Excess Spending Keeps This Couple From Getting Ahead: A Boomer & Echo Financial Makeover

Clark Sanderson (39) works a high-pressure job in sales for an international company. His wife, Jill (38) is a stay-at-home mom with two preschoolers, Sean (5) and Rachel (2).

Although Clark earns an above-average annual salary of slightly over $120,000, and gets regular bonuses, they have virtually no savings and a high debt load due to their excessive spending habits.

Clark and Jill married 11 years ago and purchased a new condo townhouse shortly thereafter. Less than a year later his company offered him a new position in another province. They sold their condo and purchased a new 3-bedroom suburban home.

Related: Portrait of an ideal saver

Another position within the company opened up after 3 years and they moved again. Because of the surge in housing prices at this time, they made a good profit, but instead of using the majority of this profit for the down payment on the new house, they put only 5% down and used the rest of the money for new furniture, electronics and other miscellany.

Again, another lucrative job opening and the Sanderson’s were forced to sell this home at a loss to move to yet another city. They borrowed money from Clark’s parents to cover the mortgage shortfall and legal fees.

Ironically this latest job move will likely be permanent and the Sanderson’s would like to finally settle into their “forever” home, but they are now renting because they can’t put together enough money for another down payment.

They have made sporadic attempts at saving and opened an RESP for their children several years ago, but they never seem to have enough available funds to keep up the deposits.

Related: Managing proceeds from a rental property sale

Large debt payments and no conscious spending plan are putting this couple further and further behind. If they carry on this way, they may be forced into bankruptcy in the future.

Assets:   Liabilities:  
Vehicle #1 SUV $33,000 Unsecured LOC $24,000
Vehicle #2 compact $6,000 Credit cards $38,000
Company RRSP $31,000 Car loan $28,000
Stock options $17,000 Student loans $2,300
RESP $500 Loan from parents $12,000
Savings account $200

The Financial Plan


  1. Pay off debts.
  2. Buy a new home in the near future.
  3. Retirement savings.

Here’s what they can do.

Create an effective spending plan

With no solid understanding of their current financial patterns, the Sanderson’s will not be able to direct their money effectively towards their goals.

They need to do a detailed analysis of their past spending to visually see where there money is going, and then create and actively follow a budget.

Related: Budgets, cashflow plans, and spending. Yawn.

They must go on a spending “diet,” eliminating all unnecessary spending as they work together to create a personal budget plan.

Aggressively pay down their debts

A savings plan will go nowhere until excessive debt is brought under control.

Clark will occasionally use his bonuses and cash in stock options towards their debts and non-regular expenses, but the available balances are soon used up again.

They must aggressively pay down the credit cards – highest interest first. Use only two cards in the future – one strictly for Clark’s work expenses and one for family. Clark had previously been embarrassed by asking for a pay advance due to his business credit card being maxed out because of miscellaneous spending.

Paying off the line of credit will allow them to use it as an emergency plan until they build up some cash reserves.

Related: Debt avalanche vs. debt snowball

Clark uses his compact car to travel back and forth to work and it has a clear title. Jill, however, is adamant about not selling the family SUV for a less expensive used model, so the loan payments will continue for some time.

The loan from Clark’s parents has no repayment schedule, but it does cause stress whenever they visit the family. His parents know approximately how much he earns but their financial problems are kept secret. They don’t understand why no attempt has been made at paying back even a small amount, but everyone avoids the topic.

Buy a house

Buying a family home in the suburbs is an important goal for the couple. Unfortunately, until they get their spending under control and eliminate their debts, it will have to be put on the back burner for the time being.

Build up retirement savings

Clark’s company matches 100% of group RRSP contributions to a maximum of 4% of base salary. His payroll deduction is currently only 1% of salary, leaving a great deal of “free” money on the table.

Related: 4 simple tools to stop drowning in debt

Once his spending patterns have been settled he should increase his contribution to the maximum matching amount. For the time being this is the only way to build up his retirement savings.

Final thoughts

Clark and Jill are worried that they will never be able to get ahead.

Clark tends to spend most of his time on work related activities and leaves the household and financial management to Jill. Unfortunately, Jill has no idea of how to budget or track her (over)spending. If there is money in their accounts, or an available balance on their credit card, she will spend it without a thought, especially when it comes to things for the children and expensive gifts for their friends and large extended family.

They need to sit down together and talk about their future dreams and plans. They must set a realistic budget and debt management plan and monitor it together regularly to see if they are on track and mindful of their spending.

Related: Retirement planning for late starters

Jill should consider going back to work. Although she has an education degree she refuses to work full-time (and, to be fair, with two preschoolers child care costs may be onerous). She could brainstorm ways to bring in extra money – perhaps tutoring or babysitting one or two children in her home.

Jill and Clark have a long and difficult road ahead of them. Only by committing to their plans will they be successful.

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  1. Cindi on May 8, 2015 at 6:27 am

    They need to start and live an honest life. Spending lavishing on gifts for family and friends only perpetuates the charade. It’s up to them to stop the illusion that they are doing great. And overindulging the kids with the latest and greatest toys doesn’t do anything to ensure their happiness or well being..they need memorable moments & experiences, NOT stuff.

  2. Duane on May 8, 2015 at 12:18 pm

    Education degree and high paying job but they can’t figure this out? I am not sure that if the embarrassment of needing an advance to cover debt due to their spending habits wasn’t enough to prompt them to action that having this review and plan will be either. It’s time to make some changes!

  3. Daniel @ SaveWithDan.ca on May 8, 2015 at 1:44 pm

    Great story!
    Couldn’t they have rented the house when moving out and then rented a house or an apartment in the new city? Several times?
    I see no point in buying a house if you are not planning to stay there for at least 5-10 years. If I am considering buying a house, I would ask myself “if I get a better job offer in the next 5 years, would I accept or would I like to continue living here?”
    But maybe this is just me being uber logical.

    • Stephanie M MacKenzie on May 8, 2015 at 2:18 pm

      Come on Jill and Clark, you are at least in your early 30s. Put on some grownup pants. Jill needs to give up the money handling as she sounds spoiled and inflexible. Also, bad at it. I have two daughters, 33 and 36. Older one has the $sense so handles it really really well and husband takes back seat. Younger daughter and son-in-law, opposite, so he handles bills etc.
      Pay your parents every month. My parents lent house money to all 5 children, and got back every cent in timely fashion.
      Jill and Clark misuse trust of their parents and wreck things for siblings.
      Ever heard of thrift stores, handmade gifts, walking or public transit?

  4. Sean Cooper, Financial Journalist on May 8, 2015 at 7:55 pm

    It amazes me how so people always buy a house, even when it doesn’t make sense. If you don’t plan to stay in a home at least 5 years, there’s no point in owning a house. The closing costs will more than likely wipe out any profits you make.

  5. MK on May 9, 2015 at 9:10 am

    Kids definitely don’t need expensive anything – clothes/toys. Kids that age play with just about anything. My son uses pots and pans to play the drums with baby’s soft plastic spoons as high drum sticks. Kids like to use their imagination. Less is more. And as for gifts – also don’t need to be expensive. Have the kids make the gifts – hand made gifts by the kids make everyone feel special including the kids making them.

    They have to put a budget together and a realistic one. No sense plugging in numbers to balance when the numbers won’t work at the end of the month. Seriously talking about a budget means making sacrifices and compromises. My husband and I got the you need a budget app and it was definitely an investment because it’s not a cheap program but it was worth it for us because it’s easy to use and accessible on our phones.

    I am all for moms staying home with their kids. I do. But, you have to make the numbers work. That means cut spending, find a job you can do while you stay at home, or both.

    I think if you were close enough with your family to borrow money from them, you should be close enough to explain your financial situation. If your parents are aware of your debts and are in a good financial position themselves, they may understand why you have to delay paying them back (so you can pay down your high interest loans). But I think it’s also fair to tell them your plans for paying the high interest debt down (once your realistic budget is in place) so you can explain when your parents will start getting their money back.

    Good luck 🙂 you’re talking about finances and seeking advice which is more than most people do so you’re on the right track and you can achieve your goals!:)

  6. Don on May 12, 2015 at 9:15 pm

    A 5 year-old is certainly not a pre-schooler. I could read the “I must stay home to look after the kids” mantra within a few sentences. I’m really amazed how many couples allow one partner the freedom to stay home to look after the children even when the economics are dead-set against it. I’ve seen this thing forgiven over and over by financial planners, but it is wrong.

    For the record, my partner and I are expecting any minute now, and she will be going back to work within 6 months. I make over $100K, but she knows that our financial situation will suffer if she takes too much time off. It’s rather selfish for this woman to stay home, and try to manage the household when she is clearly not able to. In addition, the fact she refuses to sell the SUV, but is happy to see her husband take a compact to work just speaks volumes about her personality.

    This couple has a lot of issues to work through, and I don’t hold much hope out unless both parties are willing to contribute.

    • Barbara on May 15, 2015 at 8:09 pm

      Don if you make over $100,000 per year, your wife should definitely stay home and take care of the most precious thing in your life. When you meet your baby you probably will feel this way.

      Nearing the end of his career, my husband barely makes over $100,000 and I have been a stay at home mom to our three kids. We are doing well financially, as we are saving like crazy now that our youngest is 21 and the only costs are for university and medical (no dance, music, sports etc).

      You don’t know what you will be dealt–perhaps medical problems may force a stay at home caregiver for your child, as was the case for me. But the rewards of spending time with your children cannot be measured in dollars.

  7. Diane on July 1, 2015 at 11:36 am

    I spent 8 years as a stay-at-home mom. I had a good career, but my son was having a difficult time at school and it became clear that a choice had to be made. Although it required re-inventing our financial plan (eliminating expensive leisure activities like concerts, driving much older cars, etc.), it was worth the delay in achieving our financial goals. My son is now a well adjusted teenager who can think for himself and handle himself well under any circumstance. This would not have been the case as his self esteem was suffering greatly prior to my staying home. The value of this decision cannot be defined, but we have never regretted it. I rejoined the work force 2 months ago and we are back on track with our original financial goals, just with a new deadline.

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