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Q: <\/em><\/strong>On a whim a few months ago, we agreed to go away over New Years with two other couples. The deposit is now due on the cabin and we have no idea where to get the money. Our credit cards are maxed. The only way we can manage our money and payments is to use our line of credit for our car payments. It would be really embarrassing to say that we can\u2019t afford to go, so what else can we do so that we can save face financially?<\/em><\/p>\n A:<\/strong>\u00a0Realizing that your finances are stretched to the max is bad enough; being worried about saving face to avoid a financial crisis with those who are depending on your financial commitment makes it that much worse. However, if you are already at your limit, adding more debt to what you already owe, might just be the straw that breaks the camel\u2019s back.<\/p>\n Dealing with the situation sooner than later leaves more options for everyone. Your friends might be able to find another couple to take your place or they might be able to book a less expensive cabin or holiday location.<\/p>\n For you though, this needs to be a serious reality check because a little embarrassment now with your friends will become the least of your worries if your\u00a0financial situation<\/strong>\u00a0gets worse. Falling behind on payments is one of the warning signs of debt<\/a>, and if this happens,\u00a0your credit rating<\/a>\u00a0will be impacted and you and your partner will struggle to stop collection calls<\/a>\u00a0from your creditors.<\/p>\n I would strongly suggest that you sit down with your spouse and take stock of your situation. You need to discuss:<\/p>\n How Much You Each Owe<\/em><\/p>\n List out all of your debts. This is a good time to fess up if either of you has been hiding spending and \/ or debt from the other. Put all your cards on the table, so to speak.<\/p>\n Who You Owe Money To<\/em><\/p>\n Big and small, secured and unsecured, list out all of your debts, even if they\u2019re to a family member. Don\u2019t forget to include any buy-now-pay-later accounts that aren\u2019t yet (officially) in your debt repayment plan<\/a>.<\/p>\n Your Assets<\/em><\/p>\n List out joint and individual assets. It\u2019s easy to think of your home or car, but don\u2019t forget financial assets, such as RESPs which could be in jeopardy if your financial situation deteriorates.<\/p>\n Sources of Income<\/em><\/p>\n Most people can say with relative certainty how much they earn, but take a careful look at each of your paystubs to see what your deductions are. There may be an optional deduction you had forgotten about, e.g. contributions to staff fundraising. Don\u2019t forget to add irregular income<\/a> to your list, e.g. commissions or bonuses, as long as it\u2019s already been paid to you.<\/p>\n All Expenses<\/em><\/p>\n Start by looking back over your bank and credit card statements so that you\u2019ve got a starting point. Your list of expenses needs to include all of your bills and payments, spending money and seasonal and unexpected expenses. If listing out all of your expenses accurately is too hard, you might both need to track your spending for a few weeks so that you get a more accurate picture of where your money is going. \u00a0With a bit of practice you will be managing your money well in no time!<\/p>\n While having a conversation about your debts and financial situation won\u2019t be easy, it is essential. Once you have everything listed out, prioritize your debts and expenses<\/a>. \u00a0Housing and vehicle expenses are typically at the top of the list, followed by essential living expenses.<\/p>\n Decrease Your Spending<\/em><\/p>\n Look at your overall spending and decide where you can cut back to balance your budget<\/a>. Rather than one big, drastic change, try to make several small, manageable changes that you can get used to living with immediately. To avoid a financial crisis <\/strong>it\u2019s crucial that you do not spend more than you earn<\/strong>. \u00a0Work together to help each other stick to the plan. \u00a0If after decreasing your spending your debt load\u00a0still looks unmanageable, seek professional help. The sooner you do, the more options you\u2019ll have. \u00a0Check out our free debt load calculator<\/a>\u00a0to see how much you owe and contact us if you need help.<\/p>\n The Bottom Line<\/em><\/p>\n You\u2019ll need to level with your friends, so stick with the truth. If they\u2019re good friends, they won\u2019t want to see you struggle financially, and will understand your decision. \u00a0If you would like some money management help<\/strong>\u00a0call us at 1-888-527-8999, email us<\/a>\u00a0or chat with us online<\/a>. \u00a0Our service is free and 100% confidential.<\/p>\nCut Costs In Order to Avoid Getting Further Into Debt<\/h2>\n
Personal Budgeting – Income vs Expenses, Spending vs Saving<\/h2>\n
Income vs Expenses<\/h2>\n
Prioritize Your Monthly Payments<\/h2>\n
Spending vs Saving<\/h2>\n
Contact Us for Free Money Management<\/a> Help<\/h2>\n