At some point in our lives, we may face financial hardship, but that doesn’t mean we won’t overcome it.
I’ve learned over the years from my readers that where there’s a problem, there’s also a solution, especially with money.
If you’ve never had to write a financial hardship letter today, I will show you how, with a sample letter and some resources, you can seek support.
A reader sent me an email asking me about financial hardship and how he could approach the people he owes money to in hopes of having them evaluate the debt he owes.
I didn’t think it was a bad idea given his situation and that it wouldn’t be permanent.
The worst thing you can do when you don’t have enough money in the bank to pay your debts is to ignore them.
Whether it be your credit card, mortgage, rent or any other loan, you MUST make the minimum payment required.
Sadly when it comes to renting or mortgage payments, there is no minimum. It’s a fixed expense for your budget.
Defaulting on your mortgage payments can mean BIG consequences so writing a mortgage financial hardship letter is essential.
Not paying your rent will get you evicted and possibly living homeless until you can find emergency shelter.
What is Financial Hardship?
Financial hardship is when certain events in your life have significantly impacted your cash flow, and you can’t make ends meet no matter how hard you try.
It would be best if you exhausted all avenues for earning money or adding cash before reaching the end of the barrel, sort to speak.
You know you’ve reached financial hardship when there’s nowhere else to turn.
Perhaps your financial priorities have changed based on life events that need to be addressed.
Unforeseen events such as death or divorce may be the sole reason for your financial hardship, leading to missing your obligatory debt repayment.
Changes in employment status such as job loss, restructuring or even injury and health decline can all add to the financial hardship you must address.
When should you seek financial hardship support?
The moment anything affects your income is when you must evaluate your financial position.
This may mean reworking your budget or exploring your emergency savings to see how much time it will buy you.
The emergency savings is there to help buy you some time until you can get a plan of action in place or at least your Plan B.
I often tell my readers never to depend solely on emergency savings and always have that extra plan in place just in case the worst happens.
Do you remember when I mentioned that my mother-in-law’s bank account was frozen after her husband passed away last year?
We made many phone calls to explain her financial hardship to keep creditors in the loop.
They appreciated that.
Other Financial Support To Investigate
- Credit Counselling
- Financial Advisor
- Bank Support
- Family or Friends
- Consider Refinancing
- Student Financial Aid Support
Contact everyone you owe money to that you can’t pay back and either talk to them or send them a financial hardship letter.
Make a deal with them to see if you can manage your finances with lowered interest rates or perhaps a lowered minimum payment until your situation changes.
The priority is always to let them know of your financial hardship.
Debt Reduction Spreadsheet
Earlier this year, I created a debt reduction spreadsheet that you can personalize and print or keep on your computer to track paying down your debts.
If you are struggling with financial hardship, one of the most important things you can do for yourself is to use a budget and track everything.
I know it sounds like a daunting task, and it may be just that for someone who is not a numbers nerd like me, but it’s a must if you want to get your finances back on track.
One good thing about tracking your expenses to reduce them is that you’re doing something about your debt using a visual.
Seeing your debt numbers vanish is probably one of the happiest times for anyone who carries debt; when we had our mortgage loan and how scary the numbers were with added interest over the years.
Once we set up and printed our pay-down chart, it was nice to start crossing off payments to evaluate where we stood and how much further ahead we would be if we could crush even more debt.
In other words, doing and seeing are very important for your money.
It’s all part of being a responsible adult and taking charge of how much you earn, where your money is going and keeping debt to a minimum if any.
Sample Financial Hardship Letter
Besides making a phone call, you can also write a letter, so I crafted a sample financial hardship letter for anyone who struggles with writing.
Below is a financial hardship letter I wrote that you could use by downloading and saving the word document to your computer to edit.
I’ve kept it relatively simple, so all you need to do is insert your financial hardship and personal information before sending it to the person in charge of your account.
City, Postal Code
City, Postal Code
Attn: (Insert Contact Person)
Re: Consolidating/Restructuring/Forgiveness for Debt related to Mortgage, School, Credit Card or other loan payment.
To Whom It May Concern:
I’m writing you today because I’ve fallen into financial hardship and am struggling to pay my debts back on time.
I’m hoping we can work together to help develop a restructure of payment and consolidation or reduce my monthly payments to avoid going into default.
My financial problems began when (Insert problem here death, divorce, illness etc. but be very specific.)
Since this time, I’ve only had (insert how much money you get monthly) to work with each month used in areas such as (insert where your cash goes groceries, rent, daycare, other loans) and am struggling to balance my budget.
I am not trying to avoid my responsibility for paying back my debt as I’m genuinely embarrassed by this situation but have no other choice but to seek financial relief.
I can offer a suggestion that might help me balance my budget (insert direction or money amount you can afford) until my situation changes.
This amount would help me balance my monthly expenses and pay back the money owed to you.
I look forward to discussing my options with you, so please contact me at your convenience.
(Your name here)
Get Ahead Of Your Debt
No matter where you stand financially, always be ahead of your debt, so you understand everything you require, even in emergencies.
Financial hardship can be depressing, but if you reach out to the people you owe, they may give you some space or make arrangements to help keep you out of the bankruptcy office.
It’s a wrong place to be, but explore all your options and fear no one.
Discussion: Have you ever experienced financial hardship, and how did you handle it? Would you mind leaving me your comments below?
Money earned in April 2019
Where did all the money go?
One budget category that jumped for us in April was telecommunications as we upgraded to android boxes.
The only problem is that we have 12 months of cable renewal with Rogers, so we will cancel that next year and stay strictly with the android boxes.
Another significant expense went to dental because Mrs. CBB needed a crown and will need another in May.
That means another $600 charge. Her dentist also suggested Invisalign braces to help her clicking jaw and spaces.
Like most benefits, ours covers $2500 lifetime for braces, but I’m sure the total will be around the $5-7k mark.
Both Mrs. CBB and I reviewed our budget categories in April and updated each as prices have increased for most services related to our home.
We try to do this as often as possible, but it’s easy to become lazy and view it as overage when it’s the actual bill.
For example, you might notice that your Rogers Cell phone bill will go up by $5, so you must increase that number in your budget.
Next month we will see a considerable increase in our insurance payments as we’ve taken a slightly different route, as I will discuss in an upcoming blog post.
We will also see a decrease in our investments as I’ve had to stop my RRSP for 2019 to avoid over-payment, which I will also discuss.
Overall it was a busy month, and as most homeowners experience during the Spring and Summer, lots of money end up on home maintenance and renovations.
Again, if you are not saving monthly for projected expenses, you may have to dip into your emergency savings or create debt if you haven’t kept the cash for the above.
How do you save money for renovations and maintenance to your home? (leave me a comment below)
Have a great month, everyone. See you in June.
Budget percentages April 2019
Our savings of 52.75% includes investments and any protection for this month based on the income of $8609.89.
We put money away for the projected expenses for things that need to be paid in the coming months.
All categories took 100% of our income, showing that we accounted for all the revenue in April.
Our monthly expenses
Below is a breakdown of our expenses which helps us to understand where all of our money goes.
Since May 2014, we’ve been mortgage-free, increasing our savings, investments and renovations.
Spending less than we earn and budgeting our money has been the easiest way to pay down debt and save money. It may be different for you.
- Chequing– This is the bank account from which all of our debt gets paid.
- Emergency Savings Account– This is a high-interest savings account.
- Regular Savings Account– This savings account holds our projected expenses.
- Monthly Budgeted Total: $4904.02
- Monthly Net Income Total: $8609.89
- (Check out our Ultimate Grocery Guide to see where our grocery money goes)
- Projected Expenses: These are expenses we know we will pay for throughout the year = $324.98
- Total Expenses Paid Out: $5622.27
- Total Expenses Actually Paid Out: Calculated is $8609.89 (total net monthly income) – $324.98 (projected expenses) –$2662.64 (savings to emergency fund) = $8609.89
- Actual Cash Savings going into Emergency Savings: Calculated is $8609.89 (total monthly net income) – $5622.27 (actual expenses paid out for the month) – $324.98 (costs projected) = $2662.64
Our budget results
It is time for the juicy category numbers and how we made out our monthly budget. Below you will see two tables, one is our monthly budget, and the other is our actual budget for March 2019.
This budget represents two adults and a toddler plus retirement investments.
Budget colour chart: If highlighted in blue, that means it is a projected expense
Note: We’ve decided to keep our grocery budget at $410.
Actual Budget Amounts
Our FREE simple budgeting series
Do you want to learn to budget as we do?
Would you mind taking the time to read through our budgeting series, plus read Budgeting in the New Year?
I hope the information will help stop you from making common budgeting mistakes.
Our Ultimate Budgeting Guide from A to Z has everything you need to know about budgeting in one blog post.
- How We Designed Our Budget Step 1– Gathering All the information
- How We Designed Our Budget Step 2– Budget Categories
- How We Designed Our Budget Step 3– Tracking Receipts
- How We Designed Our Budget Step 4- Note-taking
- How We Designed Our Budget Step 5– 5S Organization
- How We Designed Our Budget Step 6– Who Does What and When?
- How We Designed Our Budget Step 7– Balancing Our Budget
- How We Designed Our Budget Step 8– Knowing our Coupon Savings
- How We Designed Our Budget Step 9– Reading Our Bills
- How We Designed Our Budget Step 10– Projected Expenses
Budget updates month by month
If you missed our budget updates and want a quick search, I’ve compiled them on one handy page: monthly budgets.
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2019 Budget Challenge- 7 Monthly Budget Reports
When I was looking for people to join the CBB 2019 Budget Challenge in December, I had over 20 people interested.
We are missing two of the seven budget update reviews, so we are down two people for the year, although I will give them until the end of today to submit.
As our budget challengers venture along, you may see their budget reports increase in data which I expect, mainly because it’s a learning experience for everyone. The more you do a task, the better you get at it, and the more you learn about what you are doing.
The budget reports below will remain anonymous unless the writer chooses to use their name, and each one will be unique. They get to choose how they report their budget back to us.
Here we GO!!!
Budget Report #1
Spring has sprung, and it’s nice to see the Cherry Blossoms and tulips again!
I enjoy walking around the neighbourhood, checking out the flowers that are coming up all around us. I plan lots of lovely walks for hubby and interspersed with our errands.
The best part is other than the gas to get where our little scenic walks are planned, our outings are free! I also tend to include picnics and turn the tours into pretty special memories.
I love FREE entertainment!
Once again, I managed to stay on track with our budget during April, mostly because I stayed out of the stores, and we finished the month off with $806.62 in our vacation accounts towards the $4,500 budget we are trying to achieve before the year-end.
I decided to empty all of our High-Interest Savings accounts at Coast Capital Savings and invest those funds in either 12 or 14-month GICs offering a better rate than the savings accounts except for our Future Payments Account and the Condo Fees and Taxes Account.
I will need those funds in 2019, so they stayed in the accounts. I feel so broke, and I am consequently feeling unfortunate because the emptied accounts have less than $1.00 in them until I save up some more money.
I hate feeling broke, though…I have been there, done that, BUT that miserable, broke feeling will motivate me to save, save, save! That’s a good thing.
I also decided to move the funds in my “Mad Money” account in my name only and put them at an institution where I have a chequing account designated as my Estate account when the day comes. Hopefully, no time soon!
Until the funds are needed, they will sit in that institution’s JOINT high-interest savings account. Hubby’s “Mad Money” funds are already in a JOINT high-interest savings account, where he also has a chequing account, so there’s no repositioning of funds required for the eventual set-up of his estate account.
I haven’t done a proper grocery shop since before Christmas.
I can get hubby to pick up the “outstanding sales” on produce to round out what we have on his way home from work.
Keeping me out of the produce department is a perfect thing. I get stars in my eyes just gazing at all the lovely fruits and vegetables!
I hardly noticed myself loading the cart with all kinds of wanted, but not necessarily needed, goodies. It’s like I am a zombie attracted to all the pretty produce! LOL
On the other hand, Hubby buys exactly what’s on the list no more, no less unless, of course, they are out of stock. For example, I had him stop last week and pick up 2 cauliflower at 2 for $5, 2 x 3 lb bags of red onions for $1.97 ea and an 8 lb bag of apples for $5.97!
The whole week’s groceries were less than $15!
By keeping me away from the stores, I don’t get the opportunity to shop my WANTS; we only get our NEEDS. It makes a huge difference…we’re spending about $10-15 a week.
It’s amazing how little we NEED when we have a well-stocked pantry and freezer.
Do I think I can keep this up all year…no because I want to enjoy summer’s bounty. Still, I will use some other tricks like shopping directly from the farms to keep my costs low, only get exactly what I NEED, and in quantity, I need by taking hubby with me as my little personal grocery cop. However, I’ll still get to enjoy the LOCAL SEASONAL produce.
The things that aren’t grown locally will not be on my list this year…I can buy loads of assorted berries and skip the tropical fruits when I shop direct with a grower.
I use the loss leaders in the flyers to make the first draft of my grocery list.
Next, I make my meal plan and try to reduce the number of items on my second draft of the grocery list that I need to prepare for the week’s meal plan.
My third draft of the weekly list is made after looking at the pantry to determine how many meals I could make that do not require any items to be bought and then substitute a few meals that require no new purchases into my weekly meal plan.
By the time I have cut my grocery list twice, I am down to 1/3 of what I originally had on the list.
Talk about waste; want not!
After making our month-end deposits, I will send off our annual contributions to the joint non-registered brokerage account, our TFSAs and RRSPs. The more I squeeze into our long-term investments yearly, the happier I am.
I am never tempted to “borrow” from the savings if they are at the brokerage houses…but I have been known to temporarily tap a high-interest savings account and then have to scramble to try to re-pay my borrowings before the year-end.
I’m not perfect, so I try and limit my opportunities to fail. LOL Out of sight, out of mind works well for me.
I’ll also have eight registered account transfers between institutions over the next three months, with a bunch more coming up in the fall. Things are not slowing down volume-wise with our financial accounting this year.
I guess there’s no rest for the wicked! LOL
On the plus side, hubby and I had the 1st of our five trips this month, and all it cost was one tank of gas plus roughly $100 from our Entertainment and Gift Savings to treat ourselves to three lunches out and $20 grocery money for our room snacks and beverages.
I had extra money saved up for our summer gas needs, so we didn’t have to touch our vacation savings! Woo Hoo! < Picture me doing a happy dance!>
I used Marriott Bonvoy points to pay for our three nights of hotel, including a hot breakfast daily and evening hours deserves & milk/chocolate milk/soft drinks/bottled water.
They also have yogurt on the breakfast bar, so I always grab one for my evening snack. On the other hand, Hubby enjoys a few Cheetos or Fritos with a soft drink loaded with ice.
I bring a kettle and an assortment of teas and billions so that I can kick back & enjoy a hot cup of something with my snack before bedtime.
Budget Report #2
April was a busy month for us (and an expensive one too)! My husband finally got some overtime hours back, but it wasn’t until the end of April that May would be better for income.
Our bathroom renovation is becoming more expensive than first planned, so we cut back on a few things, and we’ll add them later.
Isn’t this always the way with home renovations!?
Our ‘Everything Else’ category included cake supplies, clothing, birthday gifts, household items, holiday craft supplies and a weekend getaway to Kalahari with the kids.
Thankfully, we had some cash banked from last month, so we didn’t have to rely on credit cards, which is my new financial goal in life!
– My husband finally got some overtime hours back
– We paid for a weekend getaway with the kids (which we’ll be enjoying in May)
– Our actual food expense was a little closer to our monthly budget
– We spent over our budget by $400
– We’ve had to adjust what we’re doing on our bathroom reno to fit our budget better
Budget Report #3
Here’s my April submission:
Current Status: 111% to Budget
Where to start for this month?
Well I’m slightly better off to budget than last month, but not by much.
Failures: I’m a bit ashamed of my food consumption, however I had a few family visitors over this month from the states and they always like to eat out.
I do have to put some of these purchases on my credit card because sometimes theirs get declined.
But they always reimburse me for the ones that are their idea. So my income to actual spent is much lower than my % to budget.
Failures this month also include parking fees, parking in downtown Vancouver is quite expensive, and you don’t know how long you’re going to be down there for.
The one thing that I learned is that always put the minimum amount of parking down that you think and you can always add more time, they have these great apps now that track your time and signal you for time remaining.
I should trust those more, but it was the first time I was using these apps quite a bit.
And I failed a bit in my Misc category, this month was my Baby shower and my sister in law really didn’t come through on decorations, balloons etc.
So I spent about $150 of my own money to get the party looking good and party favors.
Unfortunately, quite a few people cancelled on me/ didn’t show up the day of so I feel it was sort of a waste now, but I’m glad for the time I got to spend with my family that did show up.
Wins: All my static categories are still at their required levels. Especially savings for things like property taxes, sewer/water, and house insurance.
I’m hoping to keep this going while on Maternity leave, but we’ll see how that goes since my pay gets cut 55%. Another good thing is that my tax refund is getting deposited in a few days so I can pay off my credit card.
I’m hoping to get my Husband on board of not spending any money on the credit card going forward. We’ve been so good at using only one credit card for the last 2 years I’m hopeful that we can continue.
Budget Report #4
My little blurb: going very raw and putting ourselves out there with real numbers this month! this was our first month with vehicle payments so its been a change for us.
We also were able to save on groceries because we were away for 5 days with my mom over Easter and she took care of most meals.
We are working on trying to catch up on our power bill after a few pricey months this winter that we were not prepared for.
Hoping to build back up our emergency fund before I get laid off for the summer.
We have been doing extra work with our side job and should see a big increase in income there for May.
The goal is the side job needs to be enough to cover the vehicle payments (100/week).
Received some positive news. When my husband returns back to work in July (currently on parental leave) he will be working from home.
So that will save on gas (drives 50km ea way) and parking (100$/month) when he returns.
Looking forward to September when we will both be back to work full-time
Budget Report #5
So March was a tough month for me. You may wonder why I’m talking about March since April’s report, but let’s backtrack briefly.
Last month I didn’t write anything for the budget challenge.
I’ve been highly depressed with all that’s been going on in my personal and professional life; the compounding issues that never seem to end finally took their toll on me, and I broke down.
I reached out to a therapist, and thankfully I have something called EAP through my work – what a godsend. For those not aware of their health plan, look into it! I see my EAP counsellor for free.
At the end of 3 sessions, I get assessed to see if more sessions are needed and if they are, I continue to see her for free. I can also access resources for a critical dietician because I am currently in a stress-induced flare-up of Crohn’s disease.
To say March (and the last few months) has sucked is not giving it enough meaning. So April. April, I decided I needed to go down to part-time work to help manage my stress and get things back on board.
I have 13 sick and vacation days left to use up before July, so I decided to use those before looking at medical EI.
Dropping down to 55% of my income (the rate of pay I would receive on a sick claim through EI) would not be ideal for anyone, and the idea of it makes me more stressed.
I’m feeling better about things but still worried I will have to go on Ei and decrease my income.
I can make it work, but there wouldn’t be any savings. Crohn’s affects my eating a lot.
So I guess one good thing about it is my food budget has decreased significantly.
But, I’m still eating out way too much, which is the side effect of not having running water in your house.
You don’t want to make food and then have to figure out how to do your dishes (for those interested – pull water up out of the well, light a fire in the woodstove and boil pots on top of the woodstove).
I’ve still been meeting my other goals (the Gail Vax Oxlade budget amounts), but I hope to get my eating figured out and start eating healthier foods.
So this could mean the budget could go up (better quality foods cost more), or it could go down (if I budget and meal plan properly and make good-tasting food, maybe I’ll eat out less and be able to buy smaller amounts of groceries).
By the end of the month, my water was fixed—3 months, one week without water. I haven’t gotten the bill yet but based on his estimate, my tax return should cover it.
My average expenses included buying and installing summer tires and a horrendous power bill for the winter months. I also got a kitten who will get $500 worth of vet bills next month.
I just squeaked by for this month, but I know I’ll be pulling from my savings account next month. These last few months have shown me the importance of having a savings account, not just a small emergency fund.
As a note to Mr. CBB, I’d love to see a blog post on how to handle a significant dip in finances 9an unexpected layoff or sick leave, for example) and maximize your points cards, such as Air Miles and PC Points.
Here are my thoughts on these topics: Drop-in finances: call around and see if you can lower your payment plans. Maybe as a long-time customer, they will give you a deal cut services you don’t need – we have plenty of wants in our lives but fewer needs.
Get rid of the wants and add them back when you have the money share bulk grocery orders with people – buying family-size items might not make sense on your own, but they save a ton of money a lot of the time (read the price per unit labels and share with a friend) clean out your freezer and pantry.
We all have foods that don’t appeal to us that we avoid, so now’s the time to eat them up! Declutter and sell items online or to pawn shops you don’t want.
Points cards PC Points – I have no suggestions other than to try to redeem them on a spend-less day (Shoppers will run promos to save $100 of points for $125 of merchandise – or something like that). Airmiles Shop blue Friday but only get items you need.
They buy many gift cards to earn points when they have gift card promos. You can also spend Sobey’s gift cards can be spent on gas (shell), convenience stores (needs), prescriptions (Lawtons) and groceries (Sobeys).
If you know, you will be spending $400 that month on these items, buying the gift cards, and getting the air miles.
You can redeem them later for fun or in desperate financial times. Watch for mega promotions.
This past month I made $100 in Air Miles by buying things I needed anyways.
So this month’s recap went all over the place, but I’d love to hear how people have saved money when faced with an unforeseen financial roadblock and how they make their points cards work.
Here’s hoping things start smoothing out soon!
Budget Report #6 was not set
Budget Report #7
P.S- Don’t forget to leave them a comment about their budget challenge report.
Welcome to our Budget Challengers for 2019 above.
That’s all for this month; check back at the beginning of June 2019 (sometimes in the middle) to see how we made out with our May 2019 budget.
Happy Budgeting CBB’ers!