Debt Free in 30

On today's show we discuss the different forms of income that can be garnisheed (or not). Here are the types of income, with the time stamp if you want to fast forward to that section: Wages – 3:21 Ontario Works – 8:31 Disability Pension – 9:58 ODSP – 10:00 Retirement Pensions – CPP – 12:36 OAS – 13:35 Basic Income – 19:19 Full links to all legislation mentioned in the show are on our website at https://www.hoyes.com/blog/wage-garnishments-what-income-can-be-garnisheed/

How important is your credit score? In my book, Straight Talk on Your Money, on page 48 I discuss the "Credit Score Scam", and on page 52 I say that you should not focus on your credit score. (Apparently I'm not a fan of credit scores). It was those passages from the book that prompted Ross Taylor, a mortgage broker, to email me and say: I noticed when reading your book we do not completely agree on the importance of one's personal credit history. I emailed Ross back and said "great, come on the podcast and let's discuss it!", and that's exactly what we do on today's show. My view is that credit scores are for the benefit of the bank, not you. I explained this in a past post Why our credit reporting system is broken. Credit scores are a tool to help a lender decide how much money to lend you. A person who has never borrowed money but has $1 million in the bank may not even have a credit score. A person who has five credit cards and owes money on each of them may have a high credit score, because they are servicing their debt. So to get a high credit score, you need to borrow money. In many cases that's a bad idea, and that's why I don't believe in making a high credit score your top financial priority. While Ross Taylor doesn't necessarily disagree with any of those comments, as a mortgage broker he also knows that to get the best rate on a mortgage, you need a clean credit report, and a high credit score. That's why he believes you should pay attention to your credit history, and take steps to improve your credit score. In his words you need to look at: Your score, your history, the content and what comprises it.re Which approach is correct? Are we both right? You be the judge.

November is financial literacy month in Canada, and for the seventh straight year the government will encourage Canadians to: take concrete actions to better manage their money and debt, including making a budget, having a savings plan and understanding their financial rights and responsibilities. So, the solution to all of our financial problems is to make a budget. I disagree. In my experience, budget's don't work for most people, because they don't stick to them. They get discouraged, and they end up worse off than before. I've talked a lot about what I believe is a better alternative to budgeting, and on today's show I'll give a better alternative to how we are currently promoting financial literacy.

Registered Disabilities Savings Plans are geared towards helping families and individuals who are living with a disability. RDSPs can only be setup for someone who is eligible to receive the Disability Tax Credit. If this is for your child, you can only begin making contributions after your child is diagnosed with an eligible disability. This is one of the main reasons RDSPs aren't as commonly used, or as frequently discussed. On this week's podcast we're welcoming back Alan Whitton, the voice behind the Canadian Personal Finance blog. This is a subject close to Alan as he and his wife found themselves having to set up an RDSP for their son. After familiarizing themselves with the ins and outs of the Disability Tax Credit, they sought help from their doctor to obtain it. On today's show we discuss how they work, who is eligible, and what happens if you have an RDSP and file bankruptcy.

Everyone thinks that a house provides both stability and financial security, but on today's show, we'll explain why that is not always the case. It is true that if you live in the same home for many years, you have stability. But there are significant costs to owning a house. You pay real estate commissions when you move, but you also pay a penalty to break a fixed mortgage. As we explain on today's show, the penalty for breaking your mortgage can be a lot higher than you expect. The big banks have found a loophole that allows them to charge a bit Interest Rate Differential penalty, even when rates are rising, and if house prices are not increasing, the penalty to break your mortgage and closing costs can eliminate the profit on your house. Before you buy a house and sign up for a five year mortgage, be sure that you are not likely to need to move for five years, and confirm that you can afford to pay all of the costs of living in your house (since costs are more than just a mortgage payment).

In some cases it is your fault, if your debt was a result of reckless spending but, in my experience, most people get into trouble because "life happens". Many of my clients have debt problems caused by a job loss, or reduced income, or a life event like a relationship break-down or a medical condition that forces them to take time off work. On today's show we hear the story of Mary, how has debt problems. I'll leave it to you, the listener, to decide if her problems are her fault, or if there was anything she could have done to prevent her money problems.

There are recent interest rate increases from the Bank of Canada that will affect many Canadians. But the question of the day is: Do you know how a 1% interest increase will affect your budget? Today's guest is here to discuss just that. Brent Hughes and his team discovered that there are two times throughout the life cycle of a mortgage that people receive professional advice: the beginning, and the end. His company Monitor my Mortgage helps give people the information they need to make the right choices between years 1 and 30.

On today's show, I discuss the news that data from Equifax was "hacked". It appears that "only" 100,000 Canadians were impacted, but even if your data was not impacted by this event, it's a good wake-up call for all of us: So how can you protect yourself? My full comments are in my post on Equifax Data Hack: Insolvency Trustee Gives Advice on How to Protect Yourself but here's an important point: your data is already out there; you can't pull it back. If you have ever applied for credit, you have a credit file, even if you have paid off all of your debts. That means your data is vulnerable, so it's up to you to keep an eye on your data. At a minimum, review all of your credit card, bank and loan statements regularly; don't wait until the end of the month. I check my statements online every few days. If you see a problem, report it immediately. More advice on today's show.

For more than a decade the "go to" source for Canadian personal finance information has been the Canadian Personal Finance Blog operated by Alan Whitton, more commonly known as the Big Cajun Man (listen to the show to find out where that name came from; having met him to record this podcast, I can confirm that he is a big guy). The Big Cajun man has accumulated the best resources on the internet on RDSPs, so next month he'll be back to do a full show just on that topic. On today's show we addressed a very common issue: What can you do when you lose your job? Alan worked for the biggest company in Canada, Nortel, for 20 years, and he survived many rounds of layoffs until, at age 47, he was laid off. Even though everyone knew the company was in trouble, layoffs are almost always a shock. The Big Cajun Man tells us what it was like to live through that time, with a wife and four kids, and he explains how he survived 11 months of unemployment before starting a new career. On today's podcast he gives practical advice for surviving, and then thriving, after a layoff.

Over the years I have had hundreds of clients who financed a house, or a car that ended up being more expensive than they could afford, and that one purchase caused other debt problems. When I ask them why they made that purchase, even though in hindsight it was obviously more than they could afford, they give me many rational reasons. They tell me the mortgage payments were cheaper than rent, or they financed a new car covered by a warranty to avoid car repair costs. Humans Can Be Irrational Those are rational reasons, but when I ask more questions it becomes apparent that they bought the house for emotional, not rational reasons. They were afraid house prices would keep going up, so they bought now, or all of their friends were buying, so they did too. On today's show I discuss how our emotions can cause us to make bad financial decisions, even when we don't realize we are being influenced by our emotions.