Debt Free in 30

Canadians have always had a strong relationship with our southern neighbours. We escape the winter, they explore new places, and we support each other's economy. We also partake in cross-border shopping. Americans hop the border with their strong dollar and purchase goods from Canada. Canadians cross over and grab great sales at major U.S. retailers, but depending on how we pay, we're racking up U.S. debts.

Some of these purchases are made on our own Canadian credit cards, but some are made using U.S. store credit cards. Those who live closer to the border have an even stronger relationship with the U.S. Depending on their industry, some Canadians work in the U.S., but live in Canada. When the U.S. has a strong dollar, it makes sense for Canadians as their take home pay is higher than what they would make in Canada. This is great if the U.S. economy stays strong, but when it waivers, it's not so good.

Today we discuss what happens with U.S. debts when you have financial problems in Canada, with my guest, Licensed Insolvency Trustee Rebecca Martyn.

2016 was a year we won't soon forget, and early indications are that 2017 will also be very eventful, so it's time to review the events of 2016 and make our predictions for 2017.

Consumer debt reached record levels in 2016, and so did the Toronto real estate market. As Ted Michalos says on today's show:

There is no capacity to save, there's no capacity for anything to go wrong. It's just a dangerous scenario waiting to unfold.

We discussed the trends that we see with our own clients. A lot of the people we meet are working multiple jobs, just trying to make ends meet. Jobs in Canada have increased in 2016, but the growth was in part-time positions. From November 2015 to November 2016 Canada added 214,000 part-time positions, but full-time jobs declined by 30,500.

They're incurring more debt to make up the difference in the fact that their expenses have gone up but their income hasn't kept pace.

So, what can the average Canadian do to help keep themselves in the black? That's what we discuss on today's podcast.

It's the holiday season, so today we have no industry experts, and we won't talk about numbers. Instead, our focus is on real people with real financial problems.

Money problems are nothing new. In fact, back during the Great Depression, financial problems were rampant, and that's when a song written in 1930 became very popular.

Brother, Can You Spare a Dime tells the story of man who was building a dream, but the dream ended. What happened? That's our story today on Debt Free in 30.

Our guest today is Georgia Graham, Programs Manager of WEST (Women's Enterprise Skills Training). Their mission is to improve the employability of women in Windsor-Essex County.

WEST completed their own study which focused on identifying their community's financial needs, and whose results paralleled our own. The study Women's Financial Preparedness: Bridging the Divide in Windsor-Essex found that women were less knowledgeable than men when it came to financial products and financial indicators.

WEST's Needs Assessment Study concluded that there were three main vulnerable groups within Windsor-Essex. These vulnerable groups of women struggle to not only become, but to maintain a moderate level of financial preparedness.

My guest today is Michael Chong, the Member of Parliament for the federal riding of Wellington-Halton Hills, and an advocate for the privatization of the Canada Mortgage and Housing Corporation. First, some background:

As we have discussed on we've previous shows, the big banks are required to have mortgage insurance on all mortgages where the borrower has less than a 20% down payment, and the biggest mortgage insurer in Canada is CMHC.

According to Michael Chong, while there are two private mortgage insurers in Canada (Genworth and Canada Guaranty), CMHC insures 80% of all insured mortgages in Canada, and they currently insure over $500 billion in mortgages. That's huge.

Mr. Chong's position is easy to understand: with mortgage insurance, it is almost impossible for a bank to lose money on a mortgage, so they have a strong incentive to lend as much money as possible to maximize their profits.

It is understandable that when you are experiencing financial problems you don't want that information broadcast to your friends, family and co-workers. This is a concern raised by many potential clients which brings us to this week's technical podcast question:

Who will find out if you filed a bankruptcy or consumer proposal in Canada? We answer that question on today's show.

The real question however is will bankruptcy help you deal with your financial problems and should you feel embarrassed because you filed insolvency? As many as 15% of Canadians will file insolvency at some point in their life. Tune in for more on this week's edition of Debt Free in 30.

There is a lot of chatter surrounding Canadian real estate, housing prices and mortgage rates. Vancouver sales have started to drop but not in Ontario. Is there a housing bubble in Ontario? When will it burst? Part of the answer might be in the next round of changes to Canada's mortgage rules. In today's podcast we talk about how this will affect your ability to obtain a new mortgage or refinance your existing mortgage.

This week's guest is Ben Rabidoux, the founder of North Cove Advisors. They're a private research firm that advises big investors like pensions and mutual funds. Ben is predicting big changes in the mortgage and real estate markets in Ontario in 2017.

As you remember, show #110 focused on the new mortgage rules that came into play on October 17, 2016. These new rules put in place a stress test that would reduce the amount of mortgage a homeowner could qualify for if they were applying for an insured mortgage. This applied mainly to borrowers with a high-ratio mortgage (less than 20% down) but also to those with a regular mortgage as long as they had mortgage insurance.

More rules come into play at the end of November 2016. The next set of changes will set limits on what types of mortgages can qualify for mortgage portfolio insurance, and these rules will apply even if the borrower has more than a 20% down payment.

Does financial literacy belong in high schools? This question is surfacing more and more as Canadians dig themselves further into debt. Today's guest is Prakash Amarasooriya, a member of the Toronto Youth Cabinet who recently launched a petition urging the Ontario Ministry of Education to beef up their Grade 10 career studies course to include basic financial skills like budgeting. Within less than a month the petition was signed by nearly 900 supporters.

What should be taught? Will it have an impact?

That's today's topic on Debt Free in 30.

Air Miles has been in the news a lot lately about their new points expiry policy. Maybe it's because of the media attention, but we have had a lot of potential clients ask what would happen to their Air Miles and other loyalty points if they file bankruptcy?

Here is a short summary of what would happen under bankruptcy law:

Section 67 of the Bankruptcy & Insolvency Act says that a bankrupt's assets include "all property wherever situated at the date of the bankruptcy".

What that means is if you own it, it's property. While there are bankruptcy exemptions for things like an inexpensive car, household goods and a portion of your RRSP, there is no exemption for Air Miles or any loyalty programs.

Confused? We explain more in today's podcast.

Everyone wants to end poverty. The controversy begins when you start talking about how to solve the problem. One solution which has received a lot of media attention lately is the concept of basic income or guaranteed annual income. In Ontario, former senator Hugh Segal is due to release a report which will guide the Ontario government in developing a pilot project around basic income.

To help us better understand the costs and consequences of a guaranteed income program, I talked with David McDonald, senior economist with the Canadian Centre for Policy Alternatives. The CCPA has released a detailed study on basic income called A Policymaker's Guide to Basic Income.

We asked David to describe the concept of basic income:

The idea is that cash transfers are a way that we can alleviate poverty and have other beneficial effects. And the idea of basic income is that you get a cash transfer that you didn't have to apply for or the application for it is fairly minimal.

On today's show we explore the pros and cons of a basic income for all Canadians, and explore other solutions to poverty.