Seniors and Finance With Vanessa Benedict

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Posted in Money Tips
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

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Many seniors are finding it increasingly difficult to make ends meet. Our 2017 Joe Debtor study showed that the total number of debtors who are seniors is now 12%, up from 2015’s 10% and up again from 2013’s 8%. With fixed incomes, potential long-term care options and adult children to think about, there are a lot of ways seniors can end up in debt.

My guest today is Vanessa Benedict, a Wealth Advisor with one of the largest banks in Canada. Vanessa’s job covers everything from estate planning, financial planning and investment portfolios. Vanessa has many seniors as clients and is always surprised when someone in their 60’s still has significant mortgage debt. These are people who saw their parents live so frugally and wanted more for themselves, and for their children. But how much is too much, and who do you turn to for advice?

The General Practitioner and the Specialist

Financial advisors at the bank level are perfect for people who are in their early 20’s, just getting their first job, and just looking to get their feet wet. They can offer general advice for low-risk options that may work for you at that time.

Someone looking for more specialized advice with higher returns (and higher risk), would speak with someone like Vanessa. This advice is more complex and better suited to someone who has saved for a while and understands the aspects of dealing with a specialist. If you may not know enough on your own, bring someone you trust who can explain it to you.

Vanessa’s Advice

  1. Think about the big picture. In every financial move you make, think about the long-term effects. Putting your money in a GIC is certainly safer, because you’re only earning 1%. Investing in something like stocks and bonds may get you a higher rate of return, but it’s also riskier. Think about what works for you, your comfort level, and your budget. 
  2. Know who you’re speaking with. There are countless types of professionals out there offering financial advice. Each one has their own motives that you should take into consideration. If you think you need to refinance your home to pay off your debts, a mortgage broker (who would get a cut), isn’t necessarily the best person to ask for an unbiased opinion.
  3. Don’t stretch yourself for the sake of others. Being a parent is difficult and that job lasts you for life. There are a lot of seniors who take out loans, borrow against their home equity and more for the sake of helping their adult children. It’s important for your adult children to learn their own lessons. If your adult children can’t afford a down payment, chances are they haven’t thought into the day-to-day costs of owning a home or condo. Will they turn to you for help with condo fees, utility bills and property taxes as well?
  4. Do your due diligence. If you’re going to see an expert, have your questions ready. Bring someone with you that you trust if you don’t fully understand the risks and rewards. Make sure you understand all of the options available to you before you make a decision.

Don’t do the first thing, don’t run, don’t make decisions on fear.

When it comes to personal finance, it’s important to think about it in tiers. The financial advice you need differs throughout the different stages in life. You’re just starting your first bank account, you start making an income, and start planning for retirement. Each stage is different, so you need to go to the right person for the right job.

Resources mentioned in the show: 

FULL TRANSCRIPT Show #139 with Vanessa Benedictseniors-and-finance-transcript

Doug Hoyes: What it’s like to be approaching retirement and you get downsized? What happens if you get downsized and get a buyout and don’t leave enough money aside to pay the taxes owing on the buyout? What’s it like to be a senior trying to help your adult children? What happens if you help your children and that puts you in financial trouble? We’re going to answer those questions and more on today’s edition of Debt Free in 30. So, let’s get started. Meet my guest. Who are you and what do you do?

Vanessa Benedict: I’m Vanessa Benedict and I’m a wealth advisor with National Bank Financial and I’ve been doing this for 20 years. And my job is to do estate planning, financial planning and investment portfolios and just overall seeing from start to beginning your financial plans.

Doug Hoyes: 20 years, okay. So, let’s get some basic definitions out of the way here. So, you say you’re a wealth, what did you call yourself, a wealth –

Vanessa Benedict: A wealth advisor.

Doug Hoyes: A wealth advisor, so I know when I go to the bank and I deposit a $10 cheque I know the tellers says oh, you need to get an RSP or something.

Vanessa Benedict: Exactly.

Doug Hoyes: So what is the difference between – and you work for a bank.

Vanessa Benedict: Yes.

Doug Hoyes: What is the difference between a wealth advisor and whatever all the other things I could possibly be getting, the teller at the bank giving me advice or whatever, is there a difference?

Vanessa Benedict: So, the financial advisor at the bank level is a great place to start if you’re in your early 20’s or you’re making your first job. You need to start putting money away so think of it as you’re in public school and you have your public school teacher and you’re growing and you’re kind of accumulating kind of assets, you got your mortgage and everything is there in your own bank.

And you get to a certain stage in your life that you want to then progress to the next level. So, you have accumulated enough funds there that you need. Now there’s the possibility of insurance or financial planning, estate planning, investment. So, you now graduated to the high school, university level you and you need more expertise, more specialist. And that’s where the wealth management comes. Because behind me not only do I have the expertise for 20 years of investments, I also have a team of experts behind me, estate planners, tax planners. So, you’re getting that whole overall big picture scenario to look after your financial needs so you don’t have to go to different areas to get the one thing done.

Doug Hoyes: So it’s kind of like the difference between a general practitioner doctor and a fancy specialist.

Vanessa Benedict: Yes, exactly.

Doug Hoyes: Okay so that makes sense. And we’re not going to talk today about how to invest millions of dollars because we’re more focused on the debt side. So, I want to ask you about that and I know that in your practice obviously you end up dealing with a lot of seniors so we’re going to talk a bit about them today as well.

Before we get to that, I did a show I think it was back in December with Georgia Graham who works with West in Windsor and she told me that women are disadvantaged when it comes to dealing with people like you, wealth management people, financial professionals in general. And I said well, I’m a man so I don’t really understand what you’re talking about. But is that really true? And she said well, yeah if you go to a bank, a husband and a wife, the wealth management person, someone like you, is more likely to address their comments to the man as opposed to the women.

I said okay I get it men are sexist and she said well no, it’s both. Even the female wealth management people tend to focus more on the male on the assumption that he’s the one making the decision. What do you think of that? Is that actually true, is that actually a bias or do banks treat men and women exactly equally?

Vanessa Benedict: No, I have to agree with her in some regard there. From the bank level, the beginning stages of investing, primary, at the bank level 90% of the staff is women. The financial advisors are women. But then on the flip side, the wealth management side only has 20% women. Those are the women, the people you see on BNN, like give all the advice and the markets and things like that. You generally see men there. And I think the way the industry has been focused and has been focused on men. And she’s right, both females and males kind of look at males in that way.

And I think for myself being in this industry I focus primarily on women for that very reason. Because there’s only 20% of me out there in the wealth management arms so I can see why there is a bias. So, women out there should be looking for women like myself when you have a certain amount of money so you don’t get yourself into trouble if they don’t understand what you’re doing. So, like you just said you don’t understand because you’re a man.

But for me I can completely understand where, you know, Georgia was coming from because it’s true. When you go into a bank branch and everybody focuses on the males, well women now today are the ones with the money. So, the shift has to switch there but where do we begin when wealth management only has 20% women?

Doug Hoyes: Yeah and I guess the answer is what you just said well, if I’m a customer I get to pick who I’m dealing with. So, if I’m – whether I’m a man or a woman, if I’m not satisfied with the person I’m dealing with well, get somebody different and you can certainly switch.

Vanessa Benedict: Exactly.

Doug Hoyes: Okay well that was kind of a tangent but I wanted to get your opinion on it while I was thinking about it. So, let’s get back to the point you just made about dealing with people in trouble and things like that because that’s where I want to go with this. So, I want to throw some numbers at you to start and just kind of get your sense of whether this makes sense from what you see in your world as well.

So, in our Joe Debtor report, which we released at the end of March, where we profile people who go bankrupt or file a consumer proposal we reported that 12% of our clients are now 60 years of age or older. Two years ago it was only 10%, four years ago it was 8% so pretty obviously the number of seniors who are getting into financial trouble is growing.

The rate of insolvency amongst seniors is going up but that’s not the most scary part, they’ve got the highest unsecured debt of all age groups, over $64,000, they’ve got the highest debt-to-income ratio of all age groups, about 251%, they have the most owing on credit cards of all age groups. And I think a lot of that has been because they’ve been alive for longer and have been able to build up a lot of debt. Does any of that surprise you?

Vanessa Benedict: No, not at all. Like I’ve had people come see me and they want, you know, a holistic picture of investments and I’m surprised when they’re in their 60’s how much mortgage they have. Like back in the day you’d quickly pay off all your mortgages and pay off all your debt quickly. And I think because low interest rates play a part in that. Because you go in and people say well, why should we pay off our debt when we could invest it somewhere else? And the problem is –

Doug Hoyes: And this is very common what you’re talking about.

Vanessa Benedict: It’s becoming very common and I’m always shocked when I see a 55 year old or 60 year old to come and give me all their numbers and I see they have a huge mortgage. Or they’re upsizing to a bigger house, it’s usually the other way around. And then all of a sudden they’re re-mortgaging to get a bigger house.

Doug Hoyes: But is this a problem? I mean houses always go up in value and always have and they’ll be worth billions of dollars tomorrow. So, shouldn’t we all be borrowing as much as we possibly can and leveraging ourselves to the hilt.

Vanessa Benedict: Back in the 90’s though the housing market crashed.

Doug Hoyes: Uh huh, oh I remember.

Vanessa Benedict: So early 90s, what happens if that happens again? So, all of a sudden you’ve borrowed money, you think your house is going up in price and then all of a sudden and inversely the interest rates go up and they inversely the prices of the house go down. Where are you going to get the equity to live?

Doug Hoyes: You’re toast. Why do you think seniors get into trouble then? Because the way you described is exactly the way it should be. I mean I work my entire life so that by the time I retire, I’ve paid off my mortgage, I’ve got no debt, I’ve got money in my RSPs and savings and whatnot.

Vanessa Benedict: Exactly.

Doug Hoyes: So why is it that for a certain segment of the population that is just not the case?

Vanessa Benedict: Well, if you look at the segment of the population you said between 55 and 65, I think that’s what you said just now.

Doug Hoyes: I define seniors as sort of 60 and over but yeah that’s the same ballpark we’re talking about.

Vanessa Benedict: I think of seniors in two groups, the 55 to 70 year old and 70 to the 100. So, think of the people from 70 to 100, which would be these people’s parents generally. The 70 to the 100 years old, they generally are the ones who went through the depression, went through the war. So, they were diligent and frugal and they saved their money. They’re the ones that have lots of money saved but they didn’t spend a lot. When you remember when they talked about Christmas all they got was an orange and they barely got anything.

So, then the next generation, which is the 50 to 60 year olds, the kids of these parents were thinking well we lived so frugally because of our parents, we didn’t get all of those things, they now feel like they should be going on travels and, you know, renovating their kitchens getting bigger houses. They work and they feel like that. And meanwhile their parents who are in their 90’s are flabbergasted that these people are spending this kind of money. They would never have spent this money.

Doug Hoyes: Yeah. So, a lot of it is just their perceptions and what they think they’re potentially entitled to.

Vanessa Benedict: Exactly.

Doug Hoyes: Now I want to talk about something specific. We’re recording this here in Oshawa today in my office and you operate in this community as well. A few years ago a lot of long-time employees at GM got downsized, they got their buyout and from what I understand a bunch of them ended up, you know, in a lot worse shape even though they got a chunk of money. They ended up getting hit with taxes and things like that. Did you see that happening?

Vanessa Benedict: Well of course, so when somebody comes to make that decision in a commute there’s so many factors you have to look at.

Doug Hoyes: So you said commuteso what are you talking about?

Vanessa Benedict: Taking a lump sum payment of their pension.

Doug Hoyes: And you can put it into –

Vanessa Benedict: A LIRA, invest it.

Doug Hoyes: LIRA being a locked in retirement account.

Vanessa Benedict: Exactly.

Doug Hoyes: So if you do that you don’t get whacked with the tax.

Vanessa Benedict: Well no, so what happens is if you take a commuted pension out, part of it is – part of the law is you have to put it into a locked in retirement account. And then part of it is taxable because the way the numbers are calculated from your pension, part of it goes into your bank account. A big chunk goes into your bank account, almost $200,000. So, if you don’t set aside – this is not money to go buy boats and put a down payment on a cottage and I think that’s what people did. They got excited. It was like they won the lottery.

And if you never managed money your whole life all you had was a pension, you never invested, you never saved and you get this big lump sum of money and you didn’t go to a proper person to advise you, you need to – this is your locked in money, this is all you’re going to get from a pension plan and this is got to last you from 55 to 100 if you never get another job. And then you have all this debt on top of it. Where are you going to pay that? Is this the right choice to take, a commuted buyout? And then on top of that, that big $200,000 is taxable. And you need to set that money aside.

So, if no one seeks the proper advice while doing this and they think oh my gosh, I’m getting $700,000 and 300 goes into a locked in and then 400 comes out into non-tax, into taxable money and I buy all this stuff and the government sends me a letter saying I owe $100,000 in taxes, well where are they going to get this money? They’ve spent it.

Doug Hoyes: Yeah, I’ve already spent it. So, if anyone does get downsized and is getting a big package, they should definitely be talking to someone who knows a bit about what has to happen.

Vanessa Benedict: Exactly, everything.

Doug Hoyes: Yeah I mean when we did our study, 47% of seniors have tax debt when they file. And of those people who have the tax debt, they owed on average $27,000 in tax debts, which was about a third of their total unsecured debt so it’s a significant point. And I guess the buyout is one obvious example but just cashing out on RSP can do it too.

Vanessa Benedict: Yes.

Doug Hoyes: Do you see that a lot where people have cashed in an RSP and then don’t realize those implications to that?

Vanessa Benedict: Well seniors at a certain age, they get their CPP, their Old Age an some of them – and that’s all taxable money. So, then they have their RIFS and their RSPs and all these things and they’re not seeking the right counsel, like whether it’s myself or a tax specialist, an accountant. They need to see what they can take out and how much money they need to withhold. But no one does that because you generally get the 10% – like the government doesn’t know how much you’re getting from all these other sources.

So, if you take out your CPP and Old Age, they’re just going to withhold 10% because you’re in the lowest tax bracket. But if you’re withdrawing from everywhere else and the other places think you’re in the lowest tax bracket but accumulative together you’re becoming the highest tax bracket, that’s when they don’t realize on my god.

Doug Hoyes: Yeah that’s exactly the problem. So, each person thinks you’re in the 10% tax bracket, they take off 10% but you add your CPP and your OAS and then whatever you got from your RSP cashed in, now you’re in the 30% or 40% tax bracket, nobody took enough tax off.

And that’s a very common thing we see, particularly in the first year of retirement because maybe I worked until June at my job and then in July or August I started getting a pension, I maybe cashed in some other investments. When you add the two of them together I’m really toast so again, I think your advice is the obvious one, talk to someone who actually knows about this before you start spending all this money because there may be taxes owing.

I want to ask you about another problem that I see quite a bit and I want to get your thoughts so this because maybe you disagree or agree with my thoughts on it. My opinion is you shouldn’t be helping your adult children.

Vanessa Benedict: Oh I agree 100%.

Doug Hoyes: Okay good, perfect. We’re on the same page here then. And now I’m being, you know, overly dramatic and very simplistic about it because if my adult child has some very serious medical issue and needs $50 to get life saving serum then I’m going to get it for them obviously.

Vanessa Benedict: Of course.

Doug Hoyes: But I’m talking more about in this day and age where I’ll cash in some of my pension and get $100,000 so I can give it to my kid for a down payment on a house. I’m not a big fan of that, what do you think?

Vanessa Benedict: I actually had a client come in last week.

Doug Hoyes: Tell us their name and social insurance – no, you can’t do that.

Doug Hoyes: So, tell us what happened.

Vanessa So, a client comes in, the husband calls me up and says you need to meet with us. And I said okay, fine. So, we were talking and going through their whole thing. And he says what do you think about us giving our son, you know, $200,000 for a condo. And I’m looking at them and I said that’s a terrible idea. And the mother gets upset and she’s, you know, and I can understand I’m a mom, I have two little kids and I get the, you want to help your kids, you really – and I agree with you if it’s in dire straits I would help them, but to buy a condo?

So, I said well, okay how much does your son make? Well he makes $60,000. Well, what does he pay right now? And she goes well he has a basement apartment, he pays $500 a month. And I said does he save anything? And she goes no. I said so, you give $200,000 for this down payment on a condo, who’s going to pay for the mortgage now, if you guarantee it you’re on the hook. What about maintenance costs, what about hydro, what about water, what about the property tax, what about all these other incidentals that he can’t even barely do by paying rent of $500 a month. So, who’s going to pay for all that?

Great you bought him a place to live but to run a household takes more than the down payment. So, to me – and people don’t think of the big picture. They’re thinking oh I’m giving this, I feel so bad, housing prices are $800,000. Well, you know what? That’s great, maybe you have to rent a couple of years. Maybe your kids – like think about your life, think about your parents now 90. Did they give you $200,000? I don’t think so.

Doug Hoyes: They did not, no.

Vanessa Benedict: They did not give you. How much did you get for an inheritance and who’s going to look after you after you give this $200,000 to your kid? And all of a sudden you’re in dire straits and you need to go, your husband goes and gets a stroke and you have to put them in a retirement home. Who’s going to pay for that, that kid that you gave $200,000? And now you have your house and now you’re forced to do something now. So, what happens?

You’ve got to look at the bigger picture and you have to understand. People are looking for advice you have to be careful. Of course if you’re going into somewhere like a mortgage specialist or something, of course they want you to get that because they’re going to get something from it. Is it the right advice to do that?

Doug Hoyes: That’s a good point. Well, we’re all biased.

Vanessa Benedict: Yeah of course.

Doug Hoyes: I mean I want people to do a consumer proposal or a bankruptcy, you want them to invest money, the mortgage broker wants them to get a mortgage.

Vanessa Benedict: Exactly.

Doug Hoyes: I think you hit on the key point there, which is if I give my adult child $200,000 in your example, how will that impact me? And I guess if I have 10 million dollars in the bank, well it won’t impact me at all, fine I guess it would be nice if the kid, like you said, you know lived in their own two feet kind of thing but it’s not really going to impact me that much. It would be like me giving my son 20 bucks. Well, okay it’s not a big deal. But I assume in the case of the client you’re talking about $200,000 was real money. It was not an insignificant amount.

Vanessa Benedict: That’s right.

Doug Hoyes: And you’re right, you got think ahead a few years. So I have to go into a retirement home or assisted living facility, what does that cost a month? A few thousand dollars I assume.

Vanessa Benedict: Right.

Doug Hoyes: And if my CPP, OAS is $1,000 a month.

Vanessa Benedict: Right, where are you going to get the rest of the money?

Doug Hoyes: Where are you going to get the rest of the money? So, that’s the biggest issue I guess with helping adult children then.

Vanessa Benedict: Right. But going back to even the one you said with the 10 million dollars, what are you teaching your kid? You give them $200,000, something happens to you and you have an estate that’s going to go charities and all of these things and you’re not giving the full 10 million to this kid. Well, how is he going to survive or she’s going to survive, right? At the bottom of the day $200,000 is not that much when you look at the bigger picture for 30 years living.

Doug Hoyes: Right. And so, what did your clients decide do to.

Vanessa Benedict: Well, just told him to start saving and –

Doug Hoyes: So you were able to talk them out of –

Vanessa Benedict: Yeah because I wasn’t – I said –

Doug Hoyes: This isn’t the right thing for you.

Vanessa Benedict: No, and I told them the pros and cons. I did – I mean I graduated Queens with math and science so I’m about the practicality of things. I get the emotion, like I said I’m a mom I get that. But the problem I have to look at practical numbers.

So, what I did was kind of did a spreadsheet, what happens if we take $200,000 and the markets take a dive and things go the opposite, worst case scenario. And what is that going to look at in 20 years? And how is that going to impact you versus all of a sudden he needs more money and he needs more money, because it just starts with $200,000. He’s got to maintain it. So, let’s add all that up, that he needs to run that place. And where is he going to get that money if he can’t even save money from a $60,000 job?

Doug Hoyes: And so, I always like to end this show with practical advice. So, there I think you’ve just given us a very good piece of practical advice, which is crunch the numbers.

Vanessa Benedict: Yes, of course. Look at the bigger picture and know somebody who knows their numbers.

Doug Hoyes: And so in this example, so the kids buying a condo for – was it a $200,000 condo or was that the down payment?

Vanessa Benedict: The down payment. Think of housing, right?

Doug Hoyes: Yeah I know, there’s no such thing as a $200,000 condo anymore. So, the condo was going to cost, I don’t know, let’s say $500,000. I don’t know what the numbers were. So, you give him the $200,000 but he’s still got a mortgage payment of $300,000, on $300,000. He’s got the condo fees, the hydro, whatever, whatever. So, it’s still going to cost him what, two or three grand a month for the condo?

Vanessa Benedict: Right.

Doug Hoyes: And he’s been used to paying $500 a month for his basement apartment.

Vanessa Benedict: Exactly.

Doug Hoyes: And he hasn’t been able to save any money.

Vanessa Benedict: Exactly.

Doug Hoyes: So that means he’s breaking even every month but his now expenses are going to go up by a couple of thousand a month.

Vanessa Benedict: Exactly.

Doug Hoyes: There’s your math problem.

Vanessa Benedict: Exactly and a potential client for you.

Doug Hoyes: Okay. So, why are you talking him out of it? No, I totally agree with you and that’s the mindset you’ve got to have. So when you’re able to explain it to the parents that way, they were able to see that they weren’t helping their son really.

Vanessa Benedict: No, not at all.

Doug Hoyes: Because all he was going to do was have much higher expenses as a result and they were potentially hurting themselves.

Vanessa Benedict: Exactly.

Doug Hoyes: So we’re going to come back to the practical advice. One more thing I want to ask you about because this is – again blows me away. I don’t know if you’ve seen it or not, but of our clients who are seniors, so again I’m defining that as 60 years of age or older, 11% of them have payday loans when they file a bankruptcy or proposal with us. And the debt level they owe on those payday loans is about $3,600.

So, they’ve got three or four of them and they’re, you know, owing a thousand bucks on each of them, payday loans and short-term loans and they get them because their cash flow just isn’t what it needs to be and the payday loan companies are more than happy to loan to someone who has a fixed income. Oh, you got a pension from there, you get CPP, OAS, well we assume you’ll be able to pay us back. Do you ever see clients get into payday loan trouble?

Vanessa Benedict: Not mine per se but I can understand why they would get into it, especially you have to think about it. You said 60 and above, those are the generation people that would have saw interest rates in their 15, 20% GICs. So, when you get to 60 years old you’re not coming to invest in what I do because you don’t understand it, you’re afraid of it. All you think about is I’m going to invest in stocks and bonds and all these things. And all of a sudden I don’t understand I hear you’re going to lose money. But when you need 6% to live off of and you only get 1% off a GIC, that’s not enough to live off of.

So, what’s happening, these people are depleting their savings down so quickly that I can see why they have to go to these payday loans for their next paycheque to come in. So, if you’re used to making – you saved up and Canada Savings Bonds were 20% at one time and that generation would have saw that. And now you’re at an industry – industry’s for 1% that you can get on a GIC. Well, how are you going to live off of that?

So they don’t understand, even though it’s safe and comfortable there, you’re still depleting the extra 5% principle. You’re not getting that back. even though it seemed to be safe if you take the extra 5% it’s gone. So, then you have to go resort to oh my gosh, I’m depleting my savings so quickly, I’ve got to go to these loans and figure out how I’m going to do that. And because you have a fixed paycheque, the bank isn’t going to give you a line of credit because you don’t have any working income anymore.

Doug Hoyes: Yeah the banks are less likely to lend to you than the higher interest rate than other lenders are.

Vanessa Benedict: Exactly. Unfortunately they prey on that because they’d rather pay the extra 20, 15; I don’t know how much interest rate is on those payday loans.

Doug Hoyes: 468% if you look at it on a yearly basis. It’s huge.

Vanessa Benedict: It’s huge, right? But they’d rather do that than take a risk on the markets because it’s – they don’t understand enough.

Doug Hoyes: So what am I supposed to do as a senior? So, let’s assume I’m 70 years old and some days I feel like it. And I’ve been very prudent my whole life, I’ve saved money, I don’t have any debt. But I – yeah, I’m also a risk adverse person. If it was 30 years ago I could stick it in GICs and earn my 10% and live off that. But now I put it in GICs and I’m lucky to get 1%. So, I’ve got have millions of dollars just to make ends meet. What is someone supposed to do, what kind of advice do you give that kind of person?

Vanessa Benedict: Well go and see somebody that knows numbers, shows you everything, the pros and cons. There is downside to invest in the markets of course, right? Understand there are – if you get 1% with no risk involved, if you were to get an income of 6% of course there’s going to be risk involved but understand that. And understand there’s also fees to come to somebody like myself, understand how that is. So, before you do anything, and if you don’t understand enough, bring somebody that understands you to interview these people. Because I understand that you might not understand enough, bring somebody, like somebody that is knowledgeable that you trust to come to the meeting with you. And that may help you.

Doug Hoyes: So, it’s all about knowledge is what it comes down to.

Vanessa Benedict: Exactly.

Doug Hoyes: And deciding what the appropriate level of risk is. If you want to take 0 risk, well then the returns will be commensurate with that.

Vanessa Benedict: Exactly.

Doug Hoyes: And I’m certainly not going to give out investment advice on this show, that’s certainly not my purview. But I like your idea, bring someone with you then.

Vanessa Benedict: That’s right.

Doug Hoyes: Who can help you interpret what’s being said and help you along. So, what other practical advice then would you give people who are, and let’s stick with the, you know, 50 and over crowd, 60 and over crowd kind of thing. So, number one would be doing your researching, getting as much knowledge as you can what other types of things should listeners –

Vanessa Benedict: Well, for people who are in trouble like sticking to the show here, there are people who are in trouble, who already got themselves into trouble and they’re sitting there at home trying to figure out what to do. Like I’d advise them to come see you guys and get advice. It might not be as bad as they think. Get everything straightened out.

They might be sitting on a house that they could sell and do something with. And then maybe the next step is to sell it and maybe do something else with it rather than sitting and living on an asset, having all this debt, paying all this interest rate to everybody else, maybe they can come and consolidate and get everything organized first and maybe kind of get a plan starting with you guys first and then maybe the next step is to come see somebody like me, right, once everything is straightened out. You know what I mean?

Doug Hoyes: Yeah and I think that’s a good logical progression. And you’re right if I got some equity in my house well maybe now’s the time to either refinance or sell the house and cash that in and pay off the debts. A lot of people don’t realize that if they go bankrupt in most cases they don’t lose their RSP.

Vanessa Benedict: That’s right.

Doug Hoyes: So I have people who come in and say okay I owe $20,000 on my credit card, I’ve got $40,000 in my RSP, okay well you can – you know, it may be a perfectly good idea to cash in the RSP but you’re going to pay a big chunk of that in taxes.

Vanessa Benedict: That’s right.

Doug Hoyes: They’ll be nothing left. Are you better off considering either a proposal or a bankruptcy? I mean obviously there would be other factors involved and what’s your income and what are your other assets? I’m certainly not saying everyone should be just, you know, going bankrupt.

Vanessa Benedict: No, it’s case by case.

Doug Hoyes: Yeah, every case is different. But the rule in Canada is if you haven’t contributed anything to the – the only thing you lose in a bankruptcy is the money you’ve put in your RSP in the last 12 months.

Vanessa Benedict: Right.

Doug Hoyes: So if it’s the payout you got five years ago and it’s still sitting in your RSP, you don’t lose that if you go bankrupt or do a proposal. So, I like that through process figure out if there are assets that you’ve got that can be used to sell and pay off the debts. What about the income and expense side of things? Do you see a lot of people who have room in their budget to be cutting expenses and free up cash that way?

Vanessa Benedict: Oh of course they can.

Doug Hoyes: What are common things that you look at?

Vanessa Benedict: Clothes, name brand items, people didn’t care for name brands as much as they do cars. More people are car debt, like they always have to have a new car all the time. Buying their kids stuff, I don’t think your kids need to be dressed to the nines in name brand items. I think everybody has a stigma making themselves their whole family, keep up with the Jones’, right?

Doug Hoyes: Yep.

Vanessa Benedict: Going on trips, do you need to go on four cruises a year and put them all on your credit card?

Doug Hoyes: Let me think? No, the answer is no. Yeah, I’ve never gone on a cruise in my life so I’m the wrong person to answer that question.

Vanessa Benedict: Like little things like that. And people aren’t to blame, it’s also the institutions that give credit cards out and you can – you don’t even have income to get a credit card. All they do is, you know, you get in the mail you’ve been approved for $5,000 and even – it’s everybody, it isn’t just seniors, it’s everybody falls into that problem.

Doug Hoyes: Yep. And so I think that’s a great way to end it. That you got to look at the asset side of it to free stuff up there but you’ve got to look at the expenses too because you can cash in all your assets. If you’re still spending more each month than you bring in, then you’ve got a problem.

Vanessa Benedict: Exactly.

Doug Hoyes: Are there any final tips or thoughts you want to leave our listeners with today?

Vanessa Benedict: Well, do your due diligence – find – there’s experts out there who understand about it. That’s why we’re the experts. You’re coming to us for expert advice, have your questions ready. Make sure you know the ins and outs, know everything before you do anything. I think don’t do the first thing, don’t run, don’t make decisions on fear.

Doug Hoyes: Yeah the – doing nothing sometimes is the correct answer while you research your options.

Vanessa Benedict: Exactly.

Doug Hoyes: Excellent, well I think that’s a great way to end it Vanessa, thanks for being here today.

Vanessa Benedict: Thank you for having me.

Doug Hoyes: Thank you very much. That was my conversation with Vanessa Benedict, Vanessa works in the wealth management group at a major bank. I don’t know if we mentioned the name of the bank or not. But you can figure out it because what we’re going to do is put links on our show notes.

She helps spend a lot of time with seniors managing their money as well. And I think we had a lot of practical tips today about how to manage money and specifically what to do if you’ve got more debt than you can handle. You know, do your best to eliminate all your debt before retirement. When you retire your income’s going to drop so you don’t want to be carrying any additional debt because the debt service costs when you’re on a fixed income are not a good thing. And as Vanessa said if you have debt make a plan to pay it off, talk to the experts. Obviously start with the highest interest rate debts and then deal with your resolving or callable debts next.

And we both agree be very careful helping adult children. It’s great to want to help. We understand once a parent, always a parent but you don’t want to put yourself in a worse financial situation by helping your kids.

So, that’s our show for today. Full show notes including a transcript and links to some of the stuff we talked about today and how you can track down Vanessa will be on our website at hoyes.com that’s h-o-y-e-s-dot-com. Thanks for listening. Until next week, I’m Doug Hoyes. That was Debt Free in 30.