More Money, Fewer Expenses – How to Become Debt Free

Posted on 5 July 2018

Written by Jeff Adiken

During Janet and Bill’s debt free journey, they thought they had tried everything. Both had found ways to add extra money to their budget. Janet was selling products during her spare time and Bill had taken a second job. The couple had plenty of money, and plenty of debt.
Cutting costs where they could and saving money helped, but it didn’t make them debt free – they had too much to repay. One day Bill confided in a friend who told him about the time that a Consumer Proposal helped him become debt free…

Increase Your Income, Reduce Your Expenses

The first thing many people do when debt becomes unmanageable, is look for income outside of their regular pay cheque or cut costs. While both higher earnings and lower costs are good things, there is only so much you can do to have an impact on your debts. The amount of debt that you owe will ultimately determine what you should do to free yourself from it.

Asking for a raise, cashing out investments, or refinancing a home can all help to repay your debt(s). The smaller the debt load, the easier it will be to repay. You may need help negotiating larger debts. Where an investment is involved, it may not make sense to take on a tax debt or pay a penalty if the total debt load exceeds your available cash out value.

Cutting costs can be much easier and is a good idea for anyone struggling with debt. First create a monthly budget and be honest with yourself. Include everything you spend money on.  If you’re not sure, take a week and track your purchases via your bank account or by keeping notes on what you buy and spend money on. Once you have a good idea of where your money goes look for ways to adjust what you spend. Here are a few common examples of things we overspend on without noticing.

Common Household Expenses

  • Cable television
  • Hydro/Electricity
  • Coffee Shops
  • Groceries
  • Car Insurance
  • Cell Phone

All of these things can be potentially adjusted or changed. For example, if you are not watching all of the channels included in your cable television package, it might be time to get rid of it. Cable can cost upwards of $60.00 per month – cutting this cost could save you $720 a year or more. Other providers such as cellular service, internet and insurance, may be able to make account changes that will save you money. Contact your service providers if you haven’t made any changes to your service agreement recently. You may find that a new package or savings initiative can be applied to your account.

How you spend money on things like groceries, coffee shops and electricity are all things you may be able to change to add money to your budget by adjusting your habits. If you frequent coffee shops, even though you spend pocket change every visit, it will add up. For example, one $2 order daily, every 5 day work week for a year would add up to $480. If you clip coupons, shop for the best deals and take an organized list to the store with you, you can save money on your grocery bills. Saving on your hydro bill is as easy as keeping a tighter watch on your habits and sticking to using major appliances during off-peak rate times.

Meet With a Trustee

All of the cost-cutting measures in the world may not solve your problem if you have a lot of debt. While it’s a great idea to increase household income and cut expenses, if you’re still not debt free, you may need help.

Just like Janet and Bill, eventually you may find that your efforts to increase your income and cut costs are not having much of an impact on your debt(s). A consumer proposal may be the answer and it may be time to meet with a Licensed Insolvency Trustee. A proposal will help you negotiate and use your available income to offer a reasonable deal to your creditors.

With the changes you’ve already made to your income and spending habits, your proposal payment should be easy to manage. To find out more about consumer proposals call a Spergel trustee and book a free consultation to learn more, 310-4321.


Jeff Adiken

Jeff Adiken is a Certified General Accountant and Chartered Insolvency and Restructuring Professional with over 18 years’ experience as an LIT (Licensed Insolvency Trustee). He also manages all of Spergel's personal insolvency offices and is our resident expert on credit card debt and debt-free living. When his 'manager hat' comes off at the end of the day, Jeff is happiest spending quality time with his family at home.

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