April 22, 2014

By Margaret H. Johnson

I have to admit that tax time gives us an opportunity to see, without any distortions, what we spend our money on – provided that we use our bank statements and credit cards to do the accounting for us.

A colleague of mine told me that he discovered how much the cost of gas has gone up. While preparing his tax return, he found out he spent $3,000 in 2013 for gas. “That’s really incredible because I basically don’t go anywhere and I drive a 4 cylinder Honda.” He complained. “But I knew trouble surrounded my bank account when last week it cost me $65 for a fill up, which a couple of years ago, was about $40.

$3,000 per year means $500 per month for just gas. That is a lot for just gas. My colleague retired a number of years ago and does not commute to work.

The annual totals tally up a different story from our monthly orbit in and out of the stores, restaurants and gas stations. We really don’t get it until the Excel spreadsheet gives us the final answer for the year. He spent $2,000 on his internet provider – that’s almost $200 per month for wifi... no tv bundle included.

He spent $900 for his cell phone service – and that includes a $10 charge for Canada Wide long distance. That’s $75 per month for a phone. “I remember when the phone was $18 a month and cable about $10 per month,” he lamented.

His rent was $14,000. Somehow that figure jumps right off the page and slaps your face. “Ouch,” that hurts.

Then there was $1200 a year in hydro and $350 for gas. “That’s $100 bucks a month when hydro used to be $20 or $30 dollars a month. And on top of that, I’ve gotta pay $350 to cook my bacon and eggs!”

I’ve kind of left the best for the last. My friend is 64 years old on a pension income. Even with all of his benefits from his previous employer, the provincial government, he ended up paying $3000 for the year in medical benefits, $425 in dental expenses and none of this includes the prescription medicines he needs for a thyroid condition, an enlarged prostate and the usual illnesses that cost money throughout the year. No mercy for the elderly, I guess.

What really bothers him is his gradual fall into debt. For the first time he is in the red $3,000 – and doesn’t know how to get out. He can’t find the money to pay the debt off.

“This is my first encounter with Peter and Paul – you know, borrowing from Peter to pay Paul. It’s quite scary being stuck in an uncomfortable kind of quick sand that keeps pulling you down, deeper and deeper in debt every year. Kind of like, death by a thousand cuts.”

You see, the escalating costs of hydro, gas, internet and phone are silent killers. They rob the family income each year quietly and unobtrusively. You don’t really notice until, you do your taxes or you start using credit to subsidize your income. Food cost is right up there, too. As much of his expenses ended up on a credit card leaving a $3,000 outstanding balance.

Yes a budget is one way to catch the silent creep into debt. We must find a way to live within our means.

Track your spending and stay out of debt with our free budget template.

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

For more information visit Debt Canada - your Canadian credit education centre.

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