Debt

Who doesn't like reading books offering financial advice? The latest book in this oeuvre is Finding the G Spot: A Sassy, Sensible, Entertaining Approach to Finance! by Jenn Killins.

Killins is a Canadian financial planning expert who wrote the book on a "keep it simple" approach, making financial planning easy to understand for the every day reader.

Think you know everything you need about retiring? You probably don't according to a recent TD Waterhouse poll. The poll found that Canadians still believe certain myths about debt, saving and retirement.

Anna Nicole Smith, Heath Ledger, Michael Jackson, Jeff Conaway, Greg Giraldo, Mike Starr, Amy Winehouse and now, Whitney Houston and that's just a partial list of the celebrities taken by drugs in the last couple of years. It doesn't even cover all the famous people who died of a drug overdose over the course of time or those who are still struggling with addiction and dying in silence without the attention of the 24 hour news cycle.

Thanks to shows like Intervention, the emotional, relational and physical costs of drug addiction have been well established, but removing all that from the equation, still leaves the financial cost. So, how much money does it really cost to support a drug addiction, especially if you never made "Whitney Money?"

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Since 2009, filing for bankruptcy has gotten more expensive and longer in Canada than ever before. If you make just $200 above the income level set by the government, your bankruptcy status gets extended for a year. As a consequence, you have to pay half the amount of your surplus income into your bankruptcy for 21 months, instead of the requisite nine months.

Bankruptcy is one of those things that is much easier to get into than it is to get out of, especially with these new more stringent rules in place. If you ask a bankruptcy trustee, they will all tell you that filing should always be your last resort when it comes to settling your debt. When you meet them, you know it's the end of the line. But, what is it like for trustees from the other side of the desk? Trustees have seen people at their most destitute, so no one knows better than they do what it takes to keep your head above water and never have to see them in a professional capacity.

Douglas Hoyes, founding partner of Hoyes Michalos & Associates Inc., started his career as a bankruptcy trustee for a corporation, but in 1999 he realized he'd make more of a difference aiding individuals with their financial difficulties. Now he's one of the most high profile bankruptcy trustees in the country, with appearances on Canada AM, 'Til Debt Do Us Part and CBC Newsworld.

He makes it his business to help people rise above their financial circumstances and frequently writes about what it takes to not have to see him. Here are some of his greatest tips:

You might be surprised by this but people from virtually every walk of life have been known to get credit counseling help.

It seems everyone out there is working to rack their debt up to record levels lately. With that development, we're also starting to see a boom in the number of debt settlement companies hanging out a shingle in an effort to attract new customers.

Those working in credit counselor positions say their service is primarily about financial rehabilitation, not the quick fix being promoted by a lot of new debt settlement companies operating in Canada. In reality, the "solutions" promoted by debt settlement organizations, often require you to push your accounts into default before settling. The process isn't a quick one and, arguably, it isn't much of a fix either.

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On the surface, it seems simple: Pay off your debt and keep it paid off. For anyone mired or wallowing in a debt hole though, such advice sounds trite, almost laughable and easily dismissed.

There are a number of ways people get stuck in this murk. Put aside for a minute that a huge amount of revolving credit is made readily available to virtually every member of society (it's not all that difficult to find stories about companies accidentally issuing platinum credit cards to babies, deceased grandmothers and the family dog). Sometimes it's the simple and unfortunate life events, those which can happen to just about anyone, that drive a lot of people into positions where they need help.

Given how widespread the problem is, it's not all that surprising to see a whole industry of debt settlement specialists springing up online, on the airways and in advertising just about everywhere you turn.

Some of these companies are legit but a lot of them are predatory too, promising to dispense with a would-be clients' debt in a very short time, usually for a fraction of what's owed.

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Maybe you've picked up the phone recently to hear the following recording or something like it:

"Are you more than $10,000 in debt? We can help! Press #1 now to get connected with one of our agents and they can help cut you're debt in half for only a quarter of the cost."

Well, unfortunately a lot of these debt reduction agencies are nowhere near who they claim to be and most end up costing you money instead of waiving your debts. This is why The Financial Consumer Agency of Canada has issued a consumer warning against those telemarketing calls and advertisements claiming to come from debt reduction agencies or anyone who claims to provide "debt reduction," "debt relief," "debt settlement" or "debt renegotiation."

"Unfortunately, people do not always see the benefits that debt reduction companies lead them to expect-and some people wind up even deeper in debt than they were before," says FCAC Commissioner Ursula Menke. "If an offer to reduce your debts seems too good to be true, it probably is."

The usual setup promises that the company can work out a deal with your creditors so that you're able to pay back only a small percentage of what you actually owe for "pennies on the dollar." It's quite the offer, but it may actually turn into a Faustian bargain.

Related Links:

• Debt Settlement or Credit Counseling?
• What is Debt Settlement?
• It's Never Too Late to Get On Top of Your Debt
• Debt Reduction: Five Steps to Freedom

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There may be a lot of economic uncertainty out there but it appears quite a few Canadians are sure of one thing -- they're still expecting to get their annual bonus.

A recent poll suggests that one third of Canadians in the workforce expect to get their year-end bonus which usually arrives by the end of February. It seems that those anticipating the reward also have high expectations when it comes to how much they'll receive -- 79 per cent of respondents who said they think they'll get a bonus said they expect it to be the same amount as last year or higher.

Here's a list of dos and don'ts to follow when you've got yourself in debt. It comes your way courtesy the Financial Consumer Agency.

Here's where to start: create a list of all your current debts, including the minimum payments required and the interest rate for each loan.

And remember, there are two ways to pay off your debts.

It's nearing the end of the month and you've either received your credit card statement from Christmas or the dreaded mail is about to arrive. Have you taken a deep breath and braved opening the envelope, or are you resigned to letting it collect dust for now and deal with it later?

If you have the courage to open your credit card statement up, you'll notice something new - a measure the government forced companies to report a few months ago. And, if you carry a balance on your card, it might be a scary number to look at. There's a little box either on the side or back of your statement that now has to tell you how long it will take for you to pay off your credit card balance if you only make the minimum payment. This month's mini money make-over features Jeffrey, who's looking at a whopping 134 years and 7 months to pay off his credit card. Yes, you read that right. He's currently 37 years old, and if he doesn't learn a simple trick to financial freedom, his debt will outlive him by decades.