Getting out of debt is just like losing weight; all of the same principles apply. Humour me for a moment. Have you ever started a new diet or “lifestyle change” with the best of intentions, only to de-rail a few days in and find yourself with 4 donuts in your mouth at once? So many people are exactly the same with money. They decide it’s time to make a change, they feel empowered, they create a budget, they are all gung-ho, …and then after only a few days wonder why they’re swiping their credit card for something they can’t live without.

So how do we stop this gorging?

Well, we know that the way we gain weight is by eating more calories than we burn. The same applies to debt; it comes from spending more than we bring in.

What if we want to lose weight? Easier said than done some days, but we need to eat less calories than we burn. When applying this to our finances, if we want to get out of debt, we need to spend less than we earn.

There’s no magic, but it certainly sounds easier than it is.

Humans are complex emotional beings and there are many other variables involved. It’s not just about the “how”, it’s also about the “why”. The weight itself isn’t the issue you need to solve; the real problem is what’s causing the weight. The same goes for debt. Solve the problem that’s causing the debt, and the debt will take care of itself.

Why do we continue to do things that make us gain weight or get us further into debt, even though that’s not what we really want? The reasons differ for each person. For some people, they can’t resist the temptations of everyday life. For others, it’s a lack of knowledge or education on the subject. Some don’t feel ready to make a lifestyle change yet or worse, are not willing to change at all. Or quite often, people eat and spend when they feel an emotion – any emotion – whether it’s happy, angry, bored, or sad.

How to Shed the Debt Weight

What can we do to shed the debt weight? We can apply many of the tried and true weight loss methods to our money. Here’s how:

1. Live a healthy, balanced lifestyle
   • Like eating from all the food groups, you must also have funds available for all budget categories including fixed, savings, and variable expenses.
2. Write it down
   • It is often recommended that when you want to lose weight you write down what you are eating. It helps make you aware of what’s going into your mouth, and just how much you are consuming in a day. The same goes for getting out of debt. Begin your journey by writing down every purchase you make, so that you can become conscious of where your money is actually going.
3. Activity is important
   • Just as it’s recommended that you exercise to lose weight, if you want to get out of debt you must remain actively involved in the process. Set up your accounts, ensure that you make all of your payments on time, and review and revise your budget regularly.

If you’ve been successful in living a healthy lifestyle but are struggling with your debts, ask yourself what habits you can carry over from your healthy living, into your financial life to help you become debt-free.

In what other ways are getting into debt and gaining weight similar? Can you think of any ways that losing weight on the scale can help you shed your debt weight? Leave a comment below!

Until next week,

Christi Posner (@ChristiPosner)

Yes, a plunger.

But let me back up. Today I received a text message from my husband asking where I kept the plunger.

Oh oh. But not for the reason you think. Because, you see, I don’t keep the plunger anywhere. I don’t have one.

Over the course of peeling potatoes for slow cooker Shepherd’s Pie my husband decided to see just how many peels our garburator could handle.

We still don’t know the answer.

My reason for being plunger-free is admittedly silly. It roots back to a job at a summer camp where I held the position of “maintenance.” Which mostly meant maintaining the toilets. Like 10 per day.

To say I’m traumatized from the plunging would be…well kind of accurate. When I moved out on my own I decided owning a plunger reminded me too much of that summer job and those are memories I’d rather leave in the past.

But now here we are, in a situation requiring a plunger.

Looking at the situation I realize I have been more than silly. I’ve been reckless! The entire point of a plunger is to have it on hand in the event of a drain, sink, or toilet back up. To not have one makes me wonder what exactly I was planning to do if something did plug. No, really. What was I thinking?

Being in this hyper-money conscious state I couldn’t help but draw a parallel between a plunger and fiscal responsibility. Think of a plunger as your budget, your savings, your retirement. They’re a hassle to set up, they don’t deal with the present (well, not the immediate present) so they’re a bit boring, and they don’t bring any instant gratification.

Saying “future me is sure going to be glad I did this,” can only motivate action so far. Really, these tasks aren’t fun—but they’re sure handy when you need them.

After I made peace with my plunger issues I swung by the hardware store. It was time to face my fear, my past, and my resistance to planning ahead. It took me three trips around the store and a friendly cashier before I even found where they keep the plungers—did you know they come in two pieces?—but my adventure was successful and I gathered my things, preparing to receive accolades and admiration from my husband for my bravery.

And then I got another text message.

“Heya what do you know, it’s unclogged now.”

Talk about deflated!

Yet the principle of the plunger hasn’t escaped me. Now in event of a sudden clog I’ll be ready.

As of today, he has been working in a term position teaching grade 3 in rural Manitoba for almost two years. Other than the long commute, he loves it. The sad thing is this; unless they can offer him a permanent position next year he’s going to have to find another job elsewhere. The stars need to align for him to remain where he is today. There needs to be enough students to warrant the number of teachers at the school, the term job needs to be made permanent, there has to be a competition for the position, and someone within the school division that has a permanent contract could easily trump him for the job. That’s just the way it is.

Plan A is for this job to become permanent and he gets hired. Plan B is to find a term contract elsewhere. Plan C is go back to being a substitute teacher. Plan A and B are pretty good options. Plan C would suck. It would cut his income in half and benefits would be scant. We’re lucky though, as we would certainly be able to manage with less income. But what would really suck would be seeing a keen, talented, and enthusiastic teacher spending a year moving daily from school to school and classroom to classroom. A teacher without his own classroom. A teacher without his own students. I realize subs are an essential and vital part of the school system, but the thought of having to return to subbing would be just plain sad. If he has to do it, he will, but I reserve the right to be a bit whiny about it.

Sure, it would be nice to have my husband available in the evening. If he were a sub he’d be home before me, instead of at 6:30 or 7:00 at night. My dining room wouldn’t be a make shift office every evening and weekend, with duo-tangs spread out for marking and new spelling and math tests being created or science experiments being planned. There would be no more babysitting bean and tomato seedlings on the weekends at our house or dragging them along camping to make sure they’re looked after. I wouldn’t hear any more stories about afterschool run club. There wouldn’t be an over-abundance of ‘World’s Greatest Teacher’ ornaments, chocolates, or homemade gifts at Christmas. There wouldn’t be a little pile of confiscated erasers and toys on my kitchen window sill waiting to be returned to the rightful owner. We wouldn’t need to save every egg carton and milk jug for the science section on structures. He would read adult books before bed and not fall asleep with Charlotte’s Web lying across his chest.

OK, I admit it. I’d miss all of that and I know he would too. So many things would be missed. It’s about more than just the money.

Fingers and toes crossed…because here we go again.

A – List 5 things you wish you’d never purchased.  They could be large (a house, a car, a trip) or small (a sweater, a bottle of whiskey, a piece of sports equipment).  What made you buy them?  What did you think they would give you?  How did they end up being disappointing?  And why do you now put them on this list?

Doing this exercise accesses your regrets.  Regrets or disappointments can help us understand what we wish to avoid in our lives.  They can be a great learning tool.  I wish I’d never purchased Nortel stock.  I threw money down the drain and didn’t have the good sense God gave a goose to get out until the stock went from over $100 to about $3.

B – List 5 things you wish you’d purchased.  Again, what made you not buy them?  Was it too hard, too much money, too whatever?  Did education make this list?  What are you feeling you are missing from being without them?

By looking at purchases from this angle, you see the challenge of spending money.  Sometimes you regret buying things and sometimes you fret over not buying things.  This increases your awareness of your thinking process when contemplating purchases.  I wish I’d purchased a painting I saw in Ottawa when I lived there in the 1970s.  It was magical, a man sitting in a chair with strings attached to his appendages like a marionette.  I can still bring the image to my mind and would love to see it again.

C – List 5 things you are so grateful you bought.  What have these purchases given you?  What caused you to buy them?  What motivated you?  Did you feel forced or were you making the decision of your own free will?  Look at the circumstances surrounding each purchase.

As I wrote in a previous post, I am glad I bought an RRSP early in my career.  Once I started it, it became a habit: a habit that turned out to be a financial life saver for me.  Also, I’m grateful I bought an RHOSP.  For those youngsters in the crowd, this government incentive was a Registered Home Ownership Savings Plan.  I put money into the plan and it grew tax-free (like an RRSP) until I took the money out to buy a house, another purchase I’m glad I made, although I wasn’t so crazy about losing money on the second and third homes I bought.  Today’s equivalent is the TFSA: Tax Free Savings Account.  This purchase definitely needs to be on your list.

Nobody gets the purchasing portion of life exactly perfect.  As I write this I’m surveying a pile of things I plan to donate.  The goods would cover a 3 by 8 foot table.  I paid good money for them.   Some of the items I enjoyed greatly and now can pass on for someone else to enjoy.  Some items I never used once.  Ugh…

In Sarah Ban Breathnach’s book ‘Peace and Plenty’, she wrote a beautiful line.  And just to put these words in perspective, she wrote the mega-bestselling books about ‘Simple Abundance’ and then married a man and lost all her wealth.   She wrote: Solvency feels better than anything you can spend money on.  Well said.

That is what’s on my mind on this anniversary, what do you think?

Victoria Ryce

Companies that have a vested interest in making money off of customers will tell their customers about products that will make the most money for them. The sad part is, the most profitable product is most often the wrong product for the customer. Naturally customers would trust big corporations because they are professionals” and should know more than the average customer.

The problem is when there are aggressive targets that have to be met, it puts pressure on employees to perform, and so the balance between looking out for the customer and looking out for themselves is non-existent. Their jobs will always come first. I was speaking with a friend who is a realtor, and he is trying to get out of the business because he can no longer sleep at night. He’s torn between doing the right thing, and making a living. Nowadays, what one realtor or broker is not willing to do for a customer, there are 5 others that
will. So what do you do? It’s a difficult choice.

Education is great, but it depends where it’s coming from. I was recently speaking with a gentleman that declared bankruptcy in 2008. He got awful advice and is now in a position where he is thinking of declaring bankruptcy again. Thankfully I talked him out of it, because his situation is really not that bad, and he does not need to declare bankruptcy.

Sometimes I wonder why we as people put so much emphasis on things that are not important. We will do research for days on the newest Apple product, or the latest sneakers, but when it comes to our money, we just put it on the back burner or expect someone else to take care of it for us. I don’t believe anyone will ever care about me, more than I care about myself. Well, except God, but that’s it!

Some of the most important lessons I’ve learned so far in my life about financial literacy are:

1. To learn about different investment options that are right for me, not what
is being heavily advertised on TV.
2. I also learn from people who are where I want to be. I know some people who
are doing extremely well financially and those are the people I get advice
from. Could you believe I use to get advice from broke people? It’s kind of like
asking a lawyer for medical advice, or asking someone who is obese how to lose
weight. I know those were my not so smart days.
3. Getting and staying out of personal debt has freed my mind and has allowed
me to do greater things with my money than paying a bank every month.

How about you, what have you learned about money over the years?

How many times have you looked at your credit card statement and said, “WHAAAAT?!” I have, quite a few times. I’ve seen fraudulent transactions, interest charged even though the bill was paid in full, paid services added to accounts without permission,… shall I go on? Some of these mysteries have happened to me personally, and some I experienced when I worked for a credit card company. On several occasions, cardholders had called in feeling they had been wronged, only to learn that in their cardholder agreement these “surprise fees” and “unexpected interest charges” were outlined and explained.

Did I feel for them? Yes. Cardholder agreements aren’t exactly interesting or understandable reading material. So, knowing what I know, I thought I’d share a bit of my wealth of knowledge. Here are five lesser known facts about how credit cards work.

Did You Know..

• Interest is Calculated on Full Balances

A grace period is the period of time between your bill’s print date, and its due date. They can range from 21-31 days, depending on your credit card company. In most cases, if you pay your credit card bill in full before the due date, you won’t get charged any interest. However if you can only pay off a portion of your balance by the due date, interest is charged on the full amount showing on your last bill, not just the portion you didn’t pay off. The interest will also back-date to the date each item was purchased.

For example, if I were to purchase a $2000 TV, but paid $1999 of it off prior to the due date, I would get charged interest on the full $2000 from the date it was purchased. Yet another reason to pay your bills in full, to the penny!

• Certain Purchases mean Instant Interest

Interest calculations depend on what you’re using your credit card for. For the most common transactions, your grace period allows you to avoid interest if you pay the bill in full. But if you use your credit card for balance transfers, cash advances, or cash-like transactions, interest is charged immediately.

Balance transfers are when you transfer an outstanding balance from one credit card to another.

Cash advances are when you withdraw cash from your credit card, either from an ATM, a bank teller, or when you use a “convenience” cheque.

But what are cash-like transactions? They include lottery, gambling, casino gaming chips, betting, money orders, wire transfers, and travellers cheques.

That was one of the calls that came in quite often when I worked for the credit card company. “I pay my balance in full every month, why am I getting charged interest?” We’d search through the card history and sure enough we’d find purchases of lottery tickets buried deep within a transaction.

• Interest Charges can cause even More Charges

Cardholders are often surprised by the fact that some credit card companies allow you to go over your credit limit as a “convenience”, however they still charge you a $20+ over limit fee for doing so. You can also be charged an over limit fee if the interest they charge you is what brings you over your credit limit!

• U.S. Purchases Mean Mo’ Money

If you use your credit card in the US, or purchase an item from the US (including online stores), you are typically charged the exchange rate on the date of billing, plus a transaction fee around $3 per transaction. Ask your credit card company what fees you will incur before you buy!

• Unauthorized Additions

Sadly enough, I’ve also seen services like Balance Protection, Credit Alert, or others added to accounts without a cardholder’s permission. If you’re not paying close attention to your bills, this can add up to hundreds of dollars per year!

So what can we learn from all of this? Pay attention. Ask questions. Educate yourself. No one is looking out for you and your money but you. All of these facts are outlined in your lengthy tiny-print cardholder agreement, but really, how many of us read those things? Rather than learning the hard way, pick up the phone and ask a customer service rep at your credit card company about how things work. And get the answer in plain language.

Have you ever been surprised when looking at your credit card statement? What did you see?

Until next week,

Christi Posner (@ChristiPosner)

This shouldn’t be so difficult, I know.

To switch banks I just need to close one account and open another. So what’s my glitch? I don’t know if it’s fear of change or “the devil you know”…or the 15 years of loyalty I’ve given my current bank. Well, I’m loyal except for the part about becoming more and more desperate to bail.

I’ve even tried to leave a couple times.

Unsuccessfully.

The first time I tried to break up with my bank I walked in, determined. And when I stepped up to the teller I stayed on point. “I would like to close my account.”

Honestly, that’s all I remember. It’s all a blur after that. What I do know is I did not end up closing my account that day and I exited feeling a mixture of shame and confusion.

The second time I tried to break up with my bank it was shortly after my Pretty Woman experience. But this time I was intimidated and nervous. And instead of demanding my money to be released from their coffers I felt my cheeks flush and I nearly whispered my request.

“Um…please…I want to close my account…please.”

Needless to say this didn’t go well either. Again I left defeated but this time I lashed out. On social media.

“It’s time to break up with my bank. But I don’t want to move somewhere just as bad—is anyone happy with his or her bank? Care to give me a recommendation?”

In just a few minutes I got tens of suggestions. And after a few days the numbers doubled. I was surprised. You mean, some people are actually satisfied with their banking experience? They don’t just stay put because they feel bullied?

I took the recommendations and narrowed my list to three—yes after all the hubbub there were really only a handful of names suggested by my social network. I won’t bother going into details but they had the following in common:

• Exemplary service
• Little to no banking fees
• Good interest rates
• Accessible

And no, my current bank does not meet any of those criteria.

After I crafted my list I set out to research. For the most part the Top Three were equal in all areas. Eventually I crossed one out because it was highly local and I figured it would become problematic and/or expensive if I was travelling. And then there were two.

For a few weeks I deliberated between the banks until I realized I just had to make a decision.

So I did. I opened a new account and began the process of moving my money, debits, and credits over.

But it’s going so slowly. And I’m filled with fear that I’m doing it wrong, or that my current bank will find out and hunt me down and make me pay for my infidelity.

They don’t do that, right?

Hopefully they just watch you walk away into the sunset and wish you well on your journey….

Here’s how it works:

Every payday, my company deposits the equivalent of 2% of my gross (pre-tax) salary into a Registered Pension Plan. This 2% is an amount given to all employees regardless of whether or not they contribute anything extra. The money sits in a low-risk mutual fund until I decide otherwise.

As an added incentive to actively participate in saving for my own retirement, the company also offers a contribution matching program, where they match any amount I contribute on my own, up to 6% of my gross income. Obviously, in order to maximize the money I receive from my company, I have opted to contribute the full 6% from my gross income.

Based on my my age and the number of years I’ve been employed, the company currently matches 75% of my 6% contribution (equal to 4.5% of my gross income).

Here’s the math:

2% – company contribution

6% – my (employee) contribution

4.5% – company-matched contribution

So, by putting away 6% of my gross income, I get an additional 6.5% with the potential of an increase to an additional 8% down the road (at around age 40, the company will match 100% of my contribution).

If all this math has your head swimming, it basically translates to: FREE MONEY.

Why wouldn’t you want to participate in a program like this? Don’t you like FREE MONEY?!?

I’ve adopted the mindset that this money is actually part of my salary. Whether or not I accept the ‘bonus” is up to me.

Why is a group pension plan so awesome?

• The money is automatically taken off my paycheque. Since I don’t have to make the transfer myself,  I don’t even notice the 6% is ‘missing.’
• The mutual fund I chose for my RPP invests aggressively in my younger years and slowly (automatically) adjusts itself to a more conservative portfolio as I close in on retirement. Of course I’ll be monitoring my portfolio closely but so far, the returns have been terrific.
• My contribution is made in pre-tax dollars so the remainder of my paycheques are taxed at a lower income level.
• The funds grow tax-free until I start withdrawing after retirement.
• As a young guy who started contributing early, I don’t need to contribute as much to my retirement fund since I’m spreading out my contributions out over a longer period of time. This allows me to direct money towards other savings (home down-payment) and investing (TFSA) vehicles.

Why do people put this off?

Generally, I think it’s due to lack of knowledge, people feel intimidated, or folks have the perception that they can’t afford to do without the money.

If you’re not sure if your company has a group pension plan, talk to your HR. Get all the information you can and start contributing TODAY.

Related: Get To Know Your Pension Plan

Ken

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Eventually there was movement in the line and it was my turn to toss my few items on the belt. They were quickly zipped through by the cashier, but then sadly there was another delay. A man, looking a bit frantic, appeared and started talking to the cashier. Out of the corner of my eye I saw a cart full of groceries at the end of the till area. The cashier was explaining that she could set the cart aside and he could come back later. I saw two cards clutched in his hand, a credit card and a debit card. “I just don’t understand why they’re declined”, he said. Then in complete and total frustration he threw his hands up and told her to forget it, he wouldn’t be back, and he left.

I’ve seen similar situations at bank machines. A person walks up to the machine to withdraw money but soon they’re staring at their receipt but they have no money in their hand. They try again, maybe a different account. Nothing. Then they dig through their wallet and try their credit card. That doesn’t work either. Nothing. No money. They leave, angry and upset.

It’s true that there could be seven explanations to Sunday about what could have been happening in either scenario. We’ve all had credit cards declined. At least I know I have. It’s always a gentle reminder for me that I should call my credit card company and warn them that I’ll be traveling for a weekend and might go on a shopping spree in the States so they know my card hasn’t be stolen and put on hold because of ‘unusual spending patterns’. I’ve also been known to select the wrong account when using a debit machine and the answer is ‘declined’. Darn it! These things happen, but they are easily resolved, though slightly frustrating and even a bit embarrassing.

Sadly, the way these people reacted it seemed to me that a mistake wasn’t made, rather, there just wasn’t any money or credit in the accounts to access. I wondered to myself, will that be their breaking point? Are they in a financial scenario so dire that they finally deem the situation critical enough to do something about it? Seeing the guy on Sunday abandon his shopping cart full of groceries made me cringe a little, and it brought back my own memories.

Back in my much, much younger years I left home and moved out West. I thought for sure I could make it on my own, without an education of any sort (hello university drop out), and I would be just fine, maybe even successful (whatever that meant). I slowly dug myself into a financial hole. My personal breaking point came one day when I had to back out of a Thanksgiving dinner I was invited to because I couldn’t afford to buy the salad I had promised to bring. I was so embarrassed. A salad. I couldn’t afford a bag of salad! I called my friend to back out and then I curled up on the floor in my bedroom by the phone weeping. It all came crashing down. What was I thinking? What was I doing? I wasn’t getting anywhere in this world. I couldn’t even making ends meet.

Once I composed myself I remember calling my Mom. I told her that I was thinking of moving back home to Manitoba to return to University. She said ‘you can always come home’. Aw, I love my Mom. A couple of months later I sold everything, including the car that I couldn’t afford, and moved back to my hometown. I got a small, inexpensive apartment, a student loan, and a part-time job and I returned to University and ultimately got my degree. It set me on the right path. It was a good decision.

I now know that I needed to experience that breaking point, my own situation critical, in order to pull up my bootstraps and get on with it. I knew that I didn’t ever want to say again that I couldn’t afford to buy a bag of salad.

—————-

Firstly, I always file my income taxes on time.  In fact, on April 30^th I received my Canada Revenue Agency notice back telling me that they were withholding my tax return money.  What?  The reason for keeping my money was my unfiled GST/HST returns.  Plural.  I called the number on the notice and a woman informed me that since 2008 no GST/HST returns had been filed.  I needed to correct this error.  And it was my error.  I erroneously believed that since I made very little money, less than $30,000, I wasn’t required to collect this tax.   I asked about the $30,000 income amount that somehow lodged itself in my memory.

“If you have a business number, even if you make $5 you must charge, collect and pay HST.  If you make less than $30,000 you do not need to get a business number, but if you have one, you must file the annual returns,” she informed me.   I could e-file now, but I would need access codes.  She gave me the next telephone number to obtain the different access codes for each of the five years I needed to file.  I asked this next woman why I hadn’t been contacted before and she told me they’d just written a computer program to find these errors and a number of people got the same notice.   She checked my address and it was wrong, even though my correct address was on my tax return, and had been for three years at this address.

I called the bookkeeper who does my returns and she said to come in on Friday and together we’d e-file the information they needed.  The man who did my return in 2008 somehow didn’t file a GST return and the situation compounded the next year when I got to Christine since she saw no evidence of a business number on my previous year’s return.   Hence, no GST/HST returns filed.   I’d by then forgotten all about this extra return and continued in blissful ignorance.  Friday we filed all the returns and now I must pay the HST on the income, even though I didn’t charge or collect this tax.  It’s an ugly and costly lesson.

You can tell this message is about paying attention and knowing the rules.  My second costly mistake came from my cell phone.  I use this phone for emergencies.  My pal Lori bought it for me one Christmas when I rented a place without a phone.  Each year I put money on the phone, and never use the full amount.  But if I add a $100 phone card each year, they roll over my unused money.  You know where this story is going.

I looked at my records and thought it read May 8^th as the date I needed to add another $100.  It turns out it was May 8^th, 2012 and I’d forgotten to write down this year’s date of May 4^th, 2013 so when I added the money on May 5^th, it told me my balance was zero.  You might be thinking ‘who cares’ since I didn’t use the money each year anyway, yet my thought is that some time I might need to make calls if I get stuck somewhere.  I live 20 minutes from a center and if my car stopped working on the road, I wanted to be able to call for help, even if it was a long call.

My take-away is to check information, keep good records and pay attention, it costs less.

That is what’s on my mind today, what do you think?

Victoria Ryce