Doing noting about your debt is burning up your retirement savings $ – literally
Here is a very SCARY FACT:
If you are only making the minimum payments on your credit cards and lines of credit right now, it could take you more than a lifetime to get out of debt!
Minimum payments are essentially ‘interest only’ payments. This means that by making the minimum payments, the ‘principal’ (amount owing) of the loan stays the same; it does not get reduced over time. Your Creditors win by getting you to pay interest forever (this is how they make money) and you are stuck in debt forever*. Well, not forever, but a VERY long time. Look at your credit card statement to see the section that says “Time to Pay” – it will shock you)
If this is you, and you have been making only the minimum payments for a while, then perhaps it’s time to consider a debt plan to deal with this problem once and for all!
The Cost of Doing Nothing:
Not quite ready to deal with the debt? At least take a moment to calculate the cost of doing nothing:
Here is how: Take your current Minimum Payments on all of your unsecured debt (unsecured debt means debt not including car loans, mortgages and home equity lines of credit as they are connected to an asset) and multiply it by 60. That is the cost of carrying your debts for 5 years.
Example: Debt Load -$45,000 (Credit Cards and Lines of credit etc), Minimum payments on all debts $900/month. Calculate $900 x 60months = $54,000.00
This means it will cost you $54,000.00 to pay your minimums for 5 years while you “put off” making a decision on dealing with your debt.
Now that is a high cost of doing nothing! Worse than this, is the fact that the person still owes the $45,000!
Calculate $45,000 + $54,000 = $99,000.00
This is the real total cost of doing nothing over 5 years and then paying off your debts. Think about the impact on personal net worth and future retirement!
Alternatively, if this same person came to see us for help, we could likely help them get them out of debt for a grand total of only $14,000! Their debts would be reduced from $45,000 (principal) down to only $14,000 with ZERO % interest. Compare that to the total cost of doing nothing.
Calculate $99,000.00 – $14,000 and we have essentially helped save this person over $85,000.00!
Take a moment to calculate your own cost of doing nothing by following the example above. If you know what you’re dealing with, then it makes it easier to make decisions about how to deal with it.We would love to help you with your debt so you can move on. Get debt free now!
Give us a call, we would love to help.
Living Debt Free Feels Amazing!
We are very excited about a recently announced NEW legislation for British Columbia that will help push BAD Debt Settlement Companies out of the market. Finally the BC Province is waking up to the fact that there are both good and bad players in the Debt Restructuring industry, and this new legislation is designed to allow the good companies to continue helping people like they have in the past, yet help clear out the bad companies.
This is good news for our debt consulting business as we are constantly having to help clients who had previously signed up with one of the bad companies; These bad companies have generally taken big upfront fees and left the client with nothing except bad credit and judgements and wage garnishments. Luckily we can almost always help people in these situations. We quickly make arrangements with a 3rd party to stop the garnishments and work out a deal with their creditors that is “agreed to by both parties first” and then “paid for later” (and over time). Here is the link to this exciting new legislation that should help clean up our industry
And remember, never pay Debt Settlement or Credit Counselling companies large upfront fees, and always work ONLY in person with a local company with a track record of success and a good BBB rating.
I recently wrote an article about how to protect yourself from unscrupulous companies on our website here
Revenue Canada Collector Scam
This may be hard to believe, but phone scammers have actually started to pretend to be CRA (Canada Revenue Agency – aka Revenue Canada) agents in order to try to coerce people into paying them money. Don’t fall for this recent and very prevalent phone scam.
We help a lot of people deal with and reduce their debt, and this sometimes includes helping people and businesses reduce their tax debts; so a person who owes tax monies might actually be more at risk for this scam due to the fact that they might be expecting to get a call from CRA regarding their taxes owing.
As financial educators, we want to help our clients as well as other people avoid this recent scam.
Here is the link to a news article on this scam
Here is in general how to avoid phone scams and how to better decide if an agent calling you is actual a CRA agent or not. In general:
- Ask for the department name of the caller, as well as their name. If they won’t give you their name ask for their identity number – Real CRA agents have an actual ID number they need to give you when speaking with you. And most real CRA collection agents will have no problem identifying themselves on the phone with their name. ALSO, another simple tip if your not sure is to ask for their call back number and fax #. Call them back at this number to see if it is real. Also, double check online to see if the number they gave you is actually associated with CRA. There are a few main CRA phone numbers listed on their website. Remember, real CRA agents should sound at least somewhat professional. Scammers will sound unprofessional and demanding many times the phone reception will sound bad with many clicks and pauses (almost like the call is going to another country very far away). These clues can help you confirm if the call is real or not.
- Phone the actual listed phone number – If you are still not sure, the BEST thing to do is actually call the MAIN CRA phone number posted on the CRA website – that way YOU are calling CRA (not them calling you) so you know you have called the real CRA. Once on the phone ask them if your account has been sent to collections and with what department. If they say NO, then you know you were getting a scam call. If they say yes, then, chances are, you are getting a real call from CRA for collection of your tax debt.
- Statements – Fake CRA agents will likely not be willing to send you anything to prove you owe money because they just want to convince people to pay them immediately – that is how most scams work. Real CRA agents should be willing to send you an official Statement in writing from CRA showing what taxes you are owing and to what department (what type of tax debt – Income Tax, Source Deductions, Goods and Services Tax GST etc).
This advice goes for all phone scams. Instead of just agreeing to pay someone who calls you and demands you owe them money (this goes for calls from relating to bank or CRA matters etc) always follow these 2 or 3 steps to be safe.
Note: This is not legal advice or tax advice; always seek the advice of a Certified Professional Accountant for any Tax or CRA related questions, and/or seek the advice of a Lawyer for any Legal matters pertaining to taxes or creditors etc.
Today, I want to talk about two things. First, I’ve been meaning to share where people can find reviews of our 4 Pillars Victoria office. And second, I want to talk about what you need to know about debt consultants (also called debt counselors or debt settlement consultants). How can you avoid hiring a debt settlement company that is a scam? Do they prey upon vulnerable debtors? I’ll show you some immediate red flags.
OK, first the reviews. I’m really proud of all the families we’ve helped in Victoria. I encourage you to read their reviews and hear their stories on our social media profiles. I think it will give you hope. These are Victoria families who fell into debt, rebuilt their lives, and are now moving ahead.
Here are some recent 4 Pillars reviews to read. These are all local families and Victoria residents: (more…)
I just wanted to say thank you to all of our amazing clients for nominating us for this Better Business Bureau (BBB Victoria BC) Award.
This award is given to businesses based on the following criteria – Ethical Decision Making, Trustworthiness, Customer Service Excellence, and Community Engagement, and having a good customer rating with the BBB. (more…)
Based on working in the Credit and Financial industry for over 8 years now here is what I feel are the best ways to get out of debt. Really, if you condense down every program offered online these days in Canada for dealing with debt the all pretty much fall under one of these categories as there are really no other ways out of debt (legally) in this country.
So here they are the best ways to get out of debt:
1) Sell Assets:
- ADVANTAGES – Pays down debt with no effect on credit; reduces your interest cost.
- DISADVANTAGES – For some people they no assets to sell. And having no car is the first thing to consider when seriously wanting to get out of debt is what you can sell to eliminate your debt. This is the option that is “easy to say, but hard to do!” Sure, it hurts to sell that extra car or even consider selling the home but the seriousness of the debt situation may call for more extreme measures to fix it. If you work with a certified financial planner this is something you should discuss with them to help determine what might be the best item to liquidate and pay off your debt. For example – it may be worth liquidating a poor performing investment to pay off extremely high interest credit card debt but it may not be worth cashing in RRSP to pay off low interest debt.
Adults know they need to save money for that proverbial “rainy day,” but how do you teach a child that saving money is a good idea? Whether they are saving up for a new toy or a long-term goal, it’s important to teach them the skills needed to achieve that goal.
Needs vs. Wants
A good first step is to teach your child the difference between needs and wants, because otherwise it is the foundation of good money skills.
Needs: Explain to your child that your income must first pay for necessities such as rent/mortgage, heat, electricity, clothing, and food.
Wants: Once the necessities are covered, what remains are wants. These include things like family vacations or eating out, and can only be paid for if there is enough money left over after paying for your family’s needs.
- that they must learn how to live within their means
- that they cannot spend all of their money only on the things they want
- the importance of saving for the things they want
Create a three-jar system, each “Saving,” “Spending,” or “Sharing.” Every time your child receives money (more…)
It’s 2 o’clock in the morning and you’re still awake worrying about how you’re going to make ends meet this month. You’re not alone. Canadians have been particularly anxious about finances since 2007, when Lehman Brothers bank collapsed, plunging the world into the worst economic crisis in years.
According to the Holmes and Rahne Stress Scale, the 16th highest stressor is a major change in financial position (good or bad).
In 2012, the Canadian Institute of Chartered Accountants issued a survey in which 61 percent of respondents said they were worried about money.
Nearly half (47 per cent) of those surveyed wish they spent more time reviewing their finances, and almost a quarter (24 per cent) purchased items they could not afford.
“The survey results sent a clear message,” noted Kevin Dancey, FCA, president and CEO, CICA. “Saving more, spending less and developing a budget and sticking to it will go a long way in providing some peace of mind.”
How Financial Stress Affects Your Sleep: Insomnia’s Physical and Mental Consequences
Prolonged insomnia can have serious repercussions both mentally and physically. Mental clarity and concentration are affected, weight-gain can occur, and your judgement becomes impaired. Death may even occur. In 2007, British Researchers surveyed 10,000 civil servants to see how sleep loss affected their mortality. Over 20 years, they found that those that cut their sleep from 7 to 5 hours or fewer per night doubled their risk of death from all causes. Specifically, lack of sleep doubled the risk of cardiovascular disease.
There are long-term health problems associated with insomnia: (more…)
Debt-related stress affects everyone in a family — adults aren’t the only ones who feel that anxiety. Children pick up on stresses around them, even if you think you’re hiding your own anxiety well. Keep in mind that just because you speak about your situation in hushed voices doesn’t mean your child doesn’t hear and understand. Children are much more astute than we realize and pick up on all the little changes in our manner, speech, and personality.
Young children don’t understand what it takes to manage finances and can make broad assumptions about the consequences (“We’re going to lose our house and have to live on the street.”). Usually, financial issues result in cutting back on unnecessary expenses (eating out, movies, etc.) and not foreclosure.
Symptoms of Stress
Watch for signs of anxiety in your children. They include:
- Changes in sleep patterns, or bedwetting
- Stomach aches and headaches. Others have trouble concentrating or completing schoolwork. Still others become
withdrawn or spend a lot of time alone.
- Younger children may pick up new habits like thumb sucking, hair twirling, or nose picking; older kids may begin to lie, bully, or defy authority. A child who is stressed may also have nightmares, difficulty leaving you, overreactions to minor problems, and drastic changes in academic performance
What You Can Do To Help
Talk to your children at an age-appropriate level. Explain what’s happening, (more…)
More and more people are getting into debt because of how easy it is to get a credit card or to switch credit companies. Most people don’t want to be in debt, but sometimes circumstances are out of their control.
Let’s say you’re in a two-income household and your partner loses his or her job. You still have car payments, house payments, daycare, and other bills to pay. These don’t stop when you lose your job. You may be able to defer them for a short period, but eventually those bills must be paid.
What Is The Debt Cycle?
Simply put, any time the amount of money we earn is less than the money being paid out for expenses, we go into debt.
There are fixed (non-discretionary) expenses like heating and mortgage and there are discretionary expenses like eating out and going to movies. Fixed expenses can’t be changed, but we can control the number of times we go out for dinner or go to a movie. It’s when we don’t manage those expenses that debt becomes a reality. (more…)