March 2009 Questions & Answers



Hi Gail, I have been watching your show for a while, I have tried to create a budget, put away my credit cards, etc, while that works for me, my boyfriend on the other hand it does not work for. Once again we have maxed out the credit card, and our over draft. For the first time we have not had enough money to make our mortgage payments. I look up financial planners in the phone book so that we can both go and talk to someone to get our finances on track, except they all talk about planning for the future, we need help now. Who should we be going to, to talk about getting back on track? We really have to do something about this quickly. Thanks

Name withheld

I'm sorry honey, but I can't think of a single place to send you other than to your local financial institution. Credit unions are very good at hand-holding... more so than the big banks. But if you have a relationship with your banker, (s)he may be able to help you. Failing that, you're just going to have to do it yourself. Make a budget, trim your costs, make more money, do whatever it takes.


Hi Gail! Currently I am a third year university student who does not have much debt compared to those on your show. To date it totals $6,500 (this is Student visa and Student credit line combined). My expenses are low because I live with my boyfriend who understands my limited income of about $8,000/year. We do not share bank accounts. All bills are taken care of equally. However, I do have big dreams of running my own business. I was wondering how I would go about getting rid of the little debt that I have and how one takes the next life step from low income, university living to managing life successfully without having to end up on your show (Not that I would not love to meet you). I am concerned because I do not have much budgeting experience that would set me up to handle larger amounts of money because my family refers to me as a recovering shopaholic. Any direction that you would be able to provide would be greatly appreciated! Thank you so much and have a wonderful evening.


Stephany, time to get some budgeting experience girl. If you can get through university, you're smart enough to make and live on a budget. It takes discipline. And commitment. Go to my site and try Gail's Budget Worksheet (read Gail's Guide to Building a Budget first).


Hi Gail, I love your show and I watch it all the time. I have a question for you. I am a 28 year old single mother, I have no debt except for my Mtg which I owe 160 thousand on and my car which I lease. I make about 55 thousand a year in salary but I also get a yearly bonus of about 50 thousand as well. I always do a little investing in my RRSP and savings, but I was wondering what would be the best thing to do with this large sum of money that I get at once? I don't know if I should pay toward my mortgage or do some serious investments.... I just really don't know the best way to use it effectively. I would love your input on the matter. Thank you for taking the time to help me.

Name withheld        

Wow! You virtually double your income with your bonus. Great job! As a single mom you need to make sure you have a great emergency fund just in case. So I'd put $16K against the mortgage as a principal prepayment, stick $24K in a high interest savings account for emergencies, stick another $5K into an RESP for the babe, and spend the rest! Have some fun girl.


I absolutely love your show and have learned a lot.  The only thing I am missing is the break down of the percentage of income that should be allotted in each section eg. Housing= 35% of income.  I have only seen two percentages given on the show but I would like to know all of them so I can check how we are doing in terms of our own expenses.  Thank you so much.  Take care.

Name withheld    

Here they are:

  1. Housing 35%
  2. Transportation 15%
  3. Life 25%
  4. Debt 15%
  5. Savings 15% 

These are on Gail Budget Worksheet. Keep in mind that they are guidelines. If you have no debt, then that 15% can go elsewhere. If you have lots of debt, then you may have to spend more than 15% on debt repayment until the debt is GONE! The 15% is a guide as in, "if you're spending more than 15% of your income repaying debt, you have too much debt." Okay?


I hope this question doesn't sound too silly... You say to put 10% aside for savings every month but what are/can the savings to be used for? Thanks,

Name withheld

It's a good question. NOTHING, absotively, posultely NOTHING. It's long-term savings for when you have no income and still need to eat.


Hello Gail!
We L-U-V your show and are finally getting down to a budget and getting rid of a large amount of debt we have.

Our debt is our line of credit.  Because it is large ($140,000), and we are older (mid to late 40's), we opted for all the insurance we could get on it.  We are paying about $300 a month in life and disability insurance plus the interest on the account. So, it amounts to about $800 a month before we make any payment above and beyond that minimum due.  Our combined annual gross income is about $160,000 and we have no other debt but our mortgage (that will be clear in 5 years).

I don't know if we are better off cancelling the insurance and putting that $300 toward the debt every month or keeping the insurance.  Running without insurance scares us, but we want to pay down that debt.  What are your thoughts?
Thank you.

Name withheld        

At your age and with such a huge amount on the Line, I would NOT cancel the insurance. You will have to find a way to make more money to get that debt paid off. Even if you earned an extra $300 a month -- com'on, you can do that -- you'd be ahead of the game and achieve what you want faster.

You frequently tell couples to pay off their most expensive debt first (the one with the highest interest rate) and then the next expensive and so on (I believe this is called the laddering method?). My question is: My boyfriend has three credit cards and all three have the same interest rate (around 12%) but the three have varying balances (~$2000, ~$3500 and ~$7000). Should he start with the one with the lowest balance and work his way up or start with the one with the highest balance and work his way down? He currently is making about double the minimum payment on all three cards each month and I am trying to encourage him to make the minimum payment on two and aggressively pay off the third until it reaches zero and so on. Thanks for any advice and info you can offer!!

Name withheld

If the interest rates are all the same, then pay off the smallest balances first. That'll give you some strong motivation to keep it up.

Hello again Gail. I have a budget question for you. I am putting aside money in an RESP for my only child. I assume this would go under the SAVINGS category. However, if I consider that money in the base 10%, that means I'll put less in an RRSP. Does this make sense, or should my 10% only count for my RRSP, my wife's RRSP and our Emergency fund? Currently, here is what I have it set to:

RESP 3% of total income my RRSP 5% of T.I. (10% of my income) wife's pension plan 4% of T.I. (10% of her income) Total of 12%. Thanks


Eric: The Save 10% rule is for your long-term (retirement) savings. But you're doing fine since your wife already has a pension, that does go toward the 10%. I don't know what the dollar value is going into the RESP but if you're comfortable that you're doing enough, great! As for your emergency fund, you need to make sure you're setting aside enough so that you can accumulate six month's worth of essential expenses without a reasonable amount of time.

Hi Gail, My husband and I are looking at education options for our two small daughters. We are considering sending them to private school due to some concerns about the quality of education in the public system. Our eldest daughter will start jr primary next year, her sister is three years younger. My husband and I both have well paying secure jobs. We don't have a significant amount of consumer debt, overpay our mortgage, contribute to RRSPs and RESPs, & have a generous pension plan. I want to make sure we can afford this as it represents a significant expenditure (approx $12,000/yr including after school care). How can we tell if this is something we can truly afford? I would appreciate hearing your thoughts on this. Thanks so much!

Name withheld

First off you need to be able to afford $24K a year in school fees, because you're going to have two children to educate, so look at the whole cost, not just the cost today. You need to figure out if you have an extra $24K in your budget after taxes. The best way to do this is to do up a budget and figure out what you'll have to cut back on to come up with the money for private school. I will tell you that I too considered private school for my kids and decided against it because of the cost. While I could swing the first $12K, no problem, the second would have cramped my budget severely, and I wouldn't do for one child what I couldn't do for both. While you have to be very involved with the public school system to get it to work for you, there are wonderful teachers in the system, and some good administrators too. You just have to be vigilant about finding what you need and getting what you want. I used the money that would have gone to private school for one child for enrichment for both my children. My daughter is 15 and in Grade 12, and my Asperger's Syndrome son is mainstream and doing very well in grade 7. He gets lots of extra attention from his teacher and I have the world’s best elementary school principal (I even followed her, changing schools when she did, so I could keep her!)

Hi Gail. My name is Lindy and I'm 12 years old. I'm asking this from you for my parents because I know they need some help and are too shy to ask for it. They'll never tell me how much they're in debt so I'm guessing it's bad. The last I heard it was under 20 thousand dollars and I know you can help because I watch your shows a lot and you're great at what you do. So please help us with tips and suggestions that you have. Thanks.

Lindy xoxoxoxoxox

Lindy, my love, I'm so sorry that you are worried about your parents' money issues. At 12, this should not be what's on your mind. I wish I could help you, but I don't know enough about what's wrong to be able to give you any advice for them. I will say that I think you should talk to them about your fears and concerns. Ask your mom and dad to sit down with you and explain what's going on, and let them reassure you. I send you a big hug and kiss, and hope that things are better soon. Xxooxxoo

Hi Gail. I have been an avid fan for the last 8 months. Every morning I spin bike watching your show ,I always learn something new. We have been using the Jar system since July 2008 and with a little tweaking we have gotten pretty good at budgeting our variable expenses. As well my husband and I (and our kids) are actually communicating about money. My question for you is the following. Two years ago we undertook a major home renovation. Through lack of planning and budgeting we had to put a lot of purchases on our credit cards and line of credit. I have had to juggle quite a few payments (never late) in order to keep afloat. Through your TV show you suggest that we should do a mortgage consolidation loan to pay off the debt. However the only loan we were approved for is one that is sponsored through SCHL and they are charging 8000$ plus the notary fees. Should we do this or keep up our debt repayments and payment juggling?

Name withheld

If you're having to go through SCHL it means your new mortgage is high-ratio and you have to pay the insurance fees. Expensive, eh? Most people don't bat an eye because they do it when they're buying and the fee looks small compared to the price of the house. But it's not small potatoes. I don't have enough info to tell you if you can do this without consolidating to your mortgage, but if you go to and follow the directions, you'll see if you can manage payments on your own. If not, then you'll just have to bite the bullet on the fees.


This past week three credit card companies have sent notices (or a small paragraph on the back of my statement) that they have increased their monthly interest rate (even though I pay on time, etc.).  If I call them and ask them to reduce the interest rate, will this affect my credit rating?  Thanks.  PS. Love your show.


Croft, No it will not.  And you should. Good for you keeping your eyes open. There's going to be a lot more of this.


Hello Gail,
I love your show, it has been an eye opener.

I have always been very tight with money, I am the eternal pessimist and growing up in a family with a bank VP as a father we were taught to save save save for that rainly day.

I have been married for 9 years, have two school aged children and both my husband and I work in professional jobs.
Three years ago we moved from Australia to Canada (I am Canadian) to be closer to family and this ate up a huge portion of our savings and has set us back about 10 years I would say. I am 41, my husband is 50.

While watching your show over this past Christmas, my husband spilled the beans that he has a secret credit card and has about 14, 000 dollars in debt.

I am devastated, as I run the finances in the house...have managed to save about 13,000 in cash, start up RRSPS in Canada and have set up our mortgage so that it is paid off in 10 years (yes, high payments!!) as I realize my husband will retire before I do, and I want to have it paid off prior to the kids going to University.

I do have about 7000.00 in a line of credit used this year for house renovations, but I had a plan to have that all paid off in 7 months.

Now that I feel saddled with even more debt now that my husband has this debt load, I don't know where to go so that we can save and be prepared for the future.

We make about 6200.00 (add a few cents) a month, take public transport to get to work every day, have just got rid of our cable...what next? Do I get rid of the dog? sell the house and buy a smaller home??

My husband feels I am over reacting, but I just want to feel safe. Right now I am scared for our financial future.
Any thoughts?? Thank you so much. Warm Regards,

Name Withheld

You and your husband have some chatting to do. Why did he have a cc you didn't know about? Why the secret? Why isn't it paid off in full? What was the money spent on?

I suspect you hold the reins very tightly on your ranch and he may have felt constrained by your desire to save save save. You need to get on the same page when it comes to the money. Both your objectives have to be met. I'm all for having the mortgage paid off before retirement (though what's he going to do from 60 on?). And I'm all for having a safety-net in place. But you can't do that to the extreme and have no fun. Life is about balance, and if you give a little, so may he.

Are you both now working toward the same goals? If not, you'll always be running into a wall. Only when your goals match will you be able to work together to make them a reality.

Okay, so now you're sitting with $20K in debt and $13K in cash. I'm not sure how much you're spending on debt repayment outside of your mortgage. Find a way to make sure you're paying the least amount of interest. So if that cc has a high interest rate, that's the first thing to deal with. Can you transfer the balance to the line of credit? If so, make sure you're both signed on the line and then do it.

If it were my money, I'd take $8K of my cash and pay down the debt, leaving a balance of $12,000. Then I'd find the $1200 a month it'll likely take to get that debt paid off in one year. One year. Doesn't matter what you both have to give up. Next, I'd get busy rebuilding the cash fund. (Look into the Tax Free Savings Account for your emergency fund.) So, now that you have no debt, you have an extra $1200 to play with. Use $600 to rebuild your emergency fund and put the other $600 back into cash flow.
You should probably talk about you each having a certain amount you can spend on anything you want without having to answer to the other person, to give you each a pool of your own money.


How do I tell my husband that we are in $30,000.00 credit card debt. This is not only my doing but his as well, but I have been the one managing the money. I am losing sleep over this. I do however pay over the minimum payment and I am always 1 payment ahead as well. I would like to get this cleared up by the middle of next year. I however want his help in this matter as I am totally depressed over being the one with all the worry...I just don't know how to tell him. I hate confrontation and I know he is going to blow a gasket.....I need a miracle....I am totally afraid.


Ouch! Okay, so if you're that far in debt it's probably because you've been overspending, right? So why not start by making a budget that shows how much you're spending, and how much you're overspending by. Sit down and talk about how you've BOTH been overspending and how that's got to stop. Where will you cut back? This should tweak him to ask the question, "Well, if we've been overspending, how did we manage to do that, where did the money come from?" at which point you can say, "I'm really glad you asked that question, because what we've done in spending more money than WE made is WE racked up a lot of debt. And now it's to the point that I can't manage it anymore so WE have to come up with a solution."

If he doesn't ask the question, then the next conversation you have to have is this one:

"Okay, honey, so we were overspending, and now we're living within our means which is great. But while we were overspending, we were using credit to buy all that crap, and so now it's time to get rid of the debt. So now WE need to make a plan to get this debt paid off."

Then you talk about:
a) how much debt you have
b) how fast you want to pay it off (to be debt free in 18 months means you'd need to have at least $2,000 a month to put toward your debt.)
c) where you're going to get the money to repay the debt
d) how you're going to do this TOGETHER!


Gail, My husband and I have a rental property that we bought three years ago in our mid 20's. This property is an "alligator" and cost us about $2000.00 out of pocket per year.

When we bought the house, housing prices were on the rise and so we saw the property as a long term investment. We currently have seventeen years left on the mortgage.

With current housing trends my question is should we sell the house or re-amortize the mortgage to 25 years.

Name withheld

If you cannot manage the current repayment schedule and carrying costs, one alternative would be to re-amortize for 25 years to get your monthly payment down so the carrying costs will be covered by the rental income generated. This would be better in the short term than selling the property for less than it is worth. You don't say how long you have until retirement, but this would be an important asset providing the potential for appreciation is there (after the market corrects.)