How to Budget During a Consumer Proposal

Tips to Help Shift Your Financial Mindset and Tackle Your Debt Head-On

After filing a consumer proposal to help manage large amounts of debt, it’s common to go through a period of financial stress and feel like there is no end in sight.

And while consumer proposals require applicants to take debt counselling courses and to develop personal budgets, shifting your mindset and learning how to deal with your consumer proposal payments and ongoing obligations can be a challenge.

Budgeting Tips During Financial Stress

If you come to find yourself in a difficult financial position and turn to a consumer proposal as the solution to help tackle your debt, it can be hard to know where to start when it comes to getting yourself financially back on track.

The first step is the easiest – develop a budget, put it in writing, and stick with it. Here are a few tips to help you move forward.

Determine Your Monthly Income

The first part of the budgeting process is to figure out your exact net monthly income and determine how it compares to your expenses. Work with your net, take home income. Be sure to include all income sources – tips, bonuses, government benefits, spouse’s earnings. Also, if you are paid every 2 weeks, and receive 26 paychecks a year, to determine your actual average monthly net income, you will need to multiply your average net pay by 26 pay periods and divide by 12 months.

Putting all of this information down in writing – your budget – will help you understand how much you have to spend. As you will not have credit while you are in a consumer proposal, you will have to limit your spending to the amount of your net income.

Assess Your Expenses

After you’ve established how much net income you have coming in, you’ll need to track your monthly spending, and come up with a list of all of your essential and non-essential expenses.

Essential expenses include:

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  • Rent
  • Mortgage payments
  • Basic cell phone bill
  • Essential internet
  • Non luxury transportation or public transit
  • Groceries
  • Necessary clothing
  • Essential insurance
  • Medical needs
  • Spousal or child support


The following are some examples of non-essential spending:

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  • Eating out at restaurants or ordering takeout
  • Taking rideshares like Uber or taxis to get around
  • Impulsive shopping
  • Grabbing a specialty coffee, or two every day
  • Frequently going to the movies or a concert
  • Excessively large gifts to friends or relatives


You should be tracking all your spending – every day – for at least a month. The more months the better. Writing down your spending every day becomes not only a valuable source of information on spending, but also a control over impulse and non-budgeted spending. Many apps are also available to assist you. And if you pay for all purchases by debit card, or pre-authorized debits, your bank statement will be a good source of information to summarize your spending.

Learn to Live Within Your Means

Once you have gotten into the swing of tracking all daily and monthly spending, start looking for expenses you can cut back on. When paying down a large amount of debt, or a consumer proposal, it’s crucial that you don’t spend any money on things you do not need.

This could mean bringing your lunch from home instead of eating out, inviting friends over to your home instead of meeting at a bar, shopping at thrift stores, and finding recipes that involve fewer ingredients when cooking at home.

Here are a few additional tips for cutting back on your expenses:

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  • If you have multiple streaming service subscriptions, cut back to just one
  • Avoid eating out at restaurants and drinking in bars
  • Make your coffee at home instead of hitting a coffee shop
  • Shop at a grocery store that has weekly specials
  • Bicycle or carpool to work
  • Use less electricity to reduce your hydro bill
  • Try to cut back or quit smoking
  • Make your own wine or beer
  • Exercise at home rather than a gym
  • Reduce amounts spent on vacations, birthdays and holidays


Only Use Cash

Paying for everything with cash, and avoiding the use of a debit card, is a great way to keep track of everything you spend money on. When you use cash, you’ll become much more aware of what you are buying and you will reduce impulse purchases.

Create Short-Term Financial Goals

Whether it’s cutting back on expenses, or tucking away a certain amount of money into savings every month, setting attainable and achievable short term goals – and putting them in writing – can help you be accountable to yourself, and to show you that you are actually making progress in your journey to paying off your consumer proposal debt.

Reward Yourself

Getting your debt under control is something you should feel proud of. Filing a consumer proposal is not an easy decision, so taking those first steps is something that should be rewarded.

After some time has passed, and you’re feeling more comfortable about your finances, it’s important to treat yourself so you don’t feel completely deprived. You remain committed to budgeting and saving!

But that doesn’t mean going out to buy yourself a new car or TV. Think smaller, and treat yourself to dinner at a restaurant, new clothes, or even just a coffee and pastry at your favourite coffee shop. Just be sure to not make it a regular habit.

Work to Rebuild Your Credit

Once you’re on a more stable financial footing, it’s time to turn your focus towards rebuilding your credit.

First, pay off your consumer proposal as soon as possible. You cannot miss payments, but you can pay it off faster than agreed to without penalty. The sooner it is paid in full the sooner it will be struck from your credit report. Note the consumer proposal filing is removed from your credit report 3 years after the last payment is made to the Trustee of the consumer proposal.

During the term of the consumer proposal, and the 3 years after it is paid, there are steps you can take to improve your credit score.

One of the simplest ways is to apply for a secured credit card. A secured credit card requires you to make a deposit before it can be used. This may become your credit limit, at least at the beginning. Over time, the lender may extend you some credit over and above the deposit amount. Be sure to confirm the lender will report your secured credit card payments to the credit bureaus, Equifax and TransUnion.

If you have a steady income, it may also be possible to get approved for a car loan during and immediately after completing a consumer proposal. A larger than normal down payment may be required. Also expect that the interest rate you will have to pay will be quite high. If you have a co- borrower, the loan terms may be substantially better.

Other ways you can improve your credit include paying all of your rent, utilities and insurance bills on time and not missing any payments.

When faced with a large debt load that can only be eliminated by filing a consumer proposal, you will need to work with a Licensed Insolvency Trustee who will guide you through the process. You will also be required to attend debt counselling sessions that cover budgeting, rebuilding your credit rating, and other long-term debt management strategies.

Baker Tilly Ottawa Ltd., formerly Collins Barrow Brown Inc., is a Licensed Insolvency Trustee that has been servicing Ottawa, Gatineau and Eastern Ontario since 2002. Its licensed professionals have over 100 years of combined experience helping individuals through financial hardship. They have overseen thousands of successfully completed bankruptcies and consumer proposals. Their passion – their mission – is your health and well-being!