Debt education is not enough

By Bonnie Krisher

A life of service may be no life at all. There are many professions performed by committed individuals in our society that are often well respected and recognized for their benevolence. Unfortunately, one could argue that perhaps our gratitude for their work may not pay the bills. I once asked my husband if he valued our sons' teachers, and with a resounding yes he confirmed their incredible value. He stated, "Yes, they are so caring and supportive. The boys love their teacher." I then asked him who he thought provided more value, a hockey player or the kids' teachers. He hesitated as he cautiously considered his answer. Now hockey fans, I understand the true value of sports, but consider the root of my question. Simple gratitude for some very vital professions may not be enough.

There exists an invisible struggle piloted by student loans, credit-card debt, as well as lines of credit and overdraft debt. All of which may accompany the arduous journey to obtaining a teaching certificate and a limited 10-month income. When you consider the debt, limited income, and ever-increasing household expenses, the personal rewards of educating others may become tempered. While their appreciation for teaching is not diminished, their level of stress may be escalated.

Debt used to be considered a personal failure, a lack of financial education. Tamara Draut, analyst and author, states in the documentary In Debt We Trust that "we are not going to educate ourselves out of this [debt] problem. Financial education is wonderful and we need to do more of it. But what is driving a lot of the debt in these households is not the lack of budgeting or a lack of financial savvy, but an economy that is increasingly stacked against them."

Statistics Canada has shown that in the Vancouver area, mortgage payments alone consume 72% of the household income. This, eclipsed by ever-increasing gas prices and the overall cost of living, compounds the financial strain. These changes can often bring old debt to the fore and monthly payments could now become unmanageable. The minimum payments are even more difficult to meet and the sudden recognition that the 54% net profit that credit-card firms are realizing is only creating one winner.

Finding a resolution to your debt problems is never easy. If it is somewhat manageable but not being eliminated quickly enough, then consider a money coach or the program Blueprint 2 Black offered by Canadian Customer Debt Relief. Neither one will damage your credit report. We often only recommend debt consolidation if you anticipate an increase in your finances within a short period of time and if the consolidated loan comes with a low interest rate and if it is an unsecured loan. For credit counselling, we suggest that you do plenty of research first.

If your debt is not manageable or has mitigating factors such as a divorce, illness, or injury, then consider one of the following two options. Please note that each has its pros and cons:

Debt arbitration
A debt arbitrator negotiates settlements with your creditors at much less than what you owe. Find a debt arbitration service you are comfortable with.

Bankruptcy/Proposals
This should always be the last option considered. Not all trustees are created equal, so trust your gut when speaking to them. Ask all of your questions first.

I often tell my clients that if they are in debt then they are part of the majority and not the minority. It is unfortunate but true. There are many who are desperately trying to meet their monthly living expenses, not for the new car or fancy house, but simply to meet basic needs. Debt should never define a person; a person should define their debt. It is my hope that through creativity and diligence those who can somewhat manage their debt will begin to eliminate it. Those who are now in a position where debt has overcome their resources can consider options that provide a brand new start.

Bonnie Krisher, MEd, CDA, K&G Debt and Credit Professionals, www.kgdebt.ca, 1-866-354-8854.