The True Cost of Debt With Meg Penstone

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On today's show, Meg Penstone, the Manager of Financial Health and Literacy for Family Counselling and Support Services in Guelph Wellington, shares some sobering numbers and reasons why our debt can get out of control, and gives listeners advice for dealing with their debt.

The Real Cost Of A Payday Loan

Do we fully understand the cost of debt?  We see the ads for loans where you "only pay $20 on a hundred".  $20 sounds like a good deal, but is it?

Banks tend to not want to take on a lot of risk, so some clients will go into the payday loan system, and not everyone fully understands the costs of the payday loan system.

In Ontario, a payday loan lender can charge up to $21 on every $100 borrowed, which may not sound like a lot, but when you consider a payday loan will be paid back next payday, perhaps two weeks later, that's $21 every two weeks.  That's well over 500% per year if you keep borrowing every payday. Meg really drives the point home when she says

What we hear from time to time is there's a gap in the system. That's how come there's so many payday lenders out there, is there isn’t another place for people to go. And we know that there's actually more payday lenders in Ontario now than I think there are Starbucks.

Financial and Emotional Warnings Signs of Debt

So how do you know if you have too much debt? Meg says there are two obvious categories of warning signs: financial and emotional. Financial warning signs include:

  • living paycheque to paycheque;
  • always using your overdraft;
  • only making minimum payments;
  • late payments; and
  • robbing Peter to pay Paul.

Emotional warning signs include:

  • always being worried about money;
  • physical symptoms, like:
    • headaches;
    • digestive issues;
    • lack of sleep; and
  • constantly arguing about money.

Which type of warning sign is more pronounced?  According to Meg:

Usually we see the emotional side.  It's just wearing people down.

Debt builds up over time, but then there is the "straw that breaks the camel's back," a triggering event, like a medical issue or a marital separation, and that pushes the person over the edge making debt too much to handle.

Numbers Don't Lie

So, what's Meg's advice if you have too much debt?  The starting point is to look at the numbers to understand where your money is going. Once you see the numbers, the solution is often clear.  Your budget must balance, so start by getting a firm estimate on living costs. Once you see all of the numbers you can start to make changes.

Tea and Toast

Meg's advice for listeners looking to start the conversation is to talk to their partners; you need to approach debt as a team. Working together lessens the isolation, and if you both have a say in a plan, you are both more likely to stick to it.  How do you do that?  Follow the Tea and Toast Principle:

When we are under stress we have a "flight or fight" reaction, so we either avoid talking about it, or we start to argue about money.  Set some time aside.  Make yourself a cup of tea and some toast or muffins, and then discuss it.  Don't discuss it at the end of the day when you are feeling overwhelmed and stressed.

Substitution, Not Denial

When you have tea and toast with your partner to discuss your finances, focus on substitution to reduce expenses, not denial of every expense. One example is instead of stopping at the coffee shop twice a day, make your coffee at home.  You are substituting a less expensive source of coffee, but you're not denying yourself coffee all together so it's more likely you'll be able to stick with the plan. Listen to the full podcast for more about:

  • which debts to pay off first; and
  • practical advice for dealing with debt.

Scroll down to read the full transcript.

Resources Mentioned In The Show

FULL TRANSCRIPT show #74 with Meg Penstone

cost-of-debt-transcriptDoug Hoyes: This is Debt Free in 30 and today instead of just talking about one topic, we're going to discuss lots of different debt related topics, such as why do people have different debt problems? Is it just overspending or is there more to it than that. What are some of the signs we should watch for that indicate we may be getting into debt trouble? Do we fully understand the cost of debt? And if you're having debt trouble, what should you do? To answer these questions and much more I'm joined by a money expert with many years hands on experience with debt. So, let's get started, who are you? Where do you work and what do you do?

Meg Penstone: Hi Doug, my name is Meg Penstone. I work at Family Counselling and Support Services in Guelph Wellington and I manage the financial health and literacy unit here.

Doug Hoyes:    Great, well thanks for being here, Meg. And in fact we're here in Guelph in your office recording this today. So, before we start let me repeat the disclaimer that I give at the start of many of our shows and that's this: Debt Free in 30 is a show that talks about all of the ways to deal with debt. This show is not a commercial for any one method and just because I'm talking about something doesn’t mean I'm endorsing it or saying you should try it.

I'm a Licensed Insolvency Trustee so not surprisingly if you have debt I think you should consider personal bankruptcy or consumer proposal, however, I don’t think that's the right solution for everyone. In fact, it's not the right solution for most people and that's why on this show we like to discuss lots of different alternatives. One of those alternatives is credit counselling and that's a service that your agency provides. So, Meg, can you give us a quick overview of what Family Counselling and Support Services for Guelph Wellington does?

Meg Penstone: Sure. We have three major units within family counselling. One is the clinical unit and that works more with the emotional side, so stress, family related issues, couple concerns, children's programs. We also have the developmental services side and that works with families and individuals with developmental disabilities. And then there's the financial literacy unit. So, we meet with families and individuals one-on-one who are experiencing stress related to debt or financial difficulty. We also do public education seminars. We go into the classrooms and teach kids about financial literacy and we work with specialized groups such as the poverty task force.

Doug Hoyes:    And I want to pick up on something you just said there 'cause you said one-on-one. So, I personally believe that talking to a not for profit credit counsellor is a good idea if you can actually sit down with them face-to-face and have them spend time help you evaluate all of your options. I'm not a big fan of these huge agencies that'll only talk to you on the phone or by email and will help you if you meet certain criteria. So, you and your agency meet with people in person, that's the way it works? The vast majority of people you meet with are going to be one on one in person?

Meg Penstone: That's correct, Doug. Almost 100% of the clients we see are one-on-one. If someone absolutely can't get in to see us one on one we'll set some arrangements up.

Doug Hoyes: But you prefer the one on one. So, tell me about the kind of people that you're typically going to help? And let's maybe - obviously on the credit counselling side of things. But the beauty of being with an agency that does other things I guess is that people who have an issue in one area that may impact their finances, you've got people here that can deal with both areas. That's kind of the point?

Meg Penstone: That's right 'cause we know marital problems are a big cause of marital discord.

Doug Hoyes: Yeah, it's a chicken and an egg thing I guess. Which caused the problem and which is the symptoms? Well, it could be either way. So, being able to cover off both helps. So, what's the profile of the kind of person that you're going to help here at the agency?

Meg Penstone: Sure. We have a - it's quite a broad range of individuals that we meet with. The age range varies from 18 to 81 years of age last year. Our average age is probably about 45. And income levels range from zero to $250,000. It's quite a broad scope of who gets into financial stress.

Doug Hoyes: Yeah, the more money you make the more you can spend, so the more debt you can have.

Meg Penstone: That's right.

Doug Hoyes: And that shocks a lot of people. I mean I think the profile of who you help is very similar to the people we see. That sort of - 45 is the worst possible age because your kids are still at home but your parents may still be alive, you may be helping them out. You may be getting squeezed at both ends. So, it really goes run the gamut.

So, let's get to the talk about debt then. So, why is it that people get into debt difficulties? You just said there are people that come to the agency who have really good salaries, that make a lot of money. And yet they still get into debt difficulty. So, is it an overspending thing or are there a bunch of other causes?

Meg Penstone: It can be overspending but certainly that's not the only cause of financial difficulty. Separation and divorce is a big one. You're now dividing capital costs up, instead of two incomes managing one mortgage or rent. You've got one income having to handle that. Health is a big issue; physical and mental health can play a factor where people have limited incomes they can earn or they may have to take some time off work to manage their health. Chronic poverty also can cause financial distress and the debt that people with low income have to access are often those high interest rate debt costs.

Doug Hoyes: So, you hit on a few areas here. So, tell me a bit about chronic poverty first. What do you mean when you say chronic poverty?

Meg Penstone: So, someone that's had low income of a sustainable period of time. So, they may have a disability and be earning $1,000 a month from ODSP.

Doug Hoyes: And it's very hard to then get out of that. Okay, so then you also mentioned about the high cost. So, when I'm someone who is on the edge, I can't just walk into the big financial institution with the marble walls and everything and get a loan at prime minus 10%. They're not giving me the free money like the government's hand out to the big corporations. So, what do you see in that area, then? What kind of financial alternatives do people end up having to go to that end up being more expensive than what you think.

Meg Penstone: So, you're right, sometimes the banks and the more traditional lenders tend to not want to take on a lot of risk. And as a result of that, some clients will end up going into the payday loan system. And not everybody fully understands the costs of the payday loan system.

Doug Hoyes: I think we all understand it. I see their signs all the time. You know you can get a loan, you only got to pay back $10 extra at payday or whatever. What's the big deal?

Meg Penstone: Well, in Canada there's actually federal law around what lenders can charge. And not a lot of people understand that. That's the criminal code, which says you can charge about 60% annual interest. What's often not fully understood is there is an exemption to that criminal code and that's with payday lending. So the federal government said if the provinces are willing to legislate their own payday lenders then they can be exempt from the criminal code. So, in Ontario that amount is $21 for every $100 borrowed. That's how much a payday lender is allowed to charge. And often people will think that's 21% interest. But it's only 21% interest for the period of time that you borrow it.

Doug Hoyes: So, okay we got two different laws here. We've got the federal law, which I guess you're referring to the criminal code that deals with usury.

Meg Penstone: Uh huh, that's right.

Doug Hoyes: And it says, you said 60% is the maximum.

Meg Penstone: Annual rate, yeah.

Doug Hoyes: Annual rate but then there's an exemption that says in Ontario the maximum rate is $21 on every $100 borrowed.

Meg Penstone: For a payday lender.

Doug Hoyes: For a payday lender. So, if I borrow that $100 for a year, the maximum would be $21, okay that would be 21%. But of course the average payday loan isn’t a year.

Meg Penstone: That's right. So, if we took that over 10 days it would be 21% for that 10 day period. If we take - we know there's 365 days in the year, which means there's 36.5 10 day periods. If somebody did that every 10 days for a year you'd be over 700% and that's not often well understood.

Doug Hoyes: Yeah, well and I think you're exaggerating. It's usually not a 10 day loan; usually it would be a 14 day loan.

Meg Penstone: That’s right so that would be over 500%.

Doug Hoyes: That's right, it's only 500%. So, you're making it sound worse than it is. But no, your point is a valid one. If we were to do a survey of everyone who's listening today and were to ask them what is the annual rate that you would pay to one of these less traditional lenders like a payday lender, the answer probably is 5 or 600%. And I guess the problem isn’t that one loan. It's how do I pay it back in 14 days.

Meg Penstone: Right. And if you can't pay it back, often people will go another payday lender and they get into that cycle and I'm sure you've experienced that in your own organization.

Doug Hoyes: Absolutely, because if I remember correctly, you can't as a payday lender, keep lending to the same person over and over.

Meg Penstone: Right.

Doug Hoyes: You can't - I guess roll over is the word. But I can go to the guy next door and borrow from him. And then I can come back to the first guy the next time, and so, in effect I am. So, have you had people come in here who have loans outstanding to more than one payday place at the same time?

Meg Penstone: Yes, absolutely.

Doug Hoyes: And once you get into that trap you can't get out.

Meg Penstone: It's very difficult to get out of it unless you have some special amount of funding that comes in like your tax return. Once you're in it can be tough to get out.

Doug Hoyes: Yeah 'cause $21 on $100 so, the typical payday loan is going to be what do you see, like $500, $600 till next payday. Well, okay so $500 times 21, that's $100, that's more than $100. So, I borrow $500, I've got to pay back $600 in two weeks.

Meg Penstone: That's right.

Doug Hoyes: Well, if I didn’t have the $500 at the start, where am I going to have the $600 at the finish?

Meg Penstone: Yes, and that's often the conundrum unless you have a specified plan.

Doug Hoyes: So, if I know I'm getting a bonus in two weeks, fine then I guess I'll have the money to pay it off. But if it's just going to be my regular paycheque then I've got a problem. Have you seen payday loans with people on a fixed income like people on ODSP or people who get a pension once a month?

Meg Penstone: Yes.

Doug Hoyes: So, it's not really just a payday loan, it's a loan against your income, which might not be a payday. And so, is that a good idea if you're on a pension to be getting a payday loan?

Meg Penstone: Well, you have to have the plan to pay it back. The concern is how expensive it is and I get worried when people don’t fully understand those costs and that's part of why I'm on this show is to help to provide education around some of this so people know. We see that on cans of soup, we know all the ingredients, right? We know that alcohol is bad for your health. We just want to provide information so people know what they're getting into and then it's up to them to make the choice. What we hear from time to time is there's a gap in the system. That's how come there's so many payday lenders out there is there isn’t another place for people to go. And we know that there's actually more payday lenders in Ontario now than I think there are Starbucks.

Doug Hoyes: Wow.

Meg Penstone: Yeah.

Doug Hoyes: When they get to the level of Tim Hortons then we'll really have to worry I guess. Well and my perception is that the payday loan places are quite approachable. You know, they're friendly when you go in. they all have storefronts so it's not like I've got to go up the stairs in the back alley, they're right there on the street. I walk in, there's friendly people there and it's quick and easy. You need a payday loan, boom I've got the cash in my hands five minutes later and I'm walking out. And I suspect that has a lot to do with why they've been as successful as they've been.

Meg Penstone: Uh huh, we do hear that from clients for sure, that they've been treated - they have a very customer friendly service and it's not as intimidating sometimes as maybe going to a more formalized or perceived formalized institution.

Doug Hoyes: Yeah, and obviously banks have specific rules they have to follow. There's all the money laundering rules and anti-terrorism rules and know your client and they've got to get all your I.D. and all the rest of it that a payday lender perhaps has less constraints on them from that point of view. So, in terms of practical advice then, what you're saying is crunch the numbers, know what you're paying.

Meg Penstone: Yes and know too that the banks can't just turn you - I have a lot of clients that don’t deal with banks because they think they're not allowed to because they're in financial difficulty and a bank won't let them open an account. The banks are actually quite heavily regulated. They have to have specific reasons not to open a bank account for you. And having money difficulty is not one of those valid reasons.

Doug Hoyes: So, if I want to open a bank account to have my paycheque deposited, in the vast majority of cases, the bank has to do that.

Meg Penstone: Correct.

Doug Hoyes: It's pretty much that simple.

Meg Penstone: That's correct.

Doug Hoyes: And so I shouldn’t be afraid to go to a bank just for that reason. I shouldn’t be going to a cheque cashing place and paying a huge fee just because of perceived financial problems. The bank is supposed to deal with me. And you're saying in your experience, yes they will.

Meg Penstone: Yes, they will. And there's many friendly bankers out there as well. Sometimes it's that perception that this is going to be an intimidating process but it doesn’t have to be that way. And the banks have to open a bank account unless you have specific - they have to have specific reasons not to.

Doug Hoyes: And can you -

Meg Penstone: Like fraud.

Doug Hoyes: Fraud, okay.

Meg Penstone: Or you’re a threat to one of their bank staff, then they can't open up that bank account. They have the right to refuse you if they think one of their staff is going to be physically harmed.

Doug Hoyes: Got you, but that's a pretty rare circumstance.

Meg Penstone: Absolutely.

Doug Hoyes: I don’t know a huge amount of people who've already been convicted of fraud or something like that.

Meg Penstone: That's right.

Doug Hoyes: Well, so if people are sitting there right now and they're thinking okay that all makes sense, but yeah, I do kind of feel I'm on the edge, how - give me some signs that there are that I can use to recognize whether perhaps I've got more debt than I really should have. What are some of the warning signs that you typically see?

Meg Penstone: We typically see two forms of signs, two categories. One are the financial ones and one are the emotional signs. So, the financial signs are things like you're always going paycheque to paycheque. There's no savings. You're consistently dipping into overdraft all the time. You're paying the minimum on your credit cards, which can be tremendously expensive when it comes to the amount of interest you end up paying overall. You're late with your payments, you're constantly feeling like you're robbing Peter to pay Paul and from the emotional aspects you're worrying about money. A lot of the clients that we see come in and say they're even experiencing physical symptoms. They've got headaches, their digestions off, lack of sleep is a huge one. Or they're arguing about money with their partners.

Doug Hoyes: And so if anyone listening is ticking off any of those boxes than that's a serious thing. When you meet with someone, which of those typically is more severe? Is it the purely financial things, do people come in here and say well the reason I'm here is because I'm living paycheque to paycheque? Or is it really have to become an emotional thing before people reach out for help?

Meg Penstone: Usually we would see the emotional side. It's just really wearing people down.

Doug Hoyes: That's interesting. So, it's literally, not literally but figuratively, the straw that broke the camel's back.

Meg Penstone: Yeah.

Doug Hoyes: So, okay I'm not able to make my minimum payment this month, if it doesn’t affect me at an emotional level I keep on going. But do you find that with a lot of people there is some kind of triggering event? Because debt isn’t something that, yeah I had a million dollars in the bank account on Monday and today I'm a million dollars in debt. It doesn’t work like that. It's a long process in most cases, would you agree with that?

Meg Penstone: I would agree with that. And then there's the straw that breaks the camel's back. So, a separation happens or hours at work were reduced. So, they may have been carrying debt and on the margins to start with and then they've lost their overtime income. And so, that tends to be the straw.

Doug Hoyes: So, the problem was already there.

Meg Penstone: Often, not always, but often.

Doug Hoyes: It wasn’t necessarily the separation for example or the health problem that caused the debt, but it caused me not to be able to service it. So, again tell me if I'm wrong here, but I'm married, we've got some debt but like you said earlier there's two incomes coming in. We've only got to pay one set or rent, one phone bill, on hydro bill. We're able to handle it. But then when the separation happens now all of a sudden I can't cover the payments. The income is cut in half, the expense often go up and that's what becomes the triggering event then but the problem was already there.

Meg Penstone: Sometimes the problem was already there, not always. In the case of separation and divorce it can just be a matter of the two incomes aren’t going into the one form of capital cost or the mortgage and now they're having a lot more costs to carry. Someone could be earning $100,000 and have a relatively safe amount of debt and a more expensive car and then they drop to $50,000. Well, they can't afford that car that they could have carried on the $100,000 and it's very tough to get out of that loan.

Doug Hoyes: And so when that happens, so someone comes in to see you and they've just gone through a separation and you look at the numbers and you go, well you know what? You can't afford the same house, the same car, the same level of expenses. Is that a hard conversation to have with people? That okay, there are going to have to be changes ?

Meg Penstone: It can be. A lot of the clients that come in, many of them are ready for change. They know that that's happening, not always, but many of them are. And generally, what we do is we look at the numbers. We go through a very detailed income and expense statement. The beauty and the not so happy side is the numbers don’t lie, what you bring in and what goes out, they at the very least have to match and ideally there should be some savings in there. And if they don’t then we have to look at ways to make them match. We usually ask clients to drive that because it's their life and they have to follow through with that budget, but we guide them in a supportive way to try and get them to at the very least balance.

Doug Hoyes: Yeah and I think that's the beauty of what you and I do. People don’t have to believe what we're telling them. There are the numbers. If the numbers show that you've got $2,000 a month coming in and $2,500 a month going out, you can draw your own conclusions; it is what it is. So, when we get back to the practical advice then, writing it all down is a great starting point, then.

Meg Penstone: Absolutely, and get a really firm cost on what - a really firm estimate on what your cost of living is. We find that people often underestimate what it costs to live when you put in all those periodic expenses that tend to crop up from time to time. So, the dog needs to go to the vet or the car breaks down or Christmas rolls around or you have those school trips that your kids come into. You have to incorporate that into your cost of living to have a realistic estimate.

Doug Hoyes: Yeah and it's not hard to figure out when Christmas or birthdays are going to happen because they are on the same day every year. But they don’t happen every month and that's what causes you to get into trouble. So, how is it that people can find you and the agency if they are listening to this and going, yeah I really do need to sit down with someone? What's the website, what's the best way to reach you guys?

Meg Penstone: Sure, they can contact us at 519-824-2431 and ask for extension 12, which is the intake department. Intake just basically means that it gets you registered and a file open in your name. And then we're a United Way funded agency so our fees are based on a sliding scale of income and number of dependents so that will range from $10 to $100. Because as we said sometimes people are coming in with $250,000 in income, we won't use United Way for that. But for clients that can't pay we will subsidize that fee.

Doug Hoyes: And what's the website that they can find you on?

Meg Penstone: www.familyserviceguelph.

Doug Hoyes: .on.ca.

Meg Penstone: That's right.

Doug Hoyes: There you go. So, what I'm going to do in the show notes is put that phone number that you gave 519-824-2431 extension 12 or familyserviceguelph.on.ca so that people can track you down. Thanks very much for being here, Meg. Thanks very much.

Meg Penstone: Thanks, Doug.

Doug Hoyes: Thank you. We'll be right back. You're listening to Debt Free in 30.

Let's Get Started Segment

It's time for the Let's Get Started segment here on Debt Free in 30. My guest today is Meg Penstone, who is the Manager of Financial Health and Literacy at Family Counselling and Support Services here in Guelph.

So, Meg before the break we were talking about how do you know if you've got too much debt. So, let's get into the practical advice section here. So, what should people do if they think they are getting into trouble? Where's the starting point? When someone comes in to meet with you or one of your people, where do you start? What's something they should think about first?

Meg Penstone: Well, if you have a partner, sit down with your partner and start looking at the numbers. Often we feel very isolated and we try and take things on ourselves and then we tell our partner that they can't spend money on this, that or the other and people can start to get defensive. So, if you can approach it as a team, then it lessens the isolation and you can come up with a plan. And when people have a say in a plan they tend to follow it more than if people are told what they have to do.

Doug Hoyes: And you have to have the whole facts to make the decision.

Meg Penstone: Absolutely.

Doug Hoyes: So, if my spouse is the one who does the grocery shopping and I have no clue what food costs and I have to admit I have no clue what food costs. Like if you ask me what a loaf of bread is I'm not really sure. So, that would be a good place to start. But then, obviously, on the other hand what income's coming in, what overtime's available, all those kind of things.

Meg Penstone: Yeah and what your costs are. And I always talk about with my clients , the tea and toast principle.

Doug Hoyes: Tea and toast.

Meg Penstone: Tea and toast principle, so what we see often is couples start to talk about money when things are going wrong. And we know when we're under stress we usually hit that fight or flight instinct. So, we either avoid talking about it altogether or we start to argue about money. So, what I always suggest to couples is set some time aside, some quiet time aside, make yourself a cup of tea and some toast or a cookie or some muffins and then go at it. Don’t do it at the end of the day when you're feeling overwhelmed and stressed and creditors might be calling or you've just opened up the bills. Set a little time aside.

Doug Hoyes: So, maybe on a Saturday morning as opposed to a Friday night after a long week, fire up the computer so you can call up your bank accounts, get your statements all, set them all out and take a look at them. And I would think that once you start that analysis it becomes, okay now what do I have to cut back? What do I have to cut back? What do I have to cut back? What are the things I'm going to have to deny myself? What are the sacrifices I'm going to have to make? Is that the way you should be looking at it?

Meg Penstone: Well, we always like to talk about substitution not denial.

Doug Hoyes: Substitution not denial.

Meg Penstone: That's right. So, if you're used to stopping at a popular coffee shop.

Doug Hoyes: Not to mention any names, yeah.

Meg Penstone: A couple of times a day because that's your treat, we don’t say you just have to not drink coffee, but you may be able to grab a coffee from home instead of stopping in somewhere and that can actually save you a thousand bucks a year easy.

Doug Hoyes: Wow, big bucks. So, yeah it's not a case of I never drink coffee again. It's a case of, well, I guess I have to get up five minutes early, fill up the coffee pot, push the button and then I can take a huge thermos with me if I want. And I'm still saving money compared to what I would have been going out to the coffee shop to buy it.

Meg Penstone: That's right. There's different things, you know, you still want couple time but it doesn’t have to be going out for dinner on a Friday night. There may be other things you can do with friends and family that are lower cost. We want that social aspect of it. We don’t want denial, we want substitution.

Doug Hoyes: Well and I know Robert Brown who wrote the book Wealthing Like Rabbits suggests that instead of going out for dinner, maybe what you do is you go out to, you know, a popular coffee place afterwards and have a piece of cake or something. Well, okay you're still treating yourself but that's a lot cheaper than going out for a full meal. So, substitution not denial is the key to it. So, what's next, then? Then we get into the actual number crunching, I guess.

Meg Penstone: Absolutely. And I think we talked about that before the break is really getting a sense of what your true cost of living is. And there's lots of websites available that have budgets and you want a good detailed budget. If you can't find that, give us a call and we'll get one to you.

Doug Hoyes: And so if I've got a list of everybody I owe money to and I'm able to cut some money out of my budget, I got a little bit of money I throw at debt repayment What's the first thing I should pay off? Where do I start?

Meg Penstone: I believe in paying off your high interest rate debt first. There's some other principles that say pay the small balances off but I like the idea of paying your high interest rate stuff. So, that's usually have credit cards. If you have payday loans, they would be first.

Doug Hoyes: And that's because of math.

Meg Penstone: That's because of math, that's right, we're back to the numbers.

Doug Hoyes: Right, so it's not some religious statement you're taking here that we have to take on faith. Yeah, it's a math thing and, yeah, I agree with you. I understand paying off that $50 cell phone bill from two years ago maybe is a good idea 'cause then it gets it off your list. But if you've got a $3,000 credit card and a $6,000 one and the $3,000 one is the high interest rate one then by all means chip away at that one first 'cause that's going to free up more money that you can then use to chip away at the rest of your debt. So, sit down and talk, that was step one. Crunch the numbers, see where the money's going, pay off the high interest debts first and then remember it's substitution, not denial.

Meg Penstone: That's right and if you're having difficulty or want - think it would be helpful and come in and have a third party assist with that, that's what we're here for.

Doug Hoyes: Absolutely. Familyserviceguelph.on.ca is where you can find Meg and her team. Thanks for being here today, Meg.

Meg Penstone: Thanks a lot.

Doug Hoyes: That was the Let's Get Started segment. We'll be right back to wrap it up right here on Debt Free in 30.

Doug Hoyes: Welcome back. It's time for the 30 second recap of what we discussed today. On today's show Meg Penstone gave us a great list of warning signs of too much debt, including both financial and emotional warning signs. That's the 30 second recap of what we discussed today.

So, what's my take on what Meg had to say. I'm an accountant, so when I'm asked to give a list of warning signs of too much debt, I often think of financial warning signs like only making the minimum payment or making late payments. What fascinated me about what Meg had to say is that to her, the most urgent warning signs are often emotional, not financial. She meets with people that have too much debt and it's causing stress, which leads to mental anguish, but also physical signs like headaches and digestive issues. That's a great indicator of underlying stress. So, I agree with Meg's advice: if you're feeling the effects of too much stress, debt might be a problem so now is the time to get help.

That's our show for today. Full show notes are available on our website including links to Meg's agency's website and links to a list of all of the solutions to debt problems. So, please go to hoyes.com, that's h-o-y-e-s-dot-com for more information. Thanks for listening. Until next week, I'm Doug Hoyes, that was Debt Free in 30.