Debt Assistance: How to Budget on a Lower IncomeMay 09, 2017
Finding assistance with your debt can mean educating yourself and your family about how to spend wisely, live within a budget and avoid future debt. Families who are living on a lower income can also benefit from setting financial goals and seeking assistance with their consumer debt.
It’s been a series of unfortunate economic events for Smiths Falls after the closure of Hershey in 2008, the Rideau Regional Centre, Stanley Tools, and in 2015, Target. This has left many residents without work or working for low wages. The unemployment rate in the city now sits at 9.4 per cent, which only accounts for those who are still actively seeking work. Some local residents would like Smiths Fall nominated as a candidate for Ontario’s proposed, Living Wage Pilot Program. This would mean a guaranteed living wage for all residents. Although the concept has been met with some criticism, earlier findings from Dauphin, Manitoba have shown that the program could be very successful.
Dealing with debt on a low income
Low wages can keep families in “survival mode” just barely able to cover all their necessities. Getting ahead can be difficult, and adding debt into the mix can make it seem impossible. Debt can cause depression and lead to marital conflict — in short, debt can disrupt your life. Oftentimes, to get by, some families rely on high-interest payday loans or credit card debt to stretch their income between paycheques, further adding to financial stress and trapping families in a debt cycle. The good news? There is help. Here’s how to start:
Tally up your debts. Financial talk can lead to conflict so it’s best to schedule a time when you and your spouse are in the right headspace to talk about finances. Together, total all your debts and their interest rates. How much is your debt costing you each month?
Make a budget. Once you’ve added up all your debts, it’s time to add up your expenses. Together, tally all your essential monthly costs, including shelter, food, transportation and household bills. Deduct the total from your combined monthly income. Do you have enough to cover your essentials? Are you able to add money toward savings and debt repayment?
Find ways to save. It may seem impossible on such a tight budget and it’s hard to think of giving up minor luxuries, but finding a few dollars each month to contribute to an emergency fund can save you from taking on additional debt in the future. One way to save is called “paying yourself first,” which means making automatic deposits into savings from your paycheque each month — before delegating the rest of your paycheque.
Speak to a debt help professional. Sometimes, despite your best efforts, there’s just not enough money to go around, which is when debt can accumulate quickly. Before becoming buried in debt, speak to a professional about debt help management. A credit counsellor or Licensed Insolvency Trustee (LIT) are two different types of debt professionals who can assist you in different ways. A credit counsellor can teach you how to use credit wisely with the help of financial workshops and teach you how to stick to a budget. An LIT can offer insolvency options such as consumer proposal or bankruptcy, as well as recommend other consumer debt help options.
If you are struggling to get by on a low income and would like to do some research on your own before you seek out debt assistance, visit the Financial Consumer Agency of Canada to learn more about how to manage debt and set SMART financial goals. You can also learn more about filing a consumer proposal by visiting the Office of the Superintendent of Bankruptcy website.
How will you reduce debt and get ahead? Compare your options here and share your results online using the Twitter hashtags #LetsTalkDebt #BDODebtRelief