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 Read More…

  

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: Read More…

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 Read More…

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. Read More…

We’ve discussed many tips on using TFSAs to improve your cash flow and here are two more important tips to maximize your cash flow, courtesy of CanadianTaxMan, a tax specialist himself. Read More…

Do you run your own unincorporated business?

If so, you may be a candidate for cash damming, a tax reduction technique that could potentially save you lots of money.  Read More…

Debt is certainly nothing out of the ordinary and being someone who lives and breathes personal finance, one question I often get from friends and family is should I consolidate all my credit card balances, car loans, and any other debts, into a single consolidation loan?

The advice I always give in response is that consolidation can be a good idea, but two critical factors must be considered first. Read More…