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By Deanna McFadden

Like so many families, we’ve been working hard to claw our way out of the debt we “fell” into (ahem, jumped headlong into) while I was on mat leave. Yes, my son is two and a half. Yes, I’ve been back at work for one and a half years now. But it was an expensive year.



Not only was I not working, but because my pregnancy resulted in the crazy disease I have (Wegener’s Granulomatosis) going absolutely bananas, my RRHB (rock ‘n’ roll husband) didn’t work much either. And we lived in denial for many months. Used up our emergency fund. Acted like the line of credit was actual income. Charged up our cards. All in all that year was like walking up a steep hill in the winter – we’re out of breath when we get to the bottom all we’ve done is slide deeper into debt.

And I knew better. I’ve been reading about personal finance for years. During university, I worked at a small mutual fund brokerage. And there was a brief moment where I studied for my CSC before coming to my senses, and ended up with my MA in English. So, I should have been more careful. But it was a hard time, and there were only so many things I could worry about (staying alive was one of them).

Now, though, it’s the reckoning. Debt’s difficult for me, I don’t like it, but I live with it. We “own” a house that will, fingers crossed, be paid off before we send our son off to university. Everyone tells me that’s “good” debt because our house is appreciating in value. Still, that doesn’t erase the black hole that I look at every month when our Manulife One statement comes in. No matter, my point of this post is that regardless of how overwhelming your debt might be, no matter how crazy it seems when you’ve got so many different things to pay off, you still need to save. Total honesty moment: I’ve managed to squirrel away $1036.00 over the last six months. It hasn’t been easy, but I’ve done it, and I’ve still managed to reduce our consumer debt by about half. Here’s the magical question: how?

Stick to your budget

Creating a budget and sticking to it feels hard at first. You feel pinched and frustrated that you can’t overspend and use your credit like a trampoline, but when it works, and works well, it’s actually very freeing. The money you need is there, and if the money isn’t there, you simply don’t buy the stuff.

Don’t let “bonus” money float away on the wind

All of us have “bonus” money from time to time, gifts from family, government refunds, your monthly child allowance – I don’t add these into our budget. I create a budget from the cash we have in-hand that’s reliable and comes from my salary and/or writing royalties. Your parents give you $50.00 at Christmas? Bonus money. You find $20.00 on the street? Bonus money. You get a raise that amounts to $25.00 on your bi-weekly cheque? Treat it like bonus money (you were surviving without it, yes?). For the most part, it’s easy for this cash to just slip through your fingers, but I’m really strict at applying the 25 percent rule to it, regardless of the amount. I break the bonus money into quarters and use it like this:

  • one quarter goes to debt,
  • one quarter goes to a credit card bill,
  • one quarter to goes to savings,
  • and one quarter just stays in the bank for a treat (it’s a bonus after all!)


And from there, from that little, bitty 25 percent of bonus money over the last six months, I’ve saved over $1000.00. Now, it might not always be that much, it might only be $100.00, but the point is not to spend it just because it’s outside your budget. The trick is to make saving a priority, even if it’s small amounts because, and I know you know this, it adds up.

And you don’t have to use my 25 percent rule, you might not have anything on your credit card (we use ours for groceries, gas, etc., sometimes for the points). In which case you can break it up into thirds if you like – the point is to treat bonus money like it’s not there in the first place. Put it all in savings if you’d like. But don’t just let it evaporate, which is what my family was doing up until now. It feels so good to have just a teeny, tiny cushion – because, trust me, you’ll need an emergency fund one day. When it’s there, it’s just one less thing to worry about.

Deanna McFadden works in publishing and lives with her indie-rock husband and son in Toronto. She writes about about life, love, books, rock and roll, and living with Wegener’s Granulomatosis here

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