Monthly Archives: March 2015

Debt reduction, paying for college and planning for retirement

toastThe three most common financial objectives for Canadians are:

  1. How to get out of debt
  2. How to pay for education
  3. How to plan for retirement

Getting out of debt

I have been rich and I have been poor, but the fear of being poor has taught me to be frugal and to always stay out of debt.

For some people, being frugal is difficult because we are constantly bombarded with advertising which makes us desire and purchase things that we can’t afford. It therefore takes a lot of effort and discipline to stay debt free.

The most efficient way to get out of debt is not to incur it. Question all your expenses. Ask yourself: do I really need this? Does it have to be new or can I buy a used one? Can I do with a less expensive model? Do I have to buy it now or can it wait a bit longer? Make it a point not to buy things on credit and not to buy things that you can’t  afford.

I consider credit card debt the greatest enemy of financial independence. I recommend paying the debts with the highest interest rate first and then continuing down to the one with the lowest interest rate.

My preferred tactic to accelerate the payment of credit card debt is to get a line of credit at the local bank and to pay all the credit card debt. Then you’ll only have only one debt at a lower interest. This process makes your debt payment more manageable and you can save lots of money by paying less interest.

Paying for education

We Canadians are lucky to live in a country which subsidises education. A school year in Canada can cost between $3,000 to $6,000 while in the United States the same school year could could be than $20,000.

If you are a student and your parents allow you to stay at home until graduation, you could easily earn $3,000 working part time or working during the summer. A diploma is within reach of almost every Canadian.

If you are a parent and you would like to pay for your child’s education, you have a wonderful tool called “Registered Education Savings Plan.” This plan allows you to save and invest money for education tax free. Even better, the government is willing to contribute up to $5,000 towards your child’s education. This is a wonderful opportunity to get some free money and to invest it tax free.

Planning for retirement.

The main ingredients to plan for retirement are discipline and consistency. Many of us put off the idea of planning for retirement, until one day we wake up with the feeling that it might be too late.  For me, I began to have a sense of panic during my early 40s and ever since then I have been working on my plan. At the same time, I realize how much better off I would be if I’d have started saving in my early 20s.

It’s my opinion that a person should start saving for retirement as soon as they start earning money, even if it is a small token amount, to get into the habit of saving and planning.

In Canada the most popular saving tools are RRSPs (Registered Retirement Savings Plan) which allow you to defer taxable income until age 65 and TFSAs (Tax Free Savings Account) which allow you to invest money and not pay taxes on its gain. I will give more information about these plans in future articles.

After taking advantage of those two savings plans, the next step is to invest in non-registered savings accounts or real estate.


If a person has the proper plan, it’s not difficult to stay out of debt, pay for education and retire comfortably. It is all in the planning.

My services:

I offer money coaching services in person for people living in Montreal or via Skype if you live in the rest of Canada or the United States. The price is only $20/hour. To book a session, send me an email at

What are your goals?

Ivan, Sapan, Alain, & Kelly
Ivan, Sapan, Alain, & Kelly

1st step. Your net worth

When money coaching, the first thing I do with my clients is determine their net worth. It’s important to know where you are, where you want to go and then make a plan.

Determining the net worth is not difficult. The formula is: assets – liabilities = net worth. But when I ask my clients: “What are your goals?” I sometimes get a blank look. “Mmm… I am not sure,” they respond.

Then, I suggest the typical stuff: get out of debt, plan for retirement, etc.

We don’t know what we want

The reality is that most of us don’t know what we want out of life. The advertisers keep bombarding us with their messages and we lose track of our own thoughts.

For example, many people say: “I’d like to travel, but I can’t afford it.” And they never make a plan to fit traveling into their budget.

Many people borrow heavily for education knowing they’ll have a hard time paying back their student loans. They just do it because everybody else does.

The in-between

Many of us live in the “in-between.” The in-between is that uninspired space in which we are not satisfied with how things are going, but we are not dissatisfied enough to do anything about it.

We are institutionalized

We are completely institutionalized. We are born in a hospital. As soon as it’s possible, we are placed into some kind of child care facility, then we go from grammar school, to high school, to college. We work in an offices for 45 years, and finally, at age 65, we are allowed to be free for a few years before we’re put in another institution, to die quietly and away from the public eye.

We are exposed to advertisers all the time. We watch TV, listen to the radio, surf in the Internet and look at billboard on the streets. Advertisers to manipulate our way of thinking. We are told that in order to succeed we have to buy 4 years of education, get a mortgage, buy a car every 4 years, be up to date with the latest fashion trend and technology. Many of us live in that manipulated world for the rest of our lives. Very few make a conscious effort to get out.

We are addicted to our paychecks, and we are imprisoned by our mortgages. We willingly work at a job we don’t like in order to pay for a property which we don’t have time to enjoy. We see the other people, not as who they are, but as what they own.

We are not only shackled by our jobs, salaries and debt, but we are also shackled by our inability to see that there are other opportunities available. Our chains are not physical, our chains are mental, which is even worse because we become our own prison keeper. We see that pension at age 65, or the lottery, as our only way out and meanwhile we complain about the system, the government, income inequality, and so on.

We are the system. We are the 1%

But we don’t realize that we are the system. We keep the system alive by following the rules as we are told, by our aversion to uncertainty. We would rather be unhappy than face uncertainty. So we take a path that we don’t like because we fear the path we don’t know.

We live a life of material abundance, we are consumers. We complain about income inequality but only when others earn more than we do. We are the 1%. We are considered successful when we are perceived to spend than our neighbors.

We are considered successful when we spend money. We prefer riding 20 minutes to work by car than riding 20 minutes by bike. We give higher value to the person who has a garage full of stuff than the person without a garage and no stuff. I see people spending $5000 on bicycles that are 2 pounds lighter, instead of just losing two pounds. We pooh-pooh the idea of public transportation and instead spend $20K+ buying a car.

It doesn’t have to be this way

It doesn’t have to be this way. We could do things differently. For example, how about if we could get our education for free just by going to the local library or by taking free courses on the Internet? We would get rid of student debt.

Rather than working more to have more stuff, how about if we have less stuff in order to work less? Can we trade cars for bicycles? Can we do away with TV and cable? Do we really need to buy Apple gadgets every year?

Here are some suggestions:

  1. We can start by accepting personal responsibility. Instead of blindly following the system, we should realize that we are prisoners of our own culture and behavior. Just like the alcoholics who recognize themselves as alcoholics, we have to recognize that have been active participants in our own situation. We bought that iPhone on credit, we purchased that education which we are not able to afford now nor in the future, we continue living beyond our means.
  1. We can increase our dissatisfaction with the present situation. Instead of accepting things as they are, we can increase our displeasure of the situation to the point of where we are forced to do something to change our present environment.
  1.  We have to visualize life outside of the system by reading and educating ourselves about all the different alternatives.
  1. We have to build a plan to change our life. Set a series of milestones which you will able  to achieve by a set time period .
  1. Take action. Don’t postpone the changes in  your life, build that plan and start taking little steps or big steps toward that better financial and personal life.