While Paula, 37, has been in the dumps over her finances, a small remedy is an expected $7,000 to $15,000 she’ll be receiving soon “settling a pay equity case.”
Paula, 37, works in tech earning $92,000 a year — an increase from her previous job in health care.
“I drive a 2009 car that I bought with cash a few years ago. I haven’t travelled in two years,” she said. “What’s probably my most important non-essential expense is sporting goods — bikes, skis, equipment and clothes,” she said. “I also needed to get an almost entirely new wardrobe because of pandemic weight gain.”
While she’s been in the dumps over her finances, a small remedy is an expected $7,000 to $15,000 she’ll be receiving soon “settling a pay equity case.” Paula has incurred a lot of expenses to get two master’s degrees, but it has benefited her career trajectory. She now earns almost six figures. The question now is whether her accumulated debt will weigh her down and whether she should build a house or not.
I would be inclined to use the expected payment from her pay equity case to pay down her credit card debt. When you have multiple debts, it generally makes sense to pay down the highest-interest debt first. She will probably have 30 per cent tax withheld on her lump-sum payment and her tax payable on this amount could be a little higher, so she should anticipate another $500 to $750 of tax payable next April.
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