Debt-Free Forever (28 page)

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 Buyer’s 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 one’s 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 Buyer’s 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