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Power Spending – Getting More For Less

by Doug Hoyes

In addition to our articles bankruptcy in Canada, we occasionally review books that may be of interest to our readers. You can see all book reviews in our book review section.

Today we review Power Spending: Getting More For Less by Carolyn Johnston, Eric Poulin and Robin Poulin. I was consulted for the section of the book on debt, and bankruptcy, and in fact the Bankruptcy-Canada.ca website is referenced to describe how a consumer proposal works.

With that said, the highest compliment I can give this book is that it’s full of practical financial advice. Lot’s of book talk about theories, and explain complicated budgeting systems that no-one could ever implement in real life. That’s not a problem with this book; everyone who reads it will find dozens of practical tips they can implement in real life, immediately.

That doesn’t surprise me, because two of the authors, Eric and Robin Poulin, are the Co-Founders Calendar Budget - sign up for a free trial of CalendarBudget, the online personal finance tracking and planning tool that makes managing money easy. You simply open the program and you will see a calendar. Enter what you spent today in the calendar. That’s it! The program will then summarize where you spend your money, and help you produce easy to use graphs and charts so you can easily see where your money is going. (You can even get a free, one-month trial of Calendar Budget; after that, there is a very small cost each month).

Knowing that CalendarBudget is easy to use but also very powerful, I knew that Power Spending: Getting More For Less would also be powerful, but easy to apply and understand.

The first section starts with basic economic survival, and discusses household budgeting, emergency planning, credit and debt, and how to save money.

The second section is on Advanced Power Spending, and includes chapters on how to save money on your food bill (and since everyone eats, this should help everyone), and chapters on saving money on entertainment, travel, and even partying!

All chapters contain practical advice. Let me prove it. I opened the book randomly on five different pages; here’s a practical, easy to implement tip from each page I opened to:

  • put money aside at the beginning of the month (because if you wait until the end of the month, it won’t be there) (page 57);
  • on page 75 they have a nine step sidebar to answer the question “should I lease or buy a vehicle”; (the advice is practical, but you’ll have to buy the buy the book for the actual tips!;
  • don’t buy life insurance for your baby; the only members of your family who need life insurance coverage are those whose death would create a financial hardship (page 93);
  • on page 120 they have 19 ideas for an inexpensive date, including test driving cars, going on a picnic, and playing with animals at a pet shop;
  • on page 166 the book has six tips for how to sell stuff you no longer need by selling on-line.

As you can see, all of the tips are practical and easy to implement.

I suggest you start with the table of contents, and open the book at whatever section most appeals to you; you don’t have to, and probably won’t, read the book from cover to cover. Start where you want, use the tips, and return often for a refresher. That’s what makes Power Spending: Getting More For Less a powerful, practical book.

Posted on Monday, February 7th, 2011
Filed under: Book Reviews
posted by Doug Hoyes @ 5:31 am No Comments

Debt-Free Forever: A No-Nonsense Book Review

by Doug Hoyes

In addition to our usual commentary on bankruptcy in Canada, we occasionally review books that may be of interest to our readers. You can see all book reviews in our book review section.

Today we review Debt Free Forever: Take Control Of Your Money And Your Life by Gail Vaz-Oxlade, the host of TV’s Til Debt Do Us Part.

Gail Vaz-Oxlade's Debt Free Forever: Take Control Of Your Money And Your Life

I must confess that I am biased, because I have appeared twice on Till Debt Do Us Part as an “expert”. My first appearance was back on Episode #36, that first aired in 2007, called Single Mom Shake Up. My job was to explain the bankruptcy option to Tammy, the person featured on that episode. She was able to cut her expenses, and with the support of her family she avoided bankruptcy.

I also appeared in Season 8, on episode number 103; you can watch the entire episode on the Till Debt Do Us Part section of the Slice web site. (Warning: This is a very emotional episode; I had to give some difficult advice, as did Ms. Vaz-Oxlade; sometimes our advice is not taken, and that’s a difficult reality when you are a professional advisor).

As anyone who was watched Till Debt Do Us Part will know, Gail Vaz-Oxlade has a very “no nonsense” approach to money problems. She strongly believes that ultimately you are responsible for your behavior, so only you can change your behavior to eliminate money problems. I like that approach.

That no-nonsense approach is easy to see in Debt Free Forever: Take Control Of Your Money And Your Life as Gail Vaz-Oxlade starts at the same place I start in every meeting I have with someone in financial trouble: Figure Out Where You Stand. She gives practical tips on how to analyze your spending, and, most importantly, how to face up to your debt.

In my experience facing up to your debt is the hardest step to take in your journey to financial freedom. It’s hard to make a list of all of the money you owe, but it’s absolutely essential if you want to go on the next step, which is Part Two of the book: Make a Plan.

Doug Hoyes, Bankruptcy Trustee, Appearing on 'Til Debt Do Us Part

Her advice is always practical; you don’t need a math degree to follow her advice. She keeps it simple, using her trademark “jar” method of saving, where you put cash in your food jar, gas money jar, and so on to keep budgeting simple.

Speaking of budgeting, that’s Chapter 4, Create a Budget That Balances. Again, Gail gives practical advice on how to create a household budget, and how to cut expenses to make your budget balance. She illustrates the concept with what she calls the “Life Pie”, where money is allocated to life’s expenses, and you have to learn to divide the pie up to keep your spending in check.

While Debt Free Forever: Take Control Of Your Money And Your Life focuses on budgeting, spending control, and setting goals, Chapter 11 does deal with subject matter near and dear to my heart: Cope When the Caca Hits the Fan. She starts the chapter off by telling it like it is:

One of life’s hard truths is that it doesn’t matter how carefully you plan, how hard you work, or how diligent you are in taking care of the details, crap happens!….It’s nice to think that life is predictable, but it’s not ………Having made a budget, made a debt repayment plan, made up your mind to live your life consciously and take care of your money, you may dream that it’ll be smooth sailing from here on in, but it is only a dream. Sometimes life sucks.

Yes, I couldn’t agree more. Every day I meet with Canadians who were doing well, but then they got sick, lost their job, got divorced, or had some other tragedy derail their dream of financial independence. Sometimes, stuff happens. Fortunately, Gail Vaz-Oxlade carries her “no-nonsense” approach to the discussion of bankruptcy in Canada as well. Here’s what she has to say:

Bankruptcy isn’t the worst thing in the world. Living in the hell you’ve created is….

For many people, the decision to go bankrupt isn’t an easy one to make. It’s a thorny path. But if that’s what it’ll take to get you out of hell, then do it.

Wow. No-one will ever accuse Ms. Vaz-Oxlade of “sugar coating” her opinions. She’s right: in my experience it takes the average person six months of soul-searching before deciding to file bankruptcy. Bankruptcy is a last resort for dealing with your debts, but sometimes it is necessary.

If you are looking for a book that contains practical, easy to understand advice, Debt Free Forever: Take Control Of Your Money And Your Life is just what you are looking for. The advice is easy to understand, but it’s not easy to implement. Making change is hard, and it takes sacrifice, but if you are up the challenge, this book can help.

Posted on Monday, August 9th, 2010
Filed under: bankruptcy Canada andBook Reviews
posted by Doug Hoyes @ 2:05 am No Comments

Consumer Proposal: The Best Way to Avoid Bankruptcy in Canada

by Doug Hoyes

Doug Hoyes, Bankruptcy Trustee

Doug Hoyes, Bankruptcy Trustee

This is a website devoted to discussing all aspects of bankruptcy in Canada, but today we will discuss the opposite of bankruptcy. Today I present my Top Three Ways to Avoid Bankruptcy in Canada.

Why would I, a bankruptcy trustee, want you to avoid bankruptcy? Because I strongly believe that bankruptcy should be a last resort, a strategy to be used only after all all other options have been evaluated and eliminated. I take every opportunity to encourage all Canadians to explore all financial options before making a decision. This week I was interviewed by the Globe and Mail for a story on How to Avoid Filing for Bankruptcy, and again I made the comment that bankruptcy is a last resort.

Why should you consider all options? Because there are many scams and unscrupulous people that will tell you they can help you avoid bankruptcy, but many times they will simply just take your money. You can read more in our article on Debt Management and Debt Settlement Plans: Scams, or a Good Alternative to Bankruptcy in Canada?

So what are my Top Three Strategies for Avoiding Bankruptcy in Canada?

3 Get help from family or friends. This is perhaps the most over-looked strategy. I have had hundreds of people over the years tell me that they are so embarrassed about their financial situation that they are afraid to discuss it with their family or friends. I’m not suggesting you should tell everyone you know that you are having financial trouble, but reaching out to your family or closest friends is often a good solution. Many times I have encouraged people, particularly younger people, to talk to their parents. While their parents may be disappointed that they are in financial trouble, they will often also try to work with them to solve their problems.

I’m not suggesting that you should borrow money from family or friends. Borrowing money is a good way to lose friends, and an even better way to make Christmas dinner very uncomfortable. What I am suggesting is that you should ask for advice from your family and close friends.

If you don’t ask, you don’t know how people can help. Perhaps a relative can help you find a better job, and with more income you may be able to repay your debts on your own. Perhaps a friend has an extra room at their house; you could rent a room and reduce your living expenses, which will free up cash to help you deal with your debts. Moving back in with your parents may not be fun, but as a temporary measure while you get back on your feet it may not be a bad solution.

Even if they can’t help you directly, getting some advice and empathy from a trusted family member may help you decide on your next steps.

2 My second best strategy for avoiding bankruptcy is to fix it yourself. In fact, this is the strategy used by the vast majority of Canadians who experience money problems. If friends and family can’t help, and if you don’t want to file bankruptcy, you need to take matters into your own hands, and attempt to fix the problems on your own. Here’s how:

Start by making a personal budget. Your budget should list all of your expenses each month. Some will be easy, like your rent and car insurance, because they are the same each month. To ensure that you don’t forget any, review your bank statements and credit card bills for the last few months to see where you spend your money. That should give you an accurate picture of your monthly spending. There are lots of on-line budget tools that can help, like Calendar Budget, an on-line tool where you enter your purchases each day, on a calendar. There are lots of budgeting tips on line as well.

Once you have a list of your expenses, review it. What can you cut? Can you reduce or eliminate your cable bill? Car pool to work? Make your own coffee? Once you see your expenses on a list, you can take steps to cut your expenses. That will tell you how much money you can free up to repay your debts faster.

Your debts are the final piece of the puzzle: Make a list of all of your debts, and arrange them from highest interest rate to lowest, so that the top of the list has your most expensive debts. Those are the debts you want to repay first.

Now, fix it yourself by making a plan to take whatever cash you can free up each month and apply that to your highest interest rate debts first. As one debt gets paid off, use that extra money to attack the principal on the next highest debt, and so on until all of your debts are repaid. If you can keep your expenses as low as possible, you may be able to repay all of your debts on your own.

1 But what if, even with drastically reducing your expenses, you still have more debts than you can repay on your own? You need outside help, and that brings me to my top strategy for avoiding bankruptcy in Canada: filing a consumer proposal. A consumer proposal is a legally binding deal that a consumer proposal administrator negotiates with your creditors. If it’s accepted, you make one monthly payment, your debts are dealt with, and you avoid bankruptcy.

A proposal will work best if you have a job, or a stable source of income, so that you can commit to monthly payments. The good news is that, in most cases, a consumer proposal can be negotiated for less that the full amount owing on your debts, and you avoid bankruptcy.

Which option is best for you? Or do you have no choice but to file bankruptcy? Start with some research: Read our articles on consumer proposals, or read questions posted on our anonymous question and answer blog about consumer proposals. You can even join our on-line support group that allows you to discuss consumer proposals and other options. These posts are real, and people just like you post both the pros and cons about proposals, so you can hear both sides of the story to help you make a decision.

My advice: talk to your family and friends, but also talk to an expert. A consumer proposal administrator and bankruptcy trustee will give you a free, no obligation initial consultation to help you make an informed decision, so do your research, contact a trustee today, and make an informed decision.

Posted on Monday, April 19th, 2010
Filed under: Bankruptcy Alternatives andbankruptcy Canada andConsumer Proposal andDebt Options
posted by Doug Hoyes @ 5:25 am 2 Comments

Why Budgeting is the First Step Before Bankruptcy in Canada

by Doug Hoyes

If bankruptcy is one of the scariest “B” words in the English language, “Budgeting” may be the next scariest “B” word. No-one likes to make a budget, but a budget is a necessary first step before you decide whether or not you need to file bankruptcy in Canada. Here’s why:

Let’s take the case of John, a 40 year old Canadian, with $50,000 in credit card debt. He has no assets that he could sell to pay off his debts, so he’s thinking about going bankrupt. Is that the right decision for him? To answer that question we need to review John’s budget, and that’s why making a budget is the first step to deciding whether or not bankruptcy is the right option to deal with his debts.

John’s household budget will show how much he earns each month, and what he spends it on. Once John sees the money going in and out every month on a piece of paper, it may be possible for him to cut expenses to free up enough cash so that he doesn’t need to go bankrupt. If his budget shows that he doesn’t have enough money to pay all of his debts in full, he may still be able to afford a consumer proposal where he repays a portion of his debts.

So how do you make a budget? The easiest way is with a pencil and a piece of paper. Carry the paper and pencil with you, and write down everything you spend money on (even if it’s just a coffee, or a dollar in a parking meter). Save all of your receipts, and at the end of the month you can summarize your notes to see exactly where you spent your money.

Right Click and choose Save Target As to download a free sample budget templateSince you are reading this article I know you have a computer, so another option is to use an Excel spreadsheet to summarize your income and expenses. The attached spreadsheet is fully customizable, so you can add whatever categories you want. Add a new sheet for each month, and easily track your spending. With some discipline and effort, you will see where your money is going each month, and you can decide what expenses to cut to save money.

Calendar Budget - sign up for a free trial

An even simpler computerized option is to prepare your budget on-line. No software is required; all you need is an internet connection. The program is called Calendar Budget, and it’s very simple to use. Just open the program and you will see a calendar. Enter what you spent each day in the calendar. The program will then summarize where you spend your money, and help you produce easy to use graphs and charts so you can easily see where your money is going. You can even get a free, one-month trial of Calendar Budget; after that, there is a very small cost each month.

Whether you use a piece of paper, a spreadsheet, or a software program, the key is to take stock of where your money goes each month. You may be surprised at how many different places there are for you to cut your spending. Or you may realize that a bankruptcy truly is your only option.

Either way, start with a budget as the first step in evaluating your options. Once your budget is prepared, contact a local trustee for a free initial consultation to determine your next step.

Posted on Monday, August 3rd, 2009
Filed under: Bankruptcy Alternatives andConsumer Proposal
posted by Doug Hoyes @ 7:00 am No Comments

Canada Day Resolutions

by Doug Hoyes

Most people make their New Year’s Resolutions on January 1, since that’s the start of the new year. That’s a difficult time of year to start a new diet, fitness program, or other life changing activity, since you are still recovering from Christmas, and have a long cold winter ahead of you. I think Canada Day, July 1, is a better time to review your goals and make plans for the future.

canadaflag

Canada Day is the perfect time to review your finances (and your life). It’s the start of the summer holiday season, so you are probably not as rushed and hurried as you may be during the Christmas holiday season. Here’s what I suggest:

First, make an inventory of your finances. Make a list of who you owe money to, including the name, amount, interest rate, and monthly payment.

Second, make a list of what you earn each month, and what you spend. (Use the internet if you need help with making a personal budget).

Third, make a list of what you own, and what it’s worth, like your house, car, RRSPs, and other investments.

Now, look at these three pieces of information: what you owe, what you own, and what it costs you to live each month. What kind of shape are you in? If you have no debt, you have no worries about making payments on your debts each month. If you have more debt than you can handle, you need to make a plan, a Canada Day Resolution, now. You should review your debt options and make a plan, now, to deal with your debts.

The first action step is to cut your expenses. Take the budget page you created and go through every item, and see what you can cut. For example, it’s the middle of summer, and you spend lots of time outside. You spend very little time watching television. Do you really need 500 channels on your cable or satellite service? No, you don’t, so call your cable or satellite provider and cancel everything but basic service. Even better, cancel everything. With the new digital signals it’s possible to put a small antenna on your house and get all your local channels, in high definition, for free! That sure beats paying a monthly bill. (Don’t worry, when winter returns you can always call your service provider and re-start your service).

How about your phone bill? Do you really need call waiting, caller I.D., three way calling, and all of the other services you are paying for? If not, cancel them. Do you really need a cell phone and a home phone? Many people have eliminated their home phones, since they are never home anyway, and use a cell phone for everything. That’s a great idea, but only if you have an inexpensive plan, preferably with free evenings and weekends.

Look at your grocery bill. It’s summer. Local farmer’s markets and roadside stands across the country have fresh, local, healthy, inexpensive produce. Buy it fresh every day. Stop spending money on canned and processed food. Save money and eat better this summer. And, if you have access to a small plot of land, plant your own. It’s not too late to plant beans, carrots, and many other vegetables that you can start eating two months from now. Next year, start earlier for even greater savings.

What about transportation? Do you really need to drive everywhere in your car? The weather is great: walk, or ride your bicycle. It may take a bit longer to get there, but you will get great exercise, and save lots of money.

If you can cut your expenses, you can free up cash to repay your debts faster, or to save for your retirement, or your children’s education.

Canada Day is one of my favourite holidays of the year. (Of course I’m old fashioned; I still call it Dominion Day, but that’s another story). It’s a day that’s all about fun. No presents to buy, no fancy meals to prepare. You spend the day with family and friends, you cook outside on the barbecue, and you can even enjoy a cold pop. Make the holiday even better by spending an hour or two this week reviewing your finances, and making your Canada Day Resolutions. Here’s to a great summer!

Posted on Monday, June 29th, 2009
Filed under: Debt Options
posted by Doug Hoyes @ 4:20 am 1 Comment