June 2008 Questions & Answers


Hello, I watch your show in Australia and I was wondering if you had a lot of credit card [debt], would you sell your house to pay down your debt and start again with the left over money.

Name withheld    

How much cc debt are we talking about here? Selling your house is a big step, but if that’s the only way to get out of the hole, then yes I would.


We have been stuck in the cycle of bad financial decisions and finally seem to be getting on the right track. My question is this: We got suckered into a rent to own furniture agreement and we are wondering if we should send it back and pay for new in cash or if we should suffer it out? We have only been in this agreement for about 6 months out of a 3-year contract. We contacted the company for a buy out option and it is outrageous.

Name withheld       

The operative word in your question is “contract.” If you signed a contract, then you’ll have to either live with the terms, or break the contract and live with the consequences. I have no idea what kinds of penalties there are for non-payment, since I haven’t seen the contract. Nor can I advise on what the implications are if you do not fulfill your end of the deal.

Whenever you’re looking at financing ANYTHING, your first step should be to calculate what the final cost will be, including financing, fees and anything else they throw at you.


My question is this: my husband and I have been married for a little over two years. He's in the military, and we're trying to pay off our debt creatively with our very meager budget. One thing he wants me to check into is vehicle refinancing, and neither of us are sure as to when, if at all, it would be advantageous. Our current scenario is that we owe $1399.32 for three more years at 12.99% (it was his first auto loan). The vehicle is worth about what we owe. Should we try to refinance? Thank you so much!

Name withheld

How could it possibly take you three years to pay off $1399.32? That’s a typo, right?

If you can refinance to a lower interest rate, I would always do that to save money.

For the purposes of illustration, I’m going to assume your outstanding loan is for $13,900. At 12.99%, you’ll pay just over $2,900 in interest. If you get your interest rate reduced to 11%, your interest costs drop to $2360.

So, how hard are your prepared to work to save $540 in interest?


Hi Gail!! Thank you so much for your show and your wonderful website!! You are an inspiration!

Lauren, because your questions are plentiful, I’m going to answer after each one… here goes:

I have some questions regarding credit:

1) How do I find out what my credit score is (also I have been told that if you request a credit report it could negatively effect your credit score---any truth to this?)

Requesting your credit report has no impact on your credit score. Search “credit report” on my site for more info.

2) I have a credit card with about a $1500 balance (my kitty just had surgery) with a $10000 limit @ 11% interest and a $5000 line of credit with a $0 ballance @ prime +1 . I have $5000 in a high interest savings account. I am 25 and have lived on my own since 17, I went without for so long just to make ends meet that I am extremely anxious about not having money in the bank....Soooo the question is when unexpected costs come up (like my kitty getting sick) should I be using my credit or taking this from my savings?

You should be using your “emergency” fund – that’s some of your savings -- , and then replenishing the fund back to where it feels safest.

3) I have also been told that by having high credit limits lenders will see me as higher risk for loans and mortgages---any truth to this? I probably don't need that much credit but I am so scared of the unexpected and it makes me feel safe.

Credit shouldn’t make you feel safe. Having money in the bank should make you feel safe. And the more safety you need, the more money you need in the bank. As for whether high credit limits affect your ability to borrow: YES. The amount of credit you have available is the amount of credit you’ve already borrowed.

4) I have been at my job for 4 years and I am very unhappy. On my 2007 T4 my gross was $35000, if I leave my job will this also hurt my chances for getting a mortgage?

If you’re asking me will being unemployed affect your ability to borrow, you betcha. If you’re asking, will getting a new job affect your ability to borrow, it depends on how much less or more you’re making. And how often you change jobs also shows your “stability” which is a deciding factor.

5) and finally....I am 25 with no education higher than grade 13! I would like to go back to school...what is your opinion on saving for this vs. going in to debt?

Student loans are “good” debt. Making sure you can handle the repayment when you go to work is good sense. Having your living expenses covered so you’re not racking up debt to pay your phone bill is also good sense.

Thank you for your time and for your honesty and your wonderful laugh!


How much of your income should go towards your child’s extra curricular (e.g. figure skating lessons)?

Name withheld        

As much as you want and can afford. I don’t mean to sound glib, but I don’t think it’s any of my business to tell people how to spend their money. My thing is that people have a balanced financial life, covering all the bases, and not going into debt for crap. If you want to spend all the extra money that available on your child’s extracurricular activities, have a blast.


My partner and I own a house in Milton and we have moved to a rental house in Oakville (that has been owned by my mom for over 30 years.) The plan is to keep our Milton house and then purchase this house from my mom next year. We tried this year to consolidate some of our bills (which we have done in the past a few times) but we were turned down because our debt ratio is too high. We owe approximately $100,000.00 in consumer debt and we have about $10,000 equity in our Milton townhouse - It is worth $203,000.00. Would you recommend that we sell our Milton townhouse so that we can lessen our debt ratio or focus on paying down our consumer debt over the next year. Thanks and we LOVE your show and watch it all the time. We have been trying to implement the jars for us on a monthly basis and your advice is FANTASTIC!!... Thanks for your time.

Name withheld       

Whoa there girl, slow down. I can’t believe you’re ripping around trying to buy so much stuff at such a clip. You own a home, but you’re going to buy another one from your mom in the next year? Whazzup with that? You have $100,000 in consumer debt! Holy molely macaroni. 

The first thing you have to do is figure out why you’re racking up so much debt. No amount of asset liquidation (i.e., selling your house) is going to help you till you stop spending money. Second, have you noticed that you have almost no equity in your home. By the time you sell it, your costs will more than exceed your cash grab.

The fact that you’ve been turned down for yet one more consolidation loan should have been a big wake-up call for you.
Here’s what you have to do:

Get on a budget where you aren’t spending more money than you make.

To get your $100,000 in consumer debt paid off in three years will cost you almost $3,000 a month. If you can’t come up with that money, then get some more work. If you keep carrying this debt around, you’re going to end up losing everything.


Me and my hubby can’t seem to save. We try but at the end of the month we have no money and we don’t have anything to show for it. We just had a baby last year and we are trying to find out a way to budget right. We watch your show and have tried what you said but we still can’t seem to save anything. Is there anyway for us to save? We want to make a good life for our family. Can you give us some advice?


The best way to save, Darlene, is to have the money automatically deducted from your account every month and put somewhere you can’t reach it. It’s very easy to spend money when its sitting close at hand. If you’re determined to make a good life for your family, then you’ll:

Put yourself on a budget
Set up an automatic savings plan for:

  1. Your emergency fund
  2. Your long-term savings
  3. Your child’s future education

If you’re finding you don’t have enough money, find a way to make more money.
You have all the power here. This is your life, your decisions, your money. Make it work for you.

Hi Gail: I watch your show every morning while I get ready for work .... I have a question. When you tell the couples how much they are overspending every month .... is that just credit card debt or is that overdraft .... or both? Just wondering. Thank you.


Giselle, when I tell people how much they’re overspending by, it’s based on the budget work-up that I’ve done showing the shortfall between what they’re making and what they’re spending. Sometimes  the overspending shows up on their credit cards, sometimes in their overdraft. Sometimes you can’t see it because they’ve refinanced their mortgage to repay debt and so now it’s buried in their mortgage. Sometimes they’ve been playing the balance transfer game, moving the debt around and pretending they’ve paid it. To me it doesn’t matter where they’ve put it, the fact that they have a shortfall in their budget is the big concern since the overspending won’t go away till they face up to what they’re doing wrong.