Gails Blog

Every where I go I talk about the importance of making a Will. Yet, even among the financially savvy, a Will is one of the last things people seem to get around to making. It may be a general unwillingness to face life’s darker side. Or it may be that there are things people just can’t seem to decide on, so they procrastinate.

In order to make a Will, one of the first things you must do is choose your executor, and for many people this is a stumbling block. Horror stories about about estates that were mismanaged, beneficiaries who almost came to blows, and the “waste” of having a professional do the job.

So what exactly are the responsibilities of an executor? Most people have no idea how big a job it can be. Yes, a simple estate will wrap-up smoothly; a more complex one can drive you to drink. Your executor will have to complete a number of tasks including gathering and protecting your assets, forecasting your family’s cash needs, handling tax requirements and distributing your estate.

You can name someone to act alone (a sole executor), with others, (a co-executor) or as a backup if the first appointed executor is unable to act (a contingent or alternate appointment). Whomever you name, make sure you get their agreement since that person has the right to turn down the job. While it’s often positioned as an honour, it’s more like a pain in the butt and only someone who is truly fond of you, or someone being well paid, will take the job.

Some people choose to name friends or family members as executors because these people are more familiar with the personal details of their lives. While a spouse or child might seem a natural as executor, having to do the job alone can add more stress to an emotionally stressful period. Executorship can be a time-consuming task. Without financial or investment knowledge, your partner, child or dearest friend could be out of his or her depth. And if your executor is too emotionally involved, that can muck up the process.

So who should you consider? First of all, you have to choose someone of sound mind. To act, the person must have attained the age of majority, so your minor children won’t be able to act until they’ve reached adulthood. Here are some of the most obvious choices.

Your life partner: This can be a good choice if your assets are relatively uncomplicated. An estate made up of bank accounts, term deposits, a house, an RRSP and pension benefits wouldn’t be difficult to administer if it was going outright to a surviving spouse. If the assets are complex, or if there are testamentary trusts involved, then a co-executor with knowledge and expertise in the areas of investments, income tax, trust matters and accounting might be a good idea.

One or more of your children: Mature adult children will likely be familiar with your assets and the ways in which those assets have been managed and can keep costs down. However, unless they have had specific training in a profession such as law or accounting, children may lack the expertise to complete the administration of a complex estate.

Friends and Business Associates: Same-age peers may find themselves acting as executor at a time when they themselves need help in managing their affairs. Choose an older executor and she may die before you. Or he may die during the administration period at which point his executor — someone you may not even know — will have to take on the administration of your estate.

Family Lawyer/Accountants: A logical choice, right? Maybe not. Unless your family lawyer is set up to do estate administration, he may not be equipped. It’s kind of like going to a dentist to have your baby delivered. Lawyers should be considered only if they have a sound knowledge of estate law.

Corporate executors: Trust company employees are experienced, neutral and available 52 weeks of the year so your estate administration won’t be delayed because of illness, vacation, or business commitments. Professionals also tend to have a wealth of experience having handled thousands of estates. And a corporate executor has the facilities to handle the paperwork, tax returns, valuations and so forth, which often can be a mystery to the uninitiated. Of course, you’ll pay… and it could be a lot.

Choosing  your executor is just one step in making  Will. If you have minor children, you will also want to choose a guardian. No matter who you choose for these jobs, the job of actually drawing up the Will should go to someone who is an expert in estate planning. Resist the urge to do it for $29.99. You may feel you’ve covered your bases, you may have inadvertently left a mess that will cost a fortune to untangle. 

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Good day good folks. I have good news. This week Til Debt Do Us Part was nominated for a Gemini — our second nomination. We won the first time. This is Canada’s version of the Emmys. And while they are much maligned for various silly reasons, no one ever turns one down. It funny how at once we want to pretend it doesn’t matter much, but then we want to WIN! Even getting a nomination means you have one of the best shows going.

I browsed around the Gemini website after the nomination was announced to see who else had been nominated. One of the other shows nominated, At the End of my Leash, is produced by the cute chick who recruited me for Frantic (my producer) and then moved on. She’s a smart girl and deserves the recognition.

I call the show “Til Dogs Do Us Part” because the show so closely follows our format: something is wrong big-time (in their case, it’s the dogs; in our case, it’s the money), there are challenges, and there’s a resolution. There are several other shows that have picked up our format; some are better at it than others. As they say, “Imitation is the highest form of flattery.”

When we won a couple years ago, I had passed on the invitation to the party. I’m not a big party-girl. I would much rather sleep, which is what I was doing when the call came that we had won. My daughter answered the phone and said, “Sorry, we never wake a sleeping Mommy.” Ha! Ken told me at midnight when I got up to pee. I went back to sleep with a very big grin on my face.

I’ve been invited to go again this year. If I’m already in town shooting, then I’ll go. If not, I’ll wait to hear who won. It doesn’t really matter since it doesn’t much change anything for me. Here’s what does:

Yesterday when I got home from work there was a parcel on my desk. It came with a quote and a letter. The quote was from Maya Angelou, whom I admire greatly.

“People will forget what you said,
people will forget what you did,
but people will never forget
how you made them feel.”

The gift was a teapot shaped like a hippo. (No rush of hippos, please.) Alex, who sent the gift, really hit home with that because I’ve been collecting hippos for years, but this is the first one I’ve ever received this way.

The letter was my favorite part. I was very flattered by what Alex wrote, but I was most satisfied by her final line: “I have my peace of mind and life back. Thank you.” 

You’re very welcome Alex. I am so glad you have been able to put my tips to good use. But you are to be congratulated on doing so. It’s very easy to “say”; to “do” is the tough part. And YOU did. I am so proud of what you’ve accomplished, and to have been able to help.

I often hear from people why they CAN’T. They can’t make more money  because they already work so hard. They can’t pay off their credit cards because they don’t have the money. They can’t save… for a million reasons. 

Alex could. Like the little engine, she made it up the hill. So she, and all of the people who DO, should be very proud of themselves. (Take a Gail Hug here.) 

Attitude is half the battle. Knowing you can do it is a big part of success. The other half is plain old hard work. Some people just don’t have what it takes.

Whether we win a Gemini is of very little importance when put beside Alex — and all the Alexes — who have taken the work we have done and used it to make a positive difference in their lives. I am so proud of what we’ve accomplished on this show. And I’m so proud of all of you who have take the tools and made a change. Here’s to you!

I’ve had quite a few comments recently about the fact that many of the fams I work with make tons of money and couldn’t I do a show with people who make less. 

Pearl wrote:

re: the family whose income was $140,000.00 per year. It is a constant source of amazement that people with that kind of income are in debt!!! And don’t seem to know how to get out of it!!! Why don’t you give that $5,000.00 cheque to a more needy family that is in debt??? I would like to see a show where the family’s combined income is barely $55,000.00 per year, and then see how you can help that kind of a family!!!!

And SM wrote:

Why do you not do any individuals and/or couples that only gross 60k or less? It may be easier to help those with high income, however a good portion of Canadians make 60k or less per year.

I’m not sure why people are under the impression that we only work with richy-rich families on the show. If you haven’t caught these episodes, you should, because:

• Elizabeth & Wojceich only had an income of $3,400 month
• Corrina & Jay made less than $3,700 a month
• Kristy & Dean made about $4,300 a month
• Sharon & Dennis made just under $3,200 a month
• Natalie & Matt were earning almost $3,800 a month
• Jared & Christina were making just over $4,200 a month
• Tamara & Brandon made about $3,200 a month
• Andrea & Curtis made about $4,700 a month
• Evan & Jason made about $3,300 a month
• Dawn & David made $4,400 a month  

Several years ago, I had a “financial advisor” over to the apartment, believing that he would help us get on track to good financial health. We instead were convinced to purchase an expensive life insurance coverage, and he said he would support us with financial advice as a next step. I have all along felt good knowing my family is taken care of… but we are still financially sick- and have a huge debt from student loans etc. and have never seen this advisor again. I am NOW FINALLY getting on track with lots of support and information from this site. However this life insurance has always bothered me. Is $75/ month too much to pay for life insurance? It was explained at the time that i should purchase a lot of insurance now while i am young, and the premium would be lower when I am older, and in less financial need of the protection… ???? Have I been as dumb as I suspect?
 

I know you advocate checking your credit score annually or twice per year. I would like to know your thoughts on credit monitoring services? Paying a monthly fee to to Equifax, Experian etc. to keep you up to date on your credit report and score. They run about $15/mo. Is this worthwhile or overkill?
 

I have slowly paid off all my credit cards I was wondering whether to cancel them or put them away because I heard that if you cancel credit cards it will affect your credit score. I would also like to see awesome follow up shows to see if the people that you help are still on track. 
 

Your show is my daily inspiration to live completely debt free, sooner than most of my (lawyer) friends. I am 37, earning $72000 per year. I owe $6000 on my line of credit (used to finance a moderate used car), and $163 000 on my mortgage (my house is probably worth $220K). I am being highly aggressive in my debt repayment strategies: $1400 per month on mtg (PIT) and $1265 monthly on my line of credit. I have no other debt. I want the line of credit balance gone in 6 months, and plan to route the majority of the payment amounts between savings and extra principal payments once it is at a zero balance. I feel conflicted. Should I extend the payments on my PLC to one year in order to lighten up, or is it better to just stay on an extreme budgeted course and get the debt over with? I have some home reno dreams, and vacation dreams and am not sure where these should fit? I am conflicted between rewarding myself in the present or being completely debt-free and “rich” later. Thanks - your show and your website are invaluable.
 

People are always asking me what they should be investing in. I don’t know. Get yourself a financial advisor. I have one and he helps me decide how to allocate my money to suit my needs.

Of course, there are some basic things I can tell you about saving.

If you aren’t taking full advantage of a Registered Retirement Savings Plan, you should be. Save $1,000 a year for 30 years at 6%, and you’ll end up with over $79,000. Save $5,000 a year and you’ll have five times that – almost $400,000 – come retirement time.

So how much should you save? That depends on how much income you think you’ll need when you retire and how long you’ll live in retirement. If after you account for government benefits and your corporate pension plan (if you have one), you find you’ll need an income of about $30,000 from your savings, you’ll have to save about $400,000 if you want your savings to last 15 years. Need your money to last 20 years? Then you’ll have to save almost $550,000.

If you’re passing up the Canada Education Savings Grant, you’re a dope. When you put money into a Registered Education Savings Plan, the government gives you money to help with your child’s education. If you put $2,500 in the plan for Little Susie, the Feds will add $500. That’s an immediate 20% return. Why would you pass that up?

 If you’re earning a pittance on your savings account, shame on you. There are options available that will pay a decent return, so don’t settle for what your silly old bank is offering, if it isn’t competitive. You can set up an automatic debit so that money is taken from your chequing account each week or month. Whoosh! It’s gone. And you won’t even miss it. And now it’s working harder for you. Yeah! Look here for the latest savings rates.

Saving money on mortgage interest is as easy as choosing to make accelerated payments on your mortgage. When you do, you make the equivalent of one extra monthly payment, which could save you four year’s worth of interest! Wow!

Saving on your car insurance by increasing your deductible. Would you really make a claim on your car insurance for under $2,000? Are you nuts? Do you know what that’d do to your premiums? So raise your deductible to $2K and then stick the difference in the bank until you’ve saved your deductible. Then roll the difference into your RRSP.

Plan to save $5,000 a year in the new Tax-Free Savings Account. Do it for twenty years earning just 4% and you’ll end up with just less than $150,000 in tax-free money – that’s $16,000 more than you’d have if you were paying tax at a marginal tax rate of 31%. The gold medal to the first guys off the mark offering the new TFSA goes to ING DIRECT. Anybody surprised? While you’re on their site, make sure you read their Top 10 Things to Know about the TFSA. 

I’m going to be off the net for a few days.  There’s some heavy-duty site maintenance happening on June 24-26 so there’ll be no posts, no way to comment. I will be back on Friday, the 27th. In the mean time, I thought I’d give you some sites you could look at.

I have to say that there aren’t a lot of sites out there that I like. I may be picky, but I can’t help being a little distrustful of opinions that change with the winds, which is why I don’t favour traditional media. Depending on the day of the week and who sent in the latest press release, you’ll get a story that is positive or negative or, well… it depends on the day of the week and who sent in the latest press release. The sites I’m suggesting you visit are the exceptions – really good sites with rich content and an interesting, balanced perspective. Some I’ve mentioned previously, but this will give you a good list you can refer to whenever you need. Have a look. Do some bookmarking. You may just find something you’ve been looking for.

Ta Ra till Friday!

Canadian Capitalist is one of the best Canadian sites on the web. This guy isn’t just smart, he’s sensible. And he has the layman’s touch in explaining some complicated things in very accessible ways.

I’ve referred you to Fiscal Agents a few times, and this is the go-to site for calculators and information. Don’t miss it.

The FCAC (Financial Consumer Agency of Canada) is another terrific site with good tools and up-to-date info on savings accounts and credit card rates.

HRDC’s site on maternity benefits is the first place to go to find out what you need to know BEFORE you go off on mat leave.

If you want to calculate your tax exactly, you can go to Taxtips for a really thorough calculator. If that one makes your head spin, here’s a simpler one that will give you a basic of idea of how much tax you should pay.

Here’s a blog by the guys who wrote the book Freakomonics, which I like to check out from time to time. They have a very interesting take on some pretty neat stuff

Another author with an interesting site is Malcolm Gladwell who wrote two books, The Tipping Point: How Little Things Make a Big Difference and Blink: The Power of Thinking Without Thinking. These are both terrific reads. This is one smart cookie, I’ll tell ya. Backayad blud, yu kno.

For those of you who are compulsive pack-rats and may need some help getting uncluttered there’s hope.

Lifehacker bills itself as TECH TRICKS, TIPS AND DOWNLOADS FOR GETTING THINGS DONE and has some interesting stuff.

I’m fascinated with the brain, our minds, how we think. Mind Hacks has loads of stuff if you’re curious, including an interview with Steven Pinker (a Canadian) who is a personal fav of mine.

Happiness is another of my thangs. Have I ever told y’all that I believe the purpose of life is to be happy and to make as many other people as you can happy? Yup. That’s it. Simple. So I read lots about happiness and one of my favs is The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom by Jonathan Haidt, Associate Professor of Psychology University of Virginia. Terrific book. Lots of great ideas on what makes us happy and what you can do to be happier. Here’s his website too.

Finally, my favorite site, the one I go back to again and again: StatCan. I’m a pig for data and this site is packed full of  it.

Okay, your turn. What are some of your favorite sites and why do you like them? If you’re replying on Monday, great. If not, wait till Friday to put in your favs so they don’t get lost in the Maintenance Shuffle.

Have a great week.

Lots of people shop emotionally instead of with their heads, buying stuff they don’t need because they’ve had a bad day, had a great day, or been with someone who is very convincing - be it a salesman, a best friend, or a wife/husband with a itch to acquire.

So, have you ever bought something you just couldn’t live without and afterwards find yourself scratching your head and wondering, what the hell was I thinking? Then you’ve experienced something called “buyer’s remorse.”

Want to avoid that horrible sinking feeling, the guilt, the wish-I-could-take-it-back sense of waste? Here’s what you should do.

1. Make a list, and never buy anything that’s not on your list. If you see something you really, really want, add it to your list.

2. Once you’ve added it to your list, go home and sleep on it. If you want it tomorrow, go to step three.

3. Do some research before you buy. Buyer’s remorse often climbs on our backs when we find out we’ve paid too much for something. Make sure you know how much the item you’re buying is really worth.

4. Get a second opinion. Take your sister, your best friend, your mom or dad with you, and ask if they think it’s worth the price.

5. If there’s any financing involved, figure out what the item will end up costing you once you’ve paid the financing charge. If you don’t do this step, you’re deluding yourself and you deserve to feel like a dope.

6. Ask yourself, “Do I need it, or do I just want it?” If it’s a need, put it on your list in a position of priority. If it is simply a want, it goes at the bottom of your list. Take care of your “needs” before you start scratching your “want” itches.

7. Ask yourself, “What else could I do with the money I’m spending on this item?” Are you working towards a goal that would be served well by this money? Is there another priority that should take precedence? Put your money where it will do you the most good.

If you want to come and see me at the Royal York on Wednesday February 13 — that’s TOMORROW night — this is your last chance to register. Go to http://www.credential.com and click on my face.   

Monty Loree - Founder of Canadian Money Advisor (http://www.canadian-money-advisor.ca) has arranged for me to do an hour-long tele-seminar on March 4.  Go check it out at his site.   

I’ve been getting a lot of the same questions from people. Hey! Cut it out! There’s tons of stuff on the website for you. If you don’t see something on the website you need, then ask the question. If you ask a question and don’t get an answer it may be that your answer is already on the website, in which case I won’t answer it again. Don’t be so LAZY! Look around.  

Lots of people ask how the families I’ve worked with are doing. I know you’d all love a follow-up show, but it isn’t in the stars. What I am doing is contacting my families to see who would be interested in telling us whazzup with them. I’ve had a few answers and once I get it all together, I’ll post it under the Til Debt section.   

I’m going off on vacation in March — Italy for two weeks with the fam. I am soooo excited. JD, my webmaster, will continue to post blogs for me (I’m working on creating them now), and I’ll have Q&As for him to post for me too. But I won’t be around so be patient.  

And now for some fun.  When I was working with one of my families recently, I said to them, “You’re so broke, all you’re goinG to be able to afford to exchange this Christmas are bodily fluids.” Needless to say it won’t make it to air.  

So how would you finish this sentence: I’m so broke…  

Here are are some funny ones I’ve heard:

• I’m so broke, to rub two nickels together I’d have to borrow one.
• I’m so broke that I just went into McDonald’s and put a small fry on layaway. 
• We’re so broke, my wife and I got married for the rice.

Have fun!  TTFN, g 

Everybody wishes they owned their own home. Well, maybe not everybody. But lots of the people who write to me. And lots of them are looking for me to confirm what they’re hearing about no-money down, take-forever-to-pay-off-your-home plans. 

This never used to be an issue. To get a mortgage you had to come up with 25% down. Then Canada Mortgage and Housing Corporation (CMHC) started offering Canadians the opportunity to have a high-ratio mortgage… with as little as 10% down and a willingness to pay an insurance fee you could get into a home of your own. Amortizations started to lengthen … first to 30 years, then 35 years. Downpayments started to shrink, from 10% down to 5%. Finally, we’ve hit the current standard: zero down, amortize for 40 or even 45 years.  

The argument made is that most people can’t afford to save 25% down, not with housing prices where they are in big cities. And if you can get into a home with as little as possible, you can begin to build wealth through home ownership and the appreciation of your primary asset. I get that. I get how hard it is to save money in a world where everything costs a lot of money. I get that homes are expensive. My husband paid $28,000 for his first home in London, Ontario in the early 70’s. Compare that to the $350k we laid out in Toronto in 1993, or the $650,000 it sold for in 2003.  

But I also had other experiences that make me more balanced than some when it comes to how the housing market moves. I bought my first home in 1990, a nan0-second before the last real estate market slide. I paid $300,000 for my semi and then watched it erode away.  I was okay. First, I’d put down 25% so I was able to bounce back from the erosion in my equity faster than those who slid into seriously negative territory because they had little or no equity to begin with. Second, I hadn’t taken a mortgage sooooo BIG that the slightest change in interest rates had me squirming. I had room to move.  

And that’s the biggest problem I have with no-money-down plans. People don’t use them to just get into a home. They use them to get into a big, expensive, more-than-they-could-afford, how-the-hell-are-they-going-to-carry-it home.   

A single mom living in Montreal wrote to me recently asking for some advice about buying a home. She wants to know how much she should put down, and how much she should put aside for on-going maintenance. Both are very good questions. I hope she’s ready for the answers.

First off, you should know that lenders use a calculation called debt service ratio to calculate how much they’ll lend you based on how much you can afford to repay each month. They usually won’t allow your debt service ratio to go above 30 percent. So you can use this as a starting point to determine how much you can afford. If you make $5,000 a month before taxes, 30% of that would be $1,500 a month, which is what the bank will say you can afford in mortgage payments. With an interest rate of six percent, you could afford a mortgage of about $187,000. Add on your downpayment and violá, you’ve got the amount of house you can afford.

Now I say all this as a guide. And it’s a good guide. But since people are getting into houses today, who would never have qualified to buy five years ago, before you jump into the fray, you need to know the facts.

Let’s work with the following. Let’s assume you’re buying a $200,000 home (well below the average cost of a house at the time of writing: $335,000 but more reflect of the whole country), that current interest rates are 7.5 percent, and that you’re taking advantage of the no-money-down option.

First let’s look at how your amortization affects your long-term interest costs.

     Amortization     Monthly Payment     Total Interest Paid

     25     $1,463     $238,900

     30     $1,383     $297,880

     35     $1,332     $359,440

     40     $1,299     $423,520

So, if you take a 25 year amortization, you’ll pay more than double the cost of the home, and if you take a 40 year amortization, you pay more than three times the original cost of your home by the time the mortgage is paid off.

The big argument for extending the mortgage amortization from 25 to 40 years is that you’ll be able to work a lower payment (yes, the payment goes down from $1,463 to $1,299… that’s a whopping $164 a month) into your cash flow. And with no money down, you’ll be able to get into a home that will appreciate substantially, building up your equity. Hmmm. Equity. On a 40-year amortization my home would have to triple in value for me to break even on the interest cost. And equity is only something you can take advantage of if you sell your home and cash out. So, are you planning to sell your home and rent next? If not, then all your equity gives you is the ability to borrow more money.

But that’s not all. If you buy a home with anything less than 25% down, you’re going to have to buy high-ratio mortgage insurance. This insurance premium is calculated as a percentage of the loan amount, and the percentage depends on the loan to value ratio. The higher the loan to value ratio, the higher the premium cost. In other words, the lower your downpayment, the more expensive the insurance. This premium may be paid in cash (nobody does this) or added to the mortgage amount (making your mortgage even larger).

So, back to our example. On a $200,000 house with no money down, the mortgage insurance would be 3.1 percent of the value of your home or $6,200. Added into your mortgage, that mortgage insurance premium would end up costing you $13,605 if you amortized for 25 years, or $19,330 if you amortized for 40 years. Hey, that’s peanuts right? I mean, if you’re already prepared to lay out another $423,520 in interest for your home, what’s a measily little insurance premium of almost $20,000?

Now let’s see how it applies to the “average” house in Canada that’s valued at $335,000. Put no money down and your premium cost will be $10,385. Amortize for 40 years and your true cost will be $32,381. All that for buying a home you can’t really afford.

That’s what this all boils down to, people. If you can’t afford to save a downpayment - and by that I mean 25% down — what makes you think you’ll be able to afford to maintain the home (rule of thumb: budget 3-5% of the value of your home for up-keep every year), pay your property taxes (yes, they will go up each year), and deal with the general challenges of home ownership.

I’m not trying to scare y’all away from home ownership. I’m trying to impress upon you that home ownership is a BIG responsibility, not one to be taken on lightly. And I’m trying to show you that spending a little time saving for a downpayment makes way more sense than locking yourself into a mortgage payment that strangles your cash flow, while paying exorbitant amounts in interest and insurance premiums.

So I want to thank y’all who have written saying how much you like the show. It’s great to feel your enthusiasm. You have some show questions that I’ll answer today:

• Have I thought of doing a follow-up?  You betcha. People ask about a follow-up all the time, but that’s not my domain. That’s a network decision and so far the network has decided “no.” 

• I can tell you that I often hear from people who have been on the show and are doing well. I told Roxanne and Sean to go make a baby and they did! We’ve had a lot of Til Debt babies, including one from our DOP, Ben, (see my crew) who had a son recently. If you watched the very first show with Tasia and Bill, Tasia is still using the jars. Most people stick with ‘em since they see the jars as a metaphor for their change in money management behaviour. Elizabeth and Wojceich are doing well, and she’s a budget monster now. Her brother got married and wrote to thank me for helping the fam get out to his wedding. Viv and Ronald split up. Dan and Alina had another baby. Lauren & Michael did sell their condo and are doing really well together. Gillian got a terrific job and is happy. Cat (from the wedding special) was outraged when the Sheila & Frank show aired because she thought Sheila was such a (I can’t say this out loud). And there are people who keep emailing their news to us, some of whom you haven’t yet met since Season 3 is airing now, but I’m just finishing up with Season 5 shooting.

• Another question I get is about coming to your town to shoot. Sorry. Again, beyond my scope. That’s a production decision and I’ve been told that we’re sticking pretty close to Toronto.

• Would I do a private consultation? I’ve answered this one already and the answer is, “when?” I’ve already got a full-time job, people. Cut me some slack.

• Would I give investment advice? Nope. Investing is a whole world onto itself and I wouldn’t dream of trying to advise anyone without doing an indepth needs analysis. You’re going to have to find someone else you trust.

• Would I do a show on money for people who aren’t in debt? Hmmm. Maybe. Do you have a network in mind?

Keep writing. I love to read your comments.   Keep an eye open for some new stuff I’m working on designed especially for those getting hitched. These articles will have a piece on hiring financial help. 

One thing that has always driven me crazy is the number of mixed messages the financial world sends out. On the one hand you have companies fighting to give you credit, and on the other you have experts telling you how bad it is.

Then there are the messages about saving for retirement: “Make the maximum contribution every year or you’ll have to eat cat food” versus “You shouldn’t even put money in a retirement plan because the government will give you all you need.” Really?

The insurance world screams: “Term insurance is the best.” “Permanent insurance is the best.” So which is it?

Is it any wonder that the people I meet are confused?

So I’m wondering the wonderful web when I come upon the Canadian Banker’s Association’s quiz, “How financially fit are you?” You answer all the questions and they give you a score.

The problem is all the questions in the CBA’s financial fitness test relate to debt management, which is only a small part of being financially fit.

Hey, I’m the Debtinator, right, so it’s not like I don’t think having too much debt is a bad thing. What I’m objecting to is the fact that the very people who should know how important all the other components of a sound financial map are, are leading the public to believe that it’s all about debt.

It’s not all about debt. Credit isn’t the monster. Ignorance is.

Let’s say you have no debt and answer all the questions on the CBA’s Financial Fitness Test in the negative. Your score is fantastic. In fact, according to them, “You’re the picture of financial health.” Good for you.

So when your roof starts to leak on Tuesday, you’ll be fine because you have set aside money for home maintenance and you’re prepared, right? No. You mean you don’t have a home maintenance account?

How about an emergency fund? Nope?

Or disability insurance? Not that either, eh?

Well, I guess you’re not the picture of financial health.

You see, being out of debt does not mean you’re financially healthy. Having all your financial bases covered does. And you’d think the smart people at the CBA would know that, wouldn’t you? After all, if you don’t have a home maintenance account, if you don’t have an emergency fund, if you don’t have disability insurance, then it is only a matter of time until something you haven’t planned for pops up and pushes you to use your credit.

Over and over I’ve worked with families who had no financial road map and ended up lost. And it’s no wonder, since the people they are counting on for good advice are just as vacant as they are. Too bad. I guess counting on the pillars of our financial community to get it right is expecting too much.