Month: September 2013

Doug Hoyes Appears on Money Moron

appearance-on-money-moron

I appeared as the “bankruptcy trustee” on an episode of Gail Vaz-Oxlade’s television show Money Moron. (You can watch the show on the Slice website; it’s season 2 episode 6 I appear at about the 11:40 mark). I appeared as an expert on Gail’s two previous shows, Till Debt Do Us Part  and Princess, so I am somewhat familiar process. Here’s my “insider’s” view of how the show is made.

The producers of Money Moron contacted me a few weeks before filming, telling me that the couple on the show had a lot of debt, and one of Gail’s challenges for them was to meet with a Licensed Insolvency Trustee (then called a bankruptcy trustee). They gave me some details on the couple’s debts, and I asked for a few more details, and then agreed to appear on the show.

HoyesMoneyMoronMy segment was due to be filmed at the couple’s house, and I arrived at 9:00 am on the day of the shoot. When I arrived I realized that this is a “big time” production. From what I recall there were two camera operators, a sound person, a lighting person, two directors, and another three or four people who were doing other jobs while we were filming.

I thought I was well dressed, with a dark suit, a white shirt with a small check pattern, and a nice tie. Unfortunately the tight patterns on my shirt and tie are horrible on TV, as they look “jumpy” on TV. After some test shots I ditched the tie, kept my jacket on, and it worked fine (which is why in the clip I’m wearing a suit with no tie).

After sorting out my wardrobe, the next 20 minutes were spent doing sound checks and lighting checks as they adjusted the lights and camera angles to get the shots they wanted. Then, we started filming.

Since I had never met Alanna and Matt before, I spent the next 20 minutes, with cameras rolling, asking them a bunch of questions to be sure I understood their complete financial situation, including their debts, assets, and monthly budget. I did exactly what all of the professionals at Hoyes Michalos do when we first meet with you; we ask questions.

Once I had the basic facts, I walked them through their options, and gave them plenty of time to ask lots of questions. In total we filmed for close to 90 minutes, including the occasional “re-take” when the directors didn’t quite get the shot they wanted.

In the final show, I appeared on camera for a grand total of 30 seconds.  Yes, two hours under the bright lights for 30 seconds in the final show.

Of course the show is not about “Doug Hoyes giving debt advice”.  The show is about the host and the participants, and I must say I was impressed by Matt and Alanna. It’s not easy going on TV to talk about your money problems. I was also very impressed by the production crew. They work long days, and do a great job. If it took 90 minutes to get my 20 seconds of tape, it’s not hard to see that it takes many days of filming to get the footage for a show that lasts for 22 minutes.

I must confess that I also like Gail’s “no-nonesense” style.  Sometimes it is what it is, and she calls a spade a spade.  However, I should also point out that “reality” T.V. is not a perfect representation of reality.  Many hours of filming over a period of many weeks cannot be completely accurately summarized in a 22 minute (excluding commercials) television show.  Gail has a “tough love” approach.  in real life when I meet with people I don’t “sugar coat” my advice, but I’m also not trying to make anyone cry.  My approach, and the approach of all Hoyes Michalos professionals, is to deal with the facts.  I gather the facts from you about your situation (who you owe money to, what you own, what you earn and spend each month) and I present your options in clear and easy to understand language so you can make an informed decision.

So how did the show end?  They did not want to file a consumer proposal or go bankrupt, so I said that given their situation it would be possible to deal with the debt on their own, but I did say:

“Provided you are willing to put the work in to do it, because it won’t be easy.”

In the end, Alanna was able to increase her income, and they used that increase in income to significantly reduce their debt, which was a great solution.  In the end, it was the correct solution for everyone.

As for me, it appears that Gail Vax-Oxlade is suspending her television career to concentrate on other projects, so it would appear that my short reality T.V. career is also over.  (Three shows, 30 seconds each, for a total of a minute and a half.  It was a good run….).  That’s fine with me.  The occasional television appearance is fun, but sitting under bright lights every day would drive me crazy after a while.

For now, I’m content to help real people explore solutions to their debt problems, without the TV cameras rolling.

Keeping Your Small Business Afloat While Dealing with Debt

small-business-and-debt

Part of the reality of being a small business owner is that sometimes you’re stuck dealing with debt that can put your enterprise at risk. When the economy is shaky and people are tight with money, small businesses often bear the brunt of the hit. However, dealing with debt for your small business isn’t impossible. There are some steps you can take to keep your small business afloat when times are tough.

Cut Unnecessary Costs

This may be easier said than done, but it is necessary to trim the fat, so to speak. Single out the areas of your business that are money pits and deal with them promptly. Are you paying too much for certain services such as phone systems or office space? Identify elements that are expensive and non-essential; it’s a great way to start attacking your debt issues head-on.

Take Care of Cash Flow

A very common problem for small businesses is a lack of diligence when it comes to cash flow management. When business is booming, cash flow may not be much of an issue. But when keeping your small business afloat while dealing with debt, this becomes a very high priority.

Improper cash flow management is dangerous because it can become a vicious cycle. Particularly in industries with a longer operational cycle (average time it takes from receipt of inventory or services to final cash realization), sometimes profits from one cycle aren’t sufficient to finance the next cycle. Furthermore, you may not be able to get lenders to finance the cycle as you won’t have the security to support the debt.

This is why effective cash flow management is crucial. There are a few ways to help you achieve this goal and ensure your business survives while you’re dealing with debt:

  • Visit a professional: Talk to a bank loan professional and develop a good understanding of what is required in order to obtain a loan for a small business.
  • Open a line of credit: A line of credit can be a solid preemptive method that can help you in a cash-flow pinch. Make sure you do this before you run into cash-flow issues; having it as a safeguard can help you fund short-term cash flow problems.
  • Have a backup plan: Every small business owner should have other potential sources of capital lined up in order to service debt or battle through economic difficulties. This could include tapping into savings, turning to family (if you want to take that route), or an alternative is peer-to-peer lending.

Prioritize Your Debt Payments

If you can afford to tackle some of your business associated debt, be sure that you pay down the highest-interest debts first. Business debts that are personally guaranteed (your personal assets have been put up as collateral) should also be given high priority.

Get a Business Debt Consolidation Loan

Debt consolidation allows you to consolidate all your small business debts so that you make one payment per month. This is a wise option for dealing with debt as your many debts are consolidated into one. This option carries a few considerable advantages:

  • Paying one instead of multiple payments per month allows you to better budget your cash
  • Interest rates may be lower than the rate you are currently paying your creditors
  • Lower interest rates and extended terms can help you reduce total monthly payments and keep your business afloat during hard times.

File a Consumer Proposal

A consumer proposal is very similar to other debt management plans; you make monthly payments to eventually settle your debt. However, they have two main advantages:

  1. Once a majority of your creditors accept the proposal, it becomes legally binding
  2. In the majority of cases, you only repay a portion of your debts as opposed to the entire amount

Sound too good to be true? There are some caveats. First, you have to actually be able to make the payments each month. Second, a consumer proposal works only for unsecured debts like credit cards, bank loans and lines of credit. And finally, a majority of your creditors must accept your proposal (it works on a dollar per vote basis, so your larger creditors will have greater power to accept or reject your proposal).

Firms like Hoyes Michalos can help you deal with your small business debt head-on. We have been helping Ontario residents get out of debt since 1999, and we offer a wide variety of expert debt solutions.

If you need more information on how to keep your small business afloat while dealing with debt, don’t hesitate to contact us today!

Is University a Waste of Money?

is-university-waste-of-money

Attending college or university is expensive, and if you have to borrow more than you can repay it may not be worth it.

Statistics Canada released a study showing that undergraduate tuition continues to rise. Average undergraduate tuition in Canada increased a whopping 3.1% to $6,571 in 2017/2018. When you add in the cost of books and living expenses for a basic college or university education can easily cost $10,000 to $15,000 per year, or more. And that’s average, with in demand programs like engineering, business and pre-med costing much more. A four year program could cost $50,000 to $100,000 depending on the program.

Is $50,000 worth it?

In many cases the answer is “no”, a university education is a waste of money.

If instead of college or university you graduate from high school and start working immediately, even earning $10 per hour you have earnings of $20,000 per year. After four years you will have earned $80,000, as compared to the student who did not work full time while in school, and paid $50,000 for their education. That’s a $130,000 advantage for the person who didn’t pursue post-secondary education.

But wait! Isn’t it true that the university student will get a high paying job, and over their lifetime will earn significantly more than a high school graduate, so over time they will easily make up that difference?

Historically, that is certainly true: university graduates earn more than high school graduates. Unfortunately past history is no guarantee for the future, and in a weak economy jobs are scarce, even for university graduates.

Whether or not post-secondary education is a waste of money may well depend on how you finance your education. If you pay cash for your schooling and can’t find a high paying job when you graduate, it’s not the end of the world, but if you borrowed the $50,000 for your degree and can’t find a good job, you have a serious problem.

According to the Bank of Montreal the average student expects to graduate with over $26,000 in debt, and they expect it will take almost six and a half years to pay it off.

Of course expecting to get a good job and being able to pay off your student loan debt may not always happen, and the sad reality is that some students are unable to service their student loan debt. In our 2017 Joe Debtor student debt study we discovered that 1 in 7 people filing bankruptcy or a consumer proposal have a student loan, and the average student loan at the time of filing was over $13,000 (in addition to $31,000 in other debts).

Remember, under current student loan bankruptcy rules, a student loan is only discharged in a bankruptcy if you have ceased to be a student for over seven years so the only people going bankrupt to eliminate student loans have been out of school for a long time.

My point is this:

Education is great; debt is not, so before borrowing for education (or anything else) make a plan. Ask yourself these questions:

  1. Do I have a good chance of finding a good job in my field of study when I graduate?
  2. Will I be able to earn enough at my new job to pay off my student loan in a reasonable period of time?
  3. Would I be better off working for a year or two after high school to save some money to pay for some of my education, and reduce the amount I will need to borrow?

These are difficult questions to answer, but having a plan is very important. You may decide to work for a year and take one course in night school, to keep your costs low but also to prove to yourself that you are committed to your education.  You may decide that even with a student loan your job prospects upon graduation are good, so it’s worth the risk.

Formal schooling may be a good strategy for you, but only if you can accomplish your objective without a crushing level of debt, so consider your options, do the math, and make a plan to increase your chances for a successful financial future.