Are your home expenses gobbling up all your money?
Home poverty happens when there’s decreased household income, typically from unforeseen unemployment or reduced salary. Other times, people overbuy, thinking that an extra $30,000 wouldn’t make much difference or perhaps a person signed up for an overly aggressive payment plan.
Home poverty is stressful because there’s little money left over for other things like RRSP contributions, home maintenance, car repairs and vacations. It’s also cited as one of the leading causes of spousal spats. The key to getting out of home poverty is increasing your cash flow. To do that, you either need to make more money or cut back on your expenses.
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To make more; ask for a raise, work overtime, get a second job, open a small business or do some consulting. Don’t forget to apply for all applicable government support and tax breaks (cra.gc.ca).
Making more money takes time, so focus on cutting expenses immediately.
If you’re in major financial trouble, you need to make major adjustments. Consider selling your home and buying a more affordable one. Rent out rooms or investigate the legal requirements to transition your basement into a rental unit. If you’ve got two cars, sell one and share the other with your partner. Or, if you’re close to mass transit, get rid of your car. If you’ve signed up for a luxury vacation, cancel it. If you’ve got Junior in private school, put him in the public system.