Check out our new documentary DEBTASIZED.

Check out our new documentary DEBTASIZED.

Take The Blame And Shame Out Of Debt Repayment

Take The Blame And Shame Out Of Debt Repayment

In over 20 years helping Canadians eliminate their debt, I’ve yet to hear a single client say they chose to have debt problems. Debt accumulates over time and then it becomes an even bigger problem when you lose your job, become ill or get divorced. But for many of my clients, despite knowing that the cause of their money troubles was beyond their control, they still blamed themselves for their financial woes. 

So, how does one overcome self-blame to achieve debt relief? Today we talk with Shannon Lee Simmons, author of Living Debt-Free: The No-Shame, No-Blame Guide to Getting Rid of Your Debt about how negative feelings towards debt can create more debt and strategies that can put you in the right direction when dealing with your debt.

Extreme repayment plans don’t work

Solutions to paying off debt popular with the media involve taking drastic measures like working multiple jobs and reducing your spending to barely survivable levels. The problem is these aggressive repayment plans don’t work for most people. Instead of creating a healthy outlook towards debt repayment, extreme plans view any extra spending as shameful. This puts unnecessary pressure on someone trying to pay off debt this way. Failure to adhere to such an unsustainable spending plan leads to self-blame and a negative mindset towards your ability to pay off debt entirely. This creates a self-fulfilling prophecy because you believe you can’t manage your debt so you give up.

If you’ve attempted a radical approach to paying down debt but couldn’t keep up, that doesn’t mean you are unable to stick to a debt relief plan altogether. Know that you don’t have to overhaul your life to be financially responsible. Work out a debt repayment plan that’s balanced and provides some wiggle room for spending on what you like. 

Everyone has a financial lemon. What’s yours?

Whether you lost your job, had a marriage breakup, fell ill, your furnace broke, or you had to pay an unexpected vet bill, debt happens. The healthiest way to begin your journey to get out of debt is to come to terms with your financial lemon.

By acknowledging the root cause of your debt issue, you eliminate unnecessary self-blame and increase your chances of succeeding in a debt repayment plan. Your next step is to take a look at where your money goes and see if improving your cash flow will enhance debt repayment. 

Learn More: 5 Reasons Why Debt May Not Be Your Fault

Fixing a spending vortex

A spending vortex is when you don’t have a handle on where your money goes. You are overspending constantly because money goes into your bank, and money comes out and at the end of the month you don’t have enough left but you have no idea why.

To get out of the spending vortex you need a spending strategy but Shannon doesn’t think you need to have a budget. In fact, like me, she believes budgeting doesn’t work all that well.

Instead, you should set up a separate bills and savings account which is the account you use  use to pay your bills, make debt payments and put money you want to save. Shannon says this is the account where money goes to die. It’s not your money, it’s for expenses, debt reduction & savings. You should put enough money from your paycheque into this account to cover all your known bills.  After that, what’s left in your chequing account becomes your spending account. That’s the only money you can spend.  

This is very similar to my approach that says you should pay your bills as often as you get paid.  

Both approaches make sure that you prioritize your bills, and anything ‘left over’ is yours to spend.  No budgeting required.

And if you can’t afford to repay your debt, don’t blame yourself there either.  If you are missing payments, if you can’t possibly cut your expenses enough to repay your debts or if it will take 9 or ten years to repay your credit card debt you should know that there is a reason professional debt help exists: to give the honest, but unfortunate debtor a chance to start over.  Bankruptcy and consumer proposals are legal tools made available by the Government of Canada to give you a safe and efficient way to eliminate overwhelming debts.

For more details on how to have a guilt-free approach to debt repayment, tune in to today’s podcast with guest Shannon Lee Simmons, or read the complete transcription below.

Additional Resources

FULL TRANSCRIPT – Show 236 Take The Blame And Shame Out Of Debt Repayment

Take the shame and blame out of debt repayment

Doug:                For the first time ever here on Debt Free in 30, I want to start the show with a confession. As everyone knows, I’m a Licensed Insolvency Trustee, my job is to help people get out of debt, so I’m always reading blog posts and articles about how to get out of debt. But ones that drive me crazy, are the ones with titles like, “How I paid off $100,000 of debt in six months”. Now, my typical client earns around 25,000 bucks a month, so even if they had zero expenses, lived rent free, didn’t have to pay for food or transportation and paid no interest, it would still take over three years to pay off that level of debt. Those articles about how they worked three jobs and didn’t sleep for six months and of course then they inherited some money or something. My point is that those articles are not realistic, so I’m always sceptical whenever someone has some grand plan for getting out of debt.

                          So, when I heard that Shannon Lee Simmons had her new book out called, “Living Debt-Free: The No-Shame, No-Blame Guide to Getting Rid of Your Debt”, I was pretty sure that the book would tell me to give up my latte’s and everything would be fine. But I was curious, so I dug into my pocket and bought the book and I must confess I was pleasantly surprised and I’ll tell you why in a moment. So, I had my people call her people, I’m very pleased to welcome to the show, the one, the only, Shannon Lee Simmons, Shannon welcome to Debt Free in 30.

Shannon:           Thanks for having me.

Doug:                So, the reason I liked your book so much, is that this book, “Living Debt-Free” is it’s practical. So, it’s not theoretical, it’s obvious that all of the ideas in the book have come from real life, you’ve actually met with people who have debt. So, why don’t we get started by having you give us a quick introduction of what it is you do?

Shannon:           Yeah. So, I’m a certified financial planner and I run the New School of Finance, which is an advice-only or fee-only financial planning firm. And since we tried to make it affordable, we get people from all walks of life, people with debt who are sinking, people who have lots of money that they don’t know what to do with and everything in-between. And so, on the frontlines of financial planning for a decade, you see lots of stories and you learn lots of things about the human condition and how people work with money and especially with debt, some of those same themes came up again and again and again over the years.

Doug:                Yeah. And that’s I think why the book, you know, sounds so practical, because like you said, you’ve actually met with real people and –

Shannon:           Yeah.

Doug:                And have seen it, so. And we’ve talked about certified financial planners before, we’ve had people like Sandi Martin, Jason Heath, a few others on the show. And fee-only means, well you come in, you pay me a fee, I give you advice, it’s not dependent on which stocks you end up buying or –

Shannon:           Right.

Doug:                You know, what mutual funds or anything like that, so it’s a very transparent way to get advice.

Shannon:           Yeah, it’s completely unbiased. So, we don’t make more money depending on what you do with your money.

Doug:                Yeah. Which you know, if I sell mutual funds and I want you to put money in mutual funds I will never tell you to buy real estate.

Shannon:           Correct.

Doug:                Because I don’t make any money doing that, so.

Shannon:           Absolutely.

Doug:                Okay. Now, I just started with my rant about these articles that have crazy extreme plans for paying off debt, and you addressed that very issue in your book. And in fact, it’s on page two, I believe, of the book. So, I would like you to read for me the paragraph where you talk about this, so.

Shannon:           Okay.

Doug:                Again, this is, “Living Debt-Free: The No-Shame, No-Blame Guide to Getting Rid of Your Debt” and you give your thoughts on why extreme debt repayment plans don’t work and they just set people up for failure.

Shannon:           Okay. Extreme plans rely on what I call the debt repayment gospel reduce your spending as much as you possibly can and pay off your debt aggressively, starting with the highest interest rate first, no matter what your situation. They usually offer mega promises of financial freedom. How I paid off $60,000 in three years; pay off debt fast, even with a low income and how to pay off your debt in 12 months. Maybe you’ve come across plans like this on your computer at 3AM after typing in, how to pay off debt fast into a search engine.

Doug:                Yes, I have and it’s an absolutely annoying thing. So, what is the problem then, what is the problem with these extreme debt repayment plans?

Shannon:           Yeah. Well, I think you already mentioned it, I think they set people up for failure. Most of the times, they require sometime to reduce their spending to an absolutely unsustainably low amount in order to kind of move forward or they’re assuming that the person has time for an extra job, that is well above what they can handle in their day-to-day life. So, there are these extreme situations and then when you read those, you think well if that person can do it then I should be able to do it so then you try. So you know, I’ll never go out for lunch again, I’ll never, I won’t buy any clothes for a year, I won’t go to any birthdays, I won’t do anything; literally I will eat beans and reuse my plastic bags, my Ziplock bags for the whole year. And then inevitably life happens and you end up falling off of that unrealistic, unsustainable plan feeling like a huge failure.

                          And what I have learned from being on the frontlines over the years, and I’m sure you see this too, when we fail at a financial plan it’s like kicking you when you’re down if you’ve got debt, because you already are going into it feeling like, am I bad with money, because I’ve got debt. And then you try to do better, you fail at it and you think well it must be true, I must be a person that’s just bad with money. And that shame and blame mentality is what I think is truly detrimental to all of our finances.

Doug:                Okay. Now you just mentioned shame and blame. So, and of course the title of the book, “Living Debt-Free: The No-Shame, No-Blame Guide to Getting Rid of Your Debt”, see how I’ve managed to plug the book there as a –

Shannon:           Love, love it, good job, good job.

Doug:                In the form of a question, I thought that was pretty good. So, The No-Shame, No-Blame Guide, so what you are advocating, I believe based on that title, is a guilt free approach to managing your money. So, okay, how is your approach guilt free, and why does that even matter?

Shannon:           Yeah. I think that when we’re afraid to spend any money at all, which comes from those aggressive plans or if you have that constant barrage of, you know, don’t ever buy a coffee and then you do, you spend the rest of your day thinking that that Tim Horton’s cup is why you’re in debt, right. And so, I think it drags you, that shame and the blame, that mentality drags you into a hole, where you believe fundamentally that you’re bad with money. And what I have seen over the years is that that self-talk becomes self-fulfilling prophecy. If you start believing like oh well, I’m just a person with debt or I‘m just bad with money or numbers don’t really make sense to me or this is the way that it is, then you become that, because there is a switch that happens with it, you know, if you have $4,000 on a credit card, what’s another 400.

                          And that mentality, sure we all have those moments on our life, but when they start to happen more and more frequently is when things ca starts to spiral out of control and then it’s just this whole debt loop that just keeps repeating. So, I think that if we can come in and say, okay, let’s take you out of the shame and blame mentality, where you beat yourself up and make some spending money okay, you are allowed to spend some money, even if you have debt; it’s like permission to live your life while you pay down debt. And what that actually means in real-life it’s like, okay let’s figure out what you can and can’t afford, even while you’re paying down debt and then there’s still a portion of that money that’s left over for spending if you wanted to buy a coffee, it’s okay and you don’t have to beat yourself up for that, because you know that you’re doing the financially responsible thing in the background.

                          And I think what also happens with these extreme plans and the guilt that comes with not following through on those extreme plans, is that people don’t start them. Because they believe that, you know, if I want to really get control, if I want to do something about my debt, I’m going to have to completely overhaul my life and I’m not prepared or ready to do that. So, I’m just going to ignore it, because I don’t want to get in a situation where I have to like pull my kids out of dance, pull my kids out of like here, like never buy anything ever again. So, I try to find a balanced approach that is both financially responsible, like so you’re moving someone forward, but also emotionally satisfying. And I think that’s what’s truly motivating and that’s where I’ve had the most success with people.

Doug:                And I totally agree with all of that, so let me just play devil’s advocate here.

Shannon:           Please do.

Doug:                So, you’re saying, you know, no shame, no blame, well let’s take the opposite approach; you’ve got all this debt, it’s got to be your fault.

Shannon:           Okay. I don’t agree to a certain extent. So, what I have found, I’m sure you’ve seen this too.

Doug:                Oh, yeah.

Shannon:           And you’re just, yeah.

Doug:                I’m playing along here, but –

Shannon:           You’re just playing, yeah.

Doug:                But you know.

Shannon:           So, what took somebody from being a person without debt to a person with debt is usually something that wasn’t, that was out of their control or like what I call financial lemons, like something happened to you and the only way to pay for it was with debt in the beginning. And so, often that’s, you know, a cat needs to go to the vet or someone is sick or there was a job loss or retraining needed to happen and there wasn’t adequate emergency savings or the furnace broke, something happened. And there wasn’t enough emergency savings stashed on the side to kind of hit that spike in spending, so it ended up going on a line of credit or a credit card. I have never met someone who is like, can’t wait till I’m in debt, right, like that person doesn’t really exist as far as I’m concerned.

                          So, once you go from being a person who doesn’t have debt to a person with debt, well then it gets a little bit less scary each time you start swiping your card, right, it’s not as emotionally scary. And I actually had a personal experience with debt myself, after I had quit my job to start my business, I took on a lot of credit card debt and I found even from my own experience, which I’ve seen reflected with clients too. When the debt amount that you have is manageable I think you’re more worried about it, because you feel like you can do something about it and so you should and as that debt climbs higher and higher, that’s when it’s easier to just to let go and stick your head in the sand, because there, you don’t feel like it’s manageable anymore.

                          So, I think that where that shame and blame and the judgement of, you know, this is your fault; in the beginning, I actually don’t think it’s, most of the time, it’s someone’s fault, no-one’s choosing to do that. But then what happens is, they have the debt, now they have less money every month to survive their life with every month, because of those minimum payments. So, now you have to like get through life with less money, something else happens you end up taking on more debt, and then the threshold to the next swipe is less scary. So that, we come back to that, well, if you’ve got $4,000 what’s another 400, right. Whereas if you had zero debt, having 400 on your credit card would be emotionally significant. So, I think that’s where those “bad decisions” get made where you see people, you know, it’s easy to judge like, they have debt and they’re going to Mexico, that kind of thing I think comes much later once a person’s been in a debt loop for quite some time and they’ve given up.

Doug:                Yeah, I like the term financial lemons, because that I think does describe it, and you’re absolutely right, I mean we’re filming this today in my office at Yonge and King in Toronto, and the seat you’re sitting in is where all my clients come and sit. And I mean, I did have a person in this week who had exactly the situation you described with a, you know, their pet who had some issue, and that was just, I mean that wasn’t what caused their problems, that was one over another. But I mean, my typical client has gone through a job loss –

Shannon:           Yeah.

Doug:                A marriage breakup, you know, I was sick, I got injured at work, I was off work for a period of time, I had cancer for two years and couldn’t work and.

Shannon:           Yeah.

Doug:                Well okay, it’s not totally shocking man, that you used debt to survive, and it was completely innocent at the beginning, because no problem, I’ll put this on my line of credit –

Shannon:           Right.

Doug:                When I’m back to work next week, I can get it paid off, but then I’m not back to work as quickly, and it just degenerates from then.

Shannon:           It spirals.

Doug:                So, yes, I do exactly what you’re talking about. Now, there was another term in your book, page 134, for people who are playing along at home, turn to page 134 see if you can find this. You used the term spending vortex.

Shannon:           Yeah.

Doug:                Now I’ve never heard that term before probably because you invented it, but so.

Shannon:           I did.

Doug:                Okay, that’s why I’ve never heard of it before then. So, what is a spending vortex?

Shannon:           Okay. This is to me one of the biggest causes of debt beside the lemons, but once, if you have those situations where you’re just kind of constantly overspending, but you don’t know why. It’s usually because of the spending vortex, so it’s like your chequing account and all of the money is coming in, and all the things are coming out of it, right. And so, your pay cheque comes in, and then it’s spent here and then here and then here, and all things are flying out, then you’re throwing money at your credit cards, and basically everything is spent before you can even be like, can I afford to order a pizza.

                          So, what the spending vortex does is, when you don’t have a spending strategy, that’s really what it means, right. Because not what you spend your money on, that’s not what’s important to me, but how you spend your money is. And what I mean by that is, like how many chequing accounts are you using, are you using debit versus credit. Because what happen sometimes, and I see a lot of this, when we have everything come out of our one chequing account, you can feel like you have more money than you actually do, because on pay day you’re like, great, and then you spend money, but then all of a sudden the rent is due or the mortgage is due, and it’s like ew. Or you never really feel like you’re allowed to spend any money, because you’re so afraid that if the bills go through tomorrow, you’re going to be in a problem, so you use credit just because, well I won’t risk the mortgage payment or I won’t risk the rent if I use the credit, and I’ll deal with that later.

                          So, often that spending strategy is a huge cause of why people are continually in debt or sinking further into it. Classically the like stubborn $5,000 on a credit card that just will not go anywhere no matter how many times you start throwing money at it, is usually a cause of a cash flow strategy that’s gone awry.

Doug:                Yeah, and I see the exact same thing with debt, because once I’ve got debt, well now I’ve got, you know, the interest to pay.

Shannon:           Yes.

Doug:                I’ve got the minimum payments I got to pay, I’ve got, you know, it all kind of compounds from there.

Shannon:           Yeah.

Doug:                And that just drives it down and makes it even worse. So, you talk about spending strategies, so I want to throw a concept at you and you tell me if this is a silly idea or not.

Shannon:           Ooh, okay.

Doug:                Because this is what I tell clients all the time, in fact, I had this exact discussion with somebody yesterday, so.

Shannon:           Okay, lay it on me.

Doug:                So, I’m a big believer in paying your bills as often as you get paid. So, my cellphone bill is due on the 21st of every month, but I get paid bi-weekly.

Shannon:           Right.

Doug:                You know. My rent is due on the first of the month, but I get paid every week. So, I mean obviously you can do budgeting and all the rest, and I want to ask you about budgeting, we’re going to get to that.

Shannon:           Yeah.

Doug;                But you know, a simpler strategy would be, okay, so I’ve got a second bank account, and maybe it’s one of these online banks where it doesn’t cost you anything. And so, my cellphone bill is a 100 bucks a month, so every payday, I get paid every two weeks, I just automatically put 50 bucks in that account.

Shannon:           Yeah.

Doug:                And then I preprogram that account to pay my cellphone bill on whatever day it’s due, but it’s happening, I don’t even notice it. Is that a good idea or am I over thinking it?

Shannon:           No, that’s my strategic banking plan, I 100% agree with it, you have one bank account where money goes to die, that’s where all your bills are.

Doug:                Where money goes to die.

Shannon:           It’s not yours, it’s not yours.

Doug:                Ooh, where money goes to die, I like that.

Shannon:           And so, it’s all promised to someone else, whether it’s your rent or your cellphone bill, or your minimum debt payments, or the savings that you’re putting onto debt. Basically, it’s the line, then you have a second chequing account where the money you’re allowed to spend goes. So, we’ve made a line in the sand that I call your hard limit, between the money you can and can’t spent, there is a very clear distinction on payday. So, if that account where all your bills and savings are coming from, if that account needs 2,000 bucks a month, I’m just throwing out an arbitrary number, and you get paid twice a month, then on your first paycheque you put a grand in there, and then if your paycheque was $1,500, you’d move that other $500 over to your spending account.

                          And now you know, for the next two weeks I have 500 bucks to blow to zero on whatever I want, as long as it’s within the confines of this $500, whether it be groceries, gas, coffee, clothes, I don’t care, but you have 500 bucks to do it. And you never have to risk dipping into the money that’s already been allocated for bills or for savings, because that’s all happening in the other bank account. And so, if you can get an account for free, that’s ideal, but I often say to clients this, and this is controversial.

Doug:                Oh, controversial.

Shannon:           Controversial.

Doug:                Go ahead, tell us what it is.

Shannon:           So, you know, clients will be obsessed with that banking plan idea, like they love it, because it just provides so much clarity, because you can have that discussion like, can we afford to order Thai food tonight or something, what’s in the bank account, 50 bucks, get paid tomorrow, do it up, no guilt, right, like I don’t have to worry about, nothing is at risk. They love the idea, and then they’ll be like, but what about the fees, right. And especially if you’re in a situation where every dollar counts, and you’re trying to pay back debt, especially that can seem counterintuitive. And so, if you can find a way to get fee free banking, that’s obviously the ideal, but if you can’t, this is something that I stand by regardless of the controversy. If you can get a basic chequing account, maybe it’s 10 bucks a month, I ask you this, okay, would you pay an app $10 a month for your financial wellbeing, mental health and sanity, so you could stop sinking into debt. If you would, then I think that it’s worth it.

Doug:                Then do it.

Shannon:           Then do it.

Doug:                Yeah.

Shannon:           And often when you frame it like that, it’s like yeah, I would 100% pay an app that. And I was like, great, so let’s try it, and I often will say to someone like try it, and if after three months you’re not convinced, get rid of the account, go back to the old way, that’s 30 bucks, you know what I mean, it was an experiment that went wrong. I’ve never had somebody who actually implemented it, I’ve never in my years and years and years on the frontlines had somebody who this didn’t change their life.

Doug:                So, there you go, it’s – and you’re right, with the proliferation of free bank accounts, it’s probably even less of an issue.

Shannon:           Totally.

Doug:                So, let’s cycle back to this whole budgeting thing then. So, I mean obviously at the start of the podcast I said, oh I like your book, because it’s written by someone who’s spent years and years and years in the trenches as you just said. The other reason I liked it is because you agree with me and, you know, we all like to stay in our own echo chamber, right, I only want to have people on the show who agree with me, I don’t want to deviate. On page 81 you say, and I quote, I don’t like budgets, I don’t think they work. Now I of course totally agree, and I’ve been on soap box about this for years and years, and I’ve done videos on YouTube about it. So, tell me why you don’t think budgets work?

Shannon:           Oh man, because they don’t.

Doug:                Because they don’t, it’s as simple as that, well, and I think that is exactly the answer, because they don’t. Now, I’m an accountant, I mean, you’re a, you know, a financial professional too.

Shannon:           Yeah.

Doug:                So, we actually like spreadsheets we like crunching numbers and all the rest of it.

Shannon:           Love them.

Doug:                And so, it’s kind of innate to us, but even I don’t keep a detailed budget, because like frankly, I got better things to do and I’ve, you know, I’ve got other strategies to deal with it.

Shannon:           Yeah.

Doug:                And in my experience when you say to someone, okay, you got to keep track of every single thing, at the end of the day you got to come home and put it on a spreadsheet and keep track of it, they’re really eager for the first three days.

Shannon:           Yeah.

Doug:                And then it kind of fails from there, is that exactly what you see as well?

Shannon:           Yeah, a 100%. There is a portion of your spending that is predictable, and that’s the bills, that’s the stuff that goes in that one account, and there is a –

Doug:                And what do you call that account?

Shannon:           I call it the bills and savings account, because that’s where the money that’s going to pay your bills.

Doug:                Is that where the money goes to die.

Shannon:           That’s where it goes to die.

Doug:                Okay, so that’s the bills and savings account, okay.

Shannon:           Right, and that account gets all your bills, and then any savings that you’re going to do, so like any of the additional payments you’re going to make to debt or if you’re saving money to an RSP or something like that, it all goes in there. Basically, it’s the money you cannot spend, right, and that’s all predictable. I know what my rent’s going to be, I know what I’m putting towards my debt, I know what this is going to be, I know what my phone bill is going to be. And then there has to be an acknowledgement of the fact that you don’t know what you’re going to spend on groceries next week, you just don’t. Sure, you can write into a spreadsheet that you’re going to spend 80 bucks at the grocery store, but what your friend comes over and you need some cheese, like who knows. So, you have to acknowledge that like part of your spending money, including gas, groceries, like I’m not talking about optional, I’m saying like flexible or unpredictable, that’s the nature of the spending account.

                          So, that’s where you spend money on everything that you can’t really super predict, so I don’t like budgeting that part of your income, because I think it sets us up for failure again. So, you come home, you reconcile between the accounts, it makes money on your brain all the time, keeps you in constant scarcity mode, and if you’ve got a partner doing it with you, it’s rife for fights, like I think budgeting spreadsheets are where most fights happen between couples. How could you spend X amount at the, you know, grocery store, like you know, that kind of thing. And so, we need to take all of that extra work and all of that extra stress out, because then money plans can become doable and easy for people, which means they’re actually going to do them. So, that’s why I don’t like budgeting, and I think it’s interesting that you and I tout that, and we sit with clients and a lot of times people who tout the really hard core budgets, they may not actually see it, because they don’t see the people fail at it all the time.

Doug:                Yeah.

Shannon:           It just doesn’t work.

Doug:                Yeah. It just doesn’t work.

Shannon:           No.

Doug:                It’s kind of as simple as that, so.

Shannon:           Yeah. It doesn’t mean you spend whatever you want, but you just, I think that you just can’t set those micro categories up for your spending money.

Doug:                Yeah. And I don’t think either one of us is saying, oh well, you don’t have to worry about your money, you don’t have to manage your money.

Shannon:           No.

Doug:                No, we’re saying the exact opposite. But you know, my approach, very similar to yours, is kind of set and forget it, you know, the George Forman Grill approach to financial management.

Shannon:           Totally.

Doug:                So, I mean, you got your bills and savings account, you’ve got the other account, the spending account, and okay, my concept is pretty much the same as that. That okay, so I’ve got the account over there where I dump the money in every paycheque, and then the bills get paid from there and it’s kind of gone, and I’m not worrying about it.

Shannon:           I don’t see it, yeah.

Doug:                And that’s I think a much simpler way to do it. So, okay, now let’s talk about debt, because of course the second word in your book title is debt. And the book is available everywhere I assume, right, book stores, Amazon, whatever.

Shannon:           Yeah.

Doug:                So, I’ll put a link in the show notes, everyone can find it, because we don’t have time in 30 minutes to go through all of the nuances of this. But I would like to know, if someone comes into your office, and you’re seeing clients every week, right.

Shannon:           Yeah, totally.

Doug:                Like this again is not a theoretical thing. So, someone comes into your office and they got a bunch of debt, so really big picture, what is the starting point, where do you start? And I know you go through this in a lot of detail in your book.

Shannon:           Yeah.

Doug:                So you know, but can you give us like a couple of starting points when someone’s dealing with a lot of debt, how do you start that conversation?

Shannon:           I try to find the root cause first.

Doug:                Root cause.

Shannon:           So, the first thing I’ll ask them, is it something that has come all at once, or has it been a slow burn. That question has been so fundamentally important for me to have a solution, because if it’s something that’s happened all at once, a run out that got out of control, or a job loss, they finally have an income again. It’s like okay, this is a more manageable, this is a, let’s consolidate, let’s get the interest rate down, we’ll make a plan, we can pay it down. If it’s been a slow gain over time, we have a cash flow issue, right. So, okay, so if we have a cash flow issue, where is the money coming in and out, do we have a spending vortex where we can actually afford things, but we feel like we can’t, and therefore we don’t really know what we’re spending every month.

                          So, looking at what the root cause is, why you’re spending that money, what are those triggers that are happening, whether they’re emotional or routine. I find is the first step to kind of figuring out a plan, because I can sit there all day and tout about like, consolidating lowering interest rates and all that kind of stuff. But if I don’t get to the root cause of what’s actually caused it, and what’s keeping someone in debt, then it’s just going to keep happening over and over again. So, we would figure out what’s causing it, what caused it or what’s continuing to cause it, look at that cash flow strategy, that to me is such a winning combination of like trying to get control over cash flow, so you know, so you can at least stop going into debt, that’s usually sometimes that’s the first goal, it’s like –

Doug:                Yeah, stop the bleeding.

Shannon:           Just stop going into debt, you’re winning, you are winning. And then if we can get them to that point, that’s when the real magic starts to happen, that’s when it gets exciting, and that’s when they get excited, because they actually believe that a plan is going to work for the first time in a long time. So, at that point that’s when we start to do the two levers where it’s like, can we bring in a little bit more money, or can we reduce a little bit. But not in an extreme way, like can you bring in an extra $100 a month, not a second part-time job, you know, can you reduce something else by $50 not 500, right. So, little small tweaks to try to make a little bit of extra income that we can toss on top of that minimum payment and start to see it go forward.

                          And I find that you know, what’s the root cause, let’s fix your cash flow strategy and stop the bleeding, and then where can we make the magic happen to actually reduce the debt. At that point I get to show someone like, if we do this, here is what it will look like. And I, you know, 10 years on the frontlines, I still get really excited for that moment, it is a wonderful moment when you see someone go, no way, really. And you see that they believe, maybe for the first that like they’re not going to be in this forever, it’s just a wonderful thing to be able to show someone, and then you can capitalise on that motivation in the moment. And sometimes, and I do talk about this in the book too, sometimes I’ll even like talk about motivation, because in the moment, like why are they doing this, and I think that’s an important factor, because a lot of times there’s these scare tactics of like, think of the interest paying, bash, bash, bash, bash, bash. But why do you want to be out of debt, what is this debt costing you besides, you know, interest?

                          And so, the example I use in the book is like this guy, his wife is pregnant, and he didn’t want, he wants to show his wife that like he’s reliable, right, and that’s, so his debt was robbing him of his confidence, his ability to be a good dad, a good husband and all that kind of stuff. And so, that’s why he wanted to get out of debt, it had nothing to do with the interest he was paying, absolutely nothing. And so, you know, reminding someone of how they can remember that motivation in the moment when the going gets tough, because you and I both know that like a debt repayment plan may take years, so how do you stay motivated for years, not just 60 days, right. And so, I think if you can bring it back to the motivation of the human motivation there what’s going on, then I think you have a winning plan.

Doug:                Yeah. It’s so interesting to hear you describe that, because it’s exactly the same from my point of view, and obviously I’m dealing with people with massive amounts of debt, but they come in here and it’s like, there is no hope and they leave here, and they’re going, you know what, this is going to be better.

Shannon:           Right.

Doug:                And the, I mean, you asked the question, was it all at once or a slow burn. The question I ask, I probably shouldn’t be disclosing this on, but no one’s going to remember this, but the question I asked is, so what’s changed. So okay, so there’s debt that you’ve got, did it just come about in the last little while or, you know, as you describe it, has it been a slow burn.

Shannon:           Yeah.

Doug:                And some people will say to me, well you know, I lost my job and you know, six months ago and it’s all happened, –

Shannon:           Boom, boom, boom, yeah.

Doug:                But other people will say, you know, I’ve had this line of credit for 15 years.

Shannon:           Yeah.

Doug:                It hasn’t changed, it just got progressively worse. So, obviously the solution is slightly different in each case.

Shannon:           Yes.

Doug:                Because okay, you lost your job, but you’re back to work now, so you can probably get caught back up –

Shannon:           Yes.

Doug:                As opposed to, no, this is, I’ve had my job for a while, nothing has changed, it’s just gotten worse and worse, it’s a cash flow issue or something.

Shannon:           Yes.

Doug:                So, you do have to, you certainly have to identify that. So okay, final big question here, and I guess the final reason I like your book is that at the end of it, after going through all these strategies that you’ve talked about, you do acknowledge, and this is something that doesn’t often get acknowledge when people are talking about debt. You do acknowledge that there are some cases where the debt level is just so overwhelming that no amount of fancy money management is going to solve the problem, you need to talk to a professional. So, and you specifically in your book mentioned, you know, licensed insolvency trustees, consumer proposals and so on.

                          And I think that’s important, because often it’s, no, no, if you buy my book, even if you’ve got a million dollars worth of debt, and even if you don’t have a job, I can still show you how to get out of debt. Well no, there are, yes, I agree that in the majority of cases if we were to pull people off the street, then yes, if you can do the things you’ve just described –

Shannon:           Right.

Doug:                It is possible to pay off that debt, but there are cases where the numbers are just so overwhelming –

Shannon:           Yes.

Doug:                That it can’t be done. So, is there any kind of rule of thumb or warning sign you look for where you go, you know what, I can certainly help you with some cash flow management and some other things, but the debt level is just so much that you need to do something more formal.

Shannon:           Yeah. So, I’ll probably have that talk if we’re going through this and someone’s missing payments, because they’re in a situation where, you know, even with, like the minimum payments are such a huge portion of their take home pay, that they’re missing payments or they’re missing rent or they’re missing things, right. So, that’s a huge red flag that this isn’t a situation where there’s not a lot of levers to pull and we’re already missing payments, we’re making things worse and we’re actively going into debt no matter how hard we try not to. I think the other thing that I would say is, if we do all the things, and it has to be so unrealistic for them to get anywhere, right. So, it’s like, oh well, you have to cut your spending money from 600 to 200, like what is that, right, who, that’s – I have not met a person yet where that feels really a realistic solution for, and so that’s a huge red flag for me too, that this it’s too overwhelming.

                          And then the third thing that I would say is that, if we look at it, and their debt repayment plan is like nine to 10 years for a couple of credit cards, it’s like, that is also a situation where I find it unsustainable, right. So, they’re going to spend so much in interest, it’s going to be such a long period, their credit is going to take a hit for so many years. This could be easier solved with a licensed insolvency trustee. And so I, at that point, that’s out of my weight class, so I’ll say, you may want to talk to somebody, here is the pros and cons, go talk. And I think that what I’m happy about, the fact that I do that, and especially coming from like an advice only financial planning firm is that I’m taking the shame away from doing that, talking about it as a tool. Like it’s a tool, it’s there for a reason, it exists in Canada for a reason, you’re not the only person, this isn’t a punishment, I think that’s very important to have that conversation.

                          Coming from me, especially in the front line, where not the person that’s going to do it for them, right. So, like I have nothing to gain if they go to a licensed insolvency trustee, except that I think it will genuinely help. And so that can be an emotionally fraught conversation to first talk about that. Most people that are in that situation though have already Googled the crap out of it at three in the morning, and they are well versed in what it is, and they’re just too scared to pull the trigger, and sometimes I can make it okay to pull the trigger, because it’s a third party unbiased thing, this is a tool and you don’t have to afraid or ashamed.

Doug:                Yeah. We get a lot of emails at three in the morning.

Shannon:           You bet.

Doug:                That people have –

Shannon:           There’s something about 3AM, there’s something about it.

Doug:                Yeah. Well, you can’t sleep, so you’re looking and that’s what you do, so. Well, I think that’s an excellent summary and I totally agree; the math often tells you what the answer is.

Shannon:           Completely.

Doug:                You know. If it’s going to take 104 years to pay off your credit card –

Shannon:           Yeah.

Doug:                And we actually saw that in the last couple of weeks on somebody’s credit card statement, 104 years, so. But you’re right, I mean nine or ten years is a huge amount of time too, so at that point it’s probably better to seek a formal solution. So, how can people find you?

Shannon:           Yeah. The best way is to go to, kind of the Mecca, so that’s where there is links to the book, to our financial planning practice, to the online courses that we have. Essentially everything lives there, so then you can kind of navigate your way through after that, that’s the best way.

Doug:                Excellent,, I will put a link to that in the show notes. Shannon, thanks for being here today.

Shannon:           Thanks for having me, this is great.

Doug:                Thank you. So, that was Shannon Lee Simmons, I don’t know if I mentioned it or not, but the title of the book, “Living Debt-Free: The No-Shame, No-Blame Guide to Getting Rid of Your Debt”, and as I said, I’ll put a link to Shannon’s website,, and links to her book in the show notes over at, that H O Y E S .com. And you can find a full transcript and show notes with links to everything we discussed today, and also a link to the video of today’s show on YouTube. And if you liked the show, I always appreciate it if you leave a comment or review on iTunes or YouTube. That’s our show for today, thanks for listening, until next week, I’m Doug Hoyes, and that was Debt Free in 30.

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