved but not used.
• 1: Pays (or paid) within 30 days of payment due date or not one over payment past due.
• 2: Pay (or paid) in more than 30 days from payment due date, but not more than 60 days, or not more than two payments past due.
• 3: Pays (or paid) in more than 60 days from payment due date, but not more than 90 days, or not more than three payments past due.
• 4: Pays (or paid) in more than 90 days from payment due date, but not more than 120 days, or four payments past due.
• 5: Account is at least 120 days overdue, but is not yet rated "9".
• 6: This rating does not exist.
• 7: Making regular payments through a special arrangement to settle your debts.
• 8: Repossession (voluntary or involuntary return of merchandise).
• 9: Bad debt; placed for collection; moved without giving a new address or bankruptcy.

   (Financial Consumer Agency of Canada, 2012)

So put these two together and you will have a score that might look like this: R1. For each instance of credit you have received, you will get a separate score. That means that you could be an R1 (great!) for one credit card, but an R5 (not so good) for another card. 

The letter (type of credit) you have doesn't really matter to creditors, it's just a description of the type of credit you received. The number is the important part of the rating because it indicated what kind of person you are financially; are you a good person to lend money to or not? You want to have a score of 1. That is the best score you can get. 9 is obviously the worst and I hope that never happens to you, but it does go off your record after a certain number of years. Most things like credit transactions, banking items, and collections stay on for 6 years. It is important to know that TransUnion and Equifax (the only credit reporting agencies in Canada) keep things on your report for different numbers of years. Bankruptcy, for example will be on your record for 6 years with Equifax, but 7 with TransUnion. For a complete list of long everything stays on your credit report, check out this website from the government of Canada.

Credit Score

I personally didn't order my credit score this time because it cost money, but I will probably order it in the future. Your credit score will be on a scale from 300 to 900. The higher the number, the better your score is, meaning you are a good person to lend money to you. It is important to note that while Equifax and TransUnion both use this scale, they each calculate your score differently.

This score will be used to calculate whether you are worthy to be lent money and at what interest rate you will be lent it. I believe that the score is generally used in combination with your rating to give a better picture of your credit history. Since your score is calculated on a wider scale (300-900) it can give a lot for detail than your rating (1-9).

Conclusion

I can't say enough how important it is to get your credit report. It's easy and you can do it for free. Once you get your report hopefully you will understand a little better what all those numbers and letters mean. You can then focus on keeping your great credit or work to improve it. Whatever the case, it's important to know these things because these letters and numbers are going to play a huge part in your life when you apply for student loans, get a house, etc... Know them and know where you stand for getting credit.

Online Grocery Shopping

An in-depth look about how to save money on your next grocery bill by shopping online.

I hope you've all enjoyed grocery month. This is the last post for the month, and I think it should be about the future of grocery shopping: online shopping!

How many of you have tried online grocery shopping? Do you like it? I tried it for the first time a couple of weeks ago and I was impressed with the results. My husband can't have any gluten which means our typical grocery bill is higher than the average person's. We pay around $7-8 for a loaf of bread - not cheap. So we like to supplement our diet with less expensive starches like quinoa. I found some recipes I wanted to try out involving quinoa flakes, which are similar to quick-rolled oats. They taste great - the only downside is the cost. A 350 gram box cost me $6.99! I really liked them, but not at that cost, so I wanted to see if I could buy them cheaper elsewhere. And indeed I could, online. I went to Go Go Quinoa's website and bought 7 kg for $55 including shipping. That's a savings of over 50%!

My 7 kg of quinoa flakes!

I was really amazed by the savings I got, and how quick and easy the whole process was. This has made me want to do more research on online grocery shopping and see where I can use it again. Here is what I found out.

The Online Store

There are several online grocery stores that we as Canadians have access to. These are almost identical to a regular grocery store in that they have a wide range of products. You can get most of your groceries here. 

Grocery Gateway is probably the best known online grocery store in Ontario. I have never used them, but I had a roommate in university who used them and she loved it. I went onto their website and found out that as a new customer you can get $5 off your first order. They currently deliver to Toronto and surrounding areas only. You can enter your postal code on their website and see if they will deliver to you. There is a $45 minimum order and an $11.95 delivery fee. You get to choose your delivery time and they are in 90 minute slots. They also offer a freshness guarantee, so you don't have to worry about your food spoiling.

Grocery Checkout is another company I found in my research. They are very similar to Grocery Gateway, but not as popular. I looked through their website and found they carried most major brands and products found in any grocery store. For orders under $100 you pay a $7.95 delivery fee, and for orders over $100 that fee is only $5.95. You don't get to chose your delivery time, but the delivery windows are only 30 minutes, so you don't have to wait around as long. They have a 100% satisfaction guarantee.

If you live in Ottawa you can use Metro Glebe. They let you order your groceries online from Metro and deliver them to you. They only offer deliveries at certain times, so you'll have to wait around longer to get your groceries. I assume they charge for delivery, however I was not able to find a price anywhere on their website. In general this website was a lot harder to navigate and would be a problem with using this service.

There are tons of other sites and companies out there where you can order specialized products. Like I did with my quinoa flakes, I went to the web site of a company that sold quinoa products in physical stores. Think about things you buy a lot of and could do with buying in bulk. Look them up online and see if someone is offering those products at a discount. Examples of products might be cereal, protein shakes, rice, etc... Look up specific brands you buy (like I did with Go Go Quinoa, which is the same brand sold in-store), see if they have an online store you can use.

E-Order

If you don't think using an online store is for you, consider doing an e-order with a store you regularly shop at.

M&M's Meat Shops allows you to place an e-order through their website. Just go to the store and pick it up. This is great because it saves you time in the store, but you can examine the products you want in detail online before you purchase them.

Other Alternatives

If you don't want to order your groceries online, you can always call in to your grocery store and place your order over the phone and have them deliver it. Not every grocery store offers this service, but many do, so if this interests you, ask around. My Grannie used this when my Grandad was no longer able to drive her to the grocery store. She would call before 10:00 am on either Tuesday or Thursday and place her order. The groceries would be delivered either the same or next day. The cost for this was $8.00. While my Grannie generally preferred going to the grocery store, she realized that this was a reasonable alternative in her situation. She always got exactly what she wanted and sometimes the delivery person would even help her put the groceries away. You don't have to be elderly or disabled to use this service. If getting to the grocery store is difficult for you, consider delivery by your local grocer. Think of all the time and hassle you will save yourself.

Is It Worth It?

Do you ever think about how much it costs to go grocery shopping? If you have a car, you'll likely only be paying a couple of dollars in gas to get to and from the grocery store. However, gas costs are not your only costs. The government suggests that you be reimbursed at $0.53/kilometer to factor in vehicle costs. So if you have to drive 5 km to get to the grocery store and 5km to get home, you've already spent $5.30. Further, think back to my post on making things yourself. If your time is worth money, and it takes you 20 minutes total driving time, then delivery is almost certainly the more cost-effective solution. If you are pressed for time by work, keep in mind that it's probably effectively cheaper to have it delivered.

If you don't have a car and take a bus or taxi to grocery shop you'll be spending a lot more. If you take the bus to the grocery store and a taxi back, you'll be spending around $3.00 for the bus and $10.00-15.00 for the taxi. Combine the two and it is still cheaper than the most expensive delivery fee in this post of $11.95 (Grocery Gateway).

Aside from these initial costs you have to consider your time. Is grocery shopping frustrating or difficult? Do you hate doing it? Then why not consider getting someone else to do it for you? While it might seem expensive, once you add your transportation costs and labour I'm sure you'll find that ordering online is cheaper, not to mention a lot easier.

The Future

I personally think that online grocery shopping is going to continue to grow in popularity worldwide and especially here in Canada. Compared to the US we have a lot less options, but like many other things (Netflix for example), they are slowly making their way across the border. Amazon offers a great online grocery store, but only in the States. I would love to see more options here for us Canadian grocery shoppers. While shopping in a store can make sense for many people, there are lots of people out there who find it difficult. I don't have trouble grocery shopping, but I have trouble with paying too much, so that's why I looked to online stores instead. Whatever your reason, do your own research into online grocery shopping. This blog is a great starting point, but is not intended to be the final word on the subject. There are tons of great sites and deals out there to be had. I hope you find and use them.

Grocery Store Tax: What Is And Isn't Taxed?

An comprehensive look at how taxes are calculated at the grocery store.

Recently one of the grocery stores near me was having a 2-day sale where no tax was being charged on any item. This got me to thinking: how much would you actually save at this kind of sale? Only certain items are taxed in the grocery store, so the savings could be less than you think. In order to figure this out I needed to understand the very complicated Canadian system of taxation on food.

The government's document on this is 35 pages long, so I will give you a breakdown of the vital information in this post. However, I would recommend reading it for yourself here. 

What Is Zero-Rated (0% Tax)?

In short, an item is zero-rated when tax does not apply to that item. I've tried to create a list of what is zero-rated and in doing so I observed some general tendencies. For one thing, the staples of life are zero-rated, probably because we can't live without them. Also, generally anything where you have to do some of the preparation is zero-rated. Items that are healthier for you like fruits and veggies are also not taxed. However, some things like doughnuts (in packages of 6 or more) aren't taxed, despite not being good for you. Buying 6 or more doughnuts? No tax. I'm not convinced doughnuts get healthier in bulk, so this is a bit odd to be sure. See why this is complicated? Here is a concise list of Zero-Tax items:

• Fresh, frozen, canned, and vacuum sealed fruits and vegetables
• Breakfast cereals
• Most milk products
• Fresh meat
• Poultry
• Fish
• Eggs
• Coffee beans
• Syrups, crystals and powders that are not fruit-flavoured
• Fruit juices and concentrate (if it is more than 25% juice by volume)
• Puddings and beverages that are for babies or are sold in muti packs of single servings prepackaged by the manufacturer
• Plain bottled water in manufacturers’ packages of two or more single serving bottles, or in a bottle that exceeds a single serving
• Baking ingredients (chocolate chips, icing, cocktail cherries, etc...)
• Unpopped popcorn kernels
• Ice cream not sold in single servings (eg. 2 L tub)
• Muffins, cakes, pies, pastries, doughnuts, brownies, etc... in packages of 6 or more single servings
• Bread products (unsweetened)
• Salads in cans, vacuum sealed or salad kits
• Frozen pizza
• Salt 
• Meal replacements and nutritional supplements
• Spices

What Is Taxed At 13%?

The stuff taxed at 13% is generally the food that is bad for you or already prepared. Which is not to say that food taxed at 13% is always less healthy some of the zero-tax items. A protein bar, for example, strikes me as being a decidedly healthier choice than a six-pack of doughnuts. However, in general, when you don't have to do any of the work in making the food, the government thinks you should pay the tax. Unless you want 6 doughnuts. Check out the list for yourself.

• Pills, tablets and capsules
• Alcoholic beverages (wines, spirits, liquor, beer, etc...)
• Carbonated beverages
• Fruit-flavoured powders or crystals
• Fruit juices and concentrate (if it is less than 25% juice by volume)
• Puddings and beverages (other than unflavoured milk)
• Plain bottled water, one serving (under 600 mL)
• Candies
• Nut bars (honey or nuts are main ingredients)
• Energy or protein bars
• Snack foods: chips, crisps, puffs, curls, or sticks
• Granola bars
• Snack mixtures (contain cereals, nuts, dried fruit, etc...)
• Ice lollies
• Ice cream, frozen yoghurt, sherbert, bars etc... sold in single servings
• Fruit bars, rolls or drops (even the 100% fruit)
• Muffins, cakes, pies, pastries, doughnuts, brownies, etc... in packages of less than 6 single servings
• Bread products (sweetened)
• Heated prepared food (if heated at time of purchase)
• Prepared salads
• Sandwiches
• Platters

Make The Switch And Save

Do you usually buy pre-made popcorn? Buy the unpopped kernels and you won't be taxed because they aren't considered popcorn at that point.

Do you buy ready-made salad? Buy a kit and make it yourself at home with little extra effort and save the 13%.

Do you buy platters of fruits and veggies? Those are considered prepared because you aren't doing the work. Not only are they expensive, you pay tax on them as well. So buy the fruit and cut it yourself. You'll save big.

Stop buying your muffins, doughnuts, ice cream and treats in individual servings. You generally don't pay tax on these kinds of bulk purchases.

A Few Oddities

Puddings and beverages are interesting, but confusing, from a tax perspective. Basically, if you're buying multi-packs of single servings (defined as under 600 mL in volume) you won't be taxed. However, if you buy large servings you will be. So do the math but you could save money and time by buying the convenient prepackaged containers of juice and puddings.

Snack foods are also somewhat confusing. Sometimes things are described as a cracker, other times a cracker/chip, or sometimes just a flat-out chip. A lot of the taxation is based on how its marketed, using phrases such as "Makes a great snack!" and "Craving something new". I myself was still very confused after reading and re-reading this section of the government's document. I came to the conclusion that chips are taxed, crackers are not. Snack foods are taxed regardless of if they are healthy or not. So if something is more like a chip then you can bet it will be taxed. However, if it more like a cracker you won't. The confusing part is this distinction is primarily based upon the marketing of a particular product. This is an example from the CRA's January 2007 GST/HST Memoranda Series:

Product A ingredients include enriched flour, vegetable oil shortening, and potato flakes. It is available in six varieties: original, ranch, barbecue, all dressed, salt and vinegar and zesty cheese. Product A is loosely bagged and sold in 200 gram packages in the cracker aisle of the supermarkets. It is also sold in small bags. Each piece is comparable to the size of a potato chip. Product A is described on its Internet site as “healthier than potato chips”. It is labelled as “part chip and part cracker”, “made with potato like a chip” and “maximum crunch”. It is also described on the label as “ wheat cracker snacks” and “oven baked with wheat like a cracker”. 

Based on the facts set out above, Product A is taxable.Product A is considered to be a “similar snack food” for purposes of paragraph 1(f) of Part III of Schedule VI based on its properties. One of its main ingredients consists of potato (flakes), an ingredient common to those snack foods enumerated in paragraph 1(f). In addition, it is available in flavours commonly associated with snack foods. Also, the appearance (small thin slice) and the texture (crunchy) are similar to those products enumerated in paragraph 1(f). Finally, Product A is labelled and marketed in a manner similar to products enumerated in paragraph 1(f). Although we consider placement of a product in store aisles as a relevant consideration, it alone is not considered a determinative factor.

Confusing right? 

My Thoughts

Overall I learned a lot about how tax works at the grocery store and I was surprised by how complicated the whole system is. I generally always try to buy things that aren't taxed because it's a great way to save money. But in the future I'm going to try even harder to do this. There is definitely an added benefit to trying not to pay tax - you'll eat healthier. Like I said before, generally it's the bad stuff like candy, chip and pop that are taxed. Good stuff, like bananas, apples and chicken, is usually tax free. So only buy the good stuff, save 13% on tax, and live longer. What's not to love about that?