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Drinking, divorce put ex-banker $85,000 in debt, jeopardizing retirement.

Terry Cheater/Terry Cheater/Handout

As a young banker in the 1970s, Terry Cheater was living the high life. The bank's motto was "work hard and play hard," and he did both with enthusiasm.

"It was part of the bank culture at the time," the Winnipeg man says. "I spent a lot of money on drinking, dining out, clothes and my life at home. I have no idea how much I spent but I gather it was substantial in relation to my income."

Mr. Cheater gave generously to charities and regularly contributed to his retirement savings. However, behind closed doors, things were not how they appeared. His bank account was frequently overdrawn and he was using one credit card to pay off another. At one point, he was facing foreclosure for not paying his property taxes. The debts were piling up.

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"My wife and I spent more than we made and the bank credit was easy," Mr. Cheater said. "It was very easy to get into debt."

When his heavy spending on alcohol eventually drove his wife away, Mr. Cheater knew his lavish lifestyle had finally caught up with him. A long court battle left him unable to pay his divorce lawyers, and they froze his assets.

"Because there was a freeze on all my assets, I couldn't borrow any money and I couldn't sell anything and I couldn't pay."

When the courts cautioned that he could end up in prison, Mr. Cheater knew he was at rock bottom. Homeless, he turned to his parents, who loaned him money and took him in.

Laurie Campbell, CEO of Credit Canada Debt Solutions, says substance abuse and addiction problems, if they go unnoticed or are left untreated, can destroy people's finances. In Mr. Cheater's case, his work record was impeccable and his employer never asked him to get help for his drinking or his debt issues.

"You add divorce onto that -- the legal fees, the fact that you have to set up a home on your own and split your assets -- basically, you're starting over," Ms. Campbell says. "Some people would give up in situations like that and would never recover."

An increasing number of elderly people are facing debt problems, Ms. Campbell adds. "They're either going into retirement with debt, or they're creating debt in their retirement because they haven't been able to make ends meet. They didn't have a good exit plan from work because they didn't have a pension built or extra money saved. This is going to be a growing trend for Canadians, unfortunately."

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Mr. Cheater says he has lost track of how much debt he accumulated at the peak, but by age 51, with more than $85,000 still owing, he decided to get serious about tracking his cash flow and paying off his debts.

"I started to realize I couldn't go on like that forever. I could be very poor in my old age."

Using computer spreadsheets, he set up cash flow projections and painstakingly recorded every expenditure so he could stick to his budget. He paid himself a cash allowance for discretionary spending. Even spare change went toward debt repayments.

He started by paying down the debts with the highest interest rates first. "If I got a little victory by knocking one off, I really felt good."

By age 61, he was finally debt-free, and it felt "great." Now 68, Mr. Cheater says he hopes his story will help others avoid falling into debt.

"It is hard to look back on these chapters of my life. Suffice it to say I was the bad guy in my own movie," he says, adding he now has his drinking and spending under control, and is enjoying a comfortable retirement.

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"Today, my children and I have a reasonably good relationship, and none seem to be following in my footsteps."

Follow Dianne Nice on Twitter: @diannenice

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