01/31/2015 12:39 EST | Updated 04/02/2015 05:59 EDT

Disability and Debt: When One Happens to Canadians, the Other Follows

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Phil Stewart-Burgoyne was earning great money in a highly specialized job: Driving a stand-up order-picker. He had a nice house and a strong credit rating -- life was good.

But he couldn't sleep. He heard loud music in his head, even though none was playing. In 2007, he asked his boss for some time off from work. The doctors thought he was suffering from depression. Instead, it was a neurological disease called Charcot-Marie-Tooth.

He was only 50, but he never worked again. I learned about him in my role as Executive Director, when he reached out to Consolidated Credit for help.

"It was totally out of left field; I never saw it coming," recalls Phil. "I guess my body did, and my mind did, and it was trying to tell me something."

As a union member, Phil had a disability insurance policy in place. Unfortunately, his insurance payouts were far less than the wage that he was used to. A loss of employment also meant a loss of identity, and Phil filled the emotional gap by spending money he no longer had. Within three years, he was $35,000 in debt.

"You got these credit cards, you get a cash advance, you end up going to the slots because you have nothing better to do, and it just gets worse... I was bored, I had nothing to do," says Phil. "I've never been like that in my life. Since I was 13, I've always worked."

Many Canadians are well aware that a disability could occur at any time. Ninety-six per cent of us believe it, according to a recent RBC survey. The same survey showed that more than three-quarters of us also believe that missing three months of work, due to disability, would put us in serious financial jeopardy.

But here's the kicker: only seven per cent actually think they have a chance of disability. That's right -- nearly all of us believe a disability could happen at any time, but almost none of us believe it could happen to us.

Phil warns people to safeguard themselves. He told me he was lucky to have disability insurance, but he wishes he did more. The stats agree with Phil, because one in three Canadians will experience a period of disability lasting longer than 90 days during their working lives.

Here are some steps you can take to prepare yourself for a possible disability:

Know where you stand. A budget is nothing more than a snapshot of money coming in and money going out. Use a budgeting app or old-fashioned pen and paper and find out exactly what your money is doing.

Adjust your spending. Once you have completely audited your spending, the results might surprise you. Find areas where you are spending too much, and try to make cuts. In the event of a sudden disability, you will probably find that your expenses far outweigh your income, so it's best to try to close that gap as best you can. Restaurants, cable packages, and cell phone plans are good places to start.

Disability insurance. If your employer offers disability insurance, make sure you fully understand the terms and coverage. If you don't receive disability insurance from your work place, speak with an insurance provider -- coverage can be affordable and invaluable.

Stay healthy. There are some disabilities that we simply cannot protect against, but there are many that we can. Exercise, eat right, and quit smoking, and you'll prevent a lot of problems while increasing your quality of life. Healthy living not only benefits the body but the mind as well.

Get help. If you are treading water with your debts while healthy, a disability will most certainly cause you to sink. Talk to a financial advisor or a trained credit counsellor to find out the best way to get financially healthy.


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