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Name, age: Ella, 44
Annual income: $210,000
Debt: $106,500 on consumer proposal, $707,000 on mortgage
Savings: $6,000 in savings account, $65,000 in registered retirement savings plan, $35,000 in registered education savings plan (RESP)
What she does: Public sector lawyer
Where she lives: Greater Toronto Area (GTA)
Top financial concern: “I am focused on creating enough of a cushion that I can survive without credit, but I have competing priorities between my emergency fund and RESP.”
Ella lives with bipolar disorder, a condition that decreases her inhibition to spend money. The 44-year-old GTA mom has a great job as a public sector lawyer with a salary of more than $200,000, but she also has a hefty mortgage and sizable debts, many of which were accumulated during what she describes as a manic episode.
“I had no wiggle room financially and was on this crazy bonanza and wasn’t paying attention,” she said of her spending. She noted she has overspent during episodes before, but not to this extent. “By the time I realized there was a problem, everything had gone so far I wasn’t able to fix it.”
Between her line of credit and credit card, she had racked up $160,000 in debt.
“Just tracking it and seeing the terrible abject reality of my spending was a wake-up call,” says Ella, who sought help from a licensed insolvency trustee. They recently worked out a consumer proposal with her creditors that will see her pay back $106,500 of the amount she owed. That works out to $1,775 monthly for 60 months.
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She’s adjusted her lifestyle – her partner cuts her hair, she gave up her gym membership and deleted all food apps from her phone. She’s also stopped using credit completely, and is living a “cash lifestyle” where she pays for her needs with physical money.
Ella lives with her partner and tween daughter from a past relationship in a small, three-bedroom townhouse. She bought the home at the peak of the market, and says it’s now worth significantly less than she paid. Her partner contributes about $1,500 a month for household expenses.
She is relieved to have turned the corner from spending to saving and to have set new goals. Her biggest focus has been to insulate her daughter from her financial hardships, allowing her to continue playing competitive sports, for instance, despite the cost.
“I’ve told her we’re on a budget,” says Ella, who sometimes buys takeout for her daughter and not herself to save money. “None of this is her fault. I didn’t pay close enough attention and I dropped the ball. I want that to impact her as little as possible.”
She’s working to build up an emergency fund, and then plans to focus on building her daughter’s RESP. “Postsecondary school is going to start sooner than I think,” Ella says.
Her typical monthly expenses:
Investment and savings: $3,040
$1,040 to pension. “Defined benefit pension plan at the employer where I have spent my entire career.”
$2,000 to savings account. “I want to build the emergency account to $21,000.”
Servicing debt: $5,347
$1,775 to consumer proposal. “Monthly for 60 months.”
$3,572 to mortgage. “The house has gone down in value by $200,000 since I bought it so we’re going to be here for a while.”
Household and transportation: $1,792
$600 to condo fees. “They are incredibly high.”
$290 to insurance. “Home and car.”
$322 to property tax
$350 to utilities
$60 to gasoline
$100 to car repairs. “Bought my 2019 Honda new with cash.”
$70 to two cell phones. “I switched to a different cellphone service. They gave me $10 off.”
Food and drink: $900
$800 on groceries
$100 at restaurants. “I uninstalled the apps so if I want to eat out I have to go to the place.”
Miscellaneous: $4,875
$2,814 to income tax, Canada Pension Plan and Employment Insurance
$500 to child support. “Happy to pay because I think it is fair for her to have a similar standard of living in the two homes.”
$50 on entertainment
$56 to streaming services. “Netflix, Apple Music.”
$100 on clothes
$276 on pet. “Old animal, has increased vet needs.”
$335 on child’s sports. “I make this work because it’s such a good experience for her.”
$100 on personal care items. “Much of it is for my preteen daughter.”
$184 on house cleaner. “I work long hours. This is a luxury I’ve cut and then brought back into the budget.”
$20 on prescription
$400 on physiotherapy. “I had a sports injury.”
$40 on gifts
Some details may be changed to protect the privacy of the person profiled. We want to thank them for sharing their story. Are you a millennial who would like to participate in a paycheque profile? Send us an e-mail.
Participate in the Paycheque Project
Welcome to Paycheque Project, a regular series in The Globe and Mail that looks at how much young Canadians are earning – and where that money is going. We’d like to hear from young adults from a diverse range of backgrounds, geographic locations, and earnings ranges.
If you’re a millennial or Gen Z and would like to participate, fill out the form below or send an email to Roma Luciw at [email protected]. Please include your name, age, where you live, occupation, your biggest financial concern and your email. And remember, Paycheque Project is a judgement-free zone.
