Learning to Live Off CASH

Learning to live off cash, without credit cards, can be a challenge initially if you have been used to living with the help of credit cards.  We help all of the people we see with budgeting, to show them how to budget and live off cash, without the use of any credit cards.

First, buy a small notebook to use as your spending journal. To really understand where you have been spending, you have to go back over at least the last 6 months of bank statements and credit card bills to see what you have been doing with your money. You need to know this to change your behaviour and cut your spending. Come up with average weekly amounts spent in each major category of expenses.

Get your last year’s tax return or assessment or your most recent pay stub and calculate the average monthly net take home pay you are making.

Summarize your expenditures under the major expense categories eg. Food/Personal Care, Transportation, Rent, Utilities, Entertainment/Gifts; Clothing and Other. You will have to adjust the numbers you have been spending to match the net income received.

For unexpected emergencies, you need to set aside a small amount whenever you can to contribute toward these. Take the change out of your pocket each day and put it aside to deposit weekly into this savings account so it will build up and be available when needed. Automatic pay deductions of 5 or 10% off each pay directly deposited into this account are good and you will learn to live without this money until the emergency.

Take clean jars and some envelopes and label them for the expense categories above.  Load each jar with what you determine is a week’s worth of cash for each expense category. When you go out to spend, take what you need in the appropriate envelopes. Then, it is very important to keep receipts and record in your notebook what you spent on the same day you spent it so you will remember accurately.  Review this each week to ensure you are staying on track.

Doing this will become easier and will give you amazing peace of mind, not having to deal with the stress of credit card bills and hounding creditors.

What is Surplus Income?

I know you are saying – there is no way I have ANY surplus income! However, when you file for bankruptcy, the regulatory body that oversees bankruptcy has established levels of income that, if you make over these amounts, a portion of your income has to be paid to the trustee toward the creditors in your bankruptcy estate.

The Superintendent of Bankruptcy has established that the amount you are required to pay if you are bankrupt is based on your family income, and that amount is adjusted for inflation each year by the government. The limits this year increased by about 2.8% from last year.

If you, combined with net earnings (if any) of any other family member who live with you, earn more than the limit allowed by the government (based on the number of family members in the household), you pay half of the amount you are over the limit each month during your bankruptcy. Also, the time of your bankruptcy is extended by twelve months.

For example, if there are two family members in the household, the combined net monthly income (after taxes) can be up to $2,597 before you have surplus income.

If the surplus income you have to pay it too much, we can review with you the alternative of a consumer proposal to deal with your debt problems. Surplus income is not required to be calculated or paid with these.

The surplus income rules are complicated over and above what is shown above – we suggest you read our detailed explanation of surplus income

Please call us at 416-504-1511 or 888-504-1511 or 05-443-4473 to review your situation and options – our consultation will be free.

Bankruptcy Rate in 2011 and 2012

The Office of the Superintendent of Bankruptcy recently released bankruptcy statistics for the last quarter of 2011 and for the
first three months of 2012. Here is a quick summary:

In Canada in 2011 personal bankruptcies dropped by 16%, while
consumer proposals increased by 6.4%. Overall, there were 77,993 personal
bankruptcy filings, and 45,006 consumer proposals filed, for a total of 122,999
filings, the lowest number since 2008.

In Ontario in 2011 personal bankruptcy filings dropped by 22.6%,
while consumer proposals increased by 5.6%. Overall there were 25,529 personal
bankruptcies, and 24,931 consumer proposals, for a total of 50,460 filings, the
lowest number since 2008.

A reduction in the number of bankruptcy filings is generally good news;
it usually implies that consumers are more able to handle their debts.

The only troubling signs are that the number of monthly filings in
Ontario are increasing. In Ontario the total number of filings by consumers
were:

  • 3,496 in January 2012
  • 4,140 in February 2012
  • 4,333 in March 2012

At Don Allen & Associates Inc., our May and June were very busy so we predict that when the numbers for the spring are released, there will  continue to be an increase in the number of filings.

If you are experiencing financial problems, you are not alone. We
help people who have experienced a job loss, marriage break up, or medical
issues that have caused debt problems, so if you are unable to manage your
debt, call us at 800-504-1511 or email us at info@allentrustee.ca and we will review with you your options at no charge.