financial management

The news is full of stories about the rise of household debt. More Canadians are having to rely on their credit cards to make their paycheques stretch. 

Financial trouble can stem not from the amount of debt that you owe but your ability to repay that debt. Whereas some people struggle with $1,000 dollars of debt, others can handle $100,000.  

How do you know when you are heading for trouble? Licensed Insolvency Trustee, Amanda Sherwood discusses the warning signs you may have a debt problem.

Other topics covered:

  • Finding out your net worth – assets and liabilities
  • Setting up a good budget 
  • Different strategies for repaying debt
  • Advantages of budgeting with your family
  • When it’s time to make the phone call to explore your options

If you are struggling with your debt, Licensed Insolvency Trustees can help you take back control of your finances. They are considered some of the best financial advisors in the country and the only ones licensed by the federal government of Canada. 

Wayne Kay 00:04
Welcome to the Debt Matters podcast, where we help Canadians find solutions to their debt with Licensed Insolvency Trustees from across Canada. 

I’m Wayne Kay, and in today’s show, we’re going to discuss the warning signs that you may have a debt problem. Where do you start to determine if there actually is a problem? We’ll learn about some tools, tools that you can use to figure out whether or not you do have that debt problem, including a net worth statement. We’re going to learn how to set up a budget.

And what debt should you tackle first? If you have overextended yourself on credit, what is something that you can do to get yourself back on track in the near future? And finally, is it possible to make budgeting a family affair so everyone is on the same page – children, spouses, everyone. 

My guest today is Amanda Sherwood from Allan Marshall & Associates Licensed Insolvency Trustee with offices in Alberta, New Brunswick, Nova Scotia, Prince Edward Island and British Columbia.

Amanda Sherwood 01:02
Hi, Wayne.

Wayne Kay 01:03
Thanks for coming back. Great to have you again.

Amanda Sherwood 01:06
Thanks for having me.

Wayne Kay 01:07
On our last one, we got into this discussion. We were talking about debts and Bankruptcies. If your spouse goes into Bankruptcy, how does this affect you? 

And while we were discussing all that, you started talking about the other B word, budgets and debts. And I said, well, we have to have you back so we can discuss this again. So, warning signs of debt problems. There’s no big flashing light, is there?

Amanda Sherwood 01:35
No, but lots of ways to figure that out.

Wayne Kay 01:39

Amanda Sherwood 01:39
And it takes some time, but you need to sit down, come to terms with all the information, and then we can hash it out.

Wayne Kay 01:48
Really? It takes time. You probably would know if things are kind of going sideways, wouldn’t you?

Amanda Sherwood 01:53
Yes and no. Most people are living a very fast paced life in today’s world. They’re working paycheque to paycheque. They’re trying to get things paid as they’re due, but not really slowing down to take the time to see, where am I sitting financially, and do I need help?

Wayne Kay 02:11
Okay, that’s a really good point, because we are actually, as a society, I think we really just think about monthly payments. We don’t think about the overall picture. As long as we can afford the payments, there’s enough money at the end of the paycheque to pay for one more thing. Then we’ll go ahead and buy it.

Amanda Sherwood 02:28

Wayne Kay 02:29
So what are some of the steps that you do to figure out whether there is a debt problem?

Amanda Sherwood 02:36
Well, you really need to see your overall net worth. You need to figure out what you have to work with, and you need to sit down and make a budget.

So lots of words here that may not be on everyone’s top of the list, but what do you own? What assets are in your possession? What are they worth? What’s your home valued? What’s your vehicle valued at? Do you have investments? What are your possessions? 

And then what debts do you owe? What are your liabilities? And then what budget are you working with? What’s your overall take home pay? Do you have a fixed income or is it fluctuating? What are your expenses? 

And Wayne, you’re right, most people only are concerned with their monthly expenses, but what about your annual expenses? What about unexpected expenses or things that break down that need to be replaced? Do you have savings factored into that budget?

Wayne Kay 03:38
You’re giving us a lot, right? We’re only three and a half minutes in and you’ve already put all this on our shoulders.

Amanda Sherwood 03:46
It can be daunting, but it’s easy. Once you start getting things down on paper, it’s easier to address in pieces.

Wayne Kay 03:54
So the net worth statements, that’s basically what you’re talking about. When you’re talking about things you own and things you owe money on, how does that help determine the debt problem? And should we call it a problem?

Amanda Sherwood 04:09
Yes, typically it’s a problem if you have too much debt, but debt in general isn’t always a problem if you’re able to service things. But your net worth statement is a great place to start because you need to see, are you overextended?

Have you borrowed more money than what your assets are worth? Is your net worth statement positive or negative? Once you take the value of your things minus the total of what you owe, if it’s negative, then we should investigate to see if it’s a problem or if you can climb out of it.

Wayne Kay 04:47
Okay, and so how do you go about doing that?

Amanda Sherwood 04:52
So that’s where it comes into setting up a good budget. When you’re doing your statement, you want to start with, again, the value of what you own and then listing all of your debts, total amounts, then we’re going to break it down into your monthly budget. 

It can get tricky when you have a fluctuating income. That is where people struggle a lot. I typically recommend that if you do have a fluctuating income budget on your lower months that you earn, because then if you have a higher income, then you can use that for more discretionary things. But if you keep your budget at an income that you know you’re going to receive, then you’re not setting yourself up for failure.

You need to figure out what your fixed expenses are. So your housing, your vehicle, those things that you have to pay each month, groceries, and then you’re going to break down your variables. What do you want your fun money to be that fits within your budget and make sure you have savings accumulated in there. 

Then what do you have allocated to debt repayment? Because it shouldn’t really be more than 20% of your income overall that you’re sending to debt repayment. If it’s much higher than that, then that could be a problem.

Wayne Kay 06:11
I’m a numbers guy. So roughly, let’s use that as our number 20%. If we’re using 20% of the paycheque to pay down debt, that would be bad. Now, would that be just regular consumer debt? That wouldn’t be your mortgage, your car payment?

Amanda Sherwood 06:27

Wayne Kay 06:27
Your credit cards? You’re talking more like that nasty credit card that’s always lingering, right?

Amanda Sherwood 06:34
Yes. I wouldn’t include your mortgage or your vehicle, but all of the other revolving.

Wayne Kay 06:39
Credit, by the way, I just punched up that stat. I was looking at what the average debt of Canadians, and I think the average consumer debt, like credit cards, was like $17,000 to $21,000.

Amanda Sherwood 06:54

Wayne Kay 06:55
Does that seem right to you?

Amanda Sherwood 06:57
Seems a little accurate and probably a little bit more in some areas, of course. But that is average.

Wayne Kay 07:04
Okay. I thought that was high, and I would definitely be a little freaked out if it went to that.

But sometimes you see that sometimes it is no fault of somebody’s own on why they’re in a situation. But there is help available. So we’re going to talk about that. So setting up your budget, how do you figure out which debt to actually tackle first with that 20%?

Amanda Sherwood 07:30
This is a good question because this varies on personal preference, really. There’s a few different ways to do it.

I like focusing on the largest debt with the largest interest. I really don’t enjoy paying interest, so I try to do my best if I need to use credit to make sure I’m getting things paid quicker before that gets tacked on. 

But I’ll tell you, the general public typically do better by tackling their lowest amount owing first, because how you would set it up is you would figure out what are your minimum payments for all of your debt. Then whatever one you want to tackle, you’re going to use your debt repayment allocation, budget amount. After you take out minimum payments, what’s left over that lump sum is going to go on that smallest debt until it’s eliminated.

And then you start to snowball to the next lowest amount owing and keep adding that balance until you get to the largest one. So as you eliminate that credit, it’s a nice feeling, it’s a good psychological feeling that you’ve actually paid that off and it’s done then move onto the next.

Wayne Kay 08:47
And that is a part of it. Right. Our psyche, that’s just the way we’re built.

Amanda Sherwood 08:51

Wayne Kay 08:54
All of a sudden you have this consumer debt. So let’s say there’s two or three different ones, like as you’re mentioning, you tackle one, then go to the next one. Is it worth it to put it all onto, let’s say, a line of credits, which may be 8% or 9% instead of having 15 or 21%?

Amanda Sherwood 09:14
Yes, certainly. So if you have access to be able to move that around that you haven’t utilized all of it, then you would definitely want to look at moving a higher interest credit payment onto a low interest line of credit and eliminate that credit card. 

But a problem that might arise, and what I see often is that when people are struggling and they don’t realize that they’re in too deep and they try to move those things around. Tthey end up going back and needing to use that credit. So before you move things around, just make sure you’re not just basically moving debt from Peter to pay Paul, as they would say yes, and make sure you’re addressing the whole issue. 

Absolutely, if you have some debt on a credit card and your line of credit is open and it’s a lower interest rate, certainly transfer that over and then you’re paying less interest and you’re sticking to your against snowball payment. 

But when you are at a point in time where you’re ready to tackle your debt, you need to set up a proper budget that has a fixed debt repayment plan and then not use that credit again going forward, it’s to eliminate it, not to get yourself in that vicious cycle.

Wayne Kay 10:27
And I see there’s a lot of advice on TikTok and Instagram and different places of how to not use your credit card for, let’s say, 48 hours, places to, to hide it so that you can actually use it. So, yes, there actually are, there’s about three good things on TikTok and that might be one of them. The rest of it I can do without. 

If you are feeling like you’re a little bit overwhelmed with all these different debts that you’re trying to tackle and the budgeting, when is the right time to make that phone call to a Licensed Insolvency Trustee?

Amanda Sherwood 11:08
Really, at any point. I want to talk to everyone. If you have debt that causes you stress, if you are not able to pay all the bills as they’re coming due, if you’ve had an interruption in your income, if you’ve had some type of life altering event that has changed your circumstances and now you’re not able to pay things as you used to. I want to talk to you so I can explain your options to you. 

And even if maybe there’s not a problem today, but you see it coming down the road, that’s even better because usually if you’re not in too deep of water and you have the ability to navigate and move things around, then there may be even more options that you don’t realize because you’re not aware of them. 

So, again, a Licensed Insolvency Trustee is a good person to talk to to get all of your options. If you have a lot of debt, whether you’re making all those minimum payments, is the debt going down or are you just paying interest back? Have a chat so that you can get your options and then you’ll know what you can do and make a decision then, right?

Wayne Kay 12:24
So let’s talk a little bit more about the budgeting world and making it a family affair. I would assume we want everybody on the same page.

Amanda Sherwood 12:36
I’m really passionate about this topic on bringing the budget into the household, because I don’t feel like it’s taught enough in school. I don’t feel that a lot of children understand the value of money or what credit means. 

I am speaking to a lot of debtors that really don’t understand credit use, obtain it easily because let’s face it, the banks are in a sales position where they’re trying to sell you products. So if you meet their criteria, whether it’s a good role for you to actually take that debt on, if you meet their quotas, then you’re probably getting that credit. And a lot of people they speak to don’t really understand how that affects them or how to calculate interest or what they’re responsible for so it can spiral quickly.

It’s important to educate and be on the same page and create a budget so that people know this is the income that I have, this is the means that I can live within. Some things need to get adjusted or as we save towards our goals, instead of living in more of a – I want this now type of mentality, save for things because your future depends on it. Get yourself in a financially healthy position so that down the road you’re not in a position where you’re overextended.

Wayne Kay 14:10
I love that. In fact, I just saw a Susie Orman –  I think it was a TikTok.

I haven’t ever talked about TikTok as much as I have with you. But she made a comment that if we could get as excited about saving as we do spending, we would be in a far better place.

Amanda Sherwood 14:31
Exactly. I’ll tell you, I did get lucky with my spouse because he loves Excel spreadsheets. And we built a quite elaborate spreadsheet to incorporate every possible expense you can think of and broke it down over the course of a year to see what we needed to allocate where to make sure we could accommodate all of our expenses and then had a little bit of basically extra to save for the unexpected.

And I’ll tell you, it has been life changing to be on the same page and have that budget and stick to it. And we’re bringing our children into it too. So allowances – we have young children – allowances and taking them to the store. I want all these toys. Well know that things cost money and I want to teach them the way of the world so that we all can be financially healthy in our future.

Wayne Kay 15:23
And there’s nothing better than that feeling when you come out of this debt and people – do you see it every day where you help them. They’re in a terrible financial situation. Whether they maybe do a Consumer Proposal, maybe they do a Bankruptcy, but a year down the road or five years down the road. Their lives are completely turned around for the good.

Amanda Sherwood 15:44
Exactly right.

Wayne Kay 15:46
So just because you’re in that situation today doesn’t mean you’re going to be there for long. We need to work together to get out. I love this whole budgeting. Bring the family in. How about it for dealing with our teenagers? Do we let them know what’s going on in our houses for finances?

Amanda Sherwood 16:02
Personally, I would say yes. I know that some parents don’t feel that their kids need to know their personal information, but you do need to prepare them for the future. So I say the more information the better. Let them pay bills.

Let them see what a bill that comes in. Let them see what the power bill is when they are using too much energy, things like that. So I’m an advocate for budgeting with kids at any age and doing allowances and even instilling. Okay. We have to keep a certain percentage in your savings account.

And you do have to save for things. It’s not impulse buys and wasting your money. Because I want them to have a sound future too. And the way of the world, with everything increasing in price, astronomically, more saving the better.

Wayne Kay 16:57
Yes. I love it. Well, if people have questions, of course they can get a hold of you through, the website Amanda, thank you very much for all this great information.

Amanda Sherwood 17:09
No problem. Thanks for having me.

Wayne Kay 17:11
My guest, Amanda Sherwood. And if you’d like to learn more or schedule that free consultation with Allan Marshall & Associates Licensed Insolvency Trustee. As I just mentioned, the website is

That’s it for today’s Debt Matters podcast. And make sure you subscribe wherever you get your favorite podcast from. We can cover so many great topics when it comes to debt. And if you want more information, you can always check out Thanks so much for listening.

About Amanda Sherwood

Amanda started with Allan Marshall and Associates in 2008 as an Estate Administrator. She has since received her Chartered Insolvency & Restructuring Professional (CIRP) and her Licensed Insolvency Trustee (LIT) designation in 2022. 

The most rewarding part of her job, Amanda says, is hearing her clients say how relieved they are after meeting with their office. She reminds everyone that they are not alone and that help is available to get relief from insurmountable debt. 

Additional Resources