Debt Free in 30

Latest Episodes:

92 – High Interest on Payday Loans Not The Real Problem: Consumer Debt Is Jun 04, 2016

Show notes

Payday loans are expensive. Lenders charge a ridiculously high interest rate and demand repayment in one balloon payment. Inevitably, this traps some payday loan borrowers into a debt cycle. As a result, the Ontario government is reviewing current payday loan legislation and it's considering changes. In today's show, Ted Michalos, my partner and co-founder, joins me to discuss some of the suggested changes, our own recommendations for the government, and which payday loan alternatives to consider before taking out one of these high interest loans.

Conventional wisdom says the following about payday loans:

the interest rate is too high, well above the maximum rate of 60% set out in the criminal code of Canada, and this causes a financial problem for payday loan users;
people turn to payday loans because they have a low income, can't access traditional credit and need a payday loan to cover necessities like rent, utilities and groceries.

I beg to differ with this wisdom.

While the interest rate is certainly an issue, it is not the real problem with payday loans. The real issue is total existing consumer debt. More specifically, it is the other debt that payday loan users are carrying before they take out a payday loan.

91 – Consumer Proposal vs Bankruptcy – Which One is Right for You? May 28, 2016

Show notes

If you are struggling with debt, how do you know which debt relief option is right for you? Both consumer proposals and bankruptcies have similar benefits, but the length and cost are different. On today's podcast Ted Michalos, compares various aspects of filing a consumer proposal vs bankruptcy.

90 – Planning for Retirement? May 21, 2016

Show notes

Are you planning for retirement? Have you started to save? Do you know how much you need? If not, then today's podcast is for you. My guest, David Trahair, stops by to discuss his new book, The Procrastinator's Guide to Retirement: How You Can Retire in 10 Years or Less, and provides tips for Canadians who've delayed saving for retirement.

89 – Is the Canadian Housing Bubble about to Burst? May 14, 2016

Show notes

Is Canadian real estate due for a crash? On today's show, I speak with Hilliard MacBeth, a portfolio manager and author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash, who thinks the Canadian housing bubble is about to burst.

Hilliard notes that there are four symptoms of a bubble:

A period of rapidly rising prices
People telling each other stories about why the price increase makes sense
People experiencing regret that they didn't get into the market earlier, or the fear of missing out – i.e. if they don't get into the market now, they never will
The media starts to talk about the bubble

He mentions that there is a prevailing myth that only Vancouver and Toronto are in a real estate bubble, when in fact the bubble exists across Canada. While incomes have only risen by 15% in the last 15 years and inflation has been under 2% for a long time, house prices have tripled. Considering that houses are paid for with income, the ratio of house-price-to-income has become so stretched that the bubble is no longer sustainable.

88 – Pay off debt, or invest? May 07, 2016

Show notes

On today’s show we discuss a common question: if I have some extra money, should I pay off my debt, or use it to invest? In some cases the answer is easy. If you owe money on a credit card with a 29% interest rate, and your investment will earn 1%, you should obviously pay off your credit card.

But what if your debt is a low interest mortgage, and you think you can earn a greater rate of return on an investment. Than what?

That’s the question we asked Sean Cooper (famous for paying off his mortgage in just over 3 years), and Ted Michalos, all on today’s Debt Free in 30.

87 – What Happens if you stop paying your debts? Apr 30, 2016

Show notes

Today I ask a question that generates a lot of debate on our Facebook page: what happens if you stop paying your debts? More specifically, what happens if you stop paying your debts and you are not in a consumer proposal or bankruptcy?

To help me delve deeper into this topic, Ted Michalos, my partner and co-founder of Hoyes, Michalos & Associates, joins me to discuss the various outcomes of not paying your debts.

86 – How to Rebuild Credit: 5 Simple Steps Apr 23, 2016

Show notes

Often, I share advice about how to get out of debt and live debt free. But, what if you've already eliminated your debt and you're ready to get back on track? What's next? Today, I am going to share tips on how to rebuild credit after a consumer proposal or bankruptcy.

First, I don’t advise that anyone, after completing a consumer proposal or bankruptcy, jump right in and start borrowing again. If you can live without debt, that’s great!

However, in today’s modern economy, you might need or want access to credit. And if you want to borrow and keep your interest costs low you need a good credit score. On today’s show we discuss tangible steps you can take to improve your credit score after a consumer proposal or bankruptcy.

On today’s show we discuss five simple steps to rebuild credit.

85 – Is this the payday loan regulation we need? Apr 16, 2016

Show notes

It’s no secret that payday loans charge an outrageously high interest rate. In Ontario, they can charge $21 for $100. If you take out a new $100 loan every two weeks, you would pay $546 a year, that's an interest rate is 546% on an annual basis. And therein lies the problem with these types of loans. But what is the solution?

On today’s podcast, Doug Hoyes speak with Jonathan Bishop, a Research and Parliamentary Analyst at the Public Interest Advocacy Centre (PIAC) about Bill 156 and pay day loan regulation. The PIAC is a non-profit organization that conducts research into public service issues that affect consumers. The payday loan industry is something they have been investigating for well over a decade.

84 – Tax Debt Help – Who Do You Call? Apr 09, 2016

Show notes

It can be hard to know who to turn to when you are dealing with Canada Revenue Agency and you need tax debt help. Some situations are relatively simple and can be resolved on your own, while other situations may require more expertise. Choosing the wrong professional for your situation, may end up costing more than it should.

On today’s show, Doug Hoyes speaks with Janette Martin, a Certified Credit Counsellor, and Ian Martin (no relation), a Licensed Insolvency Trustee with extensive experience with the CRA, about how to get the right tax debt help.

83 – Creating A Better Payday Loan Industry Apr 02, 2016

Show notes

The payday loan industry in Canada loans an estimated $2.5 billion each year to over 2 million borrowers. Like it or not, payday loans often meet the need for urgent cash for individuals who can't, or won't, borrow from more traditional sources. If your hydro is about to be disconnected, the cost of a payday loan may be less than the hydro re-connection fee, so it may be a prudent financial decision in some cases.

As a “one time” source of cash a payday loan may not be an issue. The real problem is payday loans are structured to keep customers dependent on their services. Like opening a box of chocolates, you can’t get just one. Since a payday loan is due in full on payday, unless your situation has improved, you may have no choice but to get another loan from another payday lender to pay off the first loan, and a vicious debt cycle begins.

So what’s the solution? That’s the question I asked my two guests, Brian Dijkema and Rhys McKendry, authors of a new study, Banking on the Margins – Finding Ways to Build an Enabling Small-Dollar Credit Market.

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