Budget vs. Debt Problems

stevewelker 17.12.2020

Debt problems don’t scare me. We offer solutions specifically designed to erase your debts.

Budget problems are another matter.

People often call me when their finances feel out of control. They know there is a problem, but aren’t sure exactly what it is or how to solve it. Diagnosing these situations and formulating a plan is what we live to do!

Everyone needs to balance their budget. Running a deficit, in other words spending more than you earn, is often the root case of debt. Fixing a debt problem without addressing a budgeting problem is like addressing a symptom without addressing the root cause. The symptom or debt will simply reappear.

Even if I snap my fingers and erase all of your debt while you’re running a monthly deficit you’ll simply re-accumulate your debt over time as you’ll need to rely on credit to cover your monthly expenses.

If you are running a deficit, meaning that you’re spending more than you earn, then you may have an: Income Problem, Spending Problem, or both.

Income Problems

Even thrifty people who manage their expenses perfectly can run a deficit if their income is insufficient to cover their monthly expenses. Their expenses may be very low, and unable to be reduced any further, but they still aren’t bringing in enough money each month to cover them.

When this is the case, given that expenses can’t be reduced any further, the only option to balance their budget is to increase their income. This can be done in a few ways including:

  • Taking more hours or shifts at work
  • Finding a part-time job
  • Finding a supplementary source of income such as driving for a ride sharing or food delivery service
  • Taking on a roommate to share your rent with

The first step is to calculate your monthly shortfall or deficit and then fill that gap. Sometimes even a hundred dollars a month can make all the difference in balancing your budget.

Expense Problems

Expense problems are often objectively easy, but emotionally difficult to solve. I’ve spoken to thousands of individuals and I can assure you that everyone has a different opinion of what it costs to live. If you’re running a monthly shortfall or deficit, and you can’t or don’t want to increase your income, then you must reduce your expenses.

Sometimes this is easy and there is low hanging fruit like dining out less, reducing your cable package, or putting a costly hobby on pause.

Sometimes the necessary reductions are much more painful such as moving into a less expensive apartment, selling a house, downgrading a car or considering public transit.

People who are used to a certain standard of living often have difficulty imagining getting by with less, but in my experience everyone settles in quite quickly after making the necessary changes.

In order of ease, a few ways to reduce expenses include:

  • Mobile phone costs – This can be accomplished by reviewing all available plans with your provider, switching providers, or doing with a less recent device.
  • Cable/Internet – Contact your provider to review available packages, and ask for a discount due to financial hardship.
  • Groceries – Shop at lower cost grocers such as Price Chopper, or No Frills rather than Sobeys or Loblaws. Clip coupons or consider an app on your phone like Rebee or Flipp and ask your grocer to price match. Consider utilizing the services of your local Food Bank as required.
  • Grooming – Consider less frequent hair cuts, barbers instead of salons, and pausing any nail care.
  • Clothing – While you’ll likely require some new clothing annually consider pausing any discretionary clothing purchases, shopping second hand, and reusing your existing wardrobe.
  • Dining Out – Consider packing your lunch, cooking more at home, and eating out less.
  • Vehicle Insurance – Shop around and get the best deal.
  • Life Insurance – Consider your need for insurance. If you don’t have any dependents you may require less insurance than you used to. Review your insurance needs with a licensed professional.
  • Vehicle – Consider trading in your vehicle for a more affordable option, or selling it all together and using public transit.
  • Rent/Mortgage – As a last resort, consider moving into a more affordable home. While this may feel overwhelming at first, consider the peace of mind you will achieve by balancing your budget and having less pressure to cover your bills each month.


When individuals have debt and budget problems my professional advice is to solve the budget problem first, and then tackle the debt. Solutions exist if you can balance your budget, but remain unable to repay your debts. That’s where we can help by consolidating and reducing your debt while stopping the interest at the same time.

Our Licensed Insolvency Trustees will take the time to review your budget, and help you solve your budget problem. Once solved, we’ll guide you through the debt relief process to help you get a fresh start.

Contact our offices at (416) 246-7771 or debtrelief@stevewelker.ca to schedule a free consultation with a Licensed Insolvency Trustee.