November 07, 2013

Frugal Friday #12 - Listen to the Pros

I'm not advising you to make an appointment with your local financial guru.  I have no experience with financial counselling so I wouldn't presume to suggest you spend money on something I know nothing about.  However, I can share a little personal story (don't worry it has a happy ending).

The Tale of the Indebted Princess

About 14 or 15 years ago, I was deeply in debt.  I lacked any kind of financial know-how and I had shopped myself into credit card purgatory.  Maybe I can blame it on my bipolar disorder because running up your credit cards is a symptom but I really don't need an excuse.  In fact, I was so deeply in debt that I made no attempt to pay much more than the minimum.

I was living in a cheap apartment that I loved but I never had any money, zero savings, and no hope of ever owning a house.  Then something happened and it was like the universe was talking to me.  I was going to come into a lump sum of money (about $20,000) as a result of a human rights settlement through my employment.

The way I saw it; this money could be a godsend or I could use it to pay off most of my credit card debt.  Does that sound contradictory?  Let me explain.  I could accept the money like many of my co-workers were doing, pay the taxes on it and I would be left with almost enough to pay off my credit cards. Then I would be back at square one and I guarantee I would have just run those balances back up.  Or it could really make a difference in my life and I could realize my dream of home ownership.

In Canada, we have a nifty program that would let me deposit money into a Registered Retirement Savings Plan, pay no taxes on it, borrow money back out of my plan to make a downpayment on my first house and allow me to pay it back over 15 years.  This is what I wanted but I had the millstone of credit card debt around my neck.  My other concern was Could I afford a mortgage payment every month?

So I knew about 8 months prior that the money was coming.  I knew I needed to get rid of my debt and I started watching a Canadian TV show hosted by Gail Vaz-Oxlade.  This woman tells it like it is.  No sugar-coating - just practical "get you through the week" advice.  I put myself on the tightest budget I could.  She uses Mason jars now but back then I had envelopes.  They were labeled and filled (maybe not so full) with money every pay day. The labels said things like rent, groceries, gas, parking, cable, phone, electricity.
This is Gail

There were no envelopes for clothes or entertainment or magazines (that one was hard!).  I gave up spending anything that wasn't absolutely  necessary and every penny I saved (about half my wages) went towards paying off the credit cards.  When my first payment of my pay equity settlement was coming, I had about $3000 balance left on credit.  I had paid off over $10,000.  I took the first payment and paid a little tax.  That way, I was done with the credit cards.

Now, stage two commenced.  I got $15,000 that I put into a RRSP.  It had to stay in there for 90 days before I could withdraw it to buy a house.  So I got myself pre-approved for a mortgage and found out how much my mortgage payment would be.  I started looking for a house.  The smartest thing I did was live for those months as if I was paying a mortgage.  The difference between the mortgage payment and my rent was put aside.  That way, when I moved in to my house, I knew I could comfortably live and pay my mortgage.  The money I had put aside paid for my new appliances and lawyer's fees and all those last minute "I just bought a house" surprise expenses.

The moral of the story is I would never have been able to buy a house if I hadn't found Gail.  She made me believe I could get out of debt, her practical advice gave me the tools I needed to succeed and her words of wisdom gave me the confidence to take charge of my financial independence.  The best thing I learned from Gail?  "You earn enough money".  No matter what I earned, it was enough to realize my dreams.  The amount of money didn't matter.  What mattered was what I did with it; what I was willing to sacrifice; how hard I was willing to work.

So, find your own financial guru.  Maybe it will be Gail or David (Chiltern) or Suze (Orman) or Jean (Chatzy) or Dave (Ramsey) or your neighbour, Joe.  Find someone who you can trust and learn everything you can!  Good luck



  1. Good for you for sticking to it and winning the credit battle! I watched her show all the time. She was amazing at showing where the waste is in our lifestyles.

  2. I've watched Gail's show and if you make the plan and stick to it, it will work. Well done for sticking to it and getting yourself out of debt.

  3. I agree. Debt is a tough experience to deal with. It’s really advisable to have an inspiration or better yet, an advisor that can guide you all through the process. I’m glad you found yours already, and that you’re in a better shape than before. I hope it will continue that way so you can enjoy your debt-free life soon.

    Charlena Leonard @ WeidnerLaw


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