April 2011 Questions & Answers



Dear Gail, I really love your original show, your attitude, and your moxy! I love the premise of the new show, Princess, and find it very helpful to learn by example from other people. I wish there was something out there for singles too, but I will keep watching and following your advice. I just want to do better.

I feel like I'm doing everything right, and yet I'm still juggling to make sure bills are paid by the money in the bank! If I don't run out of cash before the next pay, at best I have a surplus of maybe $100 left in my bank when not overdrawn. So where is all my money going? And why can't I seem to get ahead? Is it a question of not tracking my cash properly, and fooling myself into thinking I am only using $400 a month for cash? Is it lack of a realistic plan, budget and goals? Am I miscalculating my actual numbers and leaving something out? And why can't I pay down that Line of Credit?

Gail says: 
Whenever people tell me they don't know where their money is going, or that money seems to just go missing, I know they are shopping unconsciously. If you want to figure out where your money is really going, you need to stop with the mental math -- it doesn't work -- and do a detailed spending analysis. I cover the process in my book, Debt-Free Forever. If you're serious about this, it's time to do some hard work. It won't be easy, but I promise you it will be well worth it.


Hi Gail, I love your show and watch it every week.  I am desperate for some advice as I have been trying to deal with the situation for months and cannot find an answer.  Our housing is costing us 50.25% of our income and we cannot sell the home because there is not enough equity in it to pay off the mortgage and cover closing costs. We are in this situation because of life changes...a drop in wages. We both work full time and my husband is also doing overtime every Saturday. We work opposite shifts to save money on child care and we do not spend money needlessly on anything. The only times our kids are given gifts are for birthdays and Christmas.  After the bills are paid we do not have anything left at the end of the month.

I went to a financial counselor and she said we have three choices...each of us take on another full time job....try to cash in some of my RRSPs to tie us over until my husband gets his raises...or walk away from the mortgage.  We have three children so it’s really hard to find housing for us at an affordable cost. I also want to mention that the kids are given a small allowance weekly for helping around the house, $32 between the 3 of them.  If they want something that costs more than their allowance, than they have to save for it.  We really need your advice. Thank You. 

Gail says:
I don't actually have enough info to be able to tell you anything specific. Here's what I can say:

1. If your financial counsellor said you should each have a second full time job, I'm wondering how much debt you have and how much money you're spending. Have you done a spending analysis to see where your money is going?  I get that your housing is high right now, but if you couldn't rent for significantly less, then walking away doesn't make sense.

2. Do not cash in RRSPs. That's just going to create more problems in terms of taxes down the road.

3. You sound like you're doing what I would tell you to do, so I'm not sure what else to say. Perhaps if you tell me how much of a shortfall there is in your budget and how much you owe I'd have a better sense of what's up.


Hi Gail, just started reading your new book.  It has many helpful hints that I will be sure to include in my financial planning.  Just have a couple questions.  My girlfriend of 4 yrs and I are looking to purchase a townhouse in the near future and are unsure of how to handle paying our bills together.  We are totally committed to each other and our future together but don't want to open a joint account and consolidate our finances until we are married.  How would you suggest we pay not only our fixed expenses but also our day to day living expenses to ensure that both of us are paying our share?  We both make about the same amount of money and would like to split our expenses down the middle but don't know a practical way to do this. 

My next question is about saving.  In your budget plan you have 10% put aside for saving.  If we decide to each put away $150/month for a future wedding is this included in the 10% or is this in addition to the 10%?

Gail says: 
I'd recommend the Yours, Mine and Ours approach to budgeting. You have a joint account into which you each put half the costs of running your home: home costs, cable, telephone (not cell), utilities, maybe even food. Everything else you manage individually, including your long-term and emergency savings.

As for your wedding plan, since you are going to spend that money, it isn't savings... you're accumulating it to spend, so it is "planned spending". Set up a separate account for it, and don't count it as "savings".


Hi.  My wife and I watch your show and love it but our situation never seems to come up.  We have two very young kids and my wife is returning to work after two of the last three years on EI.  We are struggling with our debt as our daycare bill is pretty big.  Now that we are earning our full household income we are paying it down but not as quickly as we would like.  My wife contributes her maximum to her work savings plans as mine does not have one and hers matches her contributions and our future savings is really growing.  The question is since we are thinking of moving in the next year or two and have significant equity in our house should we look at bumping up our plan to move (the equity we have right now would get rid of all our debt and be a large portion down on a new house).

Gail says: 
That's certainly one way to take care of the stress on your cash flow. However, you must make the commitment to live within your means and to put any extra money you get into paying off that mortgage so that you don't end up carrying that consumer debt for a b'zillion years. Deal?


My husband and I live in Fort McMurray, Alberta in his parent’s home. We have lived here for 3 years. We moved here from Lac La Biche because my husband practically worked 24/7 at a trucking company, making $80,000 a year. In Fort McMurray he makes the same amount of money working half the time. We have two children and we are looking to buy a home.

When we first moved to Fort McMurray we went crazy with our "new found wealth". We were approved for credit card after credit card. So after 3 years we have learned from our mistakes and now we are in debt repayment mode. We are down from 7 (or more) credit cards/payday loans to 3 credit cards and one line of credit. We also are paying off two vehicles. I have no idea how to budget!

We expect to pay off our credit debt by June 2011. Our line of credit will also be paid off also.  3 years will be left on one of the car payments and 1 year on the other.

The market in Fort McMurray is quite high. My question is can we afford a $500, 000 mortgage??? we have no down payment!! My husband makes $91, 000 a year. Are we dreaming?

Gail says: 
Well done on recognizing the problem and then laying a plan to fix it. Congrats on walking the talk. If you want to own your own home, you must bring the same kind of planning and focus to your home ownership dream as you did to your debt-repayment goals. You need to figure out how much home you can afford. You need to save a down payment. And you need to have all the extra costs like closing costs, new appliances, whatever, covered before you take the big step of becoming a homeowner. I have several blogs on home ownership on my site. Go read 'em. (Look under categories.) Only you can decide if you can afford a home based on what you are currently spending on a roof, what your other expenses are, and how hard you're prepared to work to make the money you need to make this dream a reality. Off you go. You have some work to do.


Do you ever work with college students (single) to get them in shape?  Our 21 (will be 22 in November) son has just overdrawn his checking account for the second time in three weeks.  Last time we bailed him out he swore he wouldn't buy anything that wasn't absolutely necessary.  Uh, huh.  I am so angry and disappointed with him right now I can hardly see straight.  I made a special trip in to town to put money in his account since his bank is here in IL and he is at school in VA.  What do we do?  If we let him overdraw he is charged $30/day.  Since he doesn't have a job, and we really prefer he concentrate on his studies, He would just get in debt deeper and deeper until the bank comes after him.  Please help.  My blood pressure is rising and my eye is twitching.  Thanks!!!

Gail says: 
Gosh, I've thought about this and thought about this and I'm having a dicken's of a time coming up with a solution for you. If you leave him hanging (which would be my first response), he'll rack up exorbitant fees that you'll end up having to pay. If you keep bailing him out he'll never get the lesson and will keep being a moron with his money. Is this an account into which you're putting money and he's taking it out? If he's not working, what's his source of "income"? If you're supporting him, how about shorting the amount you put in by the amount you've had to advance in the following month or only putting in an amount weekly instead of the money for the whole month all at once. Can you get in touch with the bank and remove the ability for overdraft? So debits would be rejected and cheques would be returned NSF (make sure if you're signed on this account that you get your name off so you don't ruin your own credit history.) At 21, almost 22, this man needs to get with reality. I know he's your boy and he'll always be your baby, but he is a man and he should start acting like one. You need to find a way to communicate that you will not be covering his butt any more. And if that means he'll need to get a job to pay his own way, so be it.


Hello Gail, I am a mother of 3 (my oldest is 30 months and my twins are 9 months), currently on maternity leave.  I am married and we live in a house.  Other than the mortgage, we have about $5,000.00 in debt (not bad!!!).  Between the two of us, we have maybe $35,000.00 in RRSP's, a bit in RESP's and very little in other savings accounts.  Despite living on reduced income, we seem to be doing well, but I know that life will get crazy expensive soon enough!

My dad passed away last year and left me some money.  Here is my question:  What should I do with the money???  It gets complicated because I am torn between what my mother's and my husband's expectations are...

Inheritance: roughly $250,000.00
Money left on mortgage: roughly $225,000.00 (plus the penalty for getting it paid off early)

What my husband would like: to pay off the mortgage and then start putting money away.  What my mom is telling me: either put the money in a savings account, or (if I decide to pay off the mortgage right away) make sure that we sign papers so that in case of a divorce I get the money back.  (My husband thinks that doing so means I plan on leaving him one day and that I should see the money as a way to make things easier for us as a family).
What I want: somewhere in the middle... pay off the mortgage quicker by doing accelerated payment schedule, doubling-up payments and making pre-payments...but keep some money aside for the future.

I think that covers the important information.  Thank you.

Gail says:
Let's see if I can clear some of this up for you.

1. An inheritance is money that remains outside the matrimonial assets as long as it never gets put into both people's names or is used in the matrimonial home. Whatever money you put into the home becomes part of the family assets. Your mom is giving you good advice. It isn't a case of expecting to get a divorce. Honey, it's about making sure that what your dad left for you is protected.

2. I would use $5,000 of the money to pay off the consumer debt. Once the debt is gone, you'll have more money to play with as a family.

3. I get that your hubby would want to eliminate the biggest debt you have so you can have a great life. And you can work towards that with your inheritance, but here's how I'd recommend you do it:

a) Put all the remaining money into an investment account in your name with your children as beneficiaries. That'll also reduce your need for life insurance because your kids will have a whack of cash should the worst happen.

b) Your objectives should be to first, protect your capital and second, generate an income. You need a really good advisor for this. I don't know where you live, but you should ask family/friends for people they work with whom they trust.

c) Use the income generated from the investment portfolio to supplement your family income and pay down your mortgage. That should help to appease your hubby. It'll also mean you have a head-start on a retirement savings plan, so you can skip the savings while your home taking care of the kids.

d) Do NOT use this investment account as your emergency fund. If you want to take $10K of it to jumpstart an emergency fund, fine, but no more!  You'd be surprised at home many things can be "emergencies" and how quickly you can erode a nice nest-egg.

Now this is your money, and you're going to do whatever you want with it. And that is as it should be. These are my suggestions and you can take 'em or leave 'em. This is what I would do. And it is what I'd tell my own daughter to do.


Dear Gail...my husband just completed paramedic academy in July. That put us in a debt hole of almost $29,000.00.  We are both 25 years old, been married for 5 years and have 2 beautiful boys.  He is now working as a paramedic and he is only able to get a PT perm. job for now. He is also working as a casual medic and getting a lot of hours (since he has started he has worked overtime on every pay).  I am a stay at home mom (my boys are 4 and 2) and I also bring in other kids to my home to babysit full time.  We are both making good money right now. But we need to get rid of this debt.  I have been on your website figuring some things out and I have a question.  We can work at making our debt go away within the 36 months suggested on the website.  That leaves us with enough money for emergencies.  My question is about giving money to our church. Tithing (10% of our "first fruits"). My husband believes that we should pay less on our debt and take 2-3 more years to pay it off - and give to our church.  However, I believe that we should get rid of this debt before we give to our church...was wondering what you think?

Thank you so much for taking the time to answer my question.  It really means a lot. We have been watching and enjoying your show for years and been following your progress.  You are such a smart, strong woman.  I really admire you :)

Gail says: 
I am all for sharing what you have. But if you have debt, it means that you're not sharing from your own pocket, but from your credit too. I did a whole blog on the subject.
Go read this:


M wrote: My wife and I watch your show fairly often. We have used the jars at different times and they work great. We live in the quiet town of Brighton. My wife is a stay home mother and I work in the Military. We live in our own house and rent out two others with plans to build a third in the spring.  We sort of fell into this market. I was wondering if you have any experience on this side of the financial fence. I really value your approach on financial recovery and savings, but what about going past. Do you consider meetings?

Gail says: 
If you're asking me if I think your plan is a sound one, that would depend on whether the properties are adding value to your financial life, or acting as a drain. If you are making money and seeing appreciation, you have a good thing going. Just make sure you don't put all your financial eggs in one basket in terms of your "asset allocation"...real estate is only one category. That being said, because you're in the military, you also have a pension, which adds some diversification. (I do not take private clients. I'm afraid I'm just too busy.)


Hi Gail, first off, I want to thank you for all of the help you have given. Since my last e-mail I have stopped using my credit cards and have been making headway in debt repayment plan.

Secondly, I need your advice on whether I should sell my condo and pay off all of my debts and start fresh. My condo is valued at $315,000 and my debts are $320,000. I have already paid off approx. $5,000 over the past 5 mths.

I am a single mom, make $4200/month and charge my daughter $600/month.  With this I can keep repaying my debt quickly, however, she will be moving out in a few months and I will not be able to keep it up. I don't want to revert to my previous spending but I can't see a way out.

I thought by getting completely out of debt, I would rent for a year or so and save for a down payment to buy a house OR I could continue in this place, get a second job to help pay the debt.

I want to make an intelligent well-thought out decision. If I continue as I am, my debt will cost more in the long run but I will at least have my condo. If I go with the selling and renting I can start with a good budget and get a house that I can live in debt-free.

Do you have any ideas of what I should be doing?

Gail says: 
I applaud you for taking the bull by the horns on this. There are a number of things
you have to think about before you decide if selling will actually work for you:

1. How long is left on the term of your mortgage? If you're mortgage is currently open, or up for renewal, you will have to pay a huge penalty for breaking it early.
2. Have you calculated the costs associated with selling: the realty costs, legal fees and the like?  Very often, once all the "outs" are taken into consideration, there is far less money left that people initially imagine there will be.
3. Will you, in fact, be completely out of debt? If not, how long will it take you to pay off that debt and start rebuilding your home down payment while you are renting? Are you determined to re-buy, or could you live comfortably as a renter, socking away some money for the future elsewhere?

If you answer these questions and still decide to sell, you now have a good idea of where you will stand and how long it will take to get to debt-free. If you decide to continue in your condo, you're going to need to look for a way to make up the shortfall from your daughter's leaving at least until the consumer debt is gone. Would you consider a roomie? What about taking in a student? Or will you have to take on a second job? Ultimately you are the master of your fate. Yes, you've made some mistakes, but now that you're facing them and doing what you need to do, don't get disheartened. Life is full of ups and downs and the sign of a survivor is the ability to revamp on the fly. You're on your way. Think outside the box. Keep going.


First off I love your show.  It has helped us in so many ways! I think we would be in bigger trouble if I hadn't started using the jars and writing everything down. That being said I have a couple of questions.

My husband is selling his business, after the sale we are left with about 70k in debt both in credit lines and credit card debt from both the business and personal. With his new job the 3 yr plan for paying off that debt is just too much on our budget. How do you calculate it to pay it off in 4 or 5 years? Our goal is 4 years but I’m not sure what the payments would be in order to see if that works on your (our) interactive budget.

The other question is, with the sale of the business, the money that we are getting, would it be wise to pay off the highest interest first?  Even if it’s not business debt? We owe very little in personal debt but that is the one with the highest interest rate.

Gail says: 
With the biz gone, it's all just DEBT...since you're liable for it all anyway. So pay off the one with the highest interest rate first. And make sure you check with a biz accountant to see if you can write off any of the interest on the business debt.


Hey Gail, great books! Just wondering if you are going to re-publish The Money Tree Myth? Right now new or like new copies are selling for $161+ on Amazon.com.  Yup, I checked to make sure that was not an error. Sure would like to read a good bedtime book to my grandchildren. Thanks again for straight talk and good advice.

Gail says: 
No plans right now. And it's not really bedtime reading for kids anyway. There are, however, several very good children's books that you can use. I'm sure more have come along since my kids were small, but here are some ideas:

The Bernstain Bears and Mama’s New Job (2-5), The Bernstain Bears’ Trouble With Money (2-5), Sheep In A Shop (2-5), Something Good (2-5), Just Shopping With Mom (2-5), Ox-Cart Man (2-5), A Bargain For Francis (6-8), The Purse (6-8), A Chair For My Mother (6-8), My First Job (6-8), Alexander, Who Used to Be Rich Last Sunday (6-8), Tight Times (6-8).