Good Life: How did you become so interested in debt?
Gail Vaz-Oxlade: I’ve been talking about money for decades, and while everyone else seems to
think “investing” is the be-all and end-all, I’m all about balance. There’s no point in having a bunch of money invested if you’re walking around with a whack of debt. So I went where no one else has dared to go.
GL: What is your background?
GVO: I started as a consultant to the financial services sector, designing product knowledge and sales training material for banks, trust companies and insurance companies. Later, when I had my kids and needed more flexibility, I switched to freelance writing for newspapers and magazines, like the Globe and Mail and Chatelaine. I dropped out and moved to the country and that’s where they found me when Til Debt Do Us Part was being created.
GL: What is the number one financial mistake couples make?
GVO: Most people don’t have a clue how much they are making or how much they are spending. And since they never talk to each other about the money, they’re wondering through their lives like their running a blindfolded three-legged race. It’s only a matter of time until they fall down, go buff!
GL: How have we become a society of buy-now-pay-later? Why do we have this sense of entitlement our parents didn’t have?
GVO: Between television, magazines, and the proliferation of stores, the enticements to spend are enormous. If our brother gets a big screen TV, we have to get one too. And if our cousin has a blowout wedding, we have to do it one better. Our parents didn’t do this for one simple reason: they didn’t have access to the credit we’ve had access to, so less rope to hang themselves.
GL: Are you surprised by the amount of debt-load people are willing to carry without being concerned?
GVO: I am, since I wouldn’t be able to sleep at night. But loads of people think that debt is normal, that everyone has debt (not true) and that debt will always be with them, so why worry?
GL: How do you determine the amount of monthly “play money” you have to spend?
GVO: You pay all your must haves, including enough to your debt to actually get the hell out of debt, and what you have left is your “disposable” income.
GL: On your show, you use jars to help couples budget. How does this work and why?
GVO: The jars have been a HUGE success, primarily because they allow people to see when they’re coming to the end of the money. This idea of living on cash, and only having a set amount every week, has really taken off. Of course while I call them the Magic Jars, the real magic is in the budget.
GL: You always take a tour of the household before assisting in finances. Most times there is little to show for the debt. Why is that?
GVO: Consumables probably eat up more of most people’s money than they have ever imagined: from cell phone bills, to satellite TV, from groceries to coffee and lunch on the go, people are spending the money they will need in the future a few dollars at a time. Most of my couples are astounded when I show them where their money has been going.
GL: What was the most shocking financial situation you have ever encountered on your show? How did you help that couple?
GVO: The biggest shock I ever got was with a couple that had never made a single mortgage payment from their cash flow. Every penny they used to pay their mortgage came off their line of credit! They thought that was normal. At the end, I held back a portion of the cash reward and they had three months to prove they were sticking with the program. I’m happy to say they got the extra money.
GL: How important is your credit rating? What is the best way to strengthen and protect it? How hard is it to fix?
GVO: Your credit rating is important because it’s used in determining if you should get a loan, and when you do, how much interest you’ll have to pay. The better your rating, the less it costs to borrow. Strengthening it is easy. Do the right thing: make your payments on time, use credit
responsibly, and never over-extend yourself. If you bugger up your credit rating, you need to make a plan to fix it by doing what I just described. After about six months you should see some improvement.
GL: You never advocate for consumer proposals or bankruptcy. Why?
GVO: I believe if you can’t keep a roof over your head and food on the table, and pay off your consumer debt in a reasonable amount of time – so not 10 years -- you should go and have a talk with a bankruptcy trustee to explore your options.
GL: What are the positive and negatives of couple’s having separate bank accounts instead of sharing one account?
GVO: I think having separate bank accounts is a good idea, since both people need to have their own financial identity. I often advocate for a Yours, Mine, Ours approach to money management within a family. People share their expenses in a way that works for them, and those expenses go through the joint account. But they keep their savings and credit separate so that they are strong individually. The big downside of a joint account is that if one person decides to hit the road, (s)he can empty out the joint account leaving the other guy high and dry.
Dollars & Sense
User Comments
