17 September 2009

Money, money, money

Woohoo!! my Employment Insurance Work Share Program claim finally started paying out :) What shall I do with the boatloads of cash? Well, first off, I miscalculated how the payments were made and I'm getting less than I thought I would. Ok, no problem, I'm still getting something. I hadn't really planned on where to spend it as I wanted to make sure the payments were actually coming in first. In the meantime, I learned that that government had assessed my tax return and I owed some money to the Alberta Family Employment Tax Credit, Child Tax Benefit, and the GST refund. All told I owe a little more than a month's salary on those three things.

So I was sitting in front of my computer and wondered, "if I owe money to those government agencies because I mistakenly claimed as 'divorced' instead of 'common law', would my tax refund that I received in February have been affected? Nooooo, my taxes are based on my income, not total household income, right?" Wrong. It turns out I owe Revenue Canada Taxation some money too. Now I owe a total of about two and a half months of my gross income. aka: the price I paid for my car. aka: my entire tax refund I received in Feb plus 10%. Sigh.

I called Revenue Canada right away to find out how they collect their money, like can it wait until I file taxes in Feb 2010 and just deduct what I owe from that potential refund? Oh yes, I can :) In the meantime they can garnish my wages if they want and interest will accrue compounding daily. Actually, there is already interest charged on it from the date of filing my taxes six months ago. But only interest on the Revenue Canada amount, the AFETC, GST and CTB don't accrue interest as they are credits from the government. I just owe the amount paid to me on those. So I will start paying the RC amount first to avoid more interest. Well, and I don't want them dipping into my wages. So my EI will just be transferred over to RC until the EI claim runs out.

And thinking of that, people at work think the EI claim will last for 42 weeks, which is the maximum a claim can last. I was in the vicinity of Accountant's office today so I poked my head into his office to ask if Big Boss had talked to him about the missing stat holiday pay on our cheques (he had, his mistake, will be fixed on the next cheque, some people at work think it was on purpose, lordy). While I was in there he confirmed that EI was paying out and I said it was, although some staff have minor complaints about it (like: why did I receive only four cheques out of seven weeks?(it pays out every two weeks but itemizes the receipt weekly) or: why did you get yours before I got mine (because someone has to be first and someone has to be last, it's not personal)) We rolled our eyes in unison about that.

Then Accountant then told me that the claim is only approved until the end of October. Huh. That'll come as a shock to some. I decided not to tell anyone at work for fear of Ensuing Drama. It's enough that one person thought the claim took a long time because the EI department didn't like us (yes, a whole government agency dislikes our work place and dragged their feet on purpose), and another was insulted at having to hold for 25 minutes when she called the EI help desk (more people are on EI than ever before, why would the wait times be less?), and yet another felt the bosses deliberately didn't file the claim until they were forced to (I found out they did file but were turned down. They had to revise their plan for getting us back up to five days a week, refile, and then get approved, that's why it took three months). So I'll just let my coworkers find out this tidbit of info another way.

As I was learning about all this new debt being piled on to me, my boys were bugging me for money. So I took this as a Teachable Moment and explained the vicious circle of debt to my boys.

The problem, I said, is that it's difficult to get out of the cycle of debt once it's been started. First, you accumulate debt on credit cards, lines of credit, store cards, and personal loans. You can make the minimum payments, so no problem right? Well, the day will come where your minimum payments are so high that there is no money in your budget to cover unplanned expenses (car repairs, school, clothes, dentist, etc) so....you use the credit card that you have paid off a little. Now you owe more debt. But now the next month you still have no extra money for creature comforts, so out comes the credit card. Stopping that cycle is easy enough in theory: stop spending money on things you don't need. But by now your debt load is so high that you really aren't buying unnecessary items anyway, or you've become so used to creature comforts that they feel like 'needs' instead of 'wants'. Finally, you start to get ahead. You have a debt repayment plan that is working, there is a bit of extra money for treats, debt is being paid, monthly bills are not in arrears. Then something major happens. Like you lose your job, your hours at work are decreased, your wage was rolled back, unexpected debt (taxes, divorce, marriage) comes along, or one of your loans is called and the balance is due immediately.

Now what? Back to cutting expenses, eliminating treats, or get a second job. I have come to realize that it's extremely difficult to build an emergency fund while paying off debt, that emergencies happen without the budget's consent, that debt can cling for years longer than you'd thought, and that while it's easy to adjust my budget up, it's difficult to make cuts.

What did my boys get out of this, er, lecture? Hopefully that it's difficult to pay debt once it's owed, but probably that it can be paid eventually as long as they 'stay in control'. Sigh.

1 comment:

Chantelle said...

I'm happy to hear that your EI came through... but the fact that it won't last long sucks. As does the mix-up with RC and its associated agencies :(

Every time I file my taxes I get to see the difference between filing on my own and as common-law. And it pisses me off every time to see that I get less $$ because I'm common-law. I think being married has the same tax disadvantage and I'm not sure I understand why they do that.

You and S will eventually get your way out of debt. I know it seems overwhelming now but eventually you'll get out. Sucks in the meantime, though.