We need to talk more about debt, and I do not mean shaming people who have borrowed a lot and are feeling stressed about it. What we need is more sharing of stories about how people cope with and conquer their debts.
It’s this thought that made me want to feature Monique Shebbeare’s story in this newsletter. Ms. Shebbeare is a 49-year-old lawyer in Vancouver who specializes in wills, estates and fertility law. More than 15 years ago, she was a Bay Street lawyer with big debt problems. Aside from the mortgage on her condo, she owed $53,000 in student loans, various lines of credit and a credit card.
Here’s Part One of Ms. Shebbeare’s story:
I recently saw this Globe and Mail headline: Debt levels in most developing nations hit highest level in 50 years, many in ‘dangerous waters, World Bank warns.
Now, when I see a headline like this, I think, ‘Thank God I paid off all that debt.’ I feel a renewed sense of calm and quiet satisfaction that I dug myself out of a mound of debt that hung over my head for over 15 years. I have a mortgage, but I have no other debt. No line of credit, no car loan, no student debt, no credit card balance.
What a contrast to years before, when reading headlines like this would be followed by a wave of dread and fear as I thought of my own financial situation.
I graduated from an excellent law school into an excellent Bay Street job, with a medium-sized pile of student debt and a line of credit for professional students. Unfortunately, as excellent as my job and colleagues were, Bay Street was not the place for me. A few years in, I found myself on stress leave. After months of mounting anxiety, and daily tears behind my closed office door, I sat looking out my office window and realized, ‘I can't be here anymore. I just can't. I have to go.’
I walked out of the office and straight to my doctor's office. Luckily, her husband was a lawyer and she had no trouble understanding what I was going through. She was amazing. My boss at my firm could not have been more supportive, something I often still think about and am deeply grateful for. But during that 10 week stress leave, I realized I couldn't stay where I was. I went back to my firm for one more year, then embarked on a career transition without a practical plan about how I was going to make a living during that transition.
Even more unfortunately, I had closed the deal on my purchase of a Toronto condo right around the time of that stress leave. Of course, if I'd have seen the stress leave coming, I would not have added mortgage to my debt pile and monthly expenses (rents were reasonable in Toronto then). I had no savings. It was not long after I left the firm that I found myself paying my mortgage with my Visa. I know it was insane.
My credit lines were maxed, and I was fast approaching the credit limit on my Visa. I was building a new source of income, but it was going to take a long time for that income to match my expenses.
I was not going to go bankrupt. I had got myself into this mess, and I was determined to get myself out. No matter how long it took. Good thing I didn't know that it would take me about 14 more years to fully get out of debt.
Next time: How Ms. Shebbeare got herself out of debt (except for a mortgage)
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Rob’s personal finance reading list…
The RRSP deadline looms
Don’t forget that March 2 is the deadline to contribute to registered retirement savings plans for the 2019 tax year. Here is The Globe’s guide to retirement saving and investing: RRSPs, TFSAs, CPP, other pensions and more. (For Globe Unlimited subscribers)
The snatch-and-run list of best travel reward credit cards
A list of best travel reward cards for people seeking a big sign-up bonus. The idea is that you sign-up for the card, grab the bonus and then cancel the card after six months. Yes, this can mildly hurt your credit score.
Uber vs. Lyft vs. owning your own car
A comparison of the ride-sharing services Uber and Lyft, with added analysis on when it makes sense to ditch your own car.
The same gain with less pain?
An investing pro grades low-volatility exchange-traded funds on returns, diversification and tax-efficiency, and offers advice on how to pick this type of investment for your portfolio. Low-vol ETFs have been a very popular product in the fast-growing ETF world because they offer the promise of investing in stocks with milder up and down moves than the broader market.
This robo-adviser has a unique fee structure
A review of Nest Wealth, a robo-adviser that is unique in charging flat fees (the amount depends on your account size) rather than fees set as a percentage of your holdings. Some clients would pay more with Nest, others less.
Ask Rob
Q: I have a small inheritance and have room in both my TFSA and RRSP. Should I top them both up all in one shot or spread them out over time for the maximum tax benefit
A: With RRSPs, you can make a contribution any time and then strategically choose the year(s) when you want to claim your tax deduction. Ideally, you’d claim those deductions in peak earning years. There’s no tax deduction for TFSA contributions, so you can top up your TFSA as you see fit.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
This chart compares the average rental cost of a one-bedroom apartment in cities across Canada, with year-over-year percentage increases. Nine of the 10 most expensive locations are in the Greater Toronto Area.
In case you missed these Globe and Mail personal finance-related stories
- Globe Retirement Forum: When should I start my CPP retirement benefits? (for Globe Unlimited subscribers)
- Six tips for RRSP season
- With focus on ensuring Evelyn’s care, can James retire now or should he keep working?
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Rob Carrick