Urgent cost cutting needed to keep family with net worth of only $139,791 afloat as retirement nears

Situation: Heavily indebted couple faces end of disability payments in two years

Solution: Cut expenses, consolidate loans and keep working beyond 65

A couple we’ll call Harry, 63, and Suzy, 60, live in Ontario. They have two kids at home, one with three years to go to finish university, the other in Grade 10. Suzy is an office manager. Harry is very ill and on disability. Their income totals $84,220 per year before tax, but it will soon shrink. $30,000 of that sum is Harry’s corporate disability payments based on serious neurological issues. Payments end when he turns 65 in 2020. A CPP disability payment of $10,800 per year will also end when he moves into a long-term care facility. The kids get $244 each as CPP dependents and that, too, will end in the fall of 2020. The couple rents out an apartment in their basement for $900 per month.

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The situation is grim just in terms of declining income, but it gets worse when you consider their balance sheet. They have a $360,000 house with a $240,000 mortgage, two cars worth $20,000 in total against car loans of $23,269, and $15,100 of credit card and credit line loans. They have $51,160 in their RRSPs and must still repay $13,000 taken out as part of Home Buyers Plan loans. Their net worth works out to $139,791.

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