Joe Has Change in his Pocket

Posted in Success Stories
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

change-in-joes-pocketJoe (not his real name) came to see me; he was looking somewhat depressed.

Joe had a good job, but he had a huge amount of debt. Joe told me that things had been going well for many years, but then his marriage ended. His wife had always taken care of the finances, so when she left, Joe had no idea where the money went.

Joe’s son was living with him, and with two mouths to feed, and without his wife’s income to help, Joe began to rely on credit cards to pay his day to day living expenses. He fell deeper and deeper into debt.

When he came to see me, he was afraid that he had fallen so far behind that his creditors would take him to court and garnishee his wages. He didn’t know what to do.

He felt completely hopeless.

I started by telling him that I understood the pain he was feeling. I have met with hundreds of people over the years who work hard, but for some reason have nothing to show for it at the end of the week. They live from paycheque to paycheque.

I also told Joe that my job is not just to be a shoulder to cry on. My job is to give practical advice on ways to get out of debt.

I pulled out a blank piece of paper and asked Joe to tell me everything he spends money on each month. He listed his rent, grocerices, car insurance, gas for the car, telephone bill, and hydro bill each month. He also showed me some recent pay stubs so we could figure out how much he makes each month.

What did we find? Based on what Joe was making, and what he told me he was spending, he should have had about $500 left over each month. But he didn’t.

So I dug deeper.

I asked him to describe his typical day. He told me that he got up early each morning to drive to his job in Toronto. On the way to work he stopped at the coffee shop for a cofee and a muffin.

“Stop right there”, I said. You didn’t mention the coffee shop earlier.

It turned out that Joe stopped for a coffee and muffin on his way into work, and also went to the coffee shop at this morning coffee break, at lunch, at his afternoon break, and on his way home (he had a long drive each day). He was spending about $3 on the way to work, $4 for his morning coffee break and snack break, $8 for lunch, $3 in the afternoon, and $2 on his way home.

That’s $20 per day, five days a week, or over $400 per month at the coffee shop!

Joe didn’t realize what he was spending at the coffee shop. Once he realized what he was spending, it was easy to make a plan to save money. Joe already had a coffee maker at home, and a big thermos. That night he went to the grocery store and bought a loaf of bread and some cold cuts, and he went home and filled up the coffee maker. When he got up the next morning he pushed the button on the coffee maker, and by the time he left for work he had a fresh pot of coffee, which he used to fill up his thermos. He made himself two sandwhiches and brought them with him to work. With a full thermos and a full lunch bag, he didn’t need to stop at the coffee shop.

One week later I saw Joe again. He wasn’t looking depressed. He was actually looking happy. He told me something amazing:

He had change in his pocket! Loonies, Twonies, a whole bunch of change!

Amazingly enough, by simply making his own coffee and lunch, Joe had managed to save a lot of money.

Now I don’t recommend that we all boycott the local coffee shop. We all like a fresh cup of coffee; it’s what makes us Canadian. But by actually writing down what he was spending, Joe was able to make decisions about where to cut back.

Making his own coffee and lunch allowed Joe to free up some cash, but his debts were too large. He was not able to dig his way out of debt on his own. However, with the “extra” cash he had each month, Joe was able to do a consumer proposal. We offered his creditors a plan where he paid $400 per month (the money he saved by making his own coffee and lunch) over a four year period.

They accepted the deal, and now Joe has one monthly payment, and no worries about supporting his son.

Joe is a success story, because, with our help, he was able to take control of his financial life.