Debt Free In 30

Trying to make debt an everyday topic is difficult. What’s more, most people who are in my line of work have an accounting background. As such, there’s a tendency to be more numbers-focused than say, story-telling, for example. But a year ago, I came across an individual on my Twitter feed, who was commenting on personal finance issues and the sorts of situations that my clients face. He’s even got an impressive social media follower base because of it. His name is Scott Terrio. He’s a regular contributor to Macleans, BNN, and many more  media outlets. I’m happy to share that he’s also the newest member of the Hoyes Michalos team. Scott is our new Manager of Consumer Insolvency and he’s our guest on today’s podcast, as we talk debt.

You hear the stories about the person who paid off $100,000 in debt in just 3 years; sounds great, but how did they do it, and is that realistic for the average person? The short answer is no, if you earn $25,000 per year it is mathematically impossible to pay off $100,000 in three years, but you do have options, which we discuss on today’s show.

If you think your finances are under control because you're keeping up with minimum monthly payments on credit card debt, think again. To become debt free, you need to pay down more of your balances. How do minimum payments work and why do they keep you in debt? And what do you do if all you can afford are the minimum payments or less? We discuss that on today's podcast.

We hear the same thing repeatedly. If you rent, you’re throwing away your money. Why? Because you have nothing to show for it at the end of the month. On the other hand, if you own your home, you’re paying down your mortgage and building equity. But is this true? Why can't you build wealth by renting? Today's guest thinks you can. Some points to consider, according to Alex Avery: It’s not one-size-fits-all. Buying isn’t for everyone. Neither is renting. Consider how long you expect to be in a particular location. If you have precarious employment, or know that a job will be moving you to another location, renting is a more suitable choice. On the other hand, if you know exactly where your life will be in the next 10 years and you’ll have children, who will go to school, then it’s probably better to invest in a home. When making the decision to rent or buy, don't forget all the negative carrying costs of owning and selling a home. Count that against your 'investment' decision. Be aware of you biases that migh

Because it's not the level of debt that causes the problem necessarily. It's whether or not you can service it. On show #174, we gave the example of someone with a $500,000 mortgage and 25-year amortization. If the interest on it went from 3.29% to 4.29%, the monthly payment would go from $2,400 to just over $2,700. That's about an 11% increase. On today’s show we discuss which debts should you pay first, and how to make that decision.

What will happen in 2018 that could water the seeds of a financial crisis? Ted Michalos and Doug Hoyes believe there are three big stories to watch in 2018: Minimum wage going up in Ontario from $11.60 to $14.00, effective January 1st. This means any employer that is already marginal or has very tight margins is probably going to employ fewer people. Debt. According to the Canadian Payroll Association's September 2017 survey, 49% of Ontarians are living paycheque to paycheque and 43% of them save less than 5% of their earnings. Canadians are also the most indebted in the world by at least one measure, as household debt is more than our GDP. Real estate value and mortgage interest rates. The Bank of Canada predicts that 47% of Canadian real estate mortgages will renew in 2018 and a lot of people are going to be facing an increase because rates are higher than they were a year ago. For more insight and detailed breakdown of our predictions for 2018, tune into the podcast.

On today’s podcast we explain how, even though your house may have increased in value, if you don’t have enough cash to meet your monthly expenses, you are house rich but cash poor. We give four tips to avoid being house poor.  The most important tip: decide what kind of life you want, and use that decision to decide on the house you really need.

Every year, the focus of the holiday season is on consumerism and the need to spend money on the perfect gifts, the perfect decorations and creating the perfect dinner. And every year, Canadians end up spending too much money, putting them at risk for financial difficulties once the holiday season is over. On today's show we rebroadcast a podcast from 2015 where my guest is Heather Cudmore, who at the time was the manager of Credit Counselling at Carizon Family Services in Kitchener, and is now a credit counsellor in the Hoyes Michalos London office. Heather has lots of great advice on how to make a memorable Christmas, without spending a lot of money.

Should you ever loan money to family and friends? It’s a tough question. Some of you might say, “sure, why not?” And others might think, “Maybe just to family.” Well, if you do decide to loan money, I’d recommend asking yourself this question: Do I have to borrow money to do it? If you do have to borrow to help, you shouldn’t loan money… even if it’s to family and even if they say they’ll pay you back. Now I realize that sounds harsh, but it’s in your best interest to not get yourself into financial trouble. On today’s show I discuss why you should never loan money to family and friends, and I explain how you should help them if they are in need.

On today's show, I review 10 personal finance books that would make great gifts and/or would be a great start to your own personal finance library. All 10 books are listed below, with the time stamp from the podcast, if you wish to jump ahead and listen to my comments on a particular book: General Money Management The Wealthy Barber Returns by David Chilton (2:35) Wealthing Like Rabbits by Robert Brown (3:20) 397 Ways to Save Money by Kerry K. Taylor (9:40) Stop Over-Thinking Your Money by Preet Banerjee (11:06) Debt-Free Forever by Gail Vaz-Oxlade (11:54) Protecting Your Money – A Guide to Identity Theft and Fraud by Kelley Keehn (14:24) Real Estate When the Bubble Bursts by Hilliard Macbeth (19:32) Burn Your Mortgage by Sean Cooper (23:26) Retirement Victory Lap Retirement by Jonathan Chevreau and Mike Drak (27:19) Thinking Thinking, Fast and Slow by Daniel Kahneman (28:48) Of course, I am also quite proud of my own book, Straight Talk on Your Money, which I discuss briefly at the end of the show

Have you ever wondered why a credit card isn’t called a debt card like it should be? Think about it. That’s what a credit card really does – it gives you debt. Well, I’ll tell you why. Because it’s not good marketing. And credit card companies know this. In Myth 4 of my book, Straight Talk on your Money, I point out that financial institutions know we are guided by our emotions. Banks and credit card companies have manipulated you into thinking that credit is good, and they do it constantly. Credit can also be used to describe a source of pride or honour like, 'you are a credit to your family.' Here's another example: "I'm a good person because I have a high credit score." How many times has been idea been shared? That maintaining a good credit score means you're responsible with your money and you're not a reckless spender. I disagree. Although my focus today isn't on credit scores - I already discussed that on my podcast a couple weeks back, episode 167 - I will say that a credit score, which should (once a

On today’s show we discuss the different forms of income that can be garnisheed (or not).  Here are the types of income, with the time stamp if you want to fast forward to that section: Wages – 3:21 Ontario Works – 8:31 Disability Pension – 9:58 ODSP – 10:00 Retirement Pensions – CPP – 12:36 OAS – 13:35 Basic Income – 19:19 Full links to all legislation mentioned in the show are on our website at https://www.hoyes.com/blog/wage-garnishments-what-income-can-be-garnisheed/

How important is your credit score?  In my book, Straight Talk on Your Money, on page 48 I discuss the “Credit Score Scam”, and on page 52 I say that you should not focus on your credit score.  (Apparently I’m not a fan of credit scores).  It was those passages from the book that prompted Ross Taylor, a mortgage broker, to email me and say: I noticed when reading your book we do not completely agree on the importance of one’s personal credit history. I emailed Ross back and said “great, come on the podcast and let’s discuss it!”, and that’s exactly what we do on today’s show. My view is that credit scores are for the benefit of the bank, not you.  I explained this in a past post Why our credit reporting system is broken. Credit scores are a tool to help a lender decide how much money to lend you.  A person who has never borrowed money but has $1 million in the bank may not even have a credit score.  A person who has five credit cards and owes money on each of them may have a high credit score, because they ar

November is financial literacy month in Canada, and for the seventh straight year the government will encourage Canadians to: take concrete actions to better manage their money and debt, including making a budget, having a savings plan and understanding their financial rights and responsibilities. So, the solution to all of our financial problems is to make a budget. I disagree. In my experience, budget’s don’t work for most people, because they don’t stick to them. They get discouraged, and they end up worse off than before. I've talked a lot about what I believe is a better alternative to budgeting, and on today’s show I’ll give a better alternative to how we are currently promoting financial literacy.

Registered Disabilities Savings Plans are geared towards helping families and individuals who are living with a disability. RDSPs can only be setup for someone who is eligible to receive the Disability Tax Credit. If this is for your child, you can only begin making contributions after your child is diagnosed with an eligible disability. This is one of the main reasons RDSPs aren't as commonly used, or as frequently discussed. On this week's podcast we're welcoming back Alan Whitton, the voice behind the Canadian Personal Finance blog. This is a subject close to Alan as he and his wife found themselves having to set up an RDSP for their son. After familiarizing themselves with the ins and outs of the Disability Tax Credit, they sought help from their doctor to obtain it. On today’s show we discuss how they work, who is eligible, and what happens if you have an RDSP and file bankruptcy.

Everyone thinks that a house provides both stability and financial security, but on today's show, we'll explain why that is not always the case. It is true that if you live in the same home for many years, you have stability. But there are significant costs to owning a house. You pay real estate commissions when you move, but you also pay a penalty to break a fixed mortgage. As we explain on today's show, the penalty for breaking your mortgage can be a lot higher than you expect. The big banks have found a loophole that allows them to charge a bit Interest Rate Differential penalty, even when rates are rising, and if house prices are not increasing, the penalty to break your mortgage and closing costs can eliminate the profit on your house. Before you buy a house and sign up for a five year mortgage, be sure that you are not likely to need to move for five years, and confirm that you can afford to pay all of the costs of living in your house (since costs are more than just a mortgage payment).

In some cases it is your fault, if your debt was a result of reckless spending but, in my experience, most people get into trouble because "life happens". Many of my clients have debt problems caused by a job loss, or reduced income, or a life event like a relationship break-down or a medical condition that forces them to take time off work. On today's show we hear the story of Mary, how has debt problems. I'll leave it to you, the listener, to decide if her problems are her fault, or if there was anything she could have done to prevent her money problems.

There are recent interest rate increases from the Bank of Canada that will affect many Canadians. But the question of the day is: Do you know how a 1% interest increase will affect your budget? Today's guest is here to discuss just that. Brent Hughes and his team discovered that there are two times throughout the life cycle of a mortgage that people receive professional advice: the beginning, and the end. His company Monitor my Mortgage helps give people the information they need to make the right choices between years 1 and 30.

On today's show, I discuss the news that data from Equifax was "hacked". It appears that "only" 100,000 Canadians were impacted, but even if your data was not impacted by this event, it's a good wake-up call for all of us: So how can you protect yourself? My full comments are in my post on Equifax Data Hack: Insolvency Trustee Gives Advice on How to Protect Yourself but here's an important point: your data is already out there; you can't pull it back. If you have ever applied for credit, you have a credit file, even if you have paid off all of your debts. That means your data is vulnerable, so it's up to you to keep an eye on your data. At a minimum, review all of your credit card, bank and loan statements regularly; don't wait until the end of the month. I check my statements online every few days. If you see a problem, report it immediately. More advice on today's show.

For more than a decade the "go to" source for Canadian personal finance information has been the Canadian Personal Finance Blog operated by Alan Whitton, more commonly known as the Big Cajun Man (listen to the show to find out where that name came from; having met him to record this podcast, I can confirm that he is a big guy). The Big Cajun man has accumulated the best resources on the internet on RDSPs, so next month he'll be back to do a full show just on that topic.  On today's show we addressed a very common issue: What can you do when you lose your job? Alan worked for the biggest company in Canada, Nortel, for 20 years, and he survived many rounds of layoffs until, at age 47, he was laid off.  Even though everyone knew the company was in trouble, layoffs are almost always a shock.  The Big Cajun Man tells us what it was like to live through that time, with a wife and four kids, and he explains how he survived 11 months of unemployment before starting a new career. On today’s podcast he gives practical