Pinching Pennies

Paul LaBarge and Alan MacDonald, right, share their money sense.

Photograph by: Julie Oliver, The Ottawa Citizen, Ottawa Citizen

Tax lawyer Paul LaBarge saw lottery winners fritter away millions, ending up with nothing. Financial adviser Alan MacDonald realized he was spending $3,000 a month more than he made.

The two Ottawa businessmen were seeing so much stress and misery around money, especially in these days of high debt, that they coauthored The Copperjar System, a book, workbook and website that guides people out of the ditch and back on track, whether they earn $25,000 or $600,000 a year.

The book is directed at the debt-ridden whose financial lives are in disarray, says LaBarge, a founding partner of the business law firm, LaBarge Weinstein.

Copperjar does not promise to make you rich -in fact, MacDonald took the name from his grandmother’s savings system: a jar for pennies -but it will point you towards greater happiness and financial independence.

According to the website, Copperjarsystem.com, “Copperjar was designed to provide the tools necessary to allow people to take control of their finances and in so doing develop the confidence to manage them on an ongoing basis.”

Unlike other financial plans, it begins by asking the reader to define and write down his or her life values and goals. Couples should do the exercise together because one surefire way to go off the rails is a lack of communication between spouses, says MacDonald.

Once the reader knows where he wants to go, he needs to face up to where he is.

The workbook starts with a financial fitness test with squirm-worthy questions, like, “Do you ever hide purchases from your partner?” The ensuing chapters outline how to set up a manageable, livable budget.

To get started, list all your regular fixed expenses, including rent or mortgage, utilities, property taxes, and car payments. These can’t be cut back, at least not easily. Then, for a month or two, keep track of flexible spending such as groceries, clothing, gifts and entertainment. Don’t forget annual or onetime expenses such as Christmas and car repairs.

The workbook offers an innovative system for rating expenses from absolute necessity to wild indulgence. Everyone needs a winter coat, but not a designer fur. Still, we all have our own idea of necessity.

For example, many working moms find a cleaning service is vital.

The book and workbook are available at Amazon.ca for about $20 and $15 respectively. The website has downloadable spread sheets for monthly spending, net worth, and retirement planning.

The two authors are also working on an American version for the U.S. market.

COPPERJAR’S FIVE TOP TIPS FOR KEEPING A LID ON DEBT

1 Think long and hard about your life values and goals, and talk them over with your family. Then look at your spending: Is it bringing you closer or further from those goals?

2 Track your spending for a month or two: Are you spending more than you make?

3 Set a budget, allowing for some fun and relaxation.

4 Use an envelope system, setting aside funds in designated accounts so all bills, including annual or one-time expenses such as property taxes and car repair, are covered when they come due.

5 Use cash instead of credit cards for pocket money, withdrawing a set amount once each week. Not only does this cut down on impulse spending, it streamlines recordkeeping. If you still have money in your wallet at the end of the week, you know you’re on track.