Debt Free in 30

When this show first aired back at the end of November, 2016, the real estate markets were booming, and mortgages were easy to get, but my guest, Ben Rabidoux, had some very specific predictions.

First, he predicted that Ontario would implement a foreign buyers tax, just like happened in Vancouver. Bingo. In April of this year, five months after we aired this interview, the Ontario government announced a 15% tax on foreign real estate buyers.

Second, he also predicted that mortgages would be more difficult to get in 2017. Right again, as the problems at Home Capital, one of the biggest alternative mortgage lenders in Canada made it a lot more difficult for some buyers to get a mortgage.

So Ben was correct on these predictions, and a few others, so I'm not surprised with that track record that this was one of our most downloaded episodes.

Today's show is a rebroadcast of a show that first aired in October, 2016.

My guest is David Bond, who has a PhD in Economics from Yale University, and he makes a number of interesting points. We discuss the high level of Canadian household debt, and we talk about the most popular topic here on the podcast in the last year, and that's the Canadian real estate market. Mr. Bond has some very definitive views on income inequality and taxation, and he has some thoughts on Basic Income.

Mr. Bond points out that we must face the fact that we live in an economy that has cycles. A high household debt to income ratio (167.8% at the time of our podcast) puts both the individual, and our economy as a whole, at risk. If you lose your job, you may not be able to pay your debts. If too many people default on their debts, our financial institutions might go bankrupt.

Tune in for Mr. Bond's David's advice if you have debt and risk a job loss or income reduction.

We just celebrated Canada's 150th birthday and this is Debt Free in 30 episode number 150 so to celebrate both of these milestones I'm bringing back a guest from one of our most popular shows ever. Back in season number one, show number 33, originally broadcast in April of 2015, my guest was Leigh Taylor and the topic of that show was smart ways to pay off debt.

Even though that show aired more than two years ago it is still downloaded many times each month and as of today it is one of the top three downloaded shows in the history of this podcast. That tells me that Leigh was a great guest because that show has been shared many times by our listeners. So today, two years later, I'm bringing Leigh back for round number two.

Today I want to ask Leigh about debt and bankruptcy myths. We get a lot of information from the internet and that information is not always accurate so today we're going to dispel the top debt myths that Leigh and I encounter as we help people with their debts.

On today's show Leigh Taylor dispels five common bankruptcy myths:

• People who go bankrupt are spendthrifts
• Everyone will know I filed bankruptcy
• Bankruptcy will ruin your credit forever
• If you go bankrupt, you lose everything
• Government debts are not included in bankruptcy

This is a special rebroadcast of show #111, originally aired on October 15, 2016.

We all want to help when someone is in trouble. But helping someone out of financial trouble can come with unexpected costs and consequences. It is for that reason that I strongly advise against ever loaning money to family and friends.

On today's show we hear three stories:

1. Mabel is a widow who chose to help her adult son who was struggling financially after a divorce. In the end, Mabel ended up maxing out her own line of credit and was having trouble keeping up with her own rent and debt payments.
2. Larry loaned his son money for a down payment on a new home. Unfortunately, Larry's son separated from his wife who received the house as part of the separation agreement. Larry's down payment went to his son's ex-spouse.
3. Amanda's parents gave her the 5% down payment she needed to enter the housing market. Unfortunately Amanda quickly found out she couldn't keep up with the bills associated with her new house. Maintenance, a job loss and a flooded basement resulted in her selling the home for less than she owed including some additional credit she incurred trying to keep up.

What's common about all these stories we heard on today's podcast is that in each case, loaning money to someone to 'help out' ended up with very bad consequences for everyone involved.

There's a growing number of people owing money on their tax debts. This is in part because more people are self-employed, or have more than one job, and partly due to a growing seniors population. Getting into tax debt can be relatively easy, and dangerous to your financial health if you don't deal with it quickly. Today's podcast discusses ten tips on dealing with the Canada Revenue Agency and tax debts from our in-house tax expert and Licensed Insolvency Trustee Ian Martin.

Your income tax is based on your total income for the year. If you're working for a company, that process is automated for you and the appropriate amount is taken off. But what if you have more than one job and one doesn't know about the other? What if you have pensions coming from different locations? These tips deal with how to avoid complications with the CRA, as well as what you can do to deal with those tax debts.

Debt doesn't start out as an obvious problem. For many people, lack of personal finance knowledge leads them to make poor decisions with their money. Once you figure out how easy it is to get credit, you start spending more and more because, hey, it's there. Today's guest is a former Hoyes Michalos client, and like many of our clients, he struggled with severe debt.

Beau started gambling at a young age through seemingly harmless games like scratch tickets. From there, it evolved to online card games throughout university and he eventually dabbled in "pretty much everything else you can think of". Beau had a full-time job so for him, gambling wasn't a means to earn income, it was his source for exhilaration. The main problem that Beau had was that credit was the only way he knew how to have that instant access to cash to gamble.

I'm just kind of at my wit's end and I'm thinking, you know, I'm never going to be able to afford these credit card payments that I have if I keep going.

After working with a counsellor at the Canadian Association for Mental Health (CAMH), Beau found the source of his addiction: he had gone undiagnosed with ADD his entire life. After starting on his medication, and looking through nearly $40,000 in unsecured debt, Beau knew he needed a change.

On today's show, Beau discusses his consumer proposal, and how he recovered from both gambling and debt.

As Licensed Insolvency Trustees, our clients tell us how difficult it is to live on minimum wage. That's why they often have no choice but to use debt to survive. The average person we help file a consumer proposal or bankruptcy has an income that is almost 40% less than the median income in Ontario; in many cases our clients are working minimum wage jobs.

Our clients don't have a debt problem; they have an income problem.

If minimum wage isn't enough to survive, the solution would appear to be quite simple: raise the minimum wage. That's exactly what the Ontario government is proposing to do, raising the general minimum wage from $11.40 per hour to $15 per hour on January 1, 2019.

So won't that big increase in the minimum wage solve all of our problems?

No, because, unfortunately, a minimum wage is not a living wage.

On today's show we explore the reasons why a government-mandated minimum wage is likely to do more harm than good, and we propose a more effective solution to our income problem.

We know from our Joe Debtor study that the average person in Ontario who files a consumer proposal or bankruptcy has an income that is almost 40% lower than the median income in Ontario. Low or sporadic incomes make it difficult to keep up with the cost of living. The Ontario government has recognized this fact and has started a pilot project for basic income in three cities across the province. Hamilton is one of those cities, and with me today is Tom Cooper, Director of the Hamilton Roundtable for Poverty Reduction, to discuss how this pilot project may help alleviate poverty in Hamilton.

This basic income pilot project is an initiative to reduce poverty in our province and provide people with a basic standard of living. Many existing benefits are not enough for people to pay rent, food, and transportation costs. As a result, more people turn to debt to make ends meet as noted in our 2017 Joe Debtor study.

On today's show we discuss basic income and a living wage as a way to increase incomes in Ontario.

The number of seniors filing insolvency is growing. Many seniors have the honest intention of paying back whatever debt they accumulate. That would be great, except they're using new debt to pay for it.

We've recently written about seniors increasingly turning to payday loans, which is one of the most expensive forms of lending. High interest rates paired with a fixed income aren't a good combination for anyone. The challenge that seniors are seeing is not that they are incapable of living off of their savings and pension payments.

Why are insolvency rates for seniors increasing?

What can seniors do to avoid insolvency?

Those questions and more answered on today's edition of Debt Free in 30.

For the first time ever, the federal government just issued a BOMBSHELL report, saying that it appears that two very large debt consulting firms in Canada are taking advantage of vulnerable consumers. They charge large upfront fees, and often they only service they provide is to refer you to a Licensed Insolvency Trustee.

On today's show we discuss what the government reports says about unlicensed debt consultants, and we provide practical advice for consumers on how to avoid paying for a service that you don't need.