What is in it for me?

One of the nice things about having written over 2000 posts and being on the job for over 8 years now, is the fact that you have a massive back-log of stuff that my current readers may not have read, so here I give you a post that didn’t really get much notice back 7 years ago, note the style of writing.

Dear Reader,

So as you can tell I am a mercenary blogger and will do many things to make an extra buck or two (witness the ads plastered all over this BLOG if you are unsure of this), so let’s ask ourselves how we can put a few extra bucks in our pockets (and review a few of my initial rants), What’s in it for us?

  1. Stop paying those ridiculously high banking charges (remember?)
  2. Use some coupons when you shop (hey a couple of extra bucks is nothing to sneeze at)
  3. Get a Credit Card that pays you to use it. PC Financial has a nice one (if you like shopping at Loblaws that is), and gives you cash. AMEX and Costco have one that pays cash as well. For heaven’s sake don’t pay to get money back or points (like that CIBC Aeroplan Gold, only if you are a traveling salesman would that work).
  4. Join Petropoints or whatever other “I give you points for shopping here” program you can find (as long as it is free). I also am a member of the CAA, so I get money back for buying gas at PetroCanada
  5. Stop buying those bloody “Lattes” will ya? What’s wrong with the free coffee at work!

OK, so that is the rant for the day, put your money in your pockets!


The Problem with Some Folks Who Are in Debt

First, let me preface this with the following soothing words: If you are in debt, you should ask for help if you feel you are drowning and you have nowhere to turn. There are many good community based help groups for your debt issues, so there is help for you, and if you feel you are at wit’s end, ask for help (i.e. this post is not about you).

Don’t be a Debt Dandy

I am lucky to be a financially comfortable person (relatively speaking), I am by no means rich like many of my other blogger brethren, however, I am OK financially. My debt load is kind of high, but it is manageable and I have a good job which pays reasonably well, so not too many complaints here.

I do however have many acquaintances and friends (who make a great deal more than I do, since most of them have Dual Incomes ) who are constantly harping on about how they have no money and how far in debt they are.

Let me give you a quick scenario which happened recently where an acquaintance was out to lunch, and started whining about how his credit card debt is so high, and it’s going to be really hard to go on vacation with his family this summer. He and his wife just felt that between the car payments, and day care costs it was just getting too much.

A Pair of Debt Dandies

OK, I’ll give you a second to read that one over again, just to get the gist of why I might be mildly irked, or peeved about the statement.

Let me dissect this simple scenario and why I wanted to stab this acquaintance with a spoon (because it would hurt more!):

  1. This acquaintance has a wife who also works in a similar job, and thus his family income is effectively twice mine
  2. We were sitting in a nice restaurant eating lunch (which was going to cost around $30 or so)
  3. He paid with his credit card
  4. There was still going to be a family vacation to a cottage, but just not a nice vacation somewhere down south with a hotel
  5. Same acquaintance “refreshes” their cars every year or two because they don’t like older cars, and they lease all of their cars

If you have twice my income and you complain you don’t have money, you really need help financially. Unless you are sending your income to your family “back home”, supporting a disabled family member or are attempting to recover from a financial catastrophe which left you in dire financial straits, you really have no real reason to be complaining you have no money (or more specifically you don’t have enough money).

If you are having problems with your cash flow and you are spending too much, stop eating in restaurants.

If you have a massive credit card debt, stop using your credit cards (completely). Do the Gail Vaz-Oxlade money jars thing, put your credit cards in the freezer, or whatever, but simply stop using your credit cards. You can’t fill a hole in that you are continuing to dig at the same time.

Vacation? What the hell is that? Mrs. C8j (my sainted wife) hasn’t been on a descent vacation (with me) for 18 years! Are we complaining? YES, but that is for another time. If you are having financial problems, vacations are the first thing to go.

Leasing cars? Replacing your car every two years? I won’t go into the numbers but you are just burning money for the sake of having a nice car (which evidently is an important part of your self-esteem I hear (I drive an 8 year old Corolla, which better last another 3 years at least, for reference purposes)).

Oh and if you want to be really picky, if you think Day Care costs a lot, why doesn’t one of you two cut back your hours? Do the math, how much is this all costing to put kids in Day Care, and “Do the Work Thing”, you might find you are actually in a losing position financially.

Sorry, haven’t ranted much lately about this kind of stuff (and no this isn’t one single person it’s a conglomeration of a few acquaintances, however, I am sure you all have friends like this too).

Oh and to clarify the title of this post:

The problem with some folks who are in debt, is that they won’t shut up about it, and wear it as a red badge of courage to almost brag about how badly off they are (when in fact it is their own fault, and if they just did something about it, they wouldn’t have these problems).

Don’t BITCH about it, DO something about it!

(or start your own blog and complain about it there)


Why is it Taking So Long (Debt reduction)

One of the more interesting analogies I like making is that Weight Loss and Debt Reduction have a great deal in common, not the least of which is that both are very hard for a lot of folks to succeed. If you have put on a lot of weight over time, it is hard to figure out how to lose it again, and it is the same thing with debt (i.e. it is rare that someone suddenly finds themselves in debt, it takes a while to build up a lot of debt to the point where you get upset about it).

A more interesting way to look at this is that losing weight and reducing debt both take a long time, but your progress with both are actually (usually) quite different.

If you try to lose weight and find a successful way to do it (via exercise, diet or a combination of those), typically you lose weight quicker at the start of the process than you do as you approach your ideal (or goal) weight. If you are trying to lose a lot of weight this is actually even more obvious, but this is what I have seen when I have lost weight as well.

Simplified Graph to show how weight and debt reduction take different paths to the same end point

With Debt Reduction, getting instant gratification is a lot harder to do, assuming that you are attempting to pay down debt because you are close to living “pay cheque to pay cheque”, so finding that extra cash to pay it down is a lot harder to find. At the start of your debt reduction plan, your debt will not be dropping quickly, however, if you persevere and remain constant with the money you are paying your debts down with (if not increasing it a little), you will actually start paying down debt at a much faster rate. This portion of most reduction schemes must be one of the reasons abandon their debt pay down plans (i.e. no real quick fix or quick gratification either).

L earn VISA* card
Don’t get me wrong, I still think losing weight and Debt reduction are both really hard to do, I am simply saying that should you be trying to reduce your debt, keep in mind that at the start of your process you may get frustrated but if you stay with it things should get better quickly.


Don’t Sweat the Small Stuff with Debt™

Would it be possible for me to contrive a dumber or more irresponsible title?

I am starting to see this philosophical drivel now being applied to money or debt, and frankly, I am appalled by those who might espouse not being diligent about money and debt, and the day-to-day issues of money in particular.

There is 1 truth about not sweating the small stuff about debt, if you do not sweat it, you won’t have to worry any more about small debt stuff, because it will have become a F*cking BIG Debt. I guess that implies you are supposed to sweat the big stuff about debt?

Yes, you can drive yourself batty micromanaging some things, but debt is not one of them. If you don’t have a plan to deal with your
debt, no matter how small the debt, or how unimportant you view debt, you may as well start setting money on fire or start buying crap
on the shopping channel.

The nice thing about little debt, let’s say $500 left on a credit card, which compounds 18% interest on it, that after 3 years of not sweating it and just making a minimum payment of $20, you will have only paid $132 in interest charges, so why sweat it? Seriously, I am positive I have heard folks make that exact argument, and you wonder why I am so cynical?

The Banks, Credit Card Companies, Pay Day Loan Companies, Risky Mortgage folks all really think that not sweating  the small stuff with debt™ is a great thing, because they make money with no sweat on their part.

Sweat every part of Debt™ ! 

That is the way to get out of debt and make your life happier (I’d like to thank Mark at My Own Advisor for complaining that I hadn’t ranted about debt for a while).

Canada Post

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When Should you Try to Pay Down Debt?

That is a question that seems to come up a lot so I figure I’d help folks out with some scenarios and when it might be a good time to start thinking about paying down debt, or trying to eliminate debt completely. When should we think about paying down debt? Here are some simple examples of when you should think about paying down debt:

You are using Pay Day Loans

OK, so you have got yourself into a hard place for some reason (although the ads that are out now with the person justifying their use of these services are a bit disconcerting), so now would be an excellent time to put together a plan to get rid of your debts, or maybe you should talk to a Credit Councillor of some kind (there are many not for profit folks out there). This is absolutely time when you should think about your debts, whether you can pay them off, and if you can, start paying them off.

You are carrying Commercial Debt on your Credit Cards

Your credit card is a bad place to be carrying debt, given the rates many charge (especially if they are commercial cards like the HSBC Card, or the Sears card or the like) are really crazy. Figure out why you have all this debt on your credit card, and put together a plan to pay off this debt as soon as possible, this is an excellent time to pay off debt.

Your HELOC is Bulging

That Home Equity Line of Credit was so you could finish your kitchen off, but then it was a good place to put all your credit card debt, because the rate is that much lower, and well you wanted a nice vacation this year, but didn’t quite have enough for it, and now the HELOC is a headache, this is a good indication that you should start paying down your debts. The HELOC can be called whenever the bank wants, so paying it off quicker than the bank is asking you would be a good idea. Another superb time to start paying down your debts.

You only put 5% Down on Your Mortgage

If you still have a very large principle on your Mortgage outstanding, investigate whether starting to pay Bi-Weekly or what rules your mortgage has that allows for over payment. Putting money on your principle early on in your Mortgage is a great investment in your future, as it can either shorten your mortgage period or lower your payments later on in the mortgage. Another great time to start paying down debts.

You have Student Loans

Not sure what the rules are about student loan pay back, I believe the payments have some tax implication (I am about to find out, so please feel free to enlighten me on this one), but maybe figure out if you can pay this debt off faster, it’s never good to have something like this hanging around given the job market these days and such. I would say this would be an ideal time to pay down your debt.

You owe your Uncle Fred Money

Your Uncle Fred loaned you some money when you were just getting started to pay for new tires on your car, but he never really asked for the money back. Uncle Fred is a nice guy, but do you feel right owing him money? Just for family harmony and your own self-esteem this would be a good place to pay your Uncle Back.

You are in Debt

Remember what Debt Free really means? Have you seen an ongoing thematic premise in my situations here. If you are in debt, now would be a very good time to think about paying that debt off, and putting together a plan together so you can end up debt free.

If you are Debt Free, then you can start planning how to save, but since you are Debt Free, I am sure you can plan that without too much prodding by me.


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