Chuck hunches over the calculator each month at his kitchen table, tallying up the expenses. And the numbers don't look good.
"I spend more than I earn," says the auto worker in his early 40s.
The single dad, who shares custody of his teenage disabled daughter, earns less than $25,000 a year before taxes and deductions, netting about $1,750 a month.
He's been getting by using a trick he learned from his dad, one he'd rather not have to use: juggling credit cards.
Chuck has five credit cards, all with balances. He makes the minimum payment each month but continues to borrow to cover costs -- specifically, those for his daughter.
"She doesn't have the opportunity to do much, so I try to do a lot with her, like road trips and horseback riding."
But all that activity -- along with the cost of day-to-day living -- has a high price. Chuck owes more than $12,000. About $7,000 of it is the result of a student loan, but the rest is high-interest credit card debt.
Although he is indebted and running a monthly deficit, he manages to save a little money every month. He contributes $62.50 a month to his daughter's Registered Disability Savings Plan (RDSP), to which the federal government contributes $3 for every dollar he saves. And he puts $75 each month into a TFSA with a balance of $185.
"I don't want to touch my TFSA, because I use that for emergencies," he says. "It was much higher, but I had to pay for my daughter's horseback riding and her birthday party, so that cost quite a bit of money."
Chuck says he desperately wants to get out of debt, but he's not certain how he can do that on his limited income. Furthermore, he knows he should be saving even more -- and not just for his daughter.
"I need an RRSP, which is another big problem," he says. "I definitely need some help."
Like many people struggling to balance a budget, Chuck's discretionary expenses are his financial downfall, says Christi Posner, a debt counsellor with the Credit Counselling Society.
"Chuck's current budget outlines his fixed expenses totalling $939 a month, and his savings expenses are $138 a month, but what his budget is missing are his variable expenses," she says.
"These are often significantly more than most people realize."
Even though he thinks he may watch what he spends, Chuck has to be more meticulous in tracking his costs. No outlay of cash -- no matter how small -- can be missed.
"Chuck needs to begin this journey by tracking his expenses for a month or two with an eye on reducing his living expenses by five to 10 per cent," Posner says.
"In doing so, he'll likely realize that food for him and his daughter costs more than $157 per month."
One place he shouldn't cut back is savings. Setting aside money for his daughter helps build wealth for her future, and having an emergency fund makes it less likely he will rely on credit cards in a pinch.
"Typically, a renter should work toward having enough savings for three months of living expenses to deal with life's ups and downs," she says.
Once he's got a feel for his actual costs and finds areas where he can cut back, he needs to develop a more aggressive plan to reduce his debt load.
"By making minimum payments only, it will take almost seven years to pay off his debts," she says, adding Chuck is paying $217 a month to maintain his debts that average about 23 per cent annual interest.
One possible option is asking his financial institution for a low-interest, consolidated loan, using his car as collateral. Instead of paying multiple debts with varying interest rates, he would only make one payment with a lower interest rate. More money would go toward paying down the principal instead of interest charges, and he'd be debt-free a lot quicker.
"Alternatively, Chuck could make minimum payments on all of his debts except for one," she says. "He would choose the debt that is charging him the highest interest rate and focus all of his extra payments on paying that one off first."
With the highest-interest credit card paid in full, he would bear down on the next-highest-interest-rate card and so on, until all his debts are paid.
But the linchpin to this plan is better budgeting.
"With a budget, he will fully understand how much extra income he will need to earn each month to make his dream a reality," she says. "How quickly he wants to become debt-free will depend on how hard he wants to work at it, and putting his credit cards away would help him stick to his resolution to live within his budget. "
It won't be easy. His budget is tight already, so he should consider taking another job part-time, because just a few additional dollars would have a big impact.
"Even an extra $100 a month could shave almost two-and-a-half years off his debt repayment," Posner says. "And once Chuck has become debt-free, he can focus his efforts on saving for his future."