By Jasmin Brown, BDO Debt Solutions

BDO Debt Solutions

How to deal with debt on a reduced income

Dec 22, 2020 | 9:12 AM

Low wages or a sudden dip in your income can keep your family in survival mode, just barely able to cover all the necessities.

Getting ahead can be difficult, and adding debt into the mix may 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 people rely on payday loans or credit cards to stretch their income between paycheques. Unfortunately, relying on credit to make ends meet only adds to financial stress and can quickly trap you in a cycle of debt. The good news? There is help. Here is where you can begin:

Tally up your debts. Discussing financial problems with your spouse or partner can be difficult, so consider setting aside a time where you are free of distractions and can approach the subject with a clear head. List all of your debts, taking note of the interest rates and terms. Our online debt calculator can help you determine what your debt is costing you each month, including interest charges and fees.

Make a budget. Once you have added up all your debts, it is time to review your expenses. Together, tally all your essential monthly costs, including housing, food, transportation and household bills. Next, figure out your total monthly household income. Once you have all your data, an online tool like this budget planner from the Financial Consumer Agency of Canada will make quick work of creating a monthly budget. Do you have enough to cover your essentials? Are you able to add money toward savings and debt repayment?

Look for opportunities to save. If your budget is tight, finding areas to save or cut back will not be easy. Finding a few dollars each month, though, will help you pay down the principal amount on a loan or contribute to an emergency fund. One saving strategy is called “paying yourself first,” which means directing automatic deposits from your cheque into a savings account.

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Speak to a Licensed Insolvency Trustee. Sometimes, despite your best efforts, there is just not enough money to go around, which is when debt can accumulate quickly. Whether you are experiencing the first signs of financial trouble or your debt has become unmanageable, it is important to speak to a Licensed Insolvency Trustee (LIT) as soon as possible. The role of an LIT is to review your financial situation and explain all debt solutions. If you decide a consumer proposal or bankruptcy is the right solution, only an LIT can administer these debt forgiveness solutions for you.

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 advice, visit the BDO Debt Solutions website to learn more about debt relief options. You can also learn more about formal insolvency options by visiting the consumer proposal and bankruptcy pages or checking out the blog posts on our website.

If you are having trouble make ends meet each month, finding the right debt solution can help. Call 1 855 BDO DEBT to book a free, no obligation consultation with a BDO debt professional.