Bankruptcy Kitchener Blog by Scott Schaefer

We need cash for almost everything we do. Without cash, it is impossible to pay for the necessities of everyday living. As times change we find ourselves substituting cash for credit. Future use of credit will result in the increase in interest charges and reduction of purchasing power. With today’s higher cost of living coupled with this increase in interest, the less cash we will have to put into saving for the future. Therefore, substituting cash with credit results in many people in Kitchener Waterloo living pay cheque to pay cheque. When tough times such as a loss of jobs, loss of overtime, prolonged illness, or lay-offs hit, we may incur more debts due to our lack of savings.

I meet with many people who as a result of the above tend to fall into the trap of payday loans. Payday loan stores seem to be everywhere today. If you do not have cash on hand for something, payday loan stores seem to be an instant fix to put some cash in your pocket – but at what cost? There is a significant cost associated with payday loans. Administration fees and interest charges are sizeable, not to mention you are spending tomorrow’s earnings. If you borrow today and have to pay more back next week, then it is just like you have taken a pay cut. This is where the payday loan trap begins; the cycle of using one payday loan to pay off the last. We are all constrained with how much we can make, so wasting your pay cheques on the profit of a loan business is not the best solution.

Each week I meet with several people from Kitchener Waterloo that are struggling with their financial situation and have told me that their problems escalated or came to the tipping point after several pay day loans. Therefore, my advice is to avoid payday loans if you are facing financial woes and look for other solutions. It may be that you need to see a credit counsellor to assess your budget and determine a long term solution to your financial situation. If you would like to arrange a free consultation with me in my Kitchener office, please e-mail or call me at 310-PLAN.

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As I prepare my kids for the first day of school, I think how much simpler life is to be a kid. Our children may feel that they have many stresses today, but we all know life is much tougher as an adult. There are stresses we face as adults that include jobs, family budget, marriages, raising children, health concerns, etc. Just when things are going well, it can all change. We live in a changing economy that can have big impacts on our lives. We are faced with making tough choices and may not be fully prepared to make these choices. The old saying that we learn from our mistakes comes at bigger costs as an adult. Making the wrong choice could have a huge financial impact on our future.

Therefore as the kids return to school, we should ensure we are providing them with our knowledge of real life lesson s that we have learned so they can be more prepared for their future. The two school boards we have in Waterloo region provide a strong curriculum for our children to learn, but I do feel that one area that is not talked about as much as it should be – personal finances. Our children are not taught how to purchase a house, how to negotiate a car deal, how to manage financially if someone loses a job or become ill. These are areas we all enter into during adulthood and often have to learn as we go. Therefore we should work at teaching our children how to cope with these experiences. We should teach our children how to do a budget and encourage them to save. It becomes hard when the family budget is not working and debt levels are rising.

We all need to keep learning when it comes to finances. I believe that our time today is much different than any other time in history as we live in a time with a record amount of debts as consumers and as a nation. Once someone reaches their limits, a consumer proposal or a personal bankruptcy may be necessary to allow for a fresh start financially. Once someone files a consumer proposal or a personal bankruptcy, they need to consider a world without unsecured debt (ie. credit cards etc) and how they are going to learn from past experiences. The key will be to develop a budget/cash monitoring system given the individual’s situation. This includes understanding our wants vs needs. Cash becomes king again. There are many different methods available and we need to educate ourselves to find which one works for us.

If you are searching for plan to allow you a fresh financial start, please send me an e-mail or call me in my Kitchener office at 310-PLAN.

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