Debt Free In 30

As is our tradition here at Debt Free in 30, during the month of August we rebroadcast the most popular episodes of the past year. Today’s episode is short, only 15 minutes, but I think it resonated with listeners because I discussed the concept of minimum payments.  Since September, 2010, banks are required to show you, on your monthly credit card statement, how long it will take you to pay off your balance if you only make the minimum payment.  That’s a scary number, and it’s a big reason why people call the Hoyes Michalos 310-PLAN debt helpline; they see how long they will be in debt, and they reach out for help. So what can you do if you can only afford to make the minimum payment, or less? That’s the topic on today’s rebroadcast of our episode titled Minimum Payments are Keeping you in Debt.

On today’s show, recorded in July, 2018, I give my thoughts on what the bankruptcy of Tesla Inc., the electric car company, can teach us about how we manage our own personal finances. And yes, I realize that Tesla is not (yet) bankrupt, and in fact they have a market value of approximately $50 billion (in US Dollars), which is comparable to the market value of General Motors, so on the surface it appears that everything is going great at Tesla. Perhaps, but looks can be deceiving. Is someone who drives a new car successful?  Perhaps, or perhaps they are leasing it, and can’t afford the lease payments.  Outward appearances do not tell the entire story. When I use my skills as a chartered accountant and Licensed Insolvency Trustee to analyze Tesla’s financial results, I see the same warning signs that I see with my clients just before they file bankruptcy.  What are the warning signs? First, negative cash flow.  At the moment, Tesla has a negative cash flow from operations of over $100 million per month.  My cl

There's a saying that you shouldn't put all your eggs in one basket, and this rings true for bank accounts. While it is convenient to have all your finances located at one bank, what happens in the event that the bank's systems are down and you can't access your money for a little while? Or, a more common scenario my clients have faced is having their bank account frozen due to missed debt payments. This makes their financial situation more frustrating because they can't access their chequing account to take care of their other bills and rent. Even though having one bank account can be convenient and may seem cheaper, on today's show, I share 3 reasons why you should bank at more than one bank for your own protection.

There's no need to worry. Bankruptcy court is not something that every bankrupt has to go to when they file for bankruptcy. If you complete all your duties and no one objects, you are automatically discharged from bankruptcy after the required period of time has passed, so there is no requirement to appear in bankruptcy court. In fact, this is the case for the vast majority of my clients. The only reason why you would have to appear in bankruptcy court is if your bankruptcy could not be automatically discharged, which happen if you did not pay surplus income, did not provide tax information from your Trustee, or did not complete your required counselling sessions. On today's show, we outline exactly what you can expect from bankruptcy court should you ever have to appear. And remember, if you file with a Trustee from Hoyes Michalos, you will never have to go to court alone. To tell us more about the bankruptcy court process, I am joined once again by Richard Howell, a bankruptcy lawyer with Clark Farb Fiksel

You know you need to improve your financial health. You might even know what you need to do - save more, spend less, pay down debt. So why does that not necessarily translate into healthy financial habits that move the needle? What's stopping you from achieving overall financial wellness?  That's the question asked in a recent study by Mercer Canada. The study found that while Canadians have a reasonably high level of financial literacy they aren't necessarily achieving financial wellness. For example, only 1 in 3 Canadian employees over the age of 50 have a strategy for their retirement. They know they need to save for retirement, they even know what the products are, but they don't have a strategy to reach their financial freedom goals. What is the solution then? How do you improve your financial wellness? My guest today is Jillian Kennedy, the Employee Financial Wellness Leader at Mercer Canada, a consulting firm that helps employers and organizations package and offer benefits to their employees. On today

For as long as debt has existed, society has judged people for failing to pay it back. Over the years, I've heard hundreds of honest, but unfortunate debtors tell me they are stressed out because they believe they have morally failed for being unable to repay their debts. But why is it that we attach a moral dimension to bankruptcy at all? Is bankruptcy morally and ethically wrong or is it more accurate to just consider filing bankruptcy to be a math decision? When you face financial hardship like an illness or job loss, and can no longer afford to make your debt payments, it's a math problem, not a moral dilemma. On today's show, I give you 5 reasons why bankruptcy is not morally wrong, despite what mainstream society would have you believe. Your lender collects interest Your lender prepares for risk Life happens You are the boss Bankruptcy is a necessary social safety net My full argument is on today’s podcast.

What causes us to spend beyond our means? While in some cases it's the result of a job loss or illness, in other situations, it's the Diderot Effect at play. The Diderot Effect is a social phenomenon where the introduction of a new possession that deviates from what you currently own leads to a spiral of even more consumption. For example, when you buy a new house, you don't just settle for the home. You now have to have new furniture, maybe a new deck, and so on. This creates a cycle of spending and leads to debt. How do we, then, prevent ourselves from becoming a victim of this effect? How do we control a spending spiral? My guest today suggests thinking critically about what we see on social media and on television is a great place to start. Robert Gignac works on behalf of advisors and financial professionals to help their clients better understand money management. He's also the author of Rich is a State of Mind: Building Wealth and Happiness: A Blueprint. In his experience, ordinary people become victim

Did you know that in Ontario, anyone can call themselves a financial planner? With this in mind, how can you make sure that you are getting expert and unbiased advice on money management? Should you trust the financial planners who work at banks? Are they credible or do they just want to sell you mutual funds? My guest today says that if you want an honest assessment of your finances, you should speak to an advisor who doesn't sell products, but rather, advice. My guest today is Jason Heath, a Certified Financial Planner (CFP) and a fee-only financial planner, who explains how to select an unbiased financial planner. We also discuss if, as soon as your bankruptcy is finished and you can start saving money, you can afford to hire a financial planner.

Repaying debt requires a stable income. Even when you're in a debt relief plan like a consumer proposal, you need money coming in each month to make your payments. But what if you are faced with a sudden job loss and can no longer keep up with payments on your consumer proposal? Could you revive it after you find another job? What if you don't find work until after several months, could you restart your proposal then? My guest today says it is possible to revive a consumer proposal. Richard Howell is a bankruptcy lawyer, certified by the Law Society of Upper Canada. He has over 20 years of experience helping people resolve this exact issue, and has yet to face a situation where a proposal could not be restarted.

What if you could approach personal finance like most of us try cooking? Instead of learning a bunch of rules and principles, all you'd have to do is follow some tested recipes. Would this make it easier to save money, budget and build wealth? Today's guest thought so and the result was a new approach to money management he called Cashflow Cookbook. Instead of asking you to make sacrifices to save money, he compiled 120 ideas for you to be more efficient with your spending, while not having to worry about making drastic lifestyle changes. Unlike most money experts, Gordon Stein didn't have a career in personal finance. He worked in the tech industry and led large sales teams. But, his colleagues often asked him for advice on how to make ends meet. This prompted him to start thinking of creative ways to save money. Hear his story on today’s podcast.

Credit scores are a way for a lender to assess how well you handle debt.  To be able to set a credit score, the credit bureaus need information about credit use. This leads to a strange principle behind credit scores: the more access to available credit you have, the better your credit score will be. While that's good for your credit score, is that actually good for you financially? Are we too addicted to credit scores? The techniques needed to build a higher credit score can be surprisingly harmful to you. Sometimes having a bad credit score can actually be better. On today's show, my guest Ted Michalos helps us understand just how much credit we should really be using and why having a less than stellar credit score may actually be good for you.

Your credit report is a report card on your credit activity. While you can get a free copy of your credit report from many sources, not all credit reports are the same and not all sources provide full information. With so many free report providers, how do you know which one is accurate? My guest today stresses it's important to first understand what's actually on your credit report. Then you can take action to deal with any errors and omissions. Meg Penstone is a certified credit counsellor at Hoyes Michalos and has over 20 years of experience helping people with financial difficulty. She's also an expert on credit reports. On today’s show we also discuss the problem with “free” credit reports.

Divorce can be expensive. In my experience, it's also one of the many causes for insolvency. The reason for this is when you are living together, you only have one bill for rent, cable, and utilities, but two incomes. You are in a better position to save money. When you separate, suddenly all these expenses become yours. What's more, if it's not an easy separation and lawyers are involved, it can cost tens of thousands of dollars. It's no small expense and it's often funded through debt. But, is it possible to have an affordable divorce? Do you need a lawyer for the entire process? What if you're on amicable terms? My guest today suggests there is an alternative to costly divorce: mediation. Colette Fortin is a mediator with Fairway Divorce Solutions in Kitchener. She helps people who are facing a separation develop a plan for their finances and children, with a focus on reducing cost and saving time. According to Colette, the reason why a traditional divorce can be so expensive is because of how much longer

Once upon a time, if you had a lot of credit card debt and owned a home, you could get a second mortgage to consolidate and pay off your debt. Interest rates were low and home values were rising. You could borrow against your home equity and pay down your unsecured debt affordably. But interest rates are rising. What's more, in some areas now, home values are declining. Mortgage rules are becoming stricter which means more people are being turned down for a second mortgage and the cost of borrowing is getting higher. On today’s podcast Ted Michalos explains this alternative to refinancing with a very expensive second mortgage.

As a Licensed Insolvency Trustee, I'll always advise that you prioritize debt repayment. Why is it important to pay off debt first? So that you are no longer burdened by it. While that is the most prudent course of action, not everyone wants to wait until they are debt free before pursuing their dreams. For example, if you are a recent graduate, you might not want to delay starting a business until you've paid off all your debt. This is exactly the decision that my guest, Alex Grodnik, made. Still owing $75,000 in student loan debt, he left a stable job to follow his passion. But, should you follow in his footsteps? Alex says it depends on the kind of person you are and if you're willing to take risks. More on Alex’s story, and some practical advice, on today’s podcast.

Money management is hard. That’s why so many people don’t do it. Over the years at many credit counselling sessions with clients I’ve explained budgeting, and spreadsheets, and budgeting apps, and lots of other techniques to manage money.  Some of my clients love the process of recording every transaction.  Others, not so much. So, what can you do if you want to keep track of your money, but don’t have the time or the inclination to keep a spreadsheet or spending journal? You cheat. By cheat, I don’t mean “act dishonestly”, I mean “avoid something undesirable by luck or skill”, like eating healthy to “cheat” getting sick. On today’s podcast I give my thoughts on how to manage your spending without a budget, and I explain how the 80/20 rule, known as the Pareto principle, can be used in all areas of money management, and in life.

I've said it before: when it comes to credit rating agencies like Equifax or TransUnion: You are not their customer. You are their product. Your data and loan history are for sale to any lender who is willing to pay for the data. But what if this could be flipped upside down? What if you could own your own credit history and control who gets to see it? Well, our guest today says that can be made possible with the power of blockchain technology. Derek Silva is the head of community relations at Bloom Protocol. Bloom is an end-to-end protocol for identity verification, risk assessment, and credit scoring and it runs entirely on the blockchain. Is it possible that Equifax will be replaced by Blockchain technology? That’s our discussion today on Debt Free in 30.

In our latest bankruptcy study, we discovered that over the last 5 years women have been filing for bankruptcy in higher numbers. In 2012, 42% of women filed insolvency and by 2017 that number reached 48%. But, it's not that women are suddenly using more debt. What we've noted from our client data is that female debtors face a unique set of challenges that drive women to turn to debt to makes end meet and then prevent them from being able to keep up with their debt repayment. For example, two thirds of women are either single or divorced and struggle to manage expenses on a single income. Moreover, women earn 9% less than male debtors and are also 3 times more likely to be a single parent than a male debtor. This is what our average female client looks like. But, why is it that women are increasingly finding themselves in trouble with debt? What can they do to better tackle debt problems in addition to other life challenges? Sharing their expertise today are guests Gail Vaz-Oxlade, Kerry K. Taylor, and our Tr

How can you find a good place to rent, even if you have damaged credit?  Today’s guest runs her own property management company, and she gives us the inside scoop on how to find a good place, and how to convince the landlord to rent to you.

Credit card fraud affects many stakeholders. It's damaging not only to consumers, but also to merchants and financial institutions. In addition to losing money, credit card fraud can ruin a customer's relationship with a retailer as well. But with advancements in card security like having a chip and PIN, how does fraud continue to be such a big problem? How can Canadians protect themselves? What can retailers do to limit their losses? Those topics and practical advice on today’s show.