This holiday season, many Canadians are as focused on trying to save money as they are in needing to spend some. With overall debt levels mouting in 2009, it may seem as if there is no way to start chipping away at that massive debt load. Do you start with paying off the mortgage, the line of credit, the renos or the credit card bills? Finance expert Suzanne Schultz can help.
She joined us Friday, December 4th at 12 pm ET for a live online discussion on debt management. Your questions and her answers appear in the space below.
Once the live event is over, please click here to continue the discussion in our Personal Finance forum
Ms. Schultz, a chartered accountant and certified financial planner, has more than 15 years of experience helping individuals with their financial matters. On Wednesday, she appeared in a Globe & Mail Building Blocks video with advice for young families on how to come up with a plan to dig themselves out of debt. In October she provided these tips in a Building Blocks video on how to use child, home and spouse-related credits and deductions to cut your family's tax bill.
When not helping homeowners solve their financial problems on the new HGTV series House Poor, Suzanne works as a certified financial planner at RBC Dominion Securities in Hamilton, Ontario. Her areas of expertise include personal financial planning, tax minimization strategies and estate planning. Known for her expert advice, Suzanne has appeared on Business News Network's Talking Tax, Report on Business Television, CP24, Investment Television and the Canadian Learning Channel. Suzanne also co-authored Tax Tips for Canadians for Dummies and the new 78 Tax Tips for Canadians for Dummies.
In her free time Suzanne likes to run and do yoga, but can usually be found taxiing her children to local arenas for hockey and lacrosse.
Here is a text version of the Suzanne Schultz discussion:
Roma Luciw: Hi Suzanne, Thanks for taking the time to join us today. My name is Roma Luciw and I am the personal finance web editor and reporter here at the Globe. Suzanne is with us now and ready to tackle your debt questions.
We will start with one that was sent to us by email: When debt seems overwhelming, where does one start? Credit counselling services sound like scams (in ads) so I don't know if I can trust them. At the same time, I can't afford an expensive financial planner, but need the expertise they can provide. Thanks! JJ
Suzanne Schultz: Not all credit counselling services are scams. There are many non-profit organizations around to help. It sounds like you are taking matters into your own hands, which is good. There are a lot of great online sites to get financial information and help you budget. But when you debts are overwhelming, you probably do need professional help. Not knowing all the details here, I would start with your bank to see if you can consolidate some of the debts to hopefully lower your interest rate and to have more manageable payments. If you've exhausted that, I would seek the help of a credit counselling service. Good luck.
Roma Luciw: An online reader wants to know: Is it better to close my credit card accounts when I pay them off? One of my $1,200 credit cards is a $15,000 card. After 5 years and I have it maxed out and I know I can't handle credit cards.
Suzanne Schultz: It sounds like you can't handle the temptation of having credit cards. Therefore, absolutely pay them off ASAP and close the accounts when you're done. That being said, you should have one credit card with a manageable credit limit for emergencies or for circumstances in which a credit card is a requirement. Having a credit card and paying it off in full monthly helps maintain a good credit history, in case you need credit in the future. But for now…get rid of that debt and close out the cards.
Comment From Guest: I heard the best thing to do in terms of paying off credit cards is to start off with the ones with the lowest balances owing and work your way up. Do you agree?
Suzanne Schultz: It depends. I would look to see which credit cards have the highest interest rates first. Pay those off in priority. If you have a bunch of cards with the same interest rates, then yes, I would pay the lowest balances off first, then cancel the cards. Make sure you pay at least the minimum balances by the due dates on all the cards. If you have too many cards and are paying too much interest, consider consolidating at the bank to make the payments more manageable.