Gails Blog

There’s an old saying in Jamaica - I’m sure every culture has it’s own version: If you lay down with dogs, you get up with fleas.

I was more than a little surprised when I found out that a Toronto-based credit counseling service, recently renamed Credit Canada, had teamed up with Capital One to sponsor “the first ever Credit Education Week.” Hmmm.

According to Credit Canada’s website, ninety percent of Canadians say they have more debt today than five years ago. The site goes on to say, that eighty percent of us don’t know our credit score and that, “A credit score can be one of the most significant numbers in consumers’ lives.”

Only if you want to acquire credit. And since the credit counseling mandate is to help dopes who couldn’t handle their credit get out from under, it seems odd that they are focusing on helping people understand how to better their credit scores. So they can get more credit? Or so they understand that your level of indebtedness isn’t really the issue, it’s your ability to keep up with your minimum payments. Hmmm.

One little-known fact of the quirky credit scoring system is that if I pay my balance off every month in full, I will have a lower score than someone who makes all their minimum payments on time. Yup, that’s right. The credit score not only reflects how I handle my credit (kinda), but also whether I’m someone worth lending to. And clearly, if they can make money off me because I only make my minimum payments, then I score higher than if I make my payments in full every month - which is what we’re supposed to do.

Capital One also seems to be a strange choice of partner for a credit counseling company. I’m wondering why Credit Canada couldn’t talk a Canadian bank/credit card company into their plot to educate the masses. Could it be some residual fiduciary responsibility rearing it’s guilty head amongst our national banks? Hmmm.

According to Credit Canada’s website, “Capital One is committed to building awareness on all issues related to personal finance. We are proud to partner with Credit Canada, and we hope Canadians will take advantage of Credit Education Week events and resources to build their credit wisdom.”

I wonder if they’ve seen my episode with Corrina and Jay where their November credit card statement showed the following charges

Previous balance…$797.92

Finance charges…$14.45

Monthly member fee…$6.00

Overlimit fee…$29.00

Account balance premium…$8.27

That finance charge represents a fee of 21.9%, the monthly member fee another 9%, the over-limit fee a whopping 43.6% and the account balance premium another 12.44%. WOW!

Corrina and Jay certainly did have someone’s hands in their pockets, dontcha think?

Hey, I’m all for educating consumers about debt and how not to get into it. But I’m also all for telling people the truth about how credit works and the risk you put yourself in when you spend money you haven’t yet earned.

I’ve never been a big fan of credit counseling. It does work for some people, but for many more it’s not the right choice. The right choice is to recognize that the use of credit for the wrong reasons (more shoes, more furniture, more entertainment, more anything that doesn’t meet your basic needs) is dumb, dumb, dumb. And if you’ve bitten of more than you can chew debt-wise, then it’s time to cut back and pay off. Whether it takes a second job and not going ANYWHERE until you’re done with the debt, if you’re committed to getting out of debt, you have to feel the pain. It’s part of the process. Just getting your payments in line with your existing budget isn’t enough.

Besides, going the route of credit counseling leaves you with a crappy credit rating (yes, the very thing they’re trying to educate you about) for a long, long, long time.

Want to get out of debt? Bit the bullet. Make a budget. Create a debt-repayment plan. Then just do it!

It’s your life. It’s your money. Take control. And don’t take any wooden nickels along the way.

 If it’s such common sense to only spend what you can afford, why do so many people spend money they don’t have - use credit, in other words - to buy things they want?

Think about it for a minute? Why did you whip out your credit card and pay for that meal in a restaurant, pair of new shoes, or groceries? Why did you buy that big screen TV on a buy-now-pay-later program? Why did you use your line of credit to pay off your credit card? Be honest. Why?

People want to maintain lifestyles they can’t afford. Whether it is the social pressure to conform, our own sense of entitlement, or a disregard for the potential risk we place ourselves in when we use credit to buy STUFF, we’re delusional.

There are actually people out there who believe that using credit is “normal”, that it’s what they should be doing. After all, their parents did it, their brother’s doing it, so is their best friend. In fact, most of the people they know are doing it.

It’s as if people are afraid to just be. They have to drive the right car, go on an annual cruise, have new leather furniture, watch a high-definition, big-screen television, eat out three or four times a week, drink the best Scotch, or consume store-bought coffee every day. And they’re willing to exchange hours, days, months, years of peace of mind for the momentary high that comes with the new acquisition. Whazzup with that?

Social pressure to conform isn’t in your imagination. It’s real. But if you submit, if you’re willing to live a life of smoke and mirrors, if you want it ALL right NOW, then you need to accept that you’re creating a miserable life for yourself. It’s only a matter of time before the piper comes a’knocking

One way to gain some perspective is to ask yourself (and your partner) what it is you really want in life. If you only had six months left on this sweet earth, what would you want to be doing? Would you be shopping for new furniture? Would the kind of car you drive really make a difference? How about the handbag you’re carrying?

I often talk to my daughter, Alex, about how important it is to live a worthwhile life: A life that brings challenge and love, that allows you to share, to laugh, and to be happy.

So, what are the things that make your life worthwhile? And what are you doing to put more of the things that make you happy into your life?

Want a great book to read on happiness? Read 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.

If you love your life (as opposed to your stuff), relish the time you spend working, look forward to seeing the people you share your space with, and feel as if you’re making a difference, I don’t think the kind of car you drive, whether you have a big-screen TV, or how often you eat in a fancy restaurant will mean much. If you can focus on creating the life you want, taking small steps to achieve your goals and finding a way to laugh while you’re doing it, I’m willing to bet you won’t even miss your credit cards.

As Jonathan Haidt’s website  says, “Happiness is not the shallow state of feeling pleased and chipper all the time. Happiness is the state of a human being that has achieved cross-level coherence within herself, and between herself and the people, challenges, and institutions around her. Happiness comes from between.”

I was shopping on Danforth Avenue yesterday morning. This is my old neighbourhood and it felt great to be back in the buzz. Now that I live in the bush (which I looooveee), it’s a treat to come back to my old stomping grounds and see what’s new.

One of the drawbacks of living in the country - which is counter to what you’d think when you were getting ready to move there - is that the fruits and vegis aren’t as varied or as fresh as you can get in the city. So I took the opportunity to stock up for Christmas.

I bought a lot of stuff: red peppers, mangos and cilantro for a soup I promised Alex I’d try to make for her. We had it together in a restaurant and I’m determined to reverse-engineer it. (Yes, I’m working backwards from what I remember it tasted like last summer. Wish me luck.)

I bought gobs of fruit. I’m feeding about 14 Christmas Eve, Christmas Day, and Boxing Day (which is Ken’s b/day). With so many people in the house, it makes sense to make a HUGE fruit salad and then let everyone pick out the stuff they don’t like.

I found fresh basil. My basil plant has just given up the ghost and I clapped my hands in glee when I came upon the beautiful fresh basil. And lemongrass. So I think I’ll make a nice curry tomorrow with chicken, zucchini, carrots, broccoli, maybe some cauliflower, potatoes, and the Kaffir lime leaves I found in a Korean store when I was shooting in Guelph.

I love to cook. I can’t believe the number of people who blow their budgets eating out when home-cooking is such a pleasure and so much more cost-efficient. I gave one couple I worked with the challenge of making dinner for their extended family using only $40, about 1/10 of what they would normally spend taking everyone out to eat. They only spent $38! It can be done,  people. The couples I work with often have to give up their eating-out ways because I give them so little money to live on. Then they discover the sheer joy of working together in the kitchen, creating a meal, enjoying their togetherness along with the food.

As I’m filling my arms with berries, mangos and tangerines, a woman and her husband stop to talk. They love the show. And they want to know how much of what I do sticks.

It’s a good question. I get this question a lot. My best guess is that we work wonders with about 80 percent of the people I meet. Ten percent fall into the nebulous gray area: will they, or won’t they stick with the plan? And ten percent are lost, some from the get-go. I’m shooting the last show of season five right now (season three is on the air), so that’s 65 people in total that I’ve worked with on camera. That’s a lot of people who have been Gailed! And many of them exceeded my expectations.

It seems the reach of the show is wider than I initially thought. I left the fruit stands and headed into the local grocery emporium for hummus and pita. The pretty young lass at the cash register recognized me and told me how much headway she’s making with her debt. Good for her.

Good for you all. It is no easy task facing up to your debt. But as many of you can attest, if you have the guts to face up, ‘fess up, and get moving towards your goal, the feeling you get is FANTASTIC! People are writing to tell me how excited they are to be debt-free. Wow!  And when couples appeal to me for help now, they ask me to “come kick my butt.” Ha!

The reason why so many people are embracing the idea of being debt free isn’t simply because it’s a good idea. It’s because they have me kicking their butts. So here’s my challenge to all you recent converts:

Get yourself a butt to kick and kick it hard. Show whomever you’ve chosen the error of their ways. Show them how you turned things around. Show them that they can be debt free too. And tell them, once they’re on their way, that it’s their turn to partake of some butt-kicking.

When you’ve kicked a butt, write and tell me. Better still, post it under Have Your Say. This is where I’d like y’all to talk to each other.

Happy Holidays to you and your family. Here’s hoping your pantry is full and your heart is happy.

p.s. check out the new article, Got A Raise?

When I was a kid, I procrastinated. I procrastinated so much, in fact, that my four-year-old brother who could barely say the word would admonish me (right after my mother had) for procrastinating. I wasn’t amused.

My daughter also procrastinates. Why do today what you can put off till tomorrow? It’s a huge bone of contention between us because despite the fact that I used to be a big-time procrastinator, I am particularly intolerant of her procrastination. (My mother always said, “We hate most in others the things we dislike in ourselves.”)

So I got to thinking about procrastination and why we do it. What’s that invisible force that seems to hold us back? Since this is the very specter that can haunt us when it comes to our money, it seems a worthwhile point of discussion for m’blog. After all, if you know you should be saving, but you just aren’t, you’re procrastinating. And if you believe it’s high time you set up a filing system, but tomorrow you’ll have more time, you’re procrastinating. And if you’re avoiding addressing your ever-growing debt load because it’s so intimidating, well…

So why do we procrastinate? According to the University of Cambridge website (http://www.counselling.cam.ac.uk/procras.html), we procrastinate because we:

•     have a distorted sense of the time available

•     can’t prioritize

•     have too much to do

•     are anxious and so spend more time worrying than doing

•     have difficulty concentrating

•     don’t know what to do

•     are overwhelmed by what needs to be done

•     are afraid of failing or afraid of succeeding, and what might come next

•     are perfectionists

•     are bored by what we have to do

•     can’t problem-solve

•     avoid doing things we think are hard or that we don’t like to do

Want to stop procrastinating? You can. I did. And I’m going to help Alex overcome her tendency to put it off. Here’s what I’m planning to tell her:

•     Unpleasant tasks are rarely as horrible as you think they are going to be. Bite the bullet and do the crap you’re dreading the most first, to get it out of the way. Schedule it for early in the day and then give yourself a reward when you’ve got it done.

•     When you’re working on a big project and you’re afraid of the size, you have to break the job down into manageable pieces. When the job seems too big or feels like it’ll eat up your whole life, it’s easy to put it off. Break large jobs into smaller, more manageable tasks. Once you’ve halved or quartered the job, do something to start, no matter how small, so you create some momentum.

•     Can’t make up your mind when or where to start? Pick a time for making a decision and the criteria for making it and tell someone who can hold you accountable.

•     Afraid of failure (or of success)? Create a clear mental picture of the completed project in your mind and think about how you will feel when it’s over. Focus on the end result, not just the process. Keep reminding yourself how good you’ll feel when you’re finished. Maintain your high standards, but recognize that sometimes 80 percent for you may well be 100 percent for someone else.

•     Feeling tired? Feeling lazy? Just not interested in doing the job? We all have to do crap we don’t want to do, don’t like to do, don’t see the point in doing. Hey, why should I have to scrub the lime scale off the inside of the shower stall? And, by the way, who stamped “change the bed linens” on my forehead? Schedule these tasks for a time when your energy is up.

•     Hostility towards the boss is sometimes a barrier to getting the job done. So if your gut response is to resent me asking you to clean your room, or a teacher you don’t like gives you work you don’t think is worthy, you procrastinate. That neither gets you out of the job nor does it make the job go away. So just do it.

•     Distraction and a lack of focus can make jobs that should only take an hour take all day. Then you blame the job. But it’s not the job. It’s the lack of focus. Try creating a to-do list with priorities. Block time for projects and then make a rule that you are not allowed to move out of your chair, make a call, surf the net, pick up a book, until you’ve finished your task. The sense of accomplishment in having completed something will help you start the next thing after your (short) break.

Like Alex and her homework, you can’t sidestep your financial responsibilities forever. Decide what you’re going to do to rectify your financial mistakes and then tell someone. Tell many someones. Your odds of following through will increase dramatically if you are held accountable for your actions — or lack thereof. Talk about your goals with friends or family members. Or recruit someone interested in the same goal to buddy-up with you. Document your journey in a journal or on a blog. And keep yourself motivated by rewarding yourself as you progress.

Good luck. 

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. 

If y’all want to meet my crew, now you can. These are the guys who have made the show what it is (except for the directors and editors who play a huge roll but aren’t  here. I’ll add stuff about directors and editors another time.) These guys work together like a finely oiled machine AND they make me laugh a lot. I love to laugh, and they are great at keeping the energy high on set. If anybody tries to steal them from me, you’ll know the Wrath of Gail! The other thing I’m working on for the site is a piece for people planning to marry. This came out of a question I received from a mom who wanted to buy a consultation with her soon-to-be-married daughter. Sorry, I can’t swing that, but I hope what I’m creating really helps. Would y’all like me to include a piece on budgeting for the wedding itself? 

I am constantly amazed at the number of people I meet who have grown children living at home paying no rent. Those kids are working. And they’re spending. But, for whatever reason, their parents don’t think they need to be paying rent. Whazzup with that?

If you’re one of those kids, or one of those parents, it’s time to get real.

When adult children live at home, work, and pay no rent, they are learning to live on a disposable income they will never again have in their lives. That’s right. They are learning that they can spend every cent they make on their personal indulgences.

So what happens when they finally move out? (You do want them to eventually move out, don’t you?)

Well, let’s take the case of Donna and Dick: they both lived at home before they married; they both had lots of money for concerts, shopping, fast cars and eating out. Now they’re married and they’ve bought a home. Donna can’t sleep at night because she can’t believe the bills that are piling up. Dick thinks he’s going to be trapped in his house for the rest of his life, because he doesn’t have any money to do ANYTHING.

Up until they married, Donna and Dick had no idea what real life cost. And because their well-intentioned parents didn’t make ‘em pay rent, they didn’t even dip their big toes into the reality pool.

Okay, if you’re a parent you’re probably whining at me. “I can’t take money from my kids.” Why the hell not? If they were living on their own, they would easily be spending 35 percent of their income on housing … never mind food. If you don’t take rent, you’re a bad parent. Yep! You are! You’re abdicating your responsibility to teach your kids (adults) about what life is really like. And you’re letting them get used to indulging themselves way more than they should.

When Nat and Matt got married, the only thing Matt had ever been responsible for was his cell phone bill. Pathetic! She inherited a baby from his parents. And then she had the job of growing him up. Shame on Matt’s parents.

There’s one more excuse I’ve heard parents use for not taking rent from their working children living at home:  “She’s trying to save money.” Really? Saving for what? A downpayment on a home. Terrific. Take the rent money and put it away and then give it back as a gift when the time comes for your princess to buy her palace. Ya see, she’s supposed to be saving anyway. We all are. So the fact that she has to pay rent isn’t an excuse not to save.

When should you start making your kids pay rent? As soon as they have a full time job. If they’re still in school and barely making ends meet, and you have the resources to help them get an education without burying themselves in debt, go for it. But the minute they are working full time (even it that’s three part-time jobs), they should be contributing to the household so they learn what real life costs.

As for all you parents who are still doing your grown children’s laundry, cooking their meals, packing them lunch, and all the other things you do, hey, that’s between you and your kids. Far be it from me to tell you what you should or shouldn’t do for your kids. If you want them to be your major pastime, have fun. But if you’re letting them learn the worst possible financial habits, then shame on you.

Student loans are a huge problem for lots of people. And it’s no wonder, really. After all, the way the system works now, you figure out where you want to go to school, apply, get in, apply for a student loan, are granted one, and then you proceed to rack up the debt until you’re finished school, at which point your student loan becomes repayable.

No one ever stops to think about how much of a payment they can afford, based on the income they can expect from their after-school careers.

Parents don’t stop to think. Students don’t stop to think. School counselors don’t stop to think. Universities don’t stop to think. The financial media doesn’t stop to think.

The result: students are graduating from universities and colleges with debt that’s as heavy as Mama Cass.

The student loan system isn’t doing very much to help either. Students regularly choose the “variable interest rate” option on their student loans because it is cheaper, and then start paying back their loans. What they don’t understand is that when interest rates inch up, but their payment amounts remain the same, more of their payment is going to pay the interest, and less to pay the principal they owe. I worked with one woman who, after paying her student loan for two years, had paid off a whopping 17 cents.

Most students don’t look at their loan statements. When I showed Chantelle her statement with the 17 cents paid off, she just about fell over. Well, why would they? Look at their statements, I mean. Lots of their parents hide their financial statements, throwing them in draws or boxes or trash bins and pretending they don’t exist.

What’s the answer?

We need to talk to our kids about the responsibility they assume when they take out a student loan. We need to help them see how much debt they can handle without strapping themselves so tight they squeak.

There are tools available. Go to canlearn.ca for great calculators and advice on managing student loans. My favorite is their Loan Repayment Calculator. Using it, you can figure out just how much debt you can afford to take on to work your debt repayment into your cash flow once you graduate.

Remember, as a rule of thumb, you shouldn’t spend more than 15 percent of your net income on debt repayment (not including housing and transportation).

This will take some thinking about. It’s not an easy-peasy exercise. You have to research what you think your income will be at graduation. So maybe an undergrad degree in Ancient Egyptian Art won’t really pay off. You should do some pretty detailed research about how to get as much free money as you can. And you have to make some decisions about your school/work balance while you’re getting an education so that you don’t end up with Mama Cass sitting on your shoulders at graduation. The effort will be worth it. I promise.

Have y’all watched the episode, Half-Baked? It’s the episode with Dennis & Sharon. Dennis was an aspiring baker and made a cake, which I sampled. The cake wasn’t bad, but the director of the show, Foxy Roxy, really wanted to rub it in, so she made me do three takes eating the cake. I vowed to get her back. It’s taken a year, but here it is… revenge is a dish best served cold. Go to Revenge on Roxy and see my idea of getting even. Enjoy!

There sure are a lot of questions coming into the website. I had intended to answer one a week, and maybe when it slows down a bit I can get down to that. For now, the questions are coming fast and furiously and I’m running hard to keep up. I’m sorry I can’t answer them all, but there just aren’t enough hours in the day, people.

Some of the questions are on a theme: Lots of people want to know what goes into the jars or how to budget. That’s why I created the interactive budget (look to the right under Blogroll and you’ll see all this worksheet and guide to using it). I’ve also added the worksheet for figuring out how to get out of debt, along with the holiday shopping worksheet to the Blogroll, along with their instructions. There. Now they are easy to find.  Another frequent question: Do I take private clients? Are you kidding me? Like my days aren’t long enough? And by the way, since y’all are so deeply in debt, how could you afford to pay me? I’ve given some guidance on where to seek answers or you can ask questions and work it out using the website tools as a guide.  People often ask when I’m coming to their part of the world. Hmmm. Since I visit each family four times over a month, shooting outside of Ontario would be a traveling nightmare, even assuming I’d be willing to leave my kids (which I am not.) So all you people all over the country, don’t be holdin’ your breath. I don’t want you turning blue on my behalf.  I can tell you that I intend to add more and more to this site because I can’t get to all of you privately or on the show. Since I can’t possibly visit all the people who need help, I want y’all to treat this website as a virtual me. Each question you ask helps others, and every tool I put up can be used by everyone who needs that help. If there are specific things about money you find challenging, let me know and I’ll see what I can do to help.  The site is getting some good traffic, but the more people who see it and share their ideas (that’s what the Have Your Say is supposed to be about) the better the site will get. If Have Your Say gets busy enough, I may replace it with a discussion board. The problem I have with that right now is that I can’t possibly monitor it myself (time) and I don’t believe I can leave it unmonitored (too many potential yucky things said). So I’m waiting to see how much real demand there is for a discussion board before leaping in.   I want to thank y’all for the great response and for the love. It’s great hearing how well y’all are doing, watching the show, applying the things you see. And I want to be able to help as many of you as I can. Be patient, tell me what you need (be persistent), and pass on what you’re learning to other toadies.   Keep the faith, take small steps, move towards your goals. And tell me what you want need. You’re the ones driving this bus. Where are we going next?