Gails Blog

People are always writing to me to ask for help. They want a private consultation. They don’t want to go on TV. Oh well. The only way you get me is on TV (since y’all are broke and could never afford my fee, even if I did take clients), so if you don’t want to do that, you’re SOL! Or you could just follow all the advice I give on TV and on my website and do it for yourself. Or you could get yourself an advisor and let her/him help you figure out what you’re doing wrong.

I find that most of the people who are determined to do something about their crappy financial lives DO SOMETHING about their crappy financial lives. They don’t moan, wring their hands, wail, complain, blame someone else, make excuses or whine. They get busy.

If I had a buck for every person I’ve heard say, “Well, we’ve tried, but we just don’t have enough money,” I’d never have to work again. (Yes, I HAVE to work. TV stardom doesn’t mean I’m wealthy, contrary to what some people believe.) So what is it with all the people who know their lives suck and just aren’t willing to do what it takes to make things better?

If you spend every cent you make, and then some, it may be that you’re just very good at spending money. You have a car that’s less than 5 years old. You have a house that’s bigger and better than the one you grew up in. You have expensive hobbies. You love to travel. You loooove to shop.

Ya know, there are people out there who, despite making a modest income, manage to squirrel away enough money to build up a decent nest egg. They have an emergency fund. They have some money set aside for their kids’ schooling. And they set aside the money they want to spend on new acquisitions or vacations BEFORE they put those purchases on their credit cards, so they can pay off their balances in full every month.

And there are people who have realized it’s time to pay for past mistakes: they suck it up, cut back on their spending, get another job, all in the name of getting their debt paid off so they can get back on track.

Do you realize how much of a difference even trimming your budget by $200 a month can make? But ask a princess to give up her cleaning lady and watch her brow furrow. Ask her knight in shining armour to give up digital cable and watch him shake his head furiously. Ask them both to give up their cell phones and you might just as well have asked them to lop off their left legs.

Ask either of them to get more work and you’ll hear a million excuses for why that won’t work. Family Responsibilities is one of my favorites. So you don’t have a responsibility to protect your children from your stupid financial mess and the disasters it will ultimately bring? Hmmm. The I-can’t-find-a-job excuse is another I hear regularly. I’ve had people tell me, “I sent out 20 resumes and even called two companies, but nobody is hiring right now.” Really? Or maybe they’re just not willing to hire anybody who won’t even put in the effort of TRYING to get the job.

And then there’s my absolute favorite:  I don’t have time. Gee, you have time to shop. You have time to watch TV. You have time to talk on the phone, go to the gym, have a beer with the lads. But you don’t have time to make the money you need to get out of debt? Maybe what you don’t have is a sense of what’s really important.

People don’t want to do without. They believe they are entitled to the luxuries they see other people enjoying. They believe there must be some mystery-solution that will fix the problem FAST! So they say dumb things like, ”Can’t you just give me a budget that’ll make everything work?” Really? A Magic Budget? One that will balance without having to cut back on anything or generate any more money? Hmmm.

The only thing that’s going to get anyone out of a financial mess is to stop doing the BAD and start doing the GOOD:

• Stop spending money you don’t have.
• Stop flying by the seat of your pants.
• Stop making excuses.

• Start living within your means.
• Start taking responsibility for your past mistakes.
• Start making changes: pay more off your debt, save

 And stop whining. It’s your life and you can make it anything you want it to be. If it sucks, you may have had a little something to do with that.

So, you’ve been out shopping like a mad fiend, trying to lay your hands on disability insurance coverage. It’s expensive. It’s tough to get. You give up. You’re never going to qualify! Or, worse, because you’re currently not employed (maybe you’re a mom or dad at home, or maybe you’re between careers) you can’t even apply.

While you may not be able to qualify for that disability plan I’ve convinced you that you need, I have another suggestion that might be at least a partial solution: critical illness insurance. With this insurance, you buy a policy to cover specific types of diseases and if you’re subsequently diagnosed, you’ll receive the payout of the amount of coverage you bought.

CI came to Canada in 1995. It originated in South Africa in the early 1980s, the brainchild of a cardiologist who watched as the financial stress exacerbated his patients’ health problems.

According to the Heart and Stroke Foundation of Canada, 1 in 4 Canadians will contract a critical illness by the age of 65. But with the tremendous strides in medical technology, you’re far less likely to die. You might even make a full recovery. Thirty percent of cancer victims are completely cured, while 75 percent of stroke victims and 95 percent of heart attack victims survive the initial occurrence. The problem most people face is that lengthy and expensive treatments often mean people don’t have the money to get them through the crunch until they can get back on their feet and start earning a living again. And that where CI insurance steps in to fill the gap.

Critical Illness insurance pays a lump sum on either diagnosis of the conditions you’ve bought coverage on, or their progress to an agreed state. While a heart attack is a heart attack and requires no further definition, multiple sclerosis might not actually impair your lifestyle for many years.

There are no strings attached to the payout - you’re diagnosed and 31 days later you’ve got a cheque - so you can use the money in any way you see fit. Unsure our over-burdened medical system will make space for you? Put your CI money to use seeking private treatment. Or use the money to provide an income while you convalesce. Clear up debts. Keep your small business running. Make physical changes to your home or vehicle. Ready yourself for the rest of your life. It’s your money so it’s your call how it’s used.

The ailments covered aren’t the same on every plan. While cancer, heart disease and stroke are pretty standard, there is considerable variance on conditions such as multiple sclerosis, paralysis, kidney disease, loss of speech or hearing, and so on. Look for a plan that covers the highest number of variables. And watch the definitions used for critical illness conditions, which also tend to vary from plan to plan. Don’t let the medical terminology baffle you into buying something you don’t understand. Be clear on when you’ll be covered and for what.

Buying CI insurance is a lot like buying life insurance except, of course, you don’t have to die to collect - which makes it seem more like “life” insurance than life insurance. First you select the amount you wished to be covered for. That can range from about $25,000 to the millions. Next, you provide medical evidence of good health. (Be warned: a strong emphasis is placed on your family’s health history and a tendency toward a heredity disease such as cancer could result in its omission from your coverage.) That, along with your age, your gender and whether or not you smoke gives you an annual premium amount.

That premium ain’t no small potatoes neither. CI insurance can be expensive. As an offset, policies offer a full refund of premiums to your estate if you die without making a claim. And some policies have a special rider you can purchase that will kick your premiums back to you if you haven’t made a claim within a specified time period.

If you haven’t been able to lay your hands on disability insurance, CI insurance can help ease your mind by providing a lump sum payout when you most need it. And with medical science making life-saving advances in treating major illnesses, this might be the time to insure your wallet, as well as your body.

I read a post on my site by a woman named Maureen Nowosad, who was not only sensible but also funny, a tough combination to find. I have subsequently learned that she is also a phenomenal optimist with a huge heart and a indominatable spirit. I asked Maureen to tell her story in a Guest Post. And here it is in her unique and loquacious style. Enjoy!

Once upon a time in a department store far, far away a beautiful, young Peasant Girl fell in love with a handsome, young Merchant Prince and his 20% off manager’s discount credit card.

The Lovebirds thought the world a perfect place and could not have been any happier. Ahhhh. Poor, foolish, innocent Babes in Toyland. Little did they know that from the moment they set up house together that dastardly Wizard, Maxed Out von Visa, had cast an evil spell over them, filling them with a false sense of entitlement and leaving them helpless to resist the BuyNowPayForever promises of those horrible Hobgoblins, Amex and MasterCard

Before they had vowed to love and honour, through sickness and health, for richer or poorer etc. etc. etc. our Soulmates had been thought of as bright and sensible. But under this evil spell they created really dumb debt, really quickly and lost all Common Sense and Sense of Proportion along the way.

The particularly wicked thing about this evil spell was that it turned good intentions into bad.

The Prince loved his Sweetheart so much that all he wanted was to be able to fulfill her every wish. He lived to spoil her and he did. Rotten to the core. Never imagining how this would poison their lives.

In return, our big-hearted Peasant Girl wanted to make her Truelove’s life picture-perfect - just like in the magazines and on the soap operas. And yet, almost overnight, she turned into a giddy Mall Rat Diva who lived to be spoiled and had become completely addicted to the thrill of the shop.

One pair of glass slippers was no longer enough; she needed to have the latest fashions as soon as they hit the stores or she would just DIE of embarrassment. The little thatched cottage in the woods was acceptable as a bachelor pad, but as a home for a Princess Bride? PuuuuhLEASE. Besides, the shabby furniture did not match the new recliner throne so it all had to go - but first some textured velvet drapes and flying carpets would be nice. And since living in a good neighbourhood was important for his career, they had to move into a huge, shiny new castle with a huge, shiny new mortgage. And then of course -nag, nag, nag - Little Miss Muffet just couldn’t be seen driving around in that rusty old pumpkin anymore. She needed something with enough mouse power to reflect her newfound status and impress her loyal subjects and the other Aristocrats. Especially that snotty Duchess and her endless bragging about luxury cruises to Never-never Land.

Both the Prince and Princess worked very hard but partied harder, never once thinking of such a tedious thing as consequences. With the arrogance of youth they were sure that they had everything under control and remained blissfully unaware that as their lives grew more materialistic their love had begun to change.

At first when the bills started coming in they laughed and said “Oh well, you only live once!” but after a few months they discovered that when you only live once you actually die a thousand deaths every time you open a credit card statement.

So they paid and paid but fell further and further behind because it never occurred to them to just slow down. To keep up with this life style of instant gratification the Prince got a better job and the Princess got a second job.

Problem solved. So they kept buying expensive baubles to celebrate everything and nothing and show the world how happy and successful they were. But everything has a hidden cost. They saw less and less of each other.

Years passed in a whirlwind of denial followed by storms of regret until sadly it came to pass that the only man in the Kingdom who could make the Princess laugh until she peed her pantaloons didn’t laugh much anymore. When confronted with a final notice from King Cole Hydro the Prince simply refused to talk about it and turned back to channel surfing through 75 boring cable channels until he found a new infomercial to mesmerize and tempt.

The Princess grew sullen and found comfort in a tub of Haagen-Dazs Mocha Almond Fudge ice cream. When confronted with a bounced check she would toss her head in defiance and say, “I’ll think about that tomorrow”.

Her Royal Highness had complete confidence that His Highness would always find a way out, never once thinking about the stress she was putting him through. But then there came a day when her Knight in Shining Armour could not ride to the rescue because he had to leave his gas guzzling steed at the garage until he could find enough money to pay the feed bill.

This shocked the Princess filling her with self pity and fear so she unfairly blamed the Prince and wounded him to the depth of his soul by proclaiming “Well, I guess I just can’t depend on you anymore.” Fighting words for sure but because their love was still stronger than their disappointment they kissed and made up. Because of this narrow escape they turned over a new leaf - by borrowing from the Treasury to keep the moneylenders at bay.

Constant worry led to constant bickering and under the weight of all the old and new debt the walls of the palace were beginning to crack and they couldn’t plug the holes fast enough.

The determined Princess resented the economies that were forced upon them and found very cunning ways to fool the Prince and juggle the minimum payments. Instead of feeling the love in his heart, our proud Provider began to feel the ulcer in his stomach.

It is a tragic day when your rose coloured glasses turn clear and trust turns to dust. Up until this time when he had gazed upon her the Prince still saw his beautiful Peasant Girl but now he began to see a Wicked Little Witch. And as for the Princess - well, some days she still saw the Prince but most days it was the Frustrated Frog.

Every fairy tale has an Unfriendly Giant and Terrible Ogre and this one is no exception. In our tall tale we have the tedious Troll from the collection agency who telephoned to threaten every ten minutes and the Ugly Bank Manager who got really mean and nasty and said “No more consolidation loans for you. You are broke and you need to fix it.”

Now you would think that this kiss of death would have awakened Spending Beauty and Sir Chargealot from Dreamland, but did our Hero and Heroine learn a valuable lesson? Heck no.

Even with the Wolf huffing and puffing at the door and the flames from the Fire Breathing Dragon of Revenue Canada threatening to burn down their straw palace they just kept robbing Grumpy and Dopey to pay Sneezy and Happy while ignoring Sleepy, Bashful and Doc.

Over extended, overdrawn and overdue and yet they still couldn’t help going overboard. Apparently the dishonour of looming bankruptcy just wasn’t enough to turn them away from the lure of yet another ‘No-Money-Down-No-Interest-For-A-Year’ clearance sale or to question the irresistible appeal of that “I can get it for you wholesale” Sleazy Salesman.

Unexpectedly our Busy Bees received substantial raises so for a whole year they grew up and paid their bills. However, a zero balance jinxed them again and by the end of the month they were left without a crumb to their name.

Make believe is hard to sustain and our Humpty and Dumpty were heading for a fall. They thought they hid it well from the outside world but soon snide remarks from rivals, smug looks from neighbours and wistful sighs from loved ones became impossible to ignore.

Finally with the pressure building and even whispers of D-I-V-O-R-C-E echoing through the halls of the palace they went to the King and Queen with crown in hand and begged to borrow a King’s ransom. And like many a loving but misguided parent who just wanted her children to be happy and didn’t understand that she could not solve their money problems with money, Her Majesty said “Sure. If we haven’t got enough coin of the realm in the Royal coffers, we’ll hawk the crown jewels. Do you need a kidney too?”

The Queen should have listened to the King when he said “No way, we scrimped and saved and deserve to get that RV and hip replacement” but after fifty years of finger wrapping she knew his mumble was worse than his bite.

So Jack and Jill got their reprieve and continued on their not-so-merry way having once again deftly avoided financial ruin. .

The sun still shone and the stars still glowed brightly but like the moon, the fortunes of our Not-So-Perfect couple continued to wax and wane. Returning to the King and Queen for ever more handouts eroded their self-respect but a healthy ego can instantly banish shallow regret. It’s sad how an act of generosity can taint family relationships almost beyond repair.

By this time Romeo and Juliette were practically strangers, for after all, just how intimate can you get when one of you is always sleeping on the balcony? So it seemed like a good idea to get some therapy. Of course their idea of a relationship rescue was to cash in their air miles points and go on vacation using a new credit card that had accidentally been approved. The only therapy they got was retail or that which came in a tall glass with a little plastic umbrella.

When our feckless spendthrifts returned home and realized that this time the well really had run dry, they sobered up. That is until they discovered the convenience of a Pay Day Cash Advance. Why put off living for two weeks when such a nice man was willing to trust you and advance what, after all, was really just your own hard earned money? Twisted logic, but it worked.

Now at this point someone, anyone, should have jumped in and just slapped the stupid right off of these two but I guess all the Superheroes were busy leaping tall buildings. The simple moral of this part of the story is that there is no such thing as a free lunch especially when a Loan Shark is the host and you are the main course. You do the math: 1,369% interest is not a good deal.

One day from the bottom of a black hole the Prince looked around with dissatisfaction at his career and all the stuff he had bought in order to prove to himself that life was worth living and realized that none of it was worth what he was still paying for it.

Unknown to him at that very same moment the Princess was gazing at her reflection in their new ten-slice toaster and thinking - This tiara doesn’t work. Oh Mirror, Mirror, all our youth has passed by. I don’t want us to keep living this lie.

And somewhere in the distance a bell rang.

That evening the Prince strode into the palace with a new sense of purpose and shouted, “Where are you my Wasteful Wench?” He found his Depressed Darling flaked out on the sofa watching Desperate Housewives and swept her into his arms saying, “I have abdicated and am getting off of this merry-go-round. Are you with me?”

“Oh Yes!” she cried with her lace bodice (30% off at Sears) heaving with emotion. “I will follow you anywhere but how shall we break the spell? I wish we could just snap our fingers and turn back the clock so that when it strikes midnight tonight we could go straight from red to black.”

No sooner had these words passed her lips than there was a flash and channel changing puff of smoke and on the screen there appeared a beautiful, curly haired Fairy Godmother who said:

“Let me drop my wand and have a look around
Tch! Tch! Six months of paper work and what a mess I’ve found
But live by my rules with cash in the jars
And in a twinkle I’ll turn you into solvent superstars

With no more interest accruing and careful spending
At long last you will find your happy ending
So go forth and live and love with a pure and responsible heart
And never again let debt push you apart”

So they did. The End - almost.

I’ve been having a very frustrating set of days. Last Thursday my desktop went on the bum and it turned out that it might be a hardware - arghhhhh! - problem. So I took it in to see the doctor. But like every sick child you haul off to the clinic, it wouldn’t cough or sneeze so I brought it home again, only to run into more trouble. I spent my ENTIRE day yesterday diddling around with my stupid computer as I backed-up, linked-up, wiped out, loaded up, and reinstalled. It took me from early in the morning to late at night, and the Mother still isn’t up to speed. But I’ve learned a few good lessons through all the agony.

Lesson 1: Experts are only as smart as their last good solution. That should keep me on my toes, eh? The computer doctor did his thing and my baby still wouldn’t go. The on-the-phone know-it-alls didn’t. And when I ran into my umpteenth problem at 8 p.m. last night, I had to come up with the solution too since none of the “specialist” could figure it out. Whazzup with that?

Lesson 2: Anyone can say they’re an expert. It doesn’t mean they can get your computer - your refrigerator, your car, your money — running again. Ultimately you’re the only one with a vested interest in the outcome so you better figure it out yourself or get yourself some helpers you can really trust.

Lesson 3: Persistence is the key to success. If I’d given up at any point, I’d still have to go back to the sucker and get it done. Better to bite the bullet and get the nasty stuff out of the way fast, and then get back to The Good Life.

Lesson 4: Optimism is the other key. If you don’t believe you can solve the problem, you’ll stop trying. If you stop trying, then you’ll have to keep living with the problem. That sucks!

Lesson 5: Some crap you just can do anything about. Would there have been a good time for my desktop to give up the ghost? I doubt it. The fact that I’m in the middle of production just means it’s been working really hard. All those thoughts that run through your head - what could you have done to prevent it? why didn’t you see it coming? what would so-and-so have done differently? - don’t actually help you feel better. And, in reality, you can’t possibly see IT ALL coming. So beating yourself up for it is dumb. Just be as prepared as you can be and then deal with the crap and move on.

Lesson 6: Breath. Twice while I was in the midst of dealing with my dumb computer yesterday, I stopped to do something else. I stopped to plant some stuff I’d bought that just had to get into the pots before I headed off to shoot today. And I stopped to make Alex cheese and spinach ravioli in truffle cream sauce. If not for those two breaks, I would likely have gone completely insane. I was so ticked at all the delays and Wasted Time… I wanted it fixed NOW! Well, little girl, patience is a virtue.

Lesson 7: Don’t take your eye off the ball. The problems with my computer, I believe, stem from the fact that I haven’t upgraded my software in the past year. Each month, week, day even, it tells me there’s a new upgrade and I download what I need. That happens fairly automatically. So automatically, in fact, that you don’t even notice it. When I had to reinstall my software yesterday, each of those upgrade downloads had to done, one at a time. OMG! How stupid is that! But I could have saved myself all that trouble by simply keeping up with what’s going on in my software world. My Bad! And I paid. Believe me.

There’s no such thing as smooth sailing, people. There are calm periods and rough ones. Squalls send your sails flapping; becoming becalmed in the middle of the ocean, miles from land, is hard on the psyche. It’s how you choose to deal with Life’s Little Set-backs that determine how happy you’ll be. See each one as God’s Wrath and you’re likely to hate your life. See each one as a test of your ability to bounce back, and you’ll make it.

Figure out the lesson so you don’t have to keep beating your head against that particular wall. (There will be other walls.) I know I’ve learned my lessons from this one.

Some people are of the opinion that if they have a dollar in their pocket they should spend it. In the old days, people talked about money “burning a hole in their pockets.” So this isn’t a new problem. But as we’ve become more financially sophisticated introducing new products and services, we’ve made it easier and easier to people to put a dollar in their pockets to burn a hole.

I’m just finishing up the paperwork for a fam who have, at the ripe old age of 20-something, run up $100,000 in consumer debt. Yup. You read right. They’ve spent and spent and spent. And their various suppliers of credit have helped them by giving them access to over $130,000 in credit on a income that doesn’t come close to that. Whazzup with that?

They have no idea where their money is going. And I can only tell them a part of the story since they’re withdrawing gobs of cash and keeping no records. Bank machines may be convenient, but they’re also deadly.

Once upon a time there were a few, then we demanded more. Banks discovered that bank machines were way cheaper than bodies, and that they could eliminate the bodies completely in some places. Branches closed and were replaced by machines. According to the Canadian Bankers Association, we did over 667,000,000 cash withdrawals from banking machines in 2007. Wow!

Did you know that the world’s first banking machine was installed in a branch of Barclays in Enfield, north London, in 1967? In a little over 40 years, they’ve become synonymous with “convenience.” In fact, the CBA says, “ABMs are the primary means of banking for 34 per cent of Canadians.”

The USA was the country with the most cash machines — 405,000 — in use at the end of 2006. By comparison, Canada had 16,190 machines spitting out cash in 2006.

Since we don’t have to wait for the branch to open to get our money, and since we don’t even have to go to our own bank machine - we can get at our money everywhere from our local corner store to the gas station to the casino — we’re putting more money into our pockets to burn that proverbial hole.

As if that’s not bad enough, the money in our accounts isn’t the only money we’re spending. Nope. We’re also spending money on our credit cards (and other forms of credit), sometimes even taking cash advances - more cash in our pockets - so we can do whatever we want whenever we want. And when one card fills up, we just sign up for another, and run that card to the limit.

We’re committing financial suicide and we don’t even realize it.

As if it isn’t bad enough that we’re spending money we haven’t yet earned - yes, when you use credit, you’re spending money you’re going to earn in the future… if you’re lucky - we’re also ruining our credit scores, making it more difficult and expensive to borrow for something important like, let’s say, a home.

Whenever you use all the credit you’ve been given on a credit card, the credit scoring agencies shake their heads and say, “tut tut”, and then adjust your credit score DOWN. And the closer you get to your limit, the more they shake and tut and subtract from your score. In fact, you’d do well to type up the following and stick it to the back of your card: Danger: Your credit limit is $___________ (half of what your statement says it is) and you have $_________ (how much) ROOM LEFT!

Of course, as far as I’m concerned, you shouldn’t be carrying any balance on your credit card. If you do have a balance, put your card away so you can’t use it until the balance is completely paid off. Once you get back to zero, here’s how you manage your credit use so you don’t run into trouble again.

First, get yourself a notebook or a chequebook register (available at your bank).

• Write the current balance in your bank account at the top of the page.
• Each time you use your credit or debit card, write a cheque, or take a cash withdrawal, enter the amount you have spent and minus it from your balance.
• Every time you make a deposit, add it to your balance.

There now, you have a real-time balance that shows how much money you really have to spend, and you can’t spend money you’ve already used elsewhere (like on a cheque that hasn’t cleared, or on a credit card that hasn’t come due).

Don’t forget to debit the automatic withdrawals that come out of your account: your mortgage or rent payments, car loan, pay-yourself-first-savings, retirement account deposit, utilities, car insurance, and the like.

Finally, when your credit card bill comes in, check the transactions against your list in your notebook. If there’s something on your statement that’s not your doing, call the credit card company right away and identify the wayward transaction.

There now. You have the means to stay in the black.

The question is this: Do you have the will?

If there’s one thing we’re no damn good at it’s handling credit. Fully fifty per cent of us carry a balance, racking up scads of interest and making life painful for ourselves and our partners. And the bad habits start early. Kids walking the halls of higher learning are often inundated with credit card offers at the time when they are least capable - financially or experientially - of handling credit.

Can you imagine walking into a bank and saying, “Scuse me, but I don’t have a job, and I’ve never had credit, may I have a credit card please.” Now imagine the bank manager busting a gut, tears steaming down his face as he laughed you all the out of the bank. Yet every year credit card companies issue thousands of cards to unsuspecting students who have no visible means of repayment and don’t understand the impact of failing Credit Management 101.

“If Only I’d Known” is the mantra of dozens of people who’ve gotten themselves into the deep end only to realize that it could have been avoided if they’d had a little experience with credit. But since as a culture we’re divided into the “credit is baaad” camp and the “give me more” camp, the likelihood of kids learning a balanced lesson on credit is limited. Want to change that for your children?

As early as ten, you’re kids can start learning about how credit works, when it use it, and how to spend only what you can afford. You start by issuing your child a credit card on the Bank of Mom. Have her design the card, draw up a cardholder’s agreement that you both sign, and you’re away to the races.

What goes into the cardholder’s agreement? Well, that’s where you lay down the rules: how much credit she can use (the “credit limit”), when her statement will arrive, how much time she has to pay (that’s called the “grace period”), and the minimum payment required. Most importantly, it sets out how much interest your child will have to pay on her balance.

Now before you come shrieking at me, “User, Bad Evil Mother,” remember the point of the exercise. You want your kids to learn the reality of credit use. That mean they have to learn that when you use someone else’s money to buy stuff, that stuff costs more.

Which brings us to the next point: You’ve got to charge your kids 28% a year or more - like a store card — to get the message through, otherwise the interest is not painful at all, and they end up learning the wrong lesson.

Now that your child has his own credit card, he can use it when he sees something he wants to buy but doesn’t have any money in his pocket (the same way we all use a credit card). He gives you his card. You make the purchase on his behalf (using cash or your card). You give him a charge slip to sign (a receipt book will do nicely for this). And you return his card and charge slip.

At billing time, you total his charges and present him with a bill that shows the minimum payment and the total outstanding balance. In a perfect world he pays you back in full. More likely, he makes a partial payment and carries a balance and you’re in the business of calculating interest (Now no one said parent-hood was easy! But you might learn a lesson or two here yourself.)

If your child charges more than she can repay, or if she does not make her payments on time, you can decline to accept future charges, repossess the items purchased until they are paid for, and garnishee her allowance to repay the credit. (You could also raid her savings account and take back your money - which a bank can also do - but I wouldn’t advise it since that sends the wrong message about what savings should be used for.) Also suggest she keep a notebook where she records how much she’s spent so she can anticipate her bill and know when to stop shopping.

It’s way better for your kids to experiment with credit in the safety of your arms. As adults, the embarrassment (or worse, the entitlement) they feel when it comes to credit is way overblown. Start early with the credit lessons, give them lots of opportunity to learn, and let them fail where they can learn the lessons without too much pain. By the time they head of to life on their own, they’ll have mastered their own possibilities.

I frequently get requests from people who want to try and figure out how well they are doing financially, but don’t know where to go to find benchmarks against which to measure themselves. There are figures available from places like Stat Canada, but they are very general. It’s okay to use them when we’re talking about what we spend on average or when we’re comparing what we spend on what category to another, but I’d never use them to measure an individual’s “progress.”

CR wrote:

I love your book, A Woman of Independent Means, –so full of commonsense, practical advice. I first found it in the library, and then went on quite a hunt to track down a copy for my own collection. You are pretty nearly the only financial writer who engages the renting-versus-buying a home in a fair and equal-handed way! And I thoroughly enjoy the compassionate but realistic way you advise people on “Till Debt Do Us Part”. Kudos!

My question is this. How can one go about benchmarking how well or badly one is doing? I’m an aggressive saver with a tidy portfolio, no debt (except monthly rent/utilities and a credit card I pay off in full every month), but have no idea whether I’m doing well enough, and have never been able to find any standard against which to gauge my progress. (Obviously, by not providing figures, I’m tying your hands about evaluating my own situation, but I suspect that there are quite a few others out there, all in widely differing situations, who are asking similar questions.)

CR, you’re absolutely correct. I get this question often. And I often don’t answer because the answer is “It depends,” which most people find very unsatisfying. It depends on what you want from your life. It depends on how much you make. It depends on where you live (some places are more expensive than others.) And it depends on how greedy you are.

Let’s do Question 1 first: What do you want? If you want a simple life full of shared activities, the amount you’ll need is very different than the family who wants to travel every year and drive a new car every two years. (Hey, as long as you have the money and you’re not whining, I don’t care how you spend your money.)

So, are you happy doing what you’re doing, or are there other things you need or want to do, and would more money make those things possible?

On to Question 2: How much do you make? The person who makes $100,000 a year can’t compare herself with the person who makes $50,000 a year in terms of lifestyle or accumulation of assets. Nor should she. In fact, the very problem I have with benchmarks is that there ‘s no way to compare apples to apples realistically. And what makes one person feels like soaring success will make another feel like a pathetic failure. So it’s not really about comparisons; it about following the rules. Are you doing the detail, keeping a budget, saving enough to make sure your future is comfortable, covered by the right kind of insurance, paying your bills on time, and all the rest? If you are, then by any standard you should be fine.

Question 3: Where do you live? If you’re in a big city, your costs will be different from another person living in a rural community. More importantly, where will you live when you plan to start using your stash of cash. If you’re going to remain in the same location, will you have enough to continue meeting your needs? Or will you move so that your money will go further? If you plan to move for family or lifestyle reasons, are you familiar with the costs in your new community?

Finally, Question 4: How greedy are you? Or put another way, How Much is ENOUGH? I’ve watched people sacrifice their Present to make sure they were “comfortable” in their Future. They sometimes made it hard for themselves. They sometimes made it hard for others around them. Saving for the future is a good thing, but not when it means that you have no joy in the present. I’m not talking about Shopping Joy here – so all you shop-a-holics reading this shouldn’t go off half cocked saying, “Gail says if shopping makes me happy I should shop!” What I’m trying to say is that the accumulation of assets as the only goal in life leaves one with a lot of money and not much in the way of anything else.

I will tell you that in the corporate world there’s a thing called “financial forecasting”, which is what advisors try to do when they ask people to think about what they want from their futures and how they’ll pay for it. But it’s really an individual exercise.

It’s a matter of figuring out what your personal balance sheet looks like today – is your budget balanced, how much debt do you have, and how much do you have accumulated in assets. It’s also taking a look at how much income you’ll need later, when you retire, and you’ll be counting on those assets to provide your with grocery money.

Some people who have had a bad experience with a financial adviser don’t believe they can add value to your life. But those who have a GREAT adviser know the benefits of having some else looking over a plan, listening to dreams and desires, and help you figure out priorities.

Why not check around with family and friends, bosses and co-workers, to see if you know anyone with a GREAT advisor you can chat with. Don’t settle for less than GREAT.

When was the last time you went through your bills? I don’t mean just paying them. I mean sitting down and reading them to see what you’re spending your money on. I can’t believe the number of people with whom I work who don’t have Clue One where they’re spending their money. Man, we work so hard for it you’d think we’d take better care of it. But we’re lazy. We fall into habits and then never look for ways to break them, even when they’re bleeding us dry.

Buying newspapers is a habit. Sure, you need something to read on the way to work. Borrow a book from the library. Picking up magazines at the check-out counter is another habit. Again, go to the library, or, at the very least, subscribe and save 50%. Better yet, split your subscription with a friend and save 75%.

Okay, so we all have habits, and not reading your bills is one of the worst. People don’t read their check-out bills at the supermarket and spend a lot they don’t even know they’re spending when there’s an error. And they don’t read their bills at home either. They just pay them. Blindly.

When was the last time you looked over your phone bill? Yet you’re prepared to lay out hundreds of dollars a year on your land line. Never mind what you’re spending on your cell phone. Ditto your electrical bills, your gas bills, your credit card statements, your bank statement. I’m willing to bet you dogs to donuts right now that you can’t tell me what you paid in service charges on all your bank accounts last month.

Here’s today’s challenge: Spend one hour going over ALL your bills so you’re completely familiar with where your money is going. That’s right, gather them all up, get yourself a highlighter pen and start familiarizing yourself with where your money’s going. If you find places where you’re surprised at what you’ve been shelling out, it may be time to re-evaluate what you’re getting for what you’re spending.

Keep in mind that if you have auto payments set up, you may have to go online to get the itemized bill to see where you racked up those charges. Don’t wuss-out. Do it.

Are you paying to have movies piped in, but never seem to watch? Axe it.

Are you buying services at a premium? Move to a lower level of service.

Paying for membership at a gym that you haven’t visited in six months? Lose it.

Paid even $1 in banking machine fees? Stop it!

Got a renewal for a magazine subscription you never have time to read? Don’t just automatically renew it out of habit.

Look for all the things you pay for, but seldom use, and as you chop, trim, slice and dice, make a list of the money you’re saving.

Eliminate just $50 worth of monthly spending, and you’ll have $600 to add to your savings this year. Take that $600, invest it in an RRSP at an average return of 5%, and REINVEST your tax refund every year to make your RRSP contribution grow and in:

20 years you’ll have $29,610
25 years you’ll have $37,485
30 years you’ll have $45,360
35 years you’ll have $53,235
40 years you’ll have $95,424

… all from a measly little $50 a month. Can you imagine what you could do with $100?

Can’t find anything to trim? Really? Did you look really hard? Well good for you. It means you’re running a tight ship.

I got this letter over the weekend. I just LOVE it. Read it and laugh:

I called my bank to ask for a consolidation of my credit card debt and my line of credit. The did a credit check and said than although I had never defaulted on any payments, all my cards were at or near their limit and I was only paying down the interest so I didn’t qualify. I said that was precisely why I needed a consolidation loan; to reduce the interest so more of my payment was going towards repayment of capital. She said she had gotten into debt recently because she and her husband had to pay her father in laws expenses while he was terminally ill and expected to get the money back in the will but didn’t. She suggested I do what she did- go to Wells Fargo Financial- she got her $30,000 dollars in debt consolidated at 33% interest. I said why would I do that since it is higher interest than I am paying. She said it is one easy payment and if you pay on time for one year, they reduce it to 19% for the rest of the term of the loan. What is wrong with this picture?

Okay, so here we have a banker suggesting that we take a consolidation loan at 33%. Really? And that we use a Lender of Last Resort. Really? And that we settle for getting our rate all the way down to 19% when the going rate on an unsecured loan is 12% less. Really? Is it any wonder that we’re confused about what our options are and what we should do when we find ourselves in a hole and want to make it better? Borrowing At Any Cost isn’t smart, regardless of why you’re trying to borrow.

Here’s what you should do:

First, call and negotiate with your existing creditors for a reduction on your interest rates. Tell the card companies that you’re close to the edge and are considering bankruptcy, but that you really want to pay back the principal owed. Ask for a break. You want them to waive the interest in return for post-dated regular payment.

While that works a lot of the time, sometimes it doesn’t. Or sometimes the rates don’t come down enough, in which case you need a consolidation loan. If your bank won’t help you consolidate, go and ask another lender. Sometimes our own bank takes us for granted, but another bank that would like the biz will cut us some slack. Ask for an installment loan with a maximum three-year term. Offer any other business you may have: your retirement plan, your mortgage, your accounts, whatever you have to show the new lender good faith.

Or you could do a balance transfer. Get a low interest credit card (yes, I know, but this is in the name of repayment, not more charging) and transfer part of each expensive credit balance to the new card. You want to do two things:

• reduce the cost on your borrowing, and
• get the balances on those cards below the 60% mark so you’re not seen as being too close to your limits.

Get another job. That’s right. If you’re ever going to get out of debt you need a source of money you can devote to debt repayment. If you’re already working 70 hours a week, then find a way to cut back on your spending - YES IT CAN BE DONE - to find the extra money to get out of debt. Stop buying everything but food, and that in smaller quantities.

Many of the Lenders of Last Resort, or the credit card companies that have the must outrageous rates and fees are U.S. companies. I don’t understand why Canadians have embraced these companies, making them fatter on our backs. They don’t have to follow Canadian rules because they’re U.S. companies. They don’t have to follow U.S. rules because they’re selling products outside their own jurisdiction. The result: through our own ignorance or stupidity we are being suckered into paying through our noses.

If you have a U.S. credit card - that’s any credit card issued by a U.S. company - take it out of your wallet and cut it up. I don’t care how great a “deal” you think you’re getting, it’s going to bite you in the butt. And if you’ve been dealing with a U.S. lender, give your head a shake. If you can’t get financing here in Canada, you have to ask yourself if - perhaps - you shouldn’t be borrowing. Using a Last Resort Lender is dumb, dumb, dumb. Are you?

Wedding season is around the corner. Girls are going to be strutting their stuff in dresses that cost a bagful of money, and boys are going to wonder what all the fuss is about. The equivalent of a home downpayment will be spent on flowers, food, booze, and myriad other must-haves for the Big Day. Some people will spend DAYS getting married, hosting family and friends, and maxing out their credit.

Natasha, who does my makeup on the show, also does weddings and is looking forward to a banner season. Since we’re shooting on Tuesdays and Wednesdays this year, she’s free Fridays (Friday is the new Saturday) to make up all the brides and bridesmaids who need her skillful touch. And some won’t be satisfied with having her do the deed on the day; they’ll want a dry-run to make sure they’re happy. Money’s no object.

If there’s one theme running through the stories of the newly weds I’ve worked with it’s that a wedding that takes FOREVER to pay off is dumb. People will do the darndest things on their wedding days, or in the month’s running up to it. I worked with one woman who spent far more than she could afford just to prove to her much-despised family that she’d made it. Hmmm. Great way to start a new life with your partner, huh? Another couple I worked with had to invite half of Europe to keep the parents happy. But the parents weren’t kicking in to have all the family and friends flown in. Whazzup with that? Whose day is this anyway?

When you’ve been married as often as I have, you not only get good at wedding planning, you’re pretty determined to do it just the way you want. When I married my keeper-husband, Ken, we created our own vows and we were married in a park. It rained, an auspicious sign I was told. Convention was nowhere in sight.

Whether you’re getting married for the first time, or you’re jumping into the breach yet again, you’ll want the perfect wedding. But perfect doesn’t have to be expensive. It just has to be fabulous. So why are people prepared to take on gobs of debt to have a party that meets a bunch of other people’s expectations?

Your extraordinarily happy day doesn’t have to be the most expensive day of your life. Perfection comes at a price - not only financially but emotionally. You only have to take a gander at some of the Brides-Gone-Berserk TV shows to see just how off the rails you can go.

The first step to making your wedding work is to set some realistic expectations for what you want from your special day. You and your better-half-to-be should talk about what’s most important to you and your families. The next, and equally important, step is to establish a spending plan within which you will work. These two steps are closely tied together. What you want from your wedding will set the tone for how much you spend. And how much you have to spend should guide you in setting some realistic expectations. Making your dream wedding a reality shouldn’t mean digging a debt hole that will strain your new marriage; far better to eliminate some of the less important things. With a little creativity and some legwork you can make the day memorable in the most charming ways without a hangover of unmanageable bills.

If you invite the world and his uncle to your wedding, you’re going to be on the hook to attend a b’zillion weddings (and buy presents) when your friends and family reciprocate and invite you in return. I’ve just worked with a couple that, in the first year of their marriage, went to seven weddings. She was very embarrassed as she told about writing out a gift-card that included a cheque she knew would bounce. Wow! Why would people do that to themselves?

Everyone wants a visual record of this special day. But photographs or video can cost a small fortune: $1,200 to $5,000. If that’s out of your budget, get creative. Provide your guests with disposable cameras. Everyone taking pictures of everyone else having a fabulous time will create a memorable record of the event. If you have a friend who is especially good with a camera, request her services as a wedding gift. 

Spend $350 on a limo, or hitch a ride with mom and dad.  Spend $500 - $1,000 on a wedding dress, or let a friend or relative make it for you. Better yet, go retro and borrow a dress from a girlfriend, aunt or your mom. There now, you’ve taken care of the “borrowed” category (as in something old, new, borrowed, blue.)

Choose seasonal flowers rather than imported or green house flowers in your bouquets and centrepieces. Flowers that are not in season send costs up, up, up. Use your bride’s maid’s bouquets to adorn the head table and use the aisle flower arrangements from the ceremony as table centerpieces at the reception.

The reception is another good place to cut costs. For a small gathering of 30 people or so, have your reception at a restaurant - just don’t book it as a wedding reception. Reconsider the time at which you’re having your reception. A lunch, afternoon tea, finger-foods in the early evening or desert table will be far less expensive than the hip-of-beef-approach. You don’t have to offer every alcoholic beverage available under the sun. Stay away from mixed drinks. Go with a couple of wines (one white, one red) and a couple of beers (one domestic, one imported) and you’ll save tons.

While this last tip might not save you any money, it may save your sanity. Be ready to delegate jobs when people ask, “What can I do to help?” Write every job that needs to be done on index cards. Then when people asked what they can do, give them a card. Also consider naming a friend as your Wedding Director. On the big day, any questions, problems or complaints should go to the Director so you’re free to enjoy your wedding.

Review your spending plan frequently to keep yourself on budget. Here’s a simple budget worksheet that’ll show you the average spent, which you can use to manage your expenses.

It’s really easy to let enthusiasm spiral into huge costs. But with a little creativity and a willingness to do it yourself, at least in some areas, you can have the wedding day you’ve always dreamed of without having to promise away your first born.