Kristy, 29, is finally back to work as a server. She wants to move to Australia, but has $10,000 in debt. What next?

Millennial Money is a weekly submission-based series that provides financial advice to millennials in the GTA. Read the full series here.

For Kristy, a 29-year-old Toronto millennial, Ontario’s gradual reopening has been a blessing.

“After the constant on-and-off, restaurants opening and closing — vaccinations and low numbers are giving me hope that I can earn some money again,” she said.

Working as a server, Kristy lost her job early in the pandemic. She returned to work part-time when things reopened the first time last summer, but was laid off again when numbers rose over the winter.

“Because of my rent and my declining mental health I found myself ordering a lot or buying things online to compensate. Now I have $ 10,000 in credit card debt and want a clear way to pay it off,” she said.

Now with the end of the COVID-19 pandemic in sight, she’s been getting back to her job working full-time at a restaurant on King West, earning around $ 2,500 to $ 3,000 a month. She hopes to pick up a second job to pay off the credit card debt she accumulated during the pandemic.

With parts of normalcy back, however, Kristy says she’s spent more on patio outings and hanging out with her friends. “Yes, I’ve been working more, but I miss seeing people, too.”

On work days she gets staff meals, so that helps save on some food costs — however, she still orders UberEats for other meals. On days off she goes to the beach, the park or a patio for drinks.

Kristy lives with two others in a Toronto basement and pays $ 700 a month in rent. She hopes after paying off her debt she can start saving to move to Australia or at least to rent out her own spot if travel isn’t back to normal.

“I have been surviving off $ 900 every two weeks from CRB (Canada Recovery Benefit) which is fine and I’m thankful for that, but a lot of my future plans to vacation and live elsewhere were put on hold,” she said.

We asked Kristy to share a week of spending to get an idea of her finances.

The expert: Jason Heath, managing director at Objective Financial Partners Inc., on Kristy’s situation.

At long last, restaurant servers like Kristy are back to work. Based on statistics from the U.S., it could be a busy time for her and her colleagues. Review site Yelp reported a 46 per cent increase in U.S. restaurant reservations and wait lists in April 2021 compared to April 2019 (the year prior to the pandemic).

She reports her spending was actually up a bit during the past year because she usually eats for free when working but was ordering takeout a lot while she was off. Her seven-day expense log shows most of her expenses were related to food and entertainment. Hopefully, as her income rises, she can keep her spending in check and put a dent in her credit card balance. She and a lot of people will no doubt have pent-up demand as things start to reopen, but I would encourage her to stay focused on her long-term goal — a move to Australia.

She may want to consider applying for a line of credit, which would likely be at a lower interest rate than her credit card. I would make that debt repayment her primary financial goal right now.

She should also plan for a tax bill next spring. She has been receiving the Canada Recovery Benefit (CRB) and only 10 per cent tax was withheld. Her tax rate is likely to be at least 20 per cent, meaning she will probably have a balance owing next April when she files her 2021 tax return.

Before she moves into her own place and increases her monthly rent commitment, I would consider trying to build an emergency fund. COVID showed us the importance of planning for an emergency and while we can all hope there are no more lockdowns, there are always unexpected expenses or decreases in our income that we should expect as a potential risk.

I am sure Australia would be a fantastic place to live. Housing is expensive there as well though. Crowdsourced cost-of-living database Numbeo shows the cost of living in Sydney — Australia’s most populous city — as 13 per cent higher than Toronto. Rent is pegged at 20 per cent higher. She should keep this in mind as she considers the income she could earn in Australia. I would encourage her to build a comfortable emergency fund before making the move, so she has a buffer in case of unexpected costs, a tough job market, or other emergencies (like a pandemic!).

Results: She spent less. Spending in week 1: $ 1,113 Spending in week 2: $ 327

How she thinks she did: This week, Kristy tried to eat more at home after watching cooking videos on YouTube. “I noticed that I spent a lot everyday,” Kristy said.

After seeing her week-to-week spending, she realizes that her habits of overbuying UberEats takeout when restrictions were in place also follow her now with Ontario’s reopening. “I’m on a patio at least four times a week, while also working at one. I’ll try to reduce that to twice a week.”

Take-aways: For Kristy, the advice has given her more clarity around which long-term goal to prioritize.

“As the adviser said, it might be better that I try to first pay my debts off before thinking about Australia or finding my own place,” she said. “I am thankful to be living downtown and have gotten used to basement living with others.

To pay off her debts, she also is now looking into a line-of-credit option, hoping to get on track before tax season next year which could amount to quite a bit.

“I don’t want to be surprised next year. I need to get my things in order,” Kristy added.

Finally, realizing that she has goals to move to another city that has expensive housing costs, she’ll start researching other places that might give her a break from the hot housing market.

“If I leave Toronto only to have to worry about housing in Australia, it might not be the best move. I have time to decide,” she said.

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