Cassandra, 26, makes $60,000 a year and owes $10,000. Where can she save to save for her future? – Toronto Star | CarTailz

Cassandra, 26, wants her debts paid off so she can focus on saving for her future.

The retail executive says she makes $60,000 annually and owes a total of $10,000 — $4,000 on her credit card plus a $6,000 loan.

Cassandra describes herself as a homebody who enjoys hanging out with her dog and lives with her partner in Yonge and Eglinton, where they share the rent. When she’s not working shifts on weekends, she enjoys going for walks outside, relaxing at home, or spending time with family.

Cassandra wants to start financial planning for things like home, kids, and vacations.

But her expenses are getting in her way.

“I want to cut back on my spending to pay off my debt,” says Cassandra, who adds that she repays her loan bi-weekly ($271.78 per month), “so that’s not a big issue for me.

“I want to pay off my credit card debt as soon as possible,” she says.

Cassandra admits she spends most of her money on food. Her work schedule makes it difficult for her to have a routine; She often works late, which means she also eats late or forgets to eat a meal during her shift, but snacks instead.

“I’m not a big cook and due to my work schedule, I usually eat after 7 or 8 p.m., and then I’m too tired from my day to cook for an hour or so.”

“Things are definitely more expensive now,” she says. “I notice this in everyday things like food and gas.”

Can Cassandra cut back on her expenses and pay off her debts?

We asked them to split their expenses for two weeks to get a feel for their finances.

The Expert: Jason Heath, Managing Director at Objective Financial Partners

Cassandra is totally focused on paying off the debt she has had for a few years. In 2018, she received a consolidation loan to consolidate her debt into a single monthly payment. Along with the loan and her credit card, she owes $10,000. She wants to pay it off to save for a vacation, a house, and kids.

She admits that she spends most of her expenses on groceries. A week of their spend tracking shows five Uber Eats orders as well as a couple of takeout times. Take-out will always be more expensive than a home-cooked meal, but delivery adds to those costs.

Cassandra is a homebody who loves to hang out with her partner and dog on her Sunday off day. If she’s serious about paying off her debt, she could use Sunday as a day to prepare meals and stock her fridge and freezer with meals that are easy to reheat when she gets home from work.

She doesn’t have a lot of extra money every month, so if she wants to pay down debt and start saving and investing, she’ll have to find ways to reduce her expenses or increase her income. She should consider a budgeting app that can help her track her goals.

Cassandra owns a car but lives in a reasonably walkable neighborhood in Midtown Toronto on the subway line. I can’t say she could live without it, but if she’s looking to find ways to save on expenses, her car costs about a fifth of her monthly salary, and that’s not counting auto repairs.

Her credit card rate is probably higher than her consolidation loan rate, so that would be the debt that needs to be paid off more aggressively.

If she can save $80 a week on her grocery delivery expenses, she should be able to pay off the balance within a year. The week she tracked her spending, she spent $90 on delivery and takeout in a single day and $190 in the seven days.

The more debt you get, the harder it is to get out of it.

The longer it takes you to pay off your debt, the longer it takes to start saving.

The less time you have to save, the less time your savings have to accumulate.

It makes it harder to become financially independent in the long term.

Results: She spent less. First week spend: $1,156 Second week spend: $119.08

How she thinks she did it

Cassandra did much better in the second week. She had more time to cook and ate out a lot less.

“I had very different spending habits this week,” says Cassandra. “The past week has been a bit hectic at work, which resulted in me taking some chores home with me, which meant I wasn’t able to find time to shop until later in the week.”

Cassandra says she took the advice and admits she budgets in a planner but often forgets.

“I have to make this a daily habit,” she says. “Keeping a log of my transactions has helped me realize that I’m spending money quickly without thinking.”

Regarding Heath’s advice to reduce the use of her car, Cassandra says it’s difficult to do because she lives in the city and needs it to get to work and see her family out of town.

But takeout is definitely one area she says she can reduce.

“Reducing food spending at restaurants is definitely a must, and I’ve managed to stay away from that this week because we were able to buy some groceries earlier in the week,” says Cassandra.

Take away

Cassandra says she’ll be more mindful of her spending in the future.

“Small purchases add up, so I have to be more careful and pay more attention to where my money goes,” she says. “Thinking twice about purchases before committing (to them) has worked for me this week and having my future goals in mind (also) will motivate me to achieve them.”

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