I have been remiss of late in administering to the Gail Clubs. My bad. Time just got away from me. But I am reformed, and if there is anyone who wants to set up a new Gail Club in their area, email me at getgvo@gmail.com with Gail Club in the subject line and I’ll put to and set up a club in your area on the Gail Club BB.

For those of you who have joined Gail Clubs, how are they working for you? If you’re having trouble getting out to meetings — face-time can be so hard to manage with all the other demands of life — remember you can use your Gail Club as a way to connect and share ideas online.

I have been buried in questions and, sorry folks, I can’t possibly answer them all. If any of you who have asked questions want to have the community here help with their ideas, send your question to getgvo@gmail with Community Question in the subject line.

Have y’all see Ted Talks? If you haven’t, there is a wealth of information and stimulating ideas just waiting to be mined. Here’s one I watched recently, which I thoroughly enjoyed.

Best quote:

This is about people being persuaded to spend money they don’t have to buy things we won’t need, to create impressions that won’t last on people we don’t care about.    Tim Jackson

Today’s is the final installment in the Teaching Kids About Money Series. I hope you’ve enjoyed it and learned some things you can use with your own kids. 

Think back to the effort, patience and time it took to potty-train your beautiful toddler. Remember the effort, patience and time it took to teach your child how to ride a bicycle, skate or swim. Money management is the term for a whole bunch of individual skills wrapped up in one neat package. But each of the skills needs to be taught, practised and reinforced. And each takes time to acquire.

You have the most influence in terms of teaching your kids about money. After parents, in rank order, teachers, personal experience, books or magazines, television, friends and siblings are the sources for money information. Since what you do and say will have the most impact on your children, you have to be sure you say what you mean and you mean what you say. An honest, straightforward approach to explaining money matters works best. Don’t take the easy way out. “I don’t have the money to buy you that thingamajig” as a pat answer for each request you don’t want to fulfill teaches little. Instead, use each opportunity to teach the important lessons of budgeting, relative value, prioritizing and patience.

By the time your children go to school, they will have already learned a lot from you about money. Even if you choose not to take an active role in teaching your children about money, they will learn most of what they take into their future lives from what you do (as opposed to what you say). If you save regularly, they will see savings as an important part of money management. If you are an avid investor, they will develop an interest in investing. If you regularly donate to charity, your children will likely follow your example.

They will know whether you are an impulse shopper or a planned spender, whether you are generous or miserly with your money, whether you see money as a tool or as a god. If you comparison shop, they will learn from you. If you place a strong value on expensive brands, they will hear your message.

I knew a couple who were distinct opposites when it came to money. The father was a generous spirit who impulse bought and loved to satisfy his children’s every wish. The mother was a tightwad, begrudging most spending. The father’s attitude was, “Money is a tool for making our lives more comfortable.” The mother’s attitude was, “We don’t have enough money.” The father gave his children money to buy gifts for loved ones. The mother expected her children to fund their gift-giving themselves.

The messages this couple’s children received were very mixed. While that’s pretty usual for many families, it doesn’t help to promote learning, since inconsistent messages are confusing for children. If you are teaching your children about money as a couple, it’s important you develop a joint plan about what you will teach.

Differences in style are natural. How you demonstrate those differences to your kids will have an impact on the lessons they eventually put to use in their own lives. Talk about how you want to teach your children the important money lessons. Starting from a shared belief — even if only in the basic ground rules — will go a long way to delivering a consistent message to your children. Good luck and remember that lessons learned with laughter last longer!

BTW, there are two new Gail Club forums… one for Edmonton and one for Separated, Divorced and Single Parents. The traffic is building well on the board, and the sharing of information does my heart good. Congrats to those who have actually managed face-to-face meetings. I know it’s tough with busy schedules. Those of you who are managing groups deserve kudos for tenacity and determination. Cheers to you all.

Everyone knows that if there’s a magazine you love to buy, it makes more sense to get a subscription than to pay the one-of cost every time you hit the check-out. You can save, on average, about 33% by going with a subscription. That’s three issues in ten for “free” when you subscribe. But here’s my big question: Do you read every issue?

I’ve been buying Scientific American Mind, and a couple of other science mags, for a couple of years now. But I don’t buy every issue… just the ones I actually want to read. And I find I’m breaking even or better. How many people get subscriptions to magazines, and renew automatically, just because they always have? The magazines pile up and every time you look at the stack you feel guilty for not getting to them.

The same idea applies to the cable packages you subscribe to. Because  of my move, I’ve rejigged my satellite TV package to be more in keeping with what I watch (as opposed to what my ex and his mother used to watch.) But I’m also putting a date in my calendar… April 1… at which point I’m going to reassess how much benefit I got for the money I spent. It’ll go something like this:

If I spend $70 a month on my satellite service, and I end up watching 28 hours of TV, it will have cost me $2.50 an hour. (I also listen to my favorite radio station — all 70’s all the time — via my satellite, so I’ll have to calculate that in too.) If the kids also watch 28 hours between them, my cost per hour drops to $1.25. Am I then prepared to spend $1.25 an hour for that entertainment?

Lots of people subscribe to things that don’t give them the pleasure or payback they expected, but they keep on keeping on because the change takes effort. Think of all those Classmates subscriptions that auto-renew to a credit card automatically for $9.99 a year because you can never remember to cancel them until you see the next charge go through. Or the auto-ship face cream. Or the book-of-the-month membership.

Ditto those movie discs that arrive automatically that you never have time to watch, or the satellite radio with a million choices that go un-listened-to, and that gym membership that you just won’t cancel because you know you SHOULD being going… and you will… one day. In the mean time you keep paying as if no other gym would ever have you. Hmmm.

One of the dangers of subscriptions is that the individual monthly bill is extremely affordable. That can lull you into subscribing to lots of services over time, which quickly add up to something Really Significant. If you used to play WoW online and still have your subscription, but never play, maybe it’s time to cancel.

There are lots of ways to make subscriptions you like less expensive. Negotiate hard. Threaten to switch your service. Buy at a cheaper site… you can get magazine subscriptions at a discount at some sites. And buy in bulk.

I have a subscription to Audible.com, which is where I get the books I listen to on my Ip-Od when I’m driving all over Hell’s Half-acre for work. Because I buy a two-year subscription at once, I end up paying just $10 per book download… and since I listen to unabridged looooong books, I know I’m getting my money’s worth. That ten bucks can buy me 20 hours of listening pleasure – that’s 50¢ an hour. Worth every penny.

CASE STUDY:

I know how y’all love a good case study so here’s one to sink your teeth into:

Trish is a newly separated single mother with three small kids. She wants to be able to save some money for herself and the kids but never seem to have anything left after all the bills are paid. Her net income is currently $4000.00 a month and she pays:

• Mortgage: 500/every 2 weeks
  
• RRSP/RESP: 250.00/month
  
• Taxes: 187.00/month (she’s responsible for the taxes on her child-support payments),
  
• House, life & auto insurance: 650.00/month.
  
• Trish owes $4200.00 on a credit card and $5000.00 on a PLC.
  

She and the kids currently live in a very small community where housing is cheap but are moving back to The Very Expensive Big City at the end of June and she wants to be able to buy a house. While she won’t be getting as much from her ex, Trish plans to go back to work after the move.

What advice do you have for Trish?

GAIL CLUB NEWS: The Gail Club boards are getting lots of play. I’m glad you’re able to connect, share ideas, and use each other’s expertise. You might want to pop in and have a look at what people are talking about to see if there’s anything useful for your club. Keep in mind that when you’re first starting up a group you may have to recruit from among friends and family to get some momentum going… tell everyone what you’re doing and start spreading the word that Financially Smart is the new Black! With all the crap in the news about the economy, those of you who are getting your stuff together are on the leading edge of The New Reality.

The Gail Clubs is another idea that rambled around in my brain for a while too. I just don’t have the time to help everyone who needs help and I thought it would be great if people helped each other. First I had people emailing me about getting together, but that quickly became more work, so the discussion boards seemed to be the answer. Now the boards are up and running and seem to be getting some good play. People are coming together and figuring out what they need to do to help themselves and each other. Yahoo!

Bring friends and family to your clubs, share ideas and suggestions for making things better in your lives, and get stronger by helping and by opening yourself up to being helped. Yah, yah, I know, you’ve always been The Strong One, the One Who Can Handle Anything, the One With It All Together. But I also know that there are days when you need someone to help you see how to make it better, someone to just wrap their arms around you. Don’t deny a friend the opportunity to help you because you think you need to keep up an image. You’ll benefit from sharing. And your friend will feel great because helping is its own reward.

While there are still lots of people who are embarrassed to talk about money, we should be getting over that. (I want to do that V8 thing and smack ya on the forehead!)  Everyone makes mistakes. I make mistakes and I talk about them, learn from them, and get better at dealing with my life. While we seek a Paragon of Virtue to be our fearless guide, no such person exists. We are all just folks seeking enlightenment who want to have some fun along the way. And who better to help us than the people with whom we share our lives.

I made up this fabulous rice dish a couple of days ago and am having trouble staying out of the pot! So for you today:

Gail’s Spanish Rice

• 1 large red onion chopped fine
• 4 cloves garlic chopped
• 3 tbs olive oil
• 1 tin lentils
• ½ tin black beans
• 2/3 cup tomato sauce
• Hot pepper sauce, to taste
• Salt to taste
• ¾ tsp thyme
• ¾ tsp chili powder
• ¾ paprika
• ½ tsp black pepper
• ¼ tsp allspice
• 1 large red pepper chopped
• 2/3 cups water
• 2 cups rice

Cook garlic and onions in olive oil slowly. Add all other seasonings, tomato sauce, hot sauce, lentils with their water, beans without their water. Cook for about 10 minutes. Bring to a rolling boil. Add water and red pepper and bring back to a boil. Add rice. Stir. Bring back to a boil, stir, and then cover and remove from heat. Let sit until rice is tender.

Enjoy the rice, the onset of spring, and the opportunity to share what you know and learn from each other.

Funny Money: Where does the term “cheque” or “check” come from?

The simplest way to start children off on the road to a balanced financial life is to give them some loot to manage. How much you give will depend on your personal circumstances and your attitude towards the whole concept of an allowance.

To learn how to manage money responsibly, children need an income they can rely on – one given at regular intervals. The experience of handling a steady flow of cash will teach many fundamental skills, including how to plan ahead, the skill of setting goals (both short- and long-term) and how to save.

The amount you choose to give your child will depend on how much you can afford, your child’s age, and what you expect your child to do with her allowance. If, for example, the most you can afford is five dollars a week, so be it. While many parents are stuck on the two-dollar-a-week allowance, just think about what two dollars can buy in this day and age (after you deduct for saving and sharing) and you’ll have a good idea of how effective that amount will be in teaching money management. 

Naturally, younger children need, and are capable of handling, less money. If all your child is buying is candy and the occasional toy, you may want to start her off with a relatively small sum. At five years old, 50 cents a week may be more than sufficient.

If you expect older children to buy some of their own clothes, pay for their own haircuts and plan for big-ticket buys such as camp, a television or car insurance, you’ll have to figure out what each of those things costs. To those Planned Spending items you’ll need to add some mad money (hey, they’re kids), some money for establishing a regular savings habit and perhaps also some money for sharing.

I have long recommended that people use the age of the child as a guide, giving a dollar a week for each year of age. So a five-year old gets five dollars; a seven-year old gets seven dollars. You’re the best judge of the amount that will be most appropriate for your child. Just remember that it needs to be enough so that your child can save, share and spend (mad money and planned spending included.)

As your child gets older, review and adjust the amount he receives. Pick a specific time of year – the beginning of the year, your child’s birthday week, the beginning of a new school year – and make the review routine. Ask your child to list the five most important things he wants to do with his money. If he is an avid reader and wishes to buy his own books, he’ll need more than a child who is only interested in candy. Listen carefully to what your youngster has to say.

If your son is looking for a hefty increase, ask him to give you a written proposal or a formal presentation explaining how much he wants and why. If you were asking for a raise at work, you’d have to justify your request. Perhaps he feels it is time he started buying his own clothes. You can negotiate the initial amount and attached responsibilities, and implement the plan slowly. Moving from no clothing allowance to a year’s clothing allowance in one fell swoop is a recipe for disaster. Let your child assume responsibility in small increments.

Before you do your allowance review, think about what you want to accomplish over the next year in teaching your child about money. Talk with your partner about how much responsibility you feel your child can now take on. Perhaps you wish to start your daughter on an investment program. If so, you’ll need to do a fair amount of teaching, and you’ll need to up her allowance to take the money for investing into account. You’ll also have to carefully monitor her progress to ensure the funds are being directed to the appropriate new category in her budget.

The Logistics

• Younger children find it easier to handle money if they are given a small amount every week. Consider what time of week is best. If your experience says that giving an allowance at the beginning of the weekend means it’s all gone by Monday, then give it on Monday or Wednesday. While you want your child to accept responsibility, young children need some help in developing the skills. The timing of the allowance may make all the difference.
• Children who are older and have established many of the habits of budgeting should be asked when and how often they prefer to receive their allowance. While some kids like getting a little money each week, others may prefer a lump sum once a month, allowing them to plan spending for the month.
• Whatever allowance schedule you establish with your children, make sure you stick to it. It’s demeaning for anyone to have to constantly ask for money. And providing the allowance on time will send a subtle message about the value of honoring commitments.
• Also think about the denominations in which you’ll give the allowance. If you give your ten year old all her money a single bill, she’ll have trouble implementing her budgeting plan without hitting a store to make change. On the other hand, if she gets smaller denominations she may find it easier to set aside the money for the various parts of her budget.

Next Week: Setting Expectations

Funny Money Answer: It derives from the game of chess. Putting the king in check means his choices are limited. A cheque or check is designed to limit opportunities for forgery and alteration.

Gail Club News

Spring is almost here. I can feel it in my bones. Whatever hit Winter blows my way, I know it’s a last blast and that the crocuses are around the corner. If I have crocuses. Having moved into my new home in the middle of winter, I’m not quite sure what’s in the garden. I know I lost a small tree to the wicked winter winds, and I still have to decide if I’ll save what’s left or fid something new (fruity?) for the spot. I don’t want apple or pear (not MY favorite fruits). And I think most others require that you plant two to pollinate, which I don’t have the space for. Anyone have any ideas for a satisfying, self-pollinating  fruit tree?

I have a tiny vegi garden area, so I know I’ll be doing beans, tomatoes, basil (yum), chives, and whatever else strikes my fancy as I flip through the seed catalogues. And I know I have a clematis (one of my fav plants) at the front of the house. Which one will be the surprise.

My house plants made the move successfully to their new home. My banana is positively ecstatic about his new location. My rubber plant needs a blast of summer to get herself together. My new home has a three-season sunroom so s soon as it is warm enough, out she goes to revel in the rays.

I’m a little wistful at having left my forest behind. My previous home was on 25 acres, 23 of which were mixed wood. In the spring it brims with Trilliums, white and red. And ferns. And myriad other gems. Sometimes it’s sad the things you must say goodbye to as you move from one chapter of your life to another. But I don’t regret the change. (Regret is a waste of emotion as far as I’m concerned.) I excited to see what comes next. My good friend, Catherine, took me on a tour of Presquille Park when I was moving to Brighton. Her husband spends gobs of time walking the place, bird watching and communing. So I still have a place to go and walk and think. I’ll just have to make myself do it the first couple of times until it feels like it’s home.

I had an interesting experience in a bank this week. I was done my company business and on my way out when a young lass behind the counter stopped me and asked me if I could recommend someone to help her with her budget. Anyone else see the irony?

I’m not sure why we don’t demand more of our banks in terms of helping us manage our money. After all, they say they want to help, but only in ways that may be of benefit to them. The things we need aren’t so quickly forth-coming. And if the people who work there don’t know how to help themselves, what hope do we have of getting the help we need.

So we must take up the reins of money management ourselves an learn to make our money work for us. But there are many who still feel helpless and lost, which is why I initiated the idea of the Gail Clubs: people helping people within their communities. Wouldn’t it be great if you guys became such a voice that you could actually make your local institutions sit up and pay attention? Imagine bringing enough pressure to bear on a local FI to make them come up with a product that suited your needs.

Imagine, for a moment, a consolidation loan, offered at 2.5 points above prime for those who commit to living on a budget and becoming debt free within three years. Imagine the interest rate coming down 0.5 points each year that the consolidation loan remains in good standing. Imagine the loyalty you would feel towards a company that helped you dig out and get financially healthy. Hmmm.

Of course, not everyone would take control, despite the talk. Lots of people can’t walk the walk, like this woman:

I absolutely Love your show & watch it every chance I get. Every time I watch it, I convince myself to take the next step to become debt free and use the jars & the brilliant methods used to “Tackle our Debts”…but I have yet to do that. My husband and I bought our place just over a year ago, with a huge $300,000 Mortgage and 2 loans and 2 Credit Cards going on 3 to pay off…I feel the pressure & I feel like every time I take a step forward…it lands me 10 steps back…We have approximately $18,000.00 in CC Debt & Loans…together we make approximately $4,400/month…is there any method or easy way you think we should tackle this?? It feels like we are getting absolutely No Where with Paying off 4 Seperate Debts that we only end up paying the interest and then a small portion on each month. Please Help…I am beyond Lost…

See the problem? This poor woman is looking for “an easy way” and no such thing exists. Getting out of debt is hard fricken work. And if you can’t even make yourself get on board with “brilliant methods,” then what could I possibly say to help.

People will do what people will do. And while they’re ignorantly spending their way into Debt Hell, they won’t entertain a word of advice. Would anything I’d have said to this next woman have stopped her from putting her wedding on credit?

I don’t know where else to turn. I recently got married and now I feel like me and my husband have this huge burden of debt on our shoulders that we can’t seem to get out of. This debt doesn’t just come from the wedding it goes deeper then that and to top things off with this recession I got laid off and finding work right now is really hard. We don’t know where to start and we are struggling just to pay the bills and to buy groceries. The stress is really starting to affect us, we can’t sleep and at times we get really depressed and emotional. I really want to start a family and that doesn’t seem to be happening. Let’s face it how can it with this burden of dept on our shoulders. We are newlyweds and we shouldn’t be feeling this way but sometimes it’s really hard to be hopeful when you have creditors calling all of the time. Right now we are currently living with my parents, they have been great and thankfully don’t charge us any rent but we would like to own our own home someday and to be honest we are adults and I don’t want to depend on my parents for help. My question to you is where should we start? Is there really a light at the end of that long dark tunnel? Thanks in advance for your help and we love your show!

And so she finds her whole life a nightmare because spending money she didn’t have was perfectly fine. And now she’s desperate. Was this not a foreseeable end to the path she was on?

I get between 250 and 300 questions every week. I can’t possibly answer them all. These two questions are examples of the questions I don’t answer because I just don’t have an answer. Clearly, without direction, motivation, or commitment, nothing I say is going to make a difference, so I’d be wasting my breath. There’s one of me and tens of thousands of desperate souls, and if people aren’t willing to help themselves, or get help from friends and family, the chick above is right: there is no light at the end of that long dark tunnel.

Finding people who can help you may be as simple as asking a friend, a co-worker or a family member for some guidance. I’ve had a lot of response to the Gail Clubs, and there are now people meeting (or wanting to meet) in:

• Calgary
• Edmonton
• Fenlen Falls
• Hamilton
• London
• Moosejaw
• Oshawa/Ajax/Pickering
• Ottawa
• Saskatoon
• Toronto East
• Toronto West
• Wasaga
• Windsor/Essex

I’ve decided to set up a forum for the Gail Clubs so that you can connect with each other directly. Yup, I’m stepping out of the mix, mostly because I’m about to start shooting again, and my e-mail box is flooded when I get back to my desk. JD will get to work on it over the next couple of weeks, and I’ll post again as soon as the forum is ready. With a Gail Club Forum in place, you’ll be able to speak directly with each other, set up your meetings, post updates and ideas you want to share. (I recommend you set up a hot mail or gmail address for the purposes of this forum.) These forums will only be for Gail Clubs, and so if other postings appear, they will be deleted. I simply don’t have the time to moderate a forum for the general public. Sorry, I have vegis to grow, children to raise and books to read.

TTFN

BTW: I love what y’all are doing with the Money Saving Tips and Share Your Recipes. I got the message about the soup recipe, but have to wait until I make it again before I can post the recipe, since I’ll have to note what I’m doing as I do it. I’m contemplating a Persian Chicken for this weekend with pomegranates and walnuts. If I get to it and it works, I’ll put up the recipe. 

There are a hundred billion stars in the galaxy. That used to be a huge number. But it’s less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers. Richard Feynman

How much debt is too much debt? I get letters from people all the time asking me this question. It is as if they re looking for some sort of rule of thumb in terms of how deep a hole they can dig. Or is it that with a national debt through the stratosphere, owing $30,000 on a bunch of credit cards seems like peanuts?

That’s the problem with perception: it makes everything look skewed depending on where you’re looking from. Is your glass half-empty or half-full? If you’re always looking at a glass that’s half empty, it’s human nature to want to fill it up… buy more stuff whydontcah. If your glass is half full, it may be enough, at least for now. No push to shop. Hmmm.

Look at the diagram below:

How you see things has an impact on how you feel and how you     act. If all your friends and family are buried up to their armpits in   debt, being only waist-high in credit crap will make you feel        okay, even cocky. Hang out with a bunch of folks who would no    sooner carry debt than shoot themselves in the head and you’re  suddenly a moron. Hmmm.

It’s pretty hard for some people to shift their perception.

Ever seen the picture of The Old Woman/Young Girl?

Who do you see?

And how easy is it for you to move back and forth between Old and Young?

Now imagine that you’ve never lived on a budget, never thought about making more than a minimum payment, never considered saving some money. How hard would it be for that person (is that person you?) to move to a place where “normal” means having money in the bank, writing down every penny you spend, and being debt free. Big shift, eh?

So how do you change your own (or someone else’s) perception?

First, it’s important to accept that we have been taught, over the past few decades, some things that are simply not true. We’ve been taught, for example, to believe we can live on borrowed money. We have been taught that homes are sources of capital appreciation and debt repayment. We have been taught that you don’t have to save anything – after all, who needs an emergency fund when you have a line of credit?

These are all untruths. The truth is we have to live within our means or run the risk of losing everything. Homes are places we live, and if they go up in value, we’re very lucky. And if you don’t save something just in case, you’ll be up the creek with crap happens… and crap happens to everyone.

It’s like looking at the picture of the Old Woman/Young Girl and first accepting that both pictures exist. For as long as you hold on to the illusion that the only one there is the one you can see, you’ll never be able to shift your perception.

Accepting that what you “know” can be wrong lets you open up your mind to other options. When you open your mind to other options, you create the opportunity to shift your perception.

If you only see one or the other of the Old Woman/Young Girl, print a copy of the picrure (you can find it on the web) and find someone who only sees the other person. Then spend some time helping each other to see a different picture. It’s a small exercise, but it’s fun and useful.

It’ll also give you some experience changing perception so when you have to go home and convince your honey that a budget is a good thing, you’ll be better equipped.

Here’s the source of the Ponzo Illusion used above. There are heaps more perception “tests” for those who are interested. Enjoy! http://www.yorku.ca/eye/thejoy.htm

Gail Club News: I received this email this week from Jessie in Calgary and wanted to share it with you.

We did have our first meeting last night and I wanted to let you know about it. There were 5 of us in attendance; we started by introducing ourselves and giving a bit of background and overview of each of our family and financial situations. Everyone seems to have gotten on well with everyone else and things felt very comfortable and relaxed. Questions were asked, answers, suggestions, and support given; knowledge, tips and tricks were also shared!

I think it was felt unanimously by the group that it was nice to be with others who understood and supported the decisions and efforts each is making to “cut back”, “pay off”, and “save for” various items in our daily spending. We each seem to be in a situation where our other social networks or family members just don’t understand what it is we are doing, or why we are bothering? It’s really nice to now have this network that is “safe” and supportive.

Our next meeting has been scheduled for Wednesday February 25th. We will be rotating who’s house it is held at, and everyone did a fabulous job bringing food, so we will certainly continue doing that so as to “share the cost”!

The option of breaking the group up based on geographic location was discussed last night.  I think it will take a few more meetings before it will be determined if that is what we want to do.

Rock on Jessie and all the Calgary posse! For those of you who want to join a group, or start a group, you can contact me at getgvo@gmail.com and I’ll hook you up with people in your general vicinity. There are groups starting in:

• Hamilton, or you can email directly to gailclubhamilton@hotmail.com
• Edmonton,
• Fenelon Falls/Bobcaygeon
• Oshawa/Ajax/Pickering,
• Ottawa
• Saskatoon,
• Toronto,
• Wasaga,
• Windsor/Essex,
• and there’s someone interested in London.

Toronto has more than one club, and Jamie wrote to say, “I just wanted to say that I’ve started a Gail Club, and if any women between 20-35 in Toronto that you know are interested in joining a club that we are accepting new members.” If you want to hook up specifically with Jamie’s group, make sure you say so in your email.

One final note. I received this email this week and I’m passing it on directly as an FYI. If anyone else has had this problem, or is heading into this territory, it may bear further discussion. Kate wrote:

This is really neither a question or success post, but rather an FYI. I am new to the site and have been reading some of the articles and questions. I haven’t had a chance to read them all, so you may have already addressed this, but I thought I would point it out anyway…

I read a previous question about student loan repayment and read your answer that students do not have to pay back their loan while they are in school. Unfortunately, this is not true (as my husband and I found out). Full-time students are only exempt for about 7 years. Then, they must start making repayments.

My husband took a couple extra years to complete his undergraduate degree, then went directly into a Masters and finally a PhD program. Our plan was always to wait until he finished school, then spend a couple years after living lean and putting as much money as possible towards the loan. Last year, however, in his second year, we were told by Canada Student Loans that his 7 years were up and we had to start repaying. He told them he was still in school full-time, and their response was that it didn’t matter after 7 years. So, now we are scraping together $560/month from my salary to make the minimum payments. The funny thing is, before he started making a fuss, you had to search through the references to the Student Loan Act (i.e. long legal documents) to even find this 7 year clause. Now, I believe they have updated their website.

Personally, I think it is rediculous that the Government would rather see Graduate students lessen their education or worse still drop out of school in order to work to make the payments, when these students will likely make more income, be in a better position to repay, and provide more value to the country given another 2 years or so to finish.

In any case, I thought you should know so that you can provide the right information to other students. I love your show and your information has been so valuable in helping my husband and I figure out how to repay the student loan and still meet our personal and financial goals! Thanks!

TTFN

Common wisdom among those in the money world holds that “debt” is a young person’s disease, and that “asset acquisition” – building up your nest-egg — is something that you do as you hit midlife and beyond. I’m not sure who makes up the rules for how things should work. Personally I haven’t lived by the rules and so I’ve never placed much stock in them. And I’m here to tell you that this piece of common wisdom couldn’t be more wrong.

I am getting loads of questions like the next one, and they are a reflection of the fact that people, no matter their age, are in a bind because they don’t have Clue One about how to manage their money.

My husband and I are both in our early 50s. My husband has had financial difficulties combined with bad luck during the past 10 years so we have struggled financially. We have really fell behind financially and not is the time to own up to our debts and pay up. We have been mortgage free for that period of time however now we hvae been to the Bank and are seriously considering mortgaging. Our total debt is $65,000.00. I worry whether this is our best option to repay our debts? I worry about mortgaging when so many are losing their job. Our monthly mortgage payments would be very affordable as compared to the monthly payments we would have to make to eventually pay off our debts. We ideally want to pay our debts before we retire. What would you suggest?

I could tell this woman to go ahead and do the mortgage. After all, in their early 50, she and her hubby have time to get that $65,000 paid off, and the ease to their cash flow would feel good. They’d pay a lower interest rate in the short term. And life would stabilize.

And yet I find I am loath to say, “Go ahead.”  There must be an underlying problem with her budget for them to have accumulated this kind of debt.  Yes, there have been “financial difficulties and bad luck”, but when you hit a wall the answer isn’t to move your spending to credit, the answer is to Stop Spending.

If I give this woman the okay to move her consumer debt to her mortgage, will she go right back out and start spending on credit again? Will her husband sigh with relief and think they’re in the clear. After all, a $65,000 is not a huge burden. And when you’re retired you have to live somewhere, so having a small mortgage is not the end of the world.

Of course, it could simply be a case that this couple rushed through their mortgage payment to get mortgage free, without ever looking at the credit they were using to supplement their cash flow. I see this all the time. People, in their mad dash to be mortgage-free give no thought to how their doubling-up and massive prepayments are affecting their budgets. Stealing from Peter to pay Paul, they end up with higher interest payments so they struggle to keep up.

If I could actually see this woman’s face, if I could see how serious she was about being debt free, if I could see how much she and her husband were together on this, I might be able to assure myself that the mortgage idea could work.  And this comes to the crux of the problem I have.

So many people say they want one thing, and then turn around and do something else that totally undermines what they say they want. “I want to be debt free,” they say. Then they go right out and put $200 on their credit card for dinner. “I want to set up an emergency fund,” they say. Then every time they have an expense that’s a little out of the ordinary, rather than cutting back somewhere to take care of the expenses, they dip into the “emergency” fund. “I want to help my kids through school,” they say. Then they dip into their child’s educational savings, promising themselves they’ll replace it as soon as things get better.

It’s as if we have no stick-to-it-ive-ness. We can’t hold a thought. We’re a bunch of Financial ADDs who MUST react to whatever stimulus is currently coming our way.

If this woman closes every form of credit she has and swears on her dog’s head that she’ll never ever put anything on credit again, then I’d say, “Go ahead with the mortgage.” Of course that would also mean she’d have to make a budget, track her spending daily, and never buy anything that was a Want when there were still Needs to be taken care of. There would be no excuses, no exceptions.

She would also have to get a job. I’m assuming from her letter that she does not work outside the home since she never mentions having an income. Even if she does have an income, to pay for the mistakes they have made, both these people need to find a way to Make More Money to deal with the long-term interest cost of the mortgage. So they must find a way to make at least an extra $500 a month net, so they can make an annual $6,000 prepayment to offset their mortgage interest costs.

There, that’d do it for me.

Now it’s your turn. For those of you who love case studies, here’s one for ya:

Vic works full time and makes about $50,000/yr. Vic’s partner wants to return to school in about 18 month and the program will last two years. That’ll mean the family income will go down by 50%. They have no car payments, and about $3,000 in consumer debt, and have been making extra payments against their mortgage of about $300 a month. But since they’ve been in their home for under a year, they haven’t built up much equity yet.  Vic knows things will have to change, but is desperately afraid of them getting in over their heads. What would you tell Vic?

Gail Club News: There are people in both Hamilton and Saskatoon who would be interested in joining or starting a Gail Club. If you would like to link-up in Hamilton or Saskatoon, email me at getgvo@gmail.com and I’ll pass on your contact info. For those of you who are interested in starting a Gail Club and don’t know where to begin, read the blog that started it all.

Gail Club News: They say sometimes a good idea has to simmer. This week I’ve received a flurry of emails from people who want to start a Gail Club. Join Lynda in the Windsor/Essex County area, Jessie in Calgary, and Derek in Toronto in establishing Gail Clubs. If you are interested in joining these folks, or starting a Gail Club of your own, email me at getgvo@gmail.com and I’ll try to match you up with people in your area.

I received this letter recently and I want to use it as an example of why you need to do the math before you take advice, particularly from someone who has something to gain from your decision. Marlaina wrote:

I am a huge fan and thought my husband and I were doing so well until I took a look at reality. My husband and I are 30 and 27. We have 3 children all under the age of 5 and it seemed that we were doing really well considering we have a nice house, and 2 vehicles that are both paid off. Last year we converted our mortgage into a LOC in order to reduce our payments and get further ahead then our financial advisor suggested RRSP loans to help us start saving for our future, now we have 2 RRSP loans one for 35000.00 added to our LOC at an interest rate of 3.5% and a 20000.00 loan at 8.5%. It helped us as far as my Child tax b/c now I bring in 766.00 as opposed to 180.00 but our total debt adds up to 278,000.00 including our house. I make sure to pay as much as I can every month on to our LOC but I still feel sick. Our min. payment on our LOC is 825.00 and I try as much as possible to put at least 1200.00 and any other money we come into on it as well. I have no choice but to stay at home with our kids as getting a job would make no sense considering my commute and child care would bring nothing to the table. My husband has been trying to find extra carpentry jobs but with the economy he isn’t finding a lot. Should I be freaking out? There is no way that we can pay all of this debt in 3 years…What do we do? Should we try to roll it into a mortgage. Are we doing really bad, I feel like such a failure. We have been implementing your jars but still can’t seem to get ahead and my husband and I really aren’t big shoppers. PLEASE HELP!!

Okay, can anyone spot the first mistake Marlaina and her husband made? Why would anyone convert a mortgage to a line of credit? If you want to make extra payments and get the debt paid off faster, you always have the option of increasing your mortgage payments or making principal prepayments. So the conversion to the Line is only good for one thing: to give you access to your equity more easily so you can use that money for other purposes.

Which is exactly how the “advisor” then positioned the RRSP catch-up loan as a GREAT idea, and so easy to do.

With RRSP season just around the corner, the ads for catch-up loans have already started on TV. Lenders who want you to think you’re richer than you are have been using the catch-up RRSP loan as a way to pin people’s wings to the table for years. I’ve written about it before. But this letter from Marlaina really brings the point home.

With RRSP catch-up loans amounting to $55,000, what hope in hell do Marlaina and her husband have of managing their cash flow to meet their family’s ongoing needs WHILE continuing to save for emergencies and for the long term. The plan has become unbalanced, weighted too heavily in debt, all for the sake of what? Long-term RRSP growth? A fatter child tax benefit?

This poor woman is sick with worry and feels like the rug has been pulled out from under her. She was taken in by a very bad idea. And I want you all to pay attention to what I have to say next.

Borrowing to contribute to an RRSP only makes sense if you’re in the highest tax bracket AND you can pay off the loan within one year WHILE making monthly contributions to your current year’s RRSP.

All three things have to be there. Otherwise, borrowing to contribute to an RRSP is NOT A GOOD IDEA! I don’t care how many ads you see, how many intriguing calculations you are shown, how many dollars back in tax refund you’re promised.

As for Marlaina and her husband, it’s going to take a lot longer than three years to get that RRSP catch-up loan debt repaid… perhaps as long as ten years… and all the while the lender will be raking in the profit in terms of the interest on that catch-up loan.

What would I do if it were my dilemma?

First, I’d go find another institution to deal with, one that values my financial health a little more, and is willing to help me achieve MY goals.

Then I would roll all the debt into a mortgage and get those payments in line with my cash flow so I could sleep at night. My budget would include money for on-going emergency and RRSP savings.

Finally, I’d find a way to make some extra money to build up annual prepayments against the mortgage to offset the interest on those old catch-up loans. It may take until the kids are in school full time before there’ll be enough time to make this a reality, but with some focused effort, a $278,000 mortgage can be whittled away by steady annual prepayments.

The biggest thing is to get the whole plan back into balance. Saving for the long term isn’t magic, it’s discipline and it takes time. Taking on too much debt for the sake of some other objective is a sure way to mess up your cash flow and rob you of sleep.

Slow and steady wins the race.

Gail Club Alert: Lynda in the Windsor/Essex County area, Jessie in Calgary, and Derek in Toronto are interested in joining or starting a Gail Club. If you want to hook up with Lynda, Jessie, or Derek, email me at getgvo@gmail.com and I’ll send on your contact info. Jessie had a slew of responses so you may end up with two clubs in Calgary if you also bring your family and friends to the group. Good for you!

Susan Mladenovich, CMA, is an accountant who agreed to write a guest blog about a little understood disability benefit. If you have a disabled dependent or know someone who does, send them the link to this so that they can become more familiar with a new and very important benefit. Life is tough for people who must deal with disability. We need to spread the word so we can take advantage of whatever benefits are available to ease the strain. Email Susan directly at susan@accountingdepartment.ca or visit her website at www.accountingdepartment.ca. Here’s Susan…

As an accountant, I am often involved in helping my clients get access to government funds like the disability tax credit and CPP benefits. It is amazing to me how difficult it is to get information on government programs that help with people suffering from disabilities.

Just before Christmas, a major program finally came into existence, which had been announced in the federal budget in 2007. The Registered Disability Savings Program allows eligible people to qualify for up to $4500 in government grants for a $1500 investment.

If you are the parent of a disabled child, a big question is what will happen when you are no longer there to provide the care you’ve been giving. Years of working to keep the child at home as a participating member of the family all vanishes as the only option is to have the dependent child placed in a home after the parents’ death.

Compounding the issue is the fact that recipients of provincial disability programs are not allowed to accumulate any assets or money, making putting money away for the future nearly impossible.

The Registered Disability Savings Plan (RDSP) will allow people with disabilities to put money aside in an account and allowed to grow tax free until it is needed. This is similar to the new Tax Free Savings Account but is a separate program. There is a $200,000 lifetime contribution limit but no annual limits. Also, anyone can contribute to the plan and there are no restrictions on when or how the funds are used.

In conjunction with the savings plan, the government offers a Disability Savings Grant. For families with an annual net income of less than $75,769 the grant will contribute:

• $3 for every $1 contributed on the first $500
• $2 for every $1 contributed on the next $1,000.

For families with net income over $75,769, the grant is $1 for every $1 contributed up to $1000.

There is also a Disability Savings Bond, which provides low-income (under $21,287) families with $1,000 per year without any contributions required. That is 100% FREE MONEY!

A point of clarification: family income depends on the age of the person with disabilities. For individuals under 18, family income would be the combined income of the parents. For a person over 18, family income would be the individual’s income plus their spouse’s income, or just their own income if they are single, even if they live with their parents. So, for several of my clients, the over 18 child living at home only receives disability benefits, leaving their net income well under the limit for the $1000 bond.

The challenge with the program is that the federal government had to work with the provincial governments to ensure that disability recipients would not be penalized by having their benefits reduced. As you can imagine, this has taken quite a long time. British Columbia, Newfoundland and Labrador, Saskatchewan, Manitoba, Yukon, Alberta, and Ontario have all exempted the RDSP as an asset and income when determining a person’s eligibility for provincial disability benefits. Quebec and New Brunswick have exempted the RDSP as an asset and partially exempted any payments from the plan. Prince Edward Island has fully exempted the RDSP for calculating eligibility for income?tested social programs, except where someone’s income exceeds the low?income level defined by the National Council on Welfare.

Okay, let’s do some math.

• If your net income is under $21, 287 you will receive $1000 with no contributions by you.
• If the family net income exceeds $75,769, you can receive a maximum of $1000 matched dollar for dollar to your contribution. This is a 100% return on investment!
• But the magic really happens for those with family income under $75,769. By contributing $1500 the government will give you $3500 ($3 x $500 + $2 x $1000).
• If you make under $21,287, the total government contribution is $4500. That’s right, $4500 added to your contribution of $1500.

While the launch of the program was finally approved on December 3, 2008, the grants and bonds are an annual amount that do not carry forward (unlike the RESP grants which don’t expire). So to take advantage of the 2008 government contributions, a plan had to be established before December 31st, 2008. Only one bank was offering the plan – Bank of Montreal. However, the deadline for 2008 was extended to March 2nd, 2009 so you still have time to act sock money away for 2008. But time is running out.

The basic requirements are:

• Eligible for the disability tax credit (which Gail has asked me to write about another time);
• Has a social insurance number;
• Have filed a 2007 and 2008 tax return;
• Under 50 years of age.

If you need more information, go to www.rdsp.ca or www.plan.ca.

For a first person account of a parent navigating through applying for the program, go to http://dailyhomerenotips.com/2008/12/20/registered-disability-savings-plan-rdsp-time-running-out-for-2008/ . There is a link there to the BMO group as well.

Whenever money is HOT – the markets are through the stratosphere and everyone wants a piece of the action – the talk turns to investment clubs and how to start one. (Yes, I’ll tell you how, but another time.) But when money is COLD, we all just wants to bury our heads. Hmmm. Denial is so much a part of the human condition, dontcha think?

The current financial crisis is a great opportunity for people to come together and start talking about where they are now, where they want to be, and how they’re going to cross The Great Divide. If there’s one thing I’m really, really proud of it’s the fact that people who watch my show are becoming more willing to talk about their money. Seeing those brave souls fess up and make changes on TV has got people talking. And they’re not just talking about my couples on the show. They’re talking about themselves, their problems and what they need to do differently.

I hate secrets. I hate the fact that money is a huge mystery to most people. And I HATE people’s willingness to stay in the dark so they can protect their “dirty littles” from exposure. It’s time to step into the light. It’s time to use each other strengths to learn and grow. And it’s time to do it TOGETHER.

When I first proposed the idea, someone made the comment about the idea of a “Gail Club” being a little Oprah. Hmmm. I guess I’m having trouble coming up with a catchy name. It won’t be a Get Out of Debt Club, because not everyone who might want to participate is in debt. It won’t be a Frugal Spending Club, because I’m not exactly the poster girl for frugal. And it won’t be an Investment Club because it’s more holistic than that.

The idea of the Gail Club would be to figure out how to use your money to your advantage so you can have want you want and some money too. There… The Have What You Want and Some Money Too Club. How’s that workin’ for ya?

By bringing people together to share ideas, those more knowledgeable can share their expertise, while those who need to learn can feel supported. And since everyone is smart in her or his own way, more ideas for how to cope with a particular issue can only be a good thing.

Let’s say your group decides it’s going to focus on “picking the best savings account” this month. Someone in the group may already have done some research on which accounts pay the highest rates. Others may be willing to share experiences, good or bad, in working with a various financial institutions. Yet another person may have some great ideas about ways to find money to put into savings.

So You Want to Start a Gail Club…

It doesn’t much matter how many people you’re starting with, as long as everyone is comfortable in the group. Since you’ll be sharing personal information about your money, “comfortable” is important. The idea is to grow the group so that more people come together to share ideas. So it could be you, your dad, your SIL and her best friend. If each of you brings one new person into the group, you’ve gone from 4 to 8. A good group size is between 10 and 20 people. Once you get over 25, it may make sense to split the group.

Don’t expect everyone to be a high-discloser right off the bat. Some people take time to warm up and be willing to share. Some people like to observe. However, everyone should be contributing to the group in some way. So even if a body doesn’t want to pony up with how much debt he has, he can still do some research, host a meeting, or find a resource from whom the group can learn something new.

Don’t hold your meetings too often. Once a quarter may be as much as some people want to commit to the group. If you’re going to be using each other as a support group to keep on track with your goals, maybe once a month will work for you.

Speaking of goals, your group needs one, and each individual within your group should have at least one too. And those individual goals need to be shared, progress checked and attaboys or cheer-ups given. That’s why you exist as a group: to support and help each other achieve your goals.

Don’t go getting all officious in your attempt to keep the group focused. This is one reason I so seldom join groups. I can’t stand all the rules some people think need to be in place to have the group function.

Guidelines for Meetings

However, there are a few basic guidelines you should follow:

People should eat together… it doesn’t matter if it’s soup or sandwiches, a gourmet meal, or pizza. Eating together is a great bonder and helps solidify the group.

The group’s goal and the individuals’ goals should be reviewed at every meeting.

If people aren’t coming to meetings, don’t haunt their butts, just replace them with new people. Often people commit to making a change and then find they just can’t. They want to, but they don’t have the stamina. Don’t let individuals’ non-commitment winnow away your group. If Sally doesn’t show up for a few months, it may be that she just can’t right now. Recruit a new member and then welcome Sally back when she’s ready.

Have an agenda. Yup. This is one of the things you most definitely should have. When you send out your email confirming time and location of the next meeting, ask those attending if there’s anything they want put on the agenda. If you get loads of responses, just pick a couple and save the rest for another meeting. No responses? Well then you’ll have to come up with something to talk about on your own.

Someone has to take notes. When things get said at meetings, when ideas are expressed, when questions are asked, these need to be noted so they don’t just vanish into The Great Nothing. So someone has to be the meeting’s secretary. And within the week, that someone has to email the Meeting Notes out to everyone else. There’s always someone who wants this job. But it can be tedious if they have to do it for every meeting. So I suggest you rotate the job among three reliable members.

At the end of every meeting, while you’re all together, pick the location, date and time for the next meeting and ask for ideas about what will be covered. (That’ll be the basis for your next agenda.) If you wait until some time after the meeting to try and coordinate this, it won’t work. So do it while you’re together.

Your First Meeting

So what might a first meeting look like?

Well, you’d all put down your names and contact info so the Group Leader can set up a membership file for the group.

Then you’d probably want to say why you’re interested in being in the group and what you want to get out of the group.

You might then want to talk about what the Group Goal should be. Let’s say that y’all want to get with a working budget, your Group Goal might read:

“To establish working budgets for each member of the group and have those budgets balanced within three months.”

You could then use Gail’s Budget Worksheet, an excel spreadsheet, or some other form of budgeting that works for your group to build and balance a budget for each person. Since some people may have irregular incomes, while others bring home the same buck-fifty-two every week, you could invite someone with experience managing an irregular income to come and talk about what works for them. See, now you’re sharing ideas and building on strengths to create working plans that benefit each member of the group.

You can do the same thing for debt repayment, mortgage pay-downs, dealing with student loans or children’s education, establishing an emergency fund, teaching kids about money, mitigating risk (all kinds of insurance), estate planning, setting up a money curriculum at your school, getting married, getting divorced, dealing with aging parents… the list goes on for ever.

In the first meeting, someone should review what a goal is, and what makes a good one. And using that, people can focus on writing a goal (or three) for themselves. Here’s my take on Creating S.M.A.R.T. Goals.

Creating S.M.A.R.T. Goals.

Specific – You are much more likely to accomplish a specific goal than a general goal. To set a specific goal you must answer the six “W” questions:

• Who is involved?
• What do I want to accomplish? ?
• Where will you do it?
• When will you do it?
• Why will you do it?

A general goal would be, “Pay off my debt.”

A specific goal would be, “I want to be debt free so I will pay off my debt, repaying my most expensive debt first, and having all my consumer debt paid off in three years or less.”

Measurable – Establishing concrete criteria for measuring your progress will help you to stay on track, reach your target dates, and experience the exhilaration of achievement that spurs you on to continued effort required to reach your goal. To determine if your goal is measurable, ask: How will I know when it is accomplished?

Attainable – If the goal is too big, frustration will get in the way. Planning to have a million dollars in savings when you make $10 an hour may be unattainable?

Realistic – You must be both willing and able to achieve the goal. You are the only one who can decide just how high your goal should be. Your goal is probably realistic if you truly believe that it can be accomplished.

Timely – A goal must be grounded within a time frame. With no time frame, there’s no sense of urgency. If you want to lose 10 lbs, when do you want to lose it by? “Someday” won’t work. But if you anchor it within a timeframe, “by May 1st”, then you’ve set parameters within which you’re working.

Okay, now you have some ideas how to do this. Once you have your group established, if you want to make it an Open Group where other like-minded people in your area can join, set me an email through Questions and I’ll notify all that you’re up and running. I’ll also create a space somewhere on the site for a list of all the Gail Club Chapters.

Any questions?

As y’all know I answer a lot of questions from people about their money and how to deal with it. There’s a wealth of info over in the Your Questions section. Sometimes I get a lot of the same questions, and then I do a blog so everyone will read the answers. Here’s a new crop for you to take a gander at.

I keep getting letters like these from people who are desperate:

We need help from a professional … we cannot do this on our own. We have tried (very unsuccessfully). We’ve been bankrupt once and are in loads of debt again. We make close to $200,000 a year but live paycheque to paycheque (we even get advances on our paycheques). Where do we go to find a professional??

I’m very sorry, but I can’t give recommendations to professionals because before I could do that I’d have to make sure they were up to the job, and there’s no way for me to know that. It is frustrating for y’all who need help and don’t know where to turn, I know. I’ll reiterate that I think you should start with your local branch personnel and see if there’s anyone there who can help you. It doesn’t matter if you’re a client or not YET, just open up a savings account and then use it as your “in” to have a chat or three with various people who may be able to help. Ask friends and family if they have a good advisor. Make sure you ask lots of questions and understand everything you’re being asked to do BEFORE you do anything. 

Angelina wrote:

Hi Gail I love your show. I wish I could have my husband watch your show. I really have a lot to ask but I try giving you one thing at a time. What is the recommended amount of Groceries a month for 2 adults a 2yr ( potty training in progress) & 7mth. We probably spend $400.00. I only go out once a moth and I do the cooking at home, but I would run out of bread, milk, eggs, butter diapers and have to do $100 extra always. My husband thinks it too much. What can we do?

Angelina, I can’t tell you how much to spend on food for a bunch of reasons: I don’t know how much you make and I don’t know what your other expenses are. I can tell you that according to the Stats Man, before food prices started going through the stratosphere, the average family with kids was spending about $800 a month. I think you can do better than that with some focus on meal planning and shopping the sales. If I were doing your budget, I’d give you $600 for food and personal care.

J wrote:

I’ve heard that some collections agencies are bogus, how do I know if they’re really collecting money on behalf of someone else? And is it true that if they can’t contact you and you don’t make a payment that in a certain amount of years (I heard 6 or 7) it disappears off your credit report? Thank you! P.S. Love your show! It’s been very helpful.

J: some collections agencies are indeed bogus, and you should take a name and telephone number and verify the company before dealing with them. As for stuff falling off your credit report, most information only has a life of about six or seven years, but you better not want to borrow any money during that time!

LM wrote:

I’m in over my head and I need your advice so that I won’t require a slap if ever I meet you. My question for you stems from an episode of ‘Til Debt’ Do Us Part that aired a few weeks ago but alas I missed it. Do you recall the storyline when the husband, who was in the entertainment industry, had not paid his taxes in several years and had not been caught? I’m very curious as to what your advice was to take care of this situation. Did he represent himself and go the Tax Amnesty route through CRA or did you have him go through an accountant or lawyer. I have met with a tax amnesty lawyer and got his opinion and his potential bill, not including accounting services but I was hoping that you knew of a better way. You can only guess why I’m asking this…I look forward to hearing from you.

LM: I’m sorry, hon, I don’t know of a better way. I think the tax amnesty route is the best option. Since The Tax man allows “no-name” disclosure to enable discussions to take place anonymously until a deal is reached, only a lawyer can protect the client’s identity if a deal is not reached.

J wrote:

Dear Gail, I LOVE your show! It is truly inspiring and I so wish i can get it together and start saving. My problem is that whatever money comes in, goes out immediately! My husband is a self employed photographer and makes a decent salary. He grossed about USD$180,000.00 last year, but we do not have more than $500 in our account as we speak. Money comes in and it goes to pay rent, utilities, suppliers, etc. I am so tired and worried about our financial state. We are always short of cash. On top of that, we have credit card debt of about USD$20,000. What can you suggest for me to get on the road to saving!!? It seems so hard when you’re self employed. I have a small business and that’s not been helping either. I live in Singapore by the way

J: if you have an income of more than $180,000 and you don’t have anything saved, and you have debt, you are really, really dumb. The place to start is with a budget. I don’t care how often the money comes in, that’s just an excuse. Go read my blog about living on a variable income. And then get yourself on a budget girl.

J isn’t the only one I’ve gotten this kind of letter from. All over the world people are throwing up their arms and whining, ‘I just don’t know how’ as they continue to shop themselves into a hole. Ya know what, it’s time to stop whining and start doing. Hope and wishes won’t get you anywhere you want to go. Belief in yourself and A FRICKEN PLAN will. So, people, if you think you want to get out of debt, learn to live on less, know where your money is going, use the tools on this site to make it so. I can’t possibly do budgets for y’all. Besides, I’ve made fams on the show do their own budgets and they used the tools on this site to do it, and it worked just fine. So now it’s your turn to DO IT!

I’m a-wonderin’ sumthin’: Would y’all consider creating Gail Clubs — kinda like book clubs — where those of you who actually get the whole idea of budgeting and money management get together to share your wit and wisdom with those who are in need of some more targeted guidance? It would be a little like an investment club, but more about money management, getting debt free, and sharing tips. If you want to create something like that, I’m happy to let the community know where your group is set up so that those who are interested could come and partake of the groups’ company and knowledge. You could ask a well-trusted financial mentor to be a guest or a regular guide. And you could grow the group over time to include all aspects of money management. Let me know if you see value in sharing your ideas and learning from each other. Then I’ll create a blog on how to set one up, and once I have a few group locations, I’ll post some contact names and locations for those who may be in your area and looking to connect. (I could also do a blog on how to set up an investment club, if you’re interested.)

That’s enough for now. I have plenty more, so I’ll do another blog like this soon.

TTFN