Authors: Gail Vaz-Oxlade
Explain why you’ve fallen behind and then end with:
I really want to get this debt paid off and am willing to make the following offer:
The current balance on the account is $. I am currently able to settle this amount for $. I would like to offer you this sum on the understanding that it is in full and final settlement of my debt, that
I will be released from any liability, and that neither you nor any associated company will take further action to pursue this debt.
As part of this settlement, I’m requesting that you sign this letter as a written confirmation of our agreement, that you stop any legal action against me, that you delete any negative listings on all credit bureaus to which you report, and that you give notice that the account has been settled in full or “satisfied” to all the credit bureaus to which you report.
Upon acceptance of this arrangement, (creditor name) agrees to the terms and settlement conditions outlined here and I, (your name), will send a money order in the amount of (settlement amount) paid to (creditor) by (date).
In return, (creditor) agrees to forward this letter to all credit bureaus so negative listings will be deleted.
Print your name
Print the date
Sign your name
T
hank you to all the people who helped me make this book my best yet. Curtis Russell, agent extraordinaire, persisted and convinced me this was the right time to do a new book, and then found me a great publisher with which to work. The folks at HarperCollins pulled out all the stops, especially Kate Cassaday, who made the editing process painless and took the book from good to great! Her perspicacity and persuasiveness left me in awe. My friend Kathryn read an early draft and asked good questions.
I also want to acknowledge my fans and web-peeps. These are the folks who keep me honest, listen patiently to my rants, and urge me to create the tools they need to take control of their money. It is because of them that I pulled up to a keyboard and started writing again after several years of no tap-tapping. Thank you for asking for this book so doggedly! I hope as you read this you can hear my voice, encouraging you to be all you can be.
I
was of two minds in creating this index. While I think an index can be a great tool for finding information fast, it can also be a shortcut for people who just want to focus on one area. That’s a mistake. Your financial life has to be seen in the larger context of your whole life, and if you do one part without taking care of the other details, your plan won’t work. So I give you this index with a warning: this is not a tool to circumvent the system I’m presenting here. If you want to be Debt-Free Forever, if you want to take control of your money and your life, you must read the book from beginning to end. If you want to check back on something once you’ve been through the book, here’s the index.
Page numbers in
bold
refer to material found in tables and charts.
Page numbers in
italics
refer to blank worksheets.
A
analysis, spending, 10–20
Spending Analysis Worksheet, 11–17,
21–23,
64, 66
attitudes
towards money, 46, 274–75, 278–79
towards work, 138–39
automobile.
See
car
B
balance transfers
credit cards, 95, 98–100
line of credit, 95, 100
bankruptcy, 97, 246, 255, 256–67
Bankruptcy and Insolvency Act, 259
co-borrowers/co-signers and, 261
consumer proposals, 258
credit reports and, 122, 267
debts not discharged by, 260
living expenses during, 263
RRSPs and, 262
student loans and, 127, 260, 261
beneficiaries
changing, 227–28
estate, 243, 244
life insurance, 228
RESPs, 242–43
scholarship plan, 204
Budget Worksheet, 60–61, 67, 73,
91–93
budgeting
goal setting and, 86, 159, 163–66, 170, 175, 181, 214, 216, 217, 293, 294
C
Canada Deposit Insurance Corporation (CDIC), 200–201
Canada Education Savings Grant (CESG), 201–203, 243
Canada Learning Bond, 202
Canada Student Loans, 128
car
expenses, 62
insurance, 14, 64, 87, 173–74, 218
payments, 62, 164, 211, 217
career, goal setting, 139, 144, 149, 151
cash advances
credit cards and, 15, 139
cash flow, 32, 82–84, 95, 115, 148, 206, 216, 231, 250
augmenting with credit cards, 20, 66, 103, 250, 273
impact of debt on, 30, 103, 125, 140
variable income and, 79–80
child care costs, 81, 63, 72, 211, 217,
218
, 231
children.
See
kids
collection agencies, 122, 129, 252–55, 283
commitments, 40, 63, 97, 143, 299
credit and, 255–56, 266
investing and, 196–98
budgets and, 2, 9–10, 55, 58, 61, 101, 120, 158, 272–73, 275, 278, 281, 293
compounding return, on RRSPs, 190
consolidation loan,
26
, 27,
29
,
31
, 95, 96, 100–102, 103, 104,
106
,
108
, 109–10, 128, 131, 250, 256
consumer debt, 25–26, 34, 42, 43, 44, 64, 79, 95, 104, 106, 107, 109, 158, 272, 281
credit cards, 12, 25,
26
, 27,
29
,
31
, 43, 56, 79, 96, 101, 121, 231, 261, 278, 283, 285
lines of credit, 15, 25,
26
, 27,
29
,
31
, 101, 121, 210, 250
repayment of, 26, 44, 105–12, 256, 272, 281, 286, 291, 292, 293
repayment proposal, 120
consumer proposals, 258
core values, 39–43
Core Values List, 39, 41, 42
credit bureaus, 267, 282, 288–89
credit cards, 12, 25,
26
, 27,
29
,
31
, 43, 56, 79, 96, 101, 121, 231, 261, 278, 283, 285
augmenting cash flow with, 20, 66, 103, 250, 273
balance transfers, 95, 98–100
cancelling, 117–19, 118
cash advances, 15, 139
effect on your ability to borrow, 121, 283, 288–89
establishing good credit history and, 117–19, 265–66
insurance on balance, 12, 13
insurance perks, 290
interest rates, lowering, 12–13, 30, 96–98, 105, 174
over-limit fees, 12–13
paying off, 105–12, 272, 281, 286, 291, 293
restricting use of, 47, 53, 54, 55, 130, 153, 158–9, 179–80, 204, 286, 292, 296
secured, 265–66
using to your advantage, 130–31, 289–91
variable expenses and, 72
credit counselling, 255–56, 257, 265
“credit repair,” risks, 287
credit reports, 119–123, 285, 288–89
bankruptcy and, 122, 267
collection agencies and, 112, 129, 283
rating codes, 120–21, 122
credit score, 30, 103, 110, 111, 120, 122–23, 286
factors affecting, 282–85
credit, types of
open, 121
revolving, 100,101,121
See also
credit cards; line of credit
credit-reporting agencies.
See
Equifax Canada; TransUnion Canada
critical illness insurance, 238–41
D
debt
consumer, 25–26, 34, 42, 43, 44, 64, 79, 95, 104, 106, 107, 109, 158, 272, 281
fatigue, 107
repayment of, 15,
23
, 26, 32–33, 44, 61, 105–12, 256, 272, 281, 286, 291, 292, 293
overdra, 10,
26,
27–28,
29
,
31
, 71, 84,
106
,
108
, 125–27, 163
debt counselling.
See
credit counselling
debt repayment, 15,
23
, 32–33, 61, 64, 65,
93
, 107–13, 293
credit cards, 105–12, 272, 281, 286, 291, 293
lines of credit, 79, 231
student loans, 44, 127–30, 293
deposit insurance, 200–201
disability insurance, 212, 234–38
discipline, money management and, 79, 158, 214, 217, 278, 281, 291
E
emergency fund, 2, 15, 38, 45, 123, 158, 166, 176, 209–10, 211, 276, 287
budgeting for, 60, 70, 81, 159, 172, 212–19, 249–50, 275, 294
essential expenses and, 210–12
using, 219–20
employment insurance, 212, 247–48, 249
Equifax Canada, 119, 120
equity investments, 200
essential expenses, 68, 69, 164, 165, 168–69, 210–12, 214, 218, 219
estate planning, 241–44
beneficiaries, 204, 227–28, 242–43, 244
guardianship appointment, 243
lawyers, 244
life insurance and, 228, 231, 232–33, 240
living trusts, 243
powers of attorney, 243
wills, 221, 241, 242–43, 244
expenses
fixed, 72–73, 80
variable, 68, 69, 72–73, 74
F
Fair Isaac & Co. (FICO), 282
fixed expenses, 72–73, 80
G
GICs, 194–95, 197, 199, 200, 231
goal setting, 37–39, 41–42, 47, 48, 54, 58, 80–81, 116, 271–76, 296
achieving goals, 95, 102, 281
budgeting and, 86, 159, 163–166, 170, 175, 181, 214, 216, 217, 293, 294
career and, 139, 144, 149–151
kaizen,
298
kids and, 167
long-term goals, 38, 44–45, 70, 94, 190, 193–98
milestones and, 4, 38, 39, 43–46, 48
prioritizing, 39, 41, 42–43, 49, 50, 182, 292
visual aids and, 51, 53–54, 167–68
guardianship appointment, 243
H
Heart and Stroke Foundation of Canada, 239
Home Buyers Plan (HBP), RRSP, 28
home equity, 25, 95, 102–104, 263–65, 285.
See also
consolidation loan; refinancing
household budget, 80–81, 87, 147, 231
house/home
borrowing for, 121, 267–68
buying, 50–54, 140, 267–68
“house poor,” 61
insurance, 14, 61, 64, 86, 87
maintenance, 160
refinancing, 103–104, 251
I
instalment credit, 100, 101
instalment loans, 27, 120–21
insurance, 154, 204, 217, 221–24, 241
car, 14, 64, 87, 173–74, 218
credit card balance, 12, 13
critical illness, 238–41
deposit, 200–201
disability, 212, 234–38
employment, 212, 247–48, 249
health
house/home, 14, 61, 86, 87
life, 87, 224–34, 242
medical, 218
mortgage, 51, 52, 233
perks on credit cards, 290
pet, 88
self-, 222–23
Integrated Student Loans, 128
interest rates; lowering, credit cards, 12–13, 30, 105
investments, 190, 193–200, 206
GICs, 194–95, 197, 199, 200, 231
life insurance and, 226, 230, 231
long-term, 50
RESPs, 201–204, 205, 242–43
RRSPs, 200, 205, 206
term deposits, 197, 199, 201
J
job loss, 246–252
creditors and, 250
cutting expenses a er, 249–250
employment insurance and, 247–48
finding work a er, 248–49
K
kaizen,
298
kids, 50, 55, 152, 261
and bankruptcy, living expenses during, 263
and budgeting priorities, 136, 139, 150, 158, 171
child care costs, 81, 63, 72, 211, 217,
218
, 231
education savings, 15, 37, 176, 287.
See also
RESPs
expenses, 75, 87–88, 154, 160, 175, 249
goal setting with, 167
guardianship appointment, 243
job loss and, 247
teaching good money habits to, 161–62, 167
L
life insurance, 87, 224–34, 242
beneficiaries, 228
estate planning and, 228, 231, 232–33, 240
investments and, 226, 230, 231
“Life Pie, "e” (chart), 61–64
line of credit, 15, 25,
26
, 27,
29
,
31
, 101, 121, 210, 250
augmenting cash flow with, 66, 103, 273
balance transfers, 95, 100
paying off, 71, 231
restricting use of, 286, 292
using to pay other debts, 54, 273
“living within ones means,” 5, 112, 277–78, 279, 286–87
loans
consolidation,
26
, 27,
29
,
31
, 95, 96, 100–102, 103, 104,
106
,
108
, 109–10, 128, 131, 250, 256
instalment, 120–21, 27
pay-advance,
26
, 28,
29
,
31
, 123–25
student,
26
, 27,
29
,
31
, 44, 100,
106
, 121, 127–30, 260, 261, 293
long-term goals, 38, 44–45, 70, 94, 190, 193–98
long-term investments, 50
M
“magic jars,” 61, 69, 70–79, 83, 153
medical insurance, 218
milestones, goal setting and, 4, 38, 39, 43–46, 48, 51, 52–53, 272, 274, 276
money, attitudes toward, 46, 274–75, 278–79
mortgage, 51–52, 68, 72, 81, 82, 86, 211, 217, 227, 242, 276, 279
bankruptcy and, 260, 263–64
credit score and, 284–85
insurance, 51, 52, 231, 232–33
investment, 199
paying off, 37, 44–45, 61, 174, 273
second, 25,
26
,
29
,
31
, 102–104
See also
consolidation loan; home equity; refinancing
mortgage insurance, 51, 52, 233
Mortgage Prepayment Savings Account, 45
N
non-essential expenses, 113, 249
O
overdradebt, 10,
26
, 27–28,
29
,
31
, 71, 84,
106
,
108
, 125–27, 163
P
pay-advance loans,
26
, 28,
29
,
31
, 123–25
peer pressure, 54–58
pension, 189, 191–92, 205, 231, 232
pet insurance, 88
powers of attorney, 243
priorities, 53, 246
budgeting, 62, 80, 181, 278
debt repayment, 26, 256, 292
goal setting and, 39, 41, 42–43, 49, 50, 182, 292
R
refinancing, 25,
26
,
29
,
31
, 95, 102– 104, 110.
See also
consolidation loan; home equity
RESPs, 201–204, 205, 242–43
Canada Education Savings Grant (CESG), 201–203, 243
Canada Learning Bond, 202
scholarship trusts, 203–204
revolving credit, 100, 101, 121
RRSPs, 200, 205, 206
bankruptcy and, 262
compounding return, 190
Home Buyers Plan (HBP), 28
S
savings-matching programs, 191
scholarship trusts, 203–204
secured credit cards, 265–66
self-insurance, 222–23
Service Canada, 192
shopping, 176–83, 198, 298
budget-conscious, 53–55, 152–56, 160–65
for financial services, 237–38, 288
marital strife and, 54
planned spending, 163–64
stopping, 47, 131, 153–56, 297
See also
peer pressure
short-term investments, 199–200
snowballing debt repayment, 44, 110–12
spending analysis, 10–20
Spending Analysis Worksheet, 11–17,
21–23,
64, 66
“staycations,” 16–17
student loans, 24,
26
, 27,
29
,
31
, 44, 100,
106
, 121, 127–30, 201, 293
bankruptcy and, 127, 260, 261
Canada, 128