We all want financial security, but, wow, it sure does seem like a long way off to most of us, doesn’t it?

It’s hard to stay focused on such a distant goal, so I like to create mental milestones to reach, which are easier to get to and give some sense of satisfaction along the road to financial security.  It’s just breaking the larger goal up into more manageable chunks.

Here are the stages to ensure your financial security:

Stage 1 - Monthly obligations met

This one might already be surpassed by many readers here, but you should still pat yourself on the back for it!

If your paycheque covers all of your monthly expenses, you are already well ahead of many Canadians and on your way to a more comfortable financial future.

This stage is critical for young people just getting started, as without balanced monthly finances, you will have a hard time ever building your net worth up to the point where you can reach the next stages of financial security.

Stage 2 – House paid off

The mortgage is burned.

Once you own a home and have that mortgage paid off, your monthly required cash outlay should drop quite a bit.  This means that you are able to get through a financial crisis like a job loss with much less stress and worry.

At this point, a good amount of financial freedom has been achieved.  Many people could manage with a reduced salary or part time work at this point, if needed.

Stage 3 – Basic retirement needs saved for

The next big milestone would be when you have enough money saved up pre-retirement so that all of your basic comfort needs would be covered.

At this point, even if you never saved another penny in your working life and you just earned enough to cover your monthly expenses until retirement you’d be okay.  That’s a nice feeling of comfort to have.  Maybe you hate your job, and, when you reach this point, you have the freedom to tell them to stuff it, and go work as a Walmart greeter.   You probably won’t, but it’s nice to know you can!

Everyone talks about the Big Number for retirement needs, but this invariably means the number for the ideal retirement with nice vacations, expensive meals out, etc.  Covering a basic comfortable retirement costs MUCH less, especially when you factor CPP and OAS into your income and even more especially if you have a partner who also qualifies for the same.  No one aspires to retire just ‘okay’, but sometimes the trade off is worth it.  If your career is very stressful or soul sucking, a basic retirement may sound more appealing than staying at where you are and having more luxury in retirement.

As an example, if you managed to save $100,000by age 35, never added another penny and earned a real (after inflation) rate of return of 5% for the next 35 years, you would end up with $432,000 in today’s dollars.  Assuming a safe 4% withdrawal rate, that’s $17,280/year.  Add in CPP for two people, and you have a decent base income that most people could live decently on.  We may all aspire to more than this, but I find knowing this gives me some mental comfort.

Stage 4 – No longer need to do active work

At this point, you have enough passive income from investments that if you never actively worked again, you would be able to manage fine financially.

This would be the most common definition of financial security by most people, and I agree with that.

Stage 5 – Complete Financial Independence

At this stage, I would classify you as officially wealthy.  Any paid work you might do is just to better your standard of living or even just for the challenge of it.

Agree or disagree with me? Have something to add? Comment below!

For our first financial makeover, we have a young family in the Greater Toronto Area (GTA) who has a decent income but are struggling with debt, including monthly payments.   They have requested some advice on how to best to improve their financial situation.

The Client(s)

Steve and Sue are both 32 years old and have a 2 year old son.   Steve is a technician earning $55,000 per year and feels that he has a fairly secure job.  Sue earns $45,000 as an office administrator and is concerned about her job, ‘it could be gone any day’, she says.

The Problem

This couple feels that they have a comfortable lifestyle; however, they have realized that they have made some bad decisions in the past few years, including opting to go deep into debt to upgrade their home and staying off work for the entire year to be with the new baby.

They now have monthly payment obligations far in excess of their net income and are consequently getting further in the hole.  They’ve already cashed in all of their RRSP’s to fill the hole, so they have no further  financial cushioning left.  Fortunately, they have in-laws who watch their child for no charge.

Financial Snapshot

Here is a financial snapshot of the family’s finances.

Monthly income

Net income $5,300

Monthly expenses

• Mortgage $1,700
• Property taxes $250
• Utilities $250
• Phones, Cable, Internet  $300
• Food $500
• Car payments $800 ($400 lease, $400 finance payment)
• Home and auto insurance $300
• Fuel $300
• Home upgrades $300
• Entertainment $300
• Clothes $300
• Line of credit, credit card payments $900

Total expenses $6,200

Assets

House $350,000
Car $12,000

Liabilities

• Mortgage $250,000
• Car loan $11,000
• Line of credit $9,000
• Credit cards $15,000

Net worth $77,000

Colourful Analysis

This family has multiple financial problems. The most important is the cash flow issue, especially with a possible job loss looming; they will need to address the monthly cash deficit that is becoming an even larger threat to their financial safety.

They need to not only cut spending but also restructure their debt to reduce their cash flow.  Once they have their cash flow back into a positive territory, they can then focus on growing their net worth and building a financial cushion to protect against future financial issues.

The Colourful Solution

1. The first move should be to slash the home upgrades, ideally down to nothing for now.  They simply can’t afford to keep improving their home at this point.  The same advice goes for the clothes budget; they can likely make do with much less shopping here and make what they have last a bit longer.
2. It looks like there should also be some savings in the communications budget as well, as $300 is quite high.  Easy cuts would be dropping some phone services that are not used much and reducing cable packages for features and channels not used.  More severe cuts would be dropping one or both cell phones completely and cancelling the cable.  It’s possible to get ‘Free to Air’ HD TV for nothing to replace the cable, but the channel selection will be quite limited.  You can also replace phone lines with free or near free internet phones, such as Skype in conjunction with ring2skype.com
3. Depending on the family’s claim history and risk tolerance, they should be able to reduce their insurance costs as well, which seem high for good drivers.  Sites like insurancehotline.com and kanetix.com can offer current customized quotes and are good for checking if your current plan is the best rate available.  It’s also worth reviewing your actual policy details to see if you can drop some coverage and/or increase your deductibles.  This entails some risk, but it is worth considering.
4. There are other possible areas to cut spending like food, entertainment, and utilities, but these are fairly reasonable, and cuts might reduce their quality of life which I feel should always be a last resort.

In my experience, cutting too deep and too fast often ends badly, as the feeling of being deprived can discourage people to the point where they give up trying to get back in good financial shape.

However, in other articles, I have written about how to cut some of these expenses without impacting your lifestyle.  You can find these here.

Expected Results

I estimate that the above changes could have a $600-700 positive impact on their monthly cash flow, which is a great improvement but will still leave them with more costs than income.   More work will be needed.

Spearheading The Process

The $1,300 per month of non-mortgage debt servicing is the elephant in the room here, no doubt.  From what the family tells me, the car loan is at 0%, but the line of credit is 9.75%. The credit cards are a mixture of accounts, some of which are department store cards with interest rates as high as 28.8%.
The solution that will help both their monthly cash flow and their future net worth is a consolidation of the higher rate debts into a lower rate one; with a manageable payment, this also allows for extra payments to be made against the balance.

The best way to do this for this family would be to obtain a home equity line of credit, which I calculate they would qualify for $30k based on 80% loan to value.   It will cost them around $500 to set up, but it will have an interest rate that is comparatively very low, often at the bank’s prime rate or close to it.

They wouldn’t want to pay off the car loan with it, as it has a lower rate than the new line of credit, but the other $24,000 should definitely be moved over.  The minimum payment on a home equity line of credit is normally just the interest, which should be under $100 on this balance, meaning an $800 improvement to their cash flow.

The challenge with this will be having the discipline to take that surplus and apply it as an extra payment against the line of credit to get the balance paid down faster.  It will be tempting for these admitted shopaholics to use that extra cash to go back to their old ways, so I would recommend setting up an automatic payment to the line of credit every month for much more than the minimum.  This creates a bit of a mental block to spending that money and should help.

Long Term Benefits

Once their cash flow is under control, the focus should be on growing their net worth, which protects against future financial problems and increases one’s sense of security and peace of mind.  One way for them to accelerate this process after the cost cutting process would be to increase their income.  With a young child and two full time working parents already, a part time job is really out of the question for them, but there are other ways to generate extra income, which I wrote about here.

Finally, this couple would benefit greatly from starting an emergency savings fund.  Although it doesn’t make much financial sense to be saving money while also paying down debt, it does offer mental comfort to have some money put aside for surprises that come up when given the opportunity.

The Bottom Line

This family has a hole to climb out of but by taking decisive actions now and being disciplined about it, they can definitely get back into good financial shape.  It will likely take them close to five years to do so, but they are still young and good financial practices now will carry forward for the rest of their lives.
Any questions? Please comment below.

Would you like a financial makeover? Contact us here, and we’ll set you on the right path. You have nothing to lose and everything to gain! You may remain anonymous if you wish.

Travelling can be too expensive, and it can sometimes go beyond one’s budget. A common choice people are left with is to take loans in order to obtain the money. However, traveling on loans has an important side effect of incurring debts. Piling up debts can force you to enroll in a debt settlement program.

There is good news, however! You can avoid the ‘traveling with debt’ hassle just by following a few simple tips:

•    Book your flight tickets in advance: If you have decided to travel, immediately book the tickets. Don’t wait for the last moment, as the ticket prices will soar higher. If you book the tickets in advance and in the off season, they will be available at a much lower price.

•    Do not change the flight schedule or extend your stay: You may wish to extend your stay while on your trip. It is advisable not to do so, as you would be wasting the air fare, and you would have to buy another air ticket.

•    Go for lower rate hotels: Look for hotels which are low on price but have good customer service. If you travel during the off season, the fares with affordable rates are available even at star rated hotels.

•    Avoid hiring a tourist guide: Do not hire a tourist guide; rather ask the local people or the receptionists to inform you about the different tourist spots. The locals can guide you with correct information. This becomes more interesting, as you gain an insight about the local cultures. This can make the trip all the more adventurous.

•    Try the flavors at the local restaurants: The restaurants attached with the hotels are much more expensive compared to the local restaurants. Though it might be inconvenient for you to go out every time to have food, it can save a lot of money, as these local restaurants won’t charge you with the fancy entertainment tax. They serve authentic local food at cheaper rates.

•    Travel with a friend and share the expenses: If you travel with a friend, you can save a sufficient amount of money. The food, lodging, and traveling expenses can be shared.

If you follow these steps, you can enjoy all the pleasures of traveling coupled with saving money without going beyond your fixed budget.

Traveling is meant to rejuvenate our tired and busy lives. Plan your trip well. Take pleasure in traveling while saving money too.  Come back with memorable and delightful memories for a stress-free life.

Author bio:

Sharon Smith is a financial writer and is associated with the Oak View Law Group. She offers advice on various debt management programs.

When people look for savings in their monthly budget, I find that they are hesitant to look at their grocery bills. Food is near-sacred, and thinking of cutting such expenses invokes visions of living on Kraft Dinner (KD), sacrificing health, and quality of life.

As with all of my other ideas on cost cutting, I always focus on living better, just for less. This is not the oxymoron it appears to be: you just need to find ways to buy the same things you normally would but for less. You also need to know how grocery stores work to get the money out of you. I am here to help you maximize your grocery savings.

Listed below are ideas I use to maximize my savings on grocery.

Flyers

I receive nearly a dozen flyers a week from stores that sell grocery items. They all arrive on the same day every week, so it makes it easy. When they come in, I take 10 minutes and go through them all with a notepad and pen in hand. Anything that is on sale that is of interest to me, I write down the item, the price, and the store. When finished, I have a list showing all of these in a handy list by store. I keep that list in my pocket all week and as I am out and about and happen to pass one of the stores, I will pop in and pick up the items on my list.

In total, this takes me maybe 20 minutes per week to do. Lots of times I need another staple like milk or produce anyway, and it also allows me to always have the freshest perishable items. This obviously works better if you’re in an urban area where lots of stores are located, but you should be able to do something similar even in smaller centres.

Grocery stores are always in strong competition with one another, and almost every week each store will offer what are called ‘loss leaders’, items where the store will actually lose money on it but will get you into the store, where you will hopefully buy other high-margin items (that they’ve conveniently put in places where you are most likely to see them!).

It’s common to see everyday basic grocery items like cheese, meats, cereals, and produce for very low prices. When you take advantage of these deals across a range of stores, I find you can cover a fair bit of your total grocery shopping. It works so well for us that we only need to do our ‘big’ grocery shop once a month, for a family of four!

Stocking up

One of the best investments I’ve made was for a large rack of shelves and a deep freezer for my basement. I use the shelves as a pantry for dry items and the freezer for the extra room to stock up on deals. Plenty of times, the flyer deals are for non-perishable or freezable items, and sometimes they are things that only go on sale infrequently, so stocking up where possible means you lock in your savings, protecting yourself from having to purchase an item later at full price. We always have a dozen or so boxes of cereal, loads of canned goods, frozen meat and seafood, bread, etc.

Price matching

It’s not always possible (or desirable) to hit every store on your list, but you don’t always need to. Many stores offer price matching, where you bring in the flyer of another store, and they will lower the price at the cash register to equal or beat it. It’s usually fast and easy to do.

Coupons

Use sites like save.ca to print off coupons for items you buy normally . I also find coupons in my local newspaper, junk mailings, and sometimes store flyers.

Points/Rewards

Not a direct form of cost savings, but collecting these at stores you shop at can offer indirect benefits. The key point to remember is to not shop somewhere just because of the rewards! Shop on price and quality first, then collect points if you would be buying regardless. With some stores, you can use the rewards to directly cut your grocery costs, such as Air Miles at Metro stores (redeem for store gift certificate) and PC Points at the Loblaw chain (cash in for store savings).

No Name products

Store-brand products can vary a lot in price and quality, so you have to be cautious here, but some are very good, even better than the name brand items. I find the PC brand of products to be the most reliable store-brand line.

Positive changes to eating habits

Living better for less also means sometimes changing your habits in a way that has a positive impact. This also has the side benefit of saving you money.

With groceries, you can do this by eating less meat which is expensive and can be unhealthy when eaten too frequently. Another way is to try and eat foods that are in season throughout the year, which means they are fresher and usually much cheaper. Doing this also often means eating local items, which has a positive environmental benefit as well.

Avoiding temptation

As I mentioned earlier, grocery stores plan where they put things very carefully, as it’s all designed to get you to buy the highest margin items. You’ll find these are eye level in the aisles and at the cash where you are a captive audience. The low margin items are always at the bottom or top of shelves, and at the back of the store, so you have to walk past everything else to get to them. A good strategy when shopping is to ‘shop the edges’, meaning in the produce, bakery, and dairy sections where the healthier and cheaper items usually are.

Always go shopping with a list, and stick to it. Focus on the task at hand, and be vigilant about remembering that the store is trying hard to draw your eyes and attention elsewhere. If you have kids, try to leave them at home, so you can concentrate and don’t have to worry about temptation to giving in to their requests.

The bottom line

Using these methods, we can usually keep our monthly grocery costs for a family of four to under $500. We don’t sacrifice on quality at all to do so, as we live and eat just as well (likely better) than those spending hundreds more. You can too!

Have any further questions or would like even more tips? Submit a comment below! Let’s share ideas!

What Is Leverage?

When you learn about leverage in school, it usually entails using a lever of some sort to move something heavier that you could not normally move without it. In personal finance terms, the concept is essentially the same: you use debt (other people’s money) as a lever to help do something you couldn’t do without it.

Simply put, it will amplify a gain or loss from an investment you make in something.

A Tried and True Example

The most common form of this in personal finance is borrowing to purchase real estate, usually a rental property. To see the effects of leverage here, let’s look at an example: a property that is financed in two different ways, with cash and with lots of leverage.

We’ll assume the property is $200k and will give you a net return (Cap Rate – See our article on this here) of 7% after non-financing expenses. For simplicity sake, we’ll assume the mortgage is interest only and that the value of the property does not change.

Scenario 1: No leverage - 100% Cash

If you could pay cash for the property, the annual return on your money would be 7%, or $14k.

Scenario 2: Leveraged - 5% down, 95% borrowed at 5%

With a $10k down payment on the property, your annual return on that money would be 45%. This is calculated as $14k net rents, less $9,500 in financing costs, for a $4,500 net return.

Important Considerations

In theory, if you had $200k in cash, instead of buying one $200k property, you could buy 20 of them with $10k down. Using the same assumptions as above, this would give you a $90k return ($4,500 x 20) on your $200k, instead of the $14k return if you just bought one of them with cash.

With stock investing leverage, I use stop losses to try and control losses. With other types of leverage, you can reduce risk by locking in your financing for longer periods, by having higher levels of own equity (your money) in the investment and by doing a thorough analysis on the investment.

Some people use leverage to buy or invest in a business. The principle is the same with this as well. If you’re already a business owner, you may use leverage to increase your return on investment for a capital project you’re planning. For example, a manufacturer might want to buy a new machine that improves productivity. If the net return on those productivity gains exceeds the cost of borrowing over the life of the asset, it would be wise to consider using leverage.

More Colourful Leveraged Ideas!

Aside from what I’ve discussed above, there are some other ways to employ leverage that you could consider:

• Margin loans – borrowing against stocks you already own to buy more.
• Leveraged ETF’s – some Exchange Traded Funds use leverage to magnify results. The Horizon’s Beta Pro funds are the best known in Canada for this. In the US, you can buy 3x leveraged ETF’s, such as FAS or FAZ.
• Options – contracting to buy or sell stocks at certain prices.

Of course, leverage can be used with any investment. I employ leverage to buy stocks, for example, as I’ve written about before. When my total return on the stocks exceeds my cost of borrowing, I’m ahead of the game.

The Bottom Line

This clearly shows what leverage can do for you, if successful. Sounds great, right?

Unfortunately, leverage is a double-edged sword, as it cuts both ways. If the net return on your leveraged investment is a loss, or if the underlying asset you’ve leveraged loses value, your losses would be magnified. This is why leverage is considered a risky strategy in many cases. That’s why you want to try and reduce your risk wherever possible.

When understood and used properly and with close vigilance, leverage can be a powerful tool to build wealth. It’s good to have a healthy respect for the pitfalls of leverage to keep you on your guard, but it is no reason to fear it.

When it’s time to move on and part ways with your current vehicle, people often choose to just trade it in at the dealer and be done with it.  It’s easy, convenient, and no hassles.  It’s also a surefire way to get the lowest possible sale price for your vehicle!

It is definitely worth considering selling your vehicle privately instead.  You’ll generally get far more for it, especially if you take the time to do it properly.

I have bought and sold dozens of vehicles privately over my driving lifetime and, in doing so, have worked out the best ways to go about it.  In this article, I’m going to share with you how to get the best price for your vehicle and also how to get it sold quickly.

Tips on How to Construct Your Ad

In your ad, give as much detail as possible about the vehicle, meaning all of the options it has, which transmission, the overall condition, the mileage, the records you have, any existing warranties, recent work done, etc.  If the vehicle has damage/rust/dents, I don’t mention it in the ad but will tell people about it when they call.

To properly price your vehicle, do some research on similar vehicles, look for a handful of comparables.  Ensure you are pricing it in line with these and build in some haggle room in the price as well.   The ‘book value’ you may see on some sites or documentation is near-useless (unless it’s higher than your offer price in which it’s a selling feature!), so always go with market value, based on comparables.

Make sure you give as many contact options as you can.  A home number, a cell, and e-mail address are best.   You’ll also want to ensure that you will be available when the ad goes live to handle calls and to show the vehicle.

Always include at least one picture of your vehicle!  This is critical, ads with no pictures get ignored.  Try to get a flattering picture as well.  I always find a picture of a nice clean interior always gets me more calls.

If you think your vehicle will ‘pass’ a CarFax report, it’s a nice touch to do it yourself before sale and mention this in your ad.

Ensure that you have a clear title to the vehicle.  This means no liens on it, which is what a financing or leasing company will put on when you buy it and leaves on until you pay off the loan.  If you still owe money on the vehicle, this complicates things, as the buyer will likely be spooked by the lien.  Best to pay it off before hand and get a document showing there is no liens.

You will generally sell your car two ways, ‘as-is’ or with the necessary safety and emissions inspections already done.  A vehicle with the latter will always get more attention and sell faster, but sometimes that means spending a fair bit of money on your part to get it all done.  I do it both ways, but prefer to sell with the work done.

Where to List Your Ad

In many parts of Canada, the Auto Trader (www.trader.ca) is still the leader, garnering the most readers and ensuring your vehicle is seen.  If your vehicle is worth more than a couple thousand dollars, it’s likely worth spending the money on an ad with the Trader.  The other popular options are Craigslist and Kijiji, which are both free and both with a wide readership.  I generally list solely with these for cheaper vehicles, but I always put an ad in at these for higher value vehicles, even when I also have an ad in the Trader.  After all, it’s free!

I don’t recommend listing in things like your local newspaper.  Without a picture, most people will never even bother looking here, in my experience.

What To Do Before Your Ad Goes Live

Get your vehicle ready for sale; that means spending some time cleaning it thoroughly, applying touch up paint, etc.  I also always clean the tires really well and spray on some tire shine treatment, even on the cheapest vehicles.   It just makes it look better.

Find all of your service records and compile them all in a folder.  It instills confidence to a potential buyer when you give the impression that you have taken care of your vehicle and can prove it.  Handing over a folder full of receipts almost always locks up a sale for me.

Handling Calls and Emails

When the calls and e-mails start, try to always give clear and concise answers to questions.  I also always try to personalize it, looking for opportunities to give the impression that I am a decent person, someone you can trust to buy a used car from.

Many buyers now ask for the VIN (on your ownership) when they call, so they can run a check on the vehicle.  Have this handy so you’re not fumbling for it.

The Showing

When someone takes the time to actually come and see your vehicle, it’s usually a good sign that they are a serious buyer.  Everyone is busy, and no one wants to waste time.

Show the potential buyer any positive features about the vehicle, mention it again if you have good service records, and downplay any unflattering points about it.

I often print off some ads of comparable vehicles that are listed with a higher price.  Often, those ads are dealer ads or just private sellers that are dreaming, but it looks good to give the impression that you are priced to sell.

They will always want to test drive it, understandably.  You should always go with them!  If I get the impression that someone is not serious, and especially if the vehicle is higher end or performance –oriented, I will not allow a test drive until they give a deposit.  It’s better to discourage the tire-kickers early, to prevent wasting your time.  Sometimes you can even spot them from the phone call and then say things to prevent them from even coming.

Always respond to questions about the mechanical condition by telling them they are free to have a mechanical inspection done on it and that you are completely fine with that.  In my case, saying that has always been enough to instill confidence, and no one has ever actually taken me up on it!  Say it enthusiastically, like you are 100% confident that if they do so, there will be no issues with the vehicle.

Used vehicle buyers are notorious hagglers, so  be ready for lowball offers and long negotiating sessions back and forth.  If you get the sense that they are not serious and only want it if they can get it for a ridiculously low price, just cut them off. Tell them your price is final, and that they can leave if they don’t like it.  In my experience, my buyers are usually the reasonable ones, who will ask for a fair reduction and then stop at that.

Once you have agreed on a price, always get a deposit of some sort.  Never hold a vehicle for someone without this, the first person to hand over some cash is always the one who gets it.

Do not give over the ownership without being fully paid for the vehicle.  Once you sign it and hand it over, it is then their vehicle!  Cash is best, but a certified cheque is acceptable in most cases as well.  If you are at all unsure about the buyer, say cash-only or arrange to go to the bank and transfer the funds together.

Pull your plates off before the vehicle is taken away, and never let buyer use them to transport the vehicle.  How they get it home is their problem, although I’ve often helped them by driving it to their place, taking off the plates there and then getting a ride back.  If it helps finalize the sale, do it!

The Rewards for Your Due Diligence

That’s it, all done!  Definitely some work involved, but I’ve always found it to be worth the effort.  Plus, it can be fun to meet new people, have some good natured haggling, and get the satisfaction of a sale.  I actually enjoy the process.  Hopefully, you can as well, and also put some extra money in your pocket!

With all the talk these days of impending high inflation, I find my thoughts turning to ways that I can reduce or avoid the impact of this, if it does indeed happen.  In many cases, it just isn’t possible to avoid the effects of inflation, but where there are ways to do so, I can show you how to go about it.

Let’s look at some common expenses most Canadians have and see what can be done to protect yourself.

Mortgage

Higher inflation leads to higher interest rates, sooner or later.  Locking your mortgage in for a long fixed term would protect you if rates do spike up.  Owning your home outright is a great form of inflation protection in itself, as well.

Rent

Renters in some provinces have inflation protection, to some degree, as there is often legislation that limits what landlords can increase rent by in any given year.  That limit is affected by inflation, but provinces generally won’t allow large spikes in rent.

Property Taxes

You can’t do much here, but what you can do is review your property assessment and ask to have it reviewed.

I’ve successfully reduced my assessment (and therefore my taxes) by disputing it, giving reasons for why I believe it should be lower.  It’s free to try!

Another option to consider is getting involved with your municipality and their budget committee.   There are several ways to go about this, but it can be as simple as voting for the officials who promise to keep spending in check.

Utilities

Electricity, natural gas, and water prices are generally highly regulated, but they will also be affected by inflation to some degree.  Cutting back is the obvious way to save here, but, beyond that, I think it is worth looking into alternative energy options.

Most of them have a high upfront cost, but with low or no ongoing costs, making it perfect for inflationary times.  You could put up solar panels, a solar water heating system, a wind turbine (if you have the land), an on-demand water heater, or get a woodstove, to name a few possibilities.

Phone/Cable/Internet

Sometimes you can get a better rate, and shield yourself from near-future increases, if you sign a contract for a set period of time.

Food

Stock a pantry now with non-perishables.

Not only is it good for avoiding price increases in the near term, but it’s also a good idea for all Canadians to have some stored food in case of an emergency.

Food prices have been escalating so fast lately, you’ll likely get a better ‘return’ (in the form of saved money) from stocking up on food than you would from putting that money in a savings account.

Debt

Inflation reduces the real dollar value of debt, in pure economic terms; but for most people, debt means exposure to rate increases that come with inflation.

For the debt you do have, you can lock it into a fixed rate loan via consolidation, hopefully at the lowest rate possible.

Another related strategy that is good in inflationary times is to hold inflation-tied assets.

Usually, hard assets like property and gold, as well as equities (stocks), will move up with inflation while other assets, like bonds and GIC’s will suffer from it.  This is a general rule, though, not something to live by.  Tread carefully here.

The Bottom Line

Note that I am not yet convinced that inflation rates will climb to any worrying levels anytime soon.  However, I like to keep all bases covered, and be prepared for anything that comes.