Q & A: I Earn Too Much Money to Get Financial Help, But I Am in Financial Crisis – What Can I Do?
It’s commonly assumed that people with high incomes don’t need financial help, but that’s not always the case.
A lot of the time, high-income earners have a higher cost-of-living, higher expenses, and higher debt. People with higher incomes tend to live in more expensive areas, have bigger mortgages, buy more expensive vehicles and luxury goods, and are eligible for more credit products.
If you earn a large income, it’s usually easy to qualify for lines of credit, high-limit credit cards, bigger mortgages, and more.
Job loss or divorce can also hit high-income earners harder, making it more difficult to get back to financial health. Those with large amounts of high-interest debt are also more vulnerable to increasing interest rates.
It can be just as easy to go into debt earning $300,000 per year as it is earning $30,000 per year. But when it comes time to look for financial assistance, however, the person making $300,000 per year could find they don’t qualify for many debt relief programs.
If you’re a high-income earner and find yourself in need of financial help, here are some options you may want to consider:
- Debt Consolidation
Depending on the amount of debt you have, debt consolidation could help improve your financial situation. If you are carrying a lot of high-interest credit card debt, for instance, a debt consolidation loan can pay off that credit card debt and leave you with only one monthly payment to make, likely at a lower interest rate.
- Filing for a Consumer Proposal
Consumer Proposals let you make a settlement offer to your creditors to pay off unsecured debts. A Consumer Proposal cannot settle secured debts, such as your mortgage or car loans. If you are struggling financially due to high-interest credit products, such as credit card debt, lines of credit, and unpaid bills not secured by any assets, and your debt is under $250,000, a Consumer Proposal could help you get back on track.
- Filing for Bankruptcy
If your debt is over $250,000 or you are struggling with secured debts, such as your mortgage payments or car loan payments, and the property is worth less than the secured debt, then filing for Bankruptcy may be the best choice to avoid further collection actions.
Although filing for personal Bankruptcy can be seen as a last resort, the reality is that it can be a strategy to protect yourself. It will eliminate most unsecured debts and end collection actions such as property seizures, wage garnishments, and phone calls from creditors and collection agencies.
Other tips for financial well-being:
- Don’t ignore savings. Just because you have a high income doesn’t mean you shouldn’t have a savings account — it’s the opposite in fact. A good rule of thumb is to make sure that you have six months of living expenses saved.
- Think about a retirement plan. Don’t assume this will be taken care of by a pension. You may need more money set aside than you think to maintain your current lifestyle.
- Consider if there is room to pare back your lifestyle. Ask what expenses are must-haves, and what are nice-to-haves. This can be easy to lose sight of when you are earning a higher income, but it is still a valuable exercise.
If you’re finding yourself in need of financial help, Fuller Landau Debt Solutions is here for you. Our Licensed Insolvency Trustees have experience working with people at all levels of income. We will help you deal with your debt and make a plan for future financial success.
Contact us today for a free consultation. Call 416-927-7200 or visit www.fullersolutions.ca.