December 2008 Questions & Answers


I am a married woman with a Business Administration degree from back in the eighties, no work experience and my husband's income was always our only source. Two kids at the age of 14 and 11. Few years ago, he lost his job and we had to live off the credit cards, went down the hall by 100k. Two years ago, he got a one year contract and we registered a company in his name and mine. The money was good and we managed to pay 40k of the loans, but he had also to apply for 25k RRSP loan to protect himself from the taxes. At the year end and when filing for the income tax, he is still supposed to pay $8000 and as a partner in the company, I am supposed to pay $17000 as I don't have no RRSP.

During the last couple of years, our marriage isn't going well at all. Few months ago, he found a job in the middle east area and he left. To make my story short, our present situation is: Our condo's value is $200,000, mortgage balance is $115,000, his RRSP loan for $25000, his tax to be paid $8000, my tax to be paid $17000, Credit Cards balance of $65000, in his name and mine, and he sends us the amount of $5000 on monthly basis. As I mentioned earlier, our marriage is going down the drain, and it has nothing to do with the financial problems. I got licensed in Life Insurance but my clients are very few till now. I am trying to find a part time job to help me find more clients.. What scares me the most is if he decided to stop sending me the money, I don't know what to do and where to go, and for the time being, I am the one facing the financial institutes and their phone calls and don't know what to do. Please help me.

Name withheld

Your situation is complex and you should seek advice from someone who can actually go over all the numbers with you. First off, his debt isn't your debt unless you have signed for it. So his tax debt isn't your responsibility, nor is his RSP loan. You should make a list of all the debt that is your responsibility and then see if that is manageable. If not, you should visit a trustee in bankruptcy. Your tax debt will not go away, but you could make the rest much easier to live with. And GET A JOB. It's fine to have a long-term career you're working on, but you have two children and yourself to feed. Get a job that covers all your monthly costs. Also get a cell phone and disconnect your home line.     


Gail, I receive a 3% annual raise from my employer.  I planned to increase my withholdings for my 401K from 6% to 9% with the raise.  With the stock market in trouble in the States right now, do you suggest I put the extra in a savings account or go ahead and make the change in my 401K?  My employer only matches up to 6% so the extra 3% would be un-matched.  Thanks so much!  I love your show!  


As long as you have an emergency fund, Traci, I’d keep going with the 401K. If you don’t have an emergency fund, use the extra money to build one first.


If I get an insurance policy in my name that pays to bury me and leave money to my 2 kids, and have my son and daughter as beneficiaries a good plan ? They would give me monthly payment in cash to pay for it until I die.

Name withheld

If the kids are paying the premium, why is there even a question? Unless you think they might knock you off for the dough.


I have 4 different RSPs totally $10,600 set up at two different banks.  Is it smarter to compile all my RSPs into one, or leave them as is? Will I earn more interest by compiling them together?  

Name withheld    

You actually don’t have to have separate RRSPs. You can make a withdrawal of an amount you wish so you don’t have to cash in the whole plan. You don’t have enough money to throw your weight around just yet. You should be staggering or laddering your investments so that you have a one-year investment, a two-year investment, a three-year investment and so on. Laddering helps protect you from a big drop in interest rates (which we’re not about to have right now) and from having to renew all your money at once. So, what should you do? Leave everything as it is right now and as things come due, move them to a single institution where you can ladder your investments.


I'm a huge fan of your show, as it's REAL advice to real situations. You always consider the impact that the money situation is having on the relationship. I ended a bad relationship, 20 years too late, and it left me in a very bad financial situation. However, over the past few years I've managed to take the right steps to put my life and my children's lives back on track. However, out of the blue, my youngest child has decided to live with his father, and suddenly my budget has taken a $1,000 hit from a combination of losing $800 in support and having to pay $200. I started in September keeping track of every cent that was spent. I contacted the bank and had my mortgage payments held for this month, to give me a chance to figure things out. I'm now working through your budget sheet with the plan of starting the jars by the middle of the month.

My budget was very tight to begin with because I also look after my elderly father in my home, and he cannot be left alone for long periods. So I'm trying to find something I can do from home.

Can you offer any advice on how I can absorb this kind of financial hit. It represents 1/2 my net pay for the month. Any suggestions you can give me would be greatly appreciated.


Cathy: Tough break. Since you’re home looking after dad, why not consider offering a “drop in centre” for other elderly folks to provide their caregivers with a bit of a break. You wouldn’t have to do it every day. Maybe 2 or 3 days a week. You’d charge a fee and these Olders could socialize, which would be very good for them. They could play cards, watch the tele, listen to an audio book together, that sort of thing. And you’d feed them something simple. Check out what’s available in your community, and whether this would be a good idea. Alternatively, if you can type, there are all sorts of transcription opportunities you might be able to take advantage of by contacting a transcription service to see if they need fingers. There are lots of opportunities if you can think creatively.


Gail, I notice that you often recommend that people pay off their consumer debt in three years or less. Is there a reason that three (years) is the magic number? My fiancee and I are wanting to buy a house before our wedding next spring. Together we make about 90,000 per year. He is debt free, but I have over 35,000 on a student line of credit. Should I focus on paying it off in three years, even if it means changing our plans for home-buying??  


Your student loan isn't consumer debt, Jann. It was an investment in your future ability to earn a good income. That being said, you should not settle for the student loan minimum repayment amount since that'll take 10 years... About 5 years too long. As for why I try to get people debt free in 3 years or less, it's because of something called "debt fatigue"... The sense that since you've always been in debt and will always be in debt, what's another couple of thousand? It's a negative mindset that leads nowhere good

I LOVE your show.  You are amazing and I can't wait to read your book. (I just found out you have one!) I have used so many of your principles in my family budget and now there is money in the bank and a plan in place.  This may sound like a work question but to me it's a personal finance question.  I have been in my industry for 28 years but with an 8 year sabbatical out of that time to care for kids. When I returned I built up clientele and then made the move to a home office one year ago.  I am 100% commission based. Thanks to a special purchase by a long-standing client, I have increased  my annual income from $40k to $100k in 2008. It will only happen this one time. If all goes well in our industry, I expect my income to return to normal in 2009.

The business runs debt free. Just internet, phone, tech support, training, marketing etc., plus  fees to the company for whom I am an independent sales agent. With the flowing funds I repaid family debts out of my income but have one last 8k debt that I would love to finish off. I have $16k tucked away for income tax thus far. I don't know how much the tax bill will be and I don't think I have saved enough to start with; therefore I hate to dip into it to pay the last bill and then find I owe Rev Can. I know I have about $25k in office expenditures to offset the earnings but that still leaves $75k in earnings. Should I wait until I get my tax bill and then pay the credit card debt or is Rev. Can's interest lower than the 20% I am paying on my credit card now?

Love you. Love your show. Thank you for any advice you can suggest.

Name withheld        

The tax man doesn’t like to be kept waiting. And, you’re right, 16K won’t be enough. I don’t know what province you’re in so I can’t help with a tax projection, but you can go to and do one for yourself. You should make repayment of that credit card your first priority. Since this is a one-time jump in income, you should also look for ways to minimize the tax you’ll have to pay by taking full advantage of an RRSP. Good luck, and congrats on having a GREAT year!

My husband and I are both teachers (in Ontario) and contribute to our pension plan (at present our contributions are 12%, but with the situation with our pension plan at the moment they may increase, possibly up to 16%). We used to contribute to RRSPs as well, but stopped our contributions while I was on maternity leave, and never restarted them (the money is still in the RRSPs, left to build - though in the last while it has shrunk). We have been contributing to our son's RESP since he was born. The only debt we have is our mortgage, and we do have a rainy day fund, and additional "fun" savings.

My question is, should we go back to contributing to our RRSPs (even though we contribute to our pensions, and our RRSPs are only shrinking), or would it be better to put the money into the mortgage? Or should we do a bit of both?

I'm feeling like putting the money into our mortgage will save us so much in interest, and allow us to save even more sooner (as we wouldn't have a mortgage payment)...but I'm really not sure.

I have watched your show for years and I think I've seen every one. At one point we were in debt, and again during and after my mat. leave (all the while we were putting money into savings though). Anyhow, the advice from your show is what got my husband and I back on track. We would both really appreciate any input you can provide us for our current situation. THANK YOU!

Name withheld        

The golden rule of "save 10%" includes your company pension plan. Since you're both doing that (with plans to increase to 16%), you can use any extra money you have to pay down your mortgage and have some fun. Good plan having an RESP for your boy. You should be quite proud of how you are doing. Take a pat on the back.

Hi Gail,
I think what you are doing for the public is just amazing (your money interventions - lol). Your show has totally inspired me to take control of my money (after paying off my cc several times and then charging everything right back - I have finally got it under control). Watching your show has made me re think about how I look at money and I think the people who are on it are very brave to put it all out there! I have a question...I am 33 years old, I have no children and I live with my boyfriend (we rent - about $350 each per month- so fairly cheap). At the moment I am only bringing in about $2000 a month - I put $500 towards my credit card, $350 for rent, $160 towards mutual funds, $80 for savings, $100 for gas, $160 for travel fund, $100 for food...and I spend $100 for smoking, I know :) - Where else should I be putting my money? Should I save up for a savings bond, or a GIC or RRSP? I am a bit lost and want to maximize my money. Or should I concentrate on just paying off my cc? My current balance is $1811.00

Thank you so much for any help you can give me!!! ps...when will you be back in Nanaimo - I missed you last time!!!

Name withheld        

Your priorities should be:

  1. pay off your consumer debt asap
  2. build an emergency fund equal to 3 months' worth of Essential Expenses
  3. build your long term savings to 10% of your net income... Up to 18% when you can afford it. Use an RRSP.
  4. Ensure you have some individual disability insurance

Have some fun!