How to Save Money » Frugal Living

How small savings can make a big difference

Over the past week we accomplished a couple of goals that provide some additional money now and by reducing bills, it will help us free up some available money each month.

First, we sold one of our cars. With my wife staying home to take care of our baby, having the second vehicle wasn’t very necessary. It was originally her car for going to work, but not only is it not needed for that now, but it’s also a small 2 door Accent that wasn’t really going to be helpful when trying to put our baby in a car seat in the back. We sold the vehicle for $4,500. After selling the car, I contacted our insurance company and the new monthly charge will be $100 less.

Second, we canceled our cable television. We haven’t been watching much TV, and there’s even less to watch over the summer. Before the fall season starts up, we’ll look for other free alternatives to cable like using an HDTV antenna and using our computer hooked up to our TV to watch episodes from the broadcaster’s websites. While we are still keeping our cable internet, there is a $10 charge for not having television as well. However, the total bill has been cut in half; reduced by $50.

So I sold a car and saved a whole $150 in expenses each month? It might seem more impressive when you look at it this way…

According to MoneySense’s All-Canadian Wealth Test, the average wage of an unattached individual is $37,800. While the combined federal and provincial tax rates for this level of income are different for each province, a 25% marginal tax rate is a simple amount to use for this example.

Now at that rate, if you want to have an extra $150, you would need to earn an additional $200 a month, that’s $2,400 in one year. For the average single person, that’s the equivalent of a 6.3% raise!

And the sale of the car? While granted that we paid money for the car in the first place and are simply getting some of that money back, we’re looking at it as new money. The person in this example would need to earn $6,000 more to have $4,500 in cash after taxes. If this was a lump sum of $6,000 from work, it would be a bonus of 15.9% of their salary!

Now some of you are probably thinking that since you make more than the average unattached individual that this wouldn’t be such an impressive amount for you. Keep in mind though, that you’re likely taxed at a higher rate, and therefore it takes earning even more income to equal the net effect of eliminating an expense that you pay for with after-tax dollars.

Look for ways that you can save money by reducing bills and expenses and then calculate how much more you would need to earn to have the same effect!


  1. Balance Junkie

    It sounds like you made some smart moves. Congratulations on taking the initiative to do it! I always like to annualize small savings to show myself how they add up over time. In the end, it really is worth it.

  2. Jim Yih

    Hey Tom, I hope you are not keeping your wife and baby in the house with no transportation (just kidding).
    Are you taking public transportation to work? If so how does your wife get around during the day?

  3. Darren

    Looks like these were calculated decisions that had some thought put behind them.

    I agree with Balance Junkie that annualizing the savings helps you see the a longer-term effect of your efforts.

    What are you doing with the extra money?

  4. Financial Samurai

    Small steps definitely is the way to go, since it’s so daunting sometimes!

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