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.

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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.

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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.

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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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