The people

Janis and James, both 40, live in Toronto with their infant. James works outside the home, earning $130,000 a year, and Janis is at home with their baby.

She does not receive any maternity leave because she was downsized from her job prior to getting pregnant. She also had not built up enough hours to qualify for employment insurance benefits.

The problem

While the couple is able to meet expenses on James’s income, they are not able to put a dent in eliminating their line of credit. They also had to put investing and saving on hold as they manage on one income and the added expense a baby brings to a household.

They may have to put some things on hold, such as gym memberships and travel if they don’t have enough saved. “These things won’t have to be on hold forever, but if they can go without some of it for now, it will help keep them from adding to their debt until Janis finds a job,” she says.

When Janis resumes working again, she should allocate her income to lump sum and annual expenses shortfalls first and increasing their line of credit payments.

Currently, they are on track to eliminating the debt within 10 years. Richardson would like to see it gone in half that time.

“Once the line of credit is paid down, the more available credit they could utilize in case of an emergency,” she says. “Otherwise, it would be difficult to save emergency funds while they are paying child-care costs.”

The couple also needs an insurance review. They each have term policies but they fall well short of taking care of the mortgage, other debts and future child-care expenses. They should consult an insurance broker to get the most competitive rates.