Debt Free in 30

There is a lot of bad credit and debt advice out there. We see it on YouTube, and Twitter, and Reddit, and in personal finance blogs. And it seems that one of the most popular areas to give bad advice is on how to improve your credit score.

So, today, Scott Terrio and I are going to share and debunk the bad advice you can get on the internet for improving your credit score. Some of the bad advice we discuss:

1. Raise your credit limit
2. Have many credit cards
3. Have a 30% utilization on all of your credit cards
4. Don't pay off your credit cards early
5. Show credit growth – get a new card every few months
6. Take out longer loans
7. Start getting credit cards as a student

Getting a copy of your credit report and credit score for free, from one of those "credit monitoring" services, can be very expensive.

On today's show I rant about why I don't like those services, and I give practical advice on how and when to monitor your credit score.

Today's episode is a quick "Technical Tidbits" edition where we answer one question from our listeners.

The short answer is yes, it is possible for a collection agency to take you to court, but it's not a common occurrence. We explain when they are most likely to take you to court, and what your option are if they do.

On today's show we discuss the proposed changes in the federal budget, including help for new home buyers, and explore whether or not these changes will actually help millennials and others.

Every year, we analyze information we collect about our clients to develop an updated profile of the average person filing insolvency. We call this person Joe Debtor. As the economy changes, so too does Joe Debtor. In 2014/2015 we warned that we were seeing an increase in the number of seniors filing bankruptcy. In 2017 we highlighted that, despite a robust economy, we were leaving people behind who were struggling on a lower than average household income and becoming insolvent because they were relying on debt to make ends meet. In 2018 we continued to raise concerns about the payday loan crisis facing heavily indebted borrowers.

While some of those trends continued our recent Joe Debtor study, completed in 2019 based on 2018 insolvencies with our firm, highlighted the plight felt by Millennials. They are the fastest growing cohort filing insolvency. And it's not just that they are aging in - they are dealing with more debt at a younger age than any previous generation. They are filing bankruptcy at a rate that far outstrips their entry into the working world.

I talk with Hoyes Michalos co-founder Ted Michalos as we explore reasons why Millennials are struggling with debt repayment and why they are filing a bankruptcy or consumer proposal so soon.

Budgeting for bill payments and saving can be a straightforward process when you have a regular, consistent paycheque. But how do you stay on top of your finances when your income differs from one month to the next? What if you're just not someone who can follow traditional financial planning? Enter Chris Enns. Chris is an opera-singer and a fee-only financial planner specializing in helping people who work in creative careers organize their sporadic salaries. He understands first-hand the struggles of applying traditional financial advice to a non-traditional cash-flow. Today Chris outlines his approach for managing cash-flow when you have variable or intermittent income.

Chris explains that many people in the creative world avoid thinking about money because they believe they are just bad at it; they just don't get it so they think managing their finances is something they can't do. As 'money misfits' they don't feel they are part of the financial conversation. The terminology around money is foreign so they don't connect with the language.

On today's show he gives practical advice on how to manage money, even if you think of yourself as a money misfit.

In over 20 years helping Canadians eliminate their debt, I've yet to hear a single client say they chose to have debt problems. Debt accumulates over time and then it becomes an even bigger problem when you lose your job, become ill or get divorced. But for many of my clients, despite knowing that the cause of their money troubles was beyond their control, they still blamed themselves for their financial woes.

So, how does one overcome self-blame to achieve debt relief? Today we talk with Shannon Lee Simmons, author of Living Debt-Free: The No-Shame, No-Blame Guide to Getting Rid of Your Debt about how negative feelings towards debt can create more debt and strategies that can put you in the right direction when dealing with your debt.

When used correctly, a credit card is a helpful tool to build your credit history, and it's a safer than carrying cash. However, when mismanaged, a credit card can quickly become one of the most expensive borrowing options, leading to serious debt trouble. For many of our clients, credit card debt is the second biggest debt they carry.

To help you avoid the common pitfalls that come with owning a credit card, I talk with Diane Cunha, one of our certified credit counsellors. She shares tips for using credit wisely to avoid debt problems.

We discuss billing cycles, due dates and grace periods, and we have 8 tips for avoiding credit card debt.

Many people we meet are surprised to find themselves so far behind financially they can no longer pay their bills. The problem with debt is that it creeps up on us slowly. Today we are going to take a lesson from the business world and apply it to personal finance. Businesses use financial ratio analysis all the time to assess their financial risks. Today we are going to look at 4 personal financial ratios that can help you measure your debt risk and determine some financial priorities.

Whether you are a borrower or a beginning saver, the best way to beat the bank at its own game is to learn some basics so you can make a better decision. I talk with Larry Bates, author of Beat the Bank, as he shares tips for outsmarting financial institutions and keeping the most of your hard-earned money in your own pocket rather than the bank's.

One of Larry's biggest messages is that if you understand the cost or fee structure of the financial products you are using, you can choose options that lower that cost. By keeping more of your money, each and every year, these seemingly small savings build up over time and can have a significant impact on your long term finances.

All that and more on today's show.