CBC Manitoba

Working Poor

Just because you have a job it doesn't mean you’re not poor. Many Manitobans hold down full-time and/or part-time jobs but still live in poverty.

Full-time workers with low-paying jobs are counted among those who live in poverty. Manitoba’s minimum wage is $9 an hour or $18,720 before taxes for a 40 hour week - one of the reasons working people with families are turning to food banks.

Across Canada, 19% of people who used a food bank last year had a job or had worked recently.

Blog- Edward Fread

Edward Fread and his wife are both working but buried under student loan debt, repayment of which takes one-fourth of their monthly after-tax income of $4000. Edward has a Masters degree in Archeology and his wife, who works part-time due to injury and child-care responsibilities, holds a Masters degree in Occupational Therapy. They are living hand to mouth after accumulating $90,000 in student loans and just one unexpected bill away from financial disaster.

Day 1

I am 39 years old, married, I have a Master’s degree and am a working professional and I am having great difficulty making ends meet financially.

I have a lovely wife of almost 10 years and a wonderful son aged 15 months. My wife and I are both working professionals with Master’s degrees. My wife is an occupational therapist and I am an archaeologist. We have both worked for years in the fields that we have studied and trained for and where we have worked our way up to better than average incomes. On paper we look financially great! We look like we should have our finances under control with disposable income for comfortable living. Unfortunately, this is not close to our reality.

Those who are reading this will be asking “what are they spending their money on?” “Are they the ‘must have’ people we hear about – the people that must buy the latest electronics, newest clothes, automobiles, etc.?” The answer is simply … no. We do not spend our money impulsively, we do not have to have the latest gimmicks, and we are not really materialistic (or so far have not had the means to be so).

We are like many Manitobans and Canadians: mired in debt that seems to be insurmountable and impossible to find light at the end of the financial tunnel. Part of our debt comes from the standard cost of trying to live the typical adult life: mortgage (we own a small 2 bedroom bungalow), car payments (a single vehicle, purchased used), insurance, food, clothing, etc, nothing extravagant. Over one third of our entire debt load is attributed to one source and is the topic of this blog.

Paying for our education has put us in financial turmoil. To be more specific, the drive for us to educate ourselves; to get the job we knew we wanted to get to improve our lives put us into a flaming debt-ridden tailspin without a parachute. Yes, we went after our academic pursuits in order to get the dream occupations, BUT we did not have the ability to pay for the immense costs surrounding the degrees we sought.

Student loans were the magical answer.

"We will borrow now, then when we complete our studies the jobs we get will more than provide us with the money required to pay back the loans in a timely fashion."

Oh how naïve we were!

Day 2

As mentioned, we are inundated in debt and a large portion of that debt looming over us is due to student loans to continue our university education. I am not saying we are worse off than many Manitobans; I know that many people are experiencing hardship that I can only imagine. I feel that I am still fortunate to have what I have and to be able to do my job and live my life as it is. I am just telling the story of our financial situation.

With two degrees apiece, my wife and I each had to borrow annually for almost a decade of university tuition and all corresponding expenses. I had to approach my bank for student lines of credit to assist me when I spent three consecutive summers in fieldschool and other training as an archaeologist. Those who have gone through the university system know that the summers are the most important and only time to earn money for the following school year. Over that time we amassed a debt that was inconceivable.

Stress builds in a body from a small nagging uncomfortable itch eventually into an all encompassing full body muscle spasm. Financial worries are one of those stressors. It's not just worrying about paying the debt accrued, but worrying about how to pay for day-to-day needs when any extra money is going into the student loans debt. We have had many sleepless nights worrying about how to pay down the debt, or how to find money to pay for groceries, gas, rent. Living on credit cards when there is no longer any cash available, then as the credit card debt increases – so does the worry.

Now that we have graduated and have been paying off loans for over 5 years, we still are in the same stressful situation; albeit in a different package. For example, instead of rent we have purchased a house.

As for daily activities, an example is our grocery shopping. We don’t just purchase our groceries, a lot of the time we have to pre-plan our meals and keep in mind how much we can spend during one pay period. Baby formula, fruits, vegetables and meats we use to make meals for our son is the first priority, we do not cut corners or hold back when it comes to him. Our meals are almost always prepared at home; we do not go out for dinner except for rare or special occasions.

Over the last fifteen years, the student debt is the main unchanging factor and it directly affects all aspects of our lives.

Day 3

Student debt controls how we live our lives; it is as simple as that. My wife and I were unsure if we would ever be able purchase a house. Our combined student loan payments amounted to $1500 a month, then the rent, credit card bills and day-to-day bills limited our ability to put aside extra money for a down payment. The banks essentially laughed us out of their offices when we looked at having a pre-approval for a mortgage. We were not worth touching due to our massive student debt and credit card balances and were not given assistance in making a plan for the future. We were not worth the time or trouble.

This was one of the saddest times for us; we have both recently graduated and were working in the fields that we toiled so hard to qualify for. We were on top of our world, but for a short while that came crashing down. In our life plan, a house and family were the next major steps. Being denied a mortgage took the wind out of our sails.

Not to be outdone, my wife suggested we talk with a realtor and see what they could suggest. Fran Ciccerelli of Royal Lepage was the guardian angel we were seeking. She had a working group network of professionals in all aspects of the real estate business. She put us in contact with a mortgage broker at One Link, who shopped around for the best pre-approval amount at the best rate in the city. This turned out to be Crosstown Civic Credit Union. They not only pre-approved us for a mortgage, but helped us consolidate some of our credit card debt; which gave us some financial room to put towards buying a house. We knew that we could not afford a large house; and would not be able to participate in the bidding wars over houses in Winnipeg. We were limited, but we had everything in order to proceed. With all this help, we were able to buy a nice, small (680 square feet) two bedroom bungalow that was now our own home. It is unfinished and cramped but it is ours and we are very proud.

Buying a house did not give us any financial freedom; what it did provide was almost as important … equity. We have been paying ourselves with each mortgage payment; this gives us collateral as we hope to reduce our student debt and get our lives back in our control.

It is ironic to think that putting ourselves much further in debt with a mortgage actually gives us hope for a future of being free of our student debt.

Day 4

With a house purchased, the next step was a family. This too was partially dictated by our student debt. We delayed having a family for years; simply because we felt we could not afford to raise a child when we were living from paycheque to paycheque. "What kind of life can we provide to a child when we are on the edge of financial failure?"

But we also realized we were getting older and only had a few healthy, risk free years ahead of us before it would be too late to have children. So we had our son in December 2008 and our lives changed forever.

The added costs of preparing for our baby were insurmountable. We were prepared for the most part; purchasing the typical baby items (crib, dresser, car seat, stroller, etc), but additional costs were adding up. Both my wife and our son experienced a series of health issues post partum. From this, the medication prescriptions were in the thousands of dollars. Luckily we had Blue Cross coverage at 80%, although some prescriptions were not covered at all. We also had to pay out of pocket and wait for the reimbursement for the medications that were covered. On top of that was the cost of medical equipment required to assist both my wife and our son. These were hard times emotionally, physically and financially. Our credit cards were maxing out again and bills were not being paid on time. My wife’s maternity leave income is of course greatly reduced when compared to her usual income and although we knew this was inevitable it was painful to work through. It seemed that we were falling backwards into financial collapse at a time when we were also experiencing the happiest time of our lives. This was an intense mix of emotions.

It is hard not to get angry at our student debt during times like this. As mentioned earlier we were paying $1500 monthly in student loan payments. Imagine what you can do with an extra $1500 a month! When we have to make a decision between purchasing formula and paying a hydro bill, the formula will win out every time. Unfortunately, the hydro bill does not go away. Then the letters and phone calls (from bill collectors) begin which increases stress in our daily lives.

It is not a good feeling to worry that hydro or electricity may be cut off because you cannot pay the bills. That contradicts my sole purpose of trying to make a better life for my son and giving him everything he needs to experience a rich and full life.

Day 5

The student debt that my wife and I accrued was for a purpose, our education and the opportunity for a better life. We just had a goal to meet and the student loans were the means to the end. It is unfortunate that we have worked hard to get to this point in our lives, but are not in a position to be able to fully experience it.

Every purchase we make we must think about and plan ahead. We have to weigh the consequences of filling the car up with gas or just putting in $20; or whether to completely pay the hydro bill or just half so that there is some cash available for other expenses. I have a brief sense of panic and dread when driving the car to work and feel it shudder for no reason and thinking: “is this a mechanical issue that will cost me?” One more large unexpected expense at the wrong time will almost crush us. How are these thoughts the thoughts of a person in the middle of his adult life? According to the movies I should be shopping for a convertible sports car not delaying a grocery shopping trip until close to the next pay period.

One of the bigger questions I have asked myself is … where has our money gone? Well after some calculations, it becomes quite clear. Over the last five years my wife and I have paid out close to $70,000 in student loan payments – both government and bank student lines of credit. Over half of that went into the interest payments on that debt.

Then more reality; we still have 10 years of payments to go. I will be closing on age 50 when all our student debt is paid off ..j. ust in time to pay for our children’s education and also pay into a retirement fund so we may be able to enjoy our golden years. Incidentally, as soon as our son was born we began a Registered Education Savings Plan for him. It will not be a lot of money when he goes to school, but it will start him off and reduce the need to borrow to get him through school. It would be terrible to witness our son go through the struggles and stresses we went through. Life is tough enough without those added problems.

Speaking of a tough life, you have to be optimistic to get through it. And I have gratitude: (1) because of the student loans, I have a Master’s degree when I never would have thought of myself as academic; (2) my education and training has given me a good occupation and a job that I love to do and feel lucky to be a part of (something rare in this day and age); and (3) I have a great appreciation for even small luxuries, and I believe that I will never lose that feeling and will not take such things for granted.

They say "hardship builds character" and I can say with great certainty that I was a character before I had hardship and that the hardships have just accentuated it!