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Debt Expert — Stephanie Holmes-Winton

 
 

Answers from Stephanie Holmes-Winton

Mar 27, 2012

Q:

I have worked all my adult life and have been married over 35 years; we own our home. We have a small line of credit with the bank and investments within RRSPs at a reputable firm, among some other investments. A few weeks ago, I was approached while grocery shopping to apply for a grocery store credit card. I just got a response back declining me...It seems I have no credit report or rating! asked by M.K., RN, Surrey, BC

A:
The first thing you should do is find out if there has been an error. Mistakes do happen. A store credit card, for example, could be the product of a more obscure lender; they may have different procedures and rules. However, if all your debts are jointly held, someone is the “primary” borrower at least as far as your credit is concerned. You MUST have your very own credit card and other debts that you and only you have applied for to create your own credit score. Even if you’ve got a card with your name on it, if it’s connected to an account where your husband is the primary borrower, you won’t get any credit for your credit. Things like contributing to your RRSPs, paying your regular household bills and paying your mortgage on time won’t actually contribute to your credit score. read more »
 
 

Mar 26, 2012

Q:

My husband has some personal tax issues and credit card debt amounting to over $150,000 at present that he is unable to settle at this time. We heard that we could employ companies that specialize in debt consolidation to help? We do not own any property, but are wondering if the creditors can seize our home assets if his debts are not settled? I’m also wondering if the creditors can come after me to settle his debts because I am his wife? asked by Anonymous, insurance agent, Vancouver, BC

A:
I can imagine how stressed you are. I would strongly recommend you go out and pick up a copy of The Wolf At The Door: What to do When Collection Agencies Come Calling by Mark Silverthorn. This has some great guidelines as to what a creditor is and isn’t permitted to do. read more »
 
 

Mar 26, 2012

Q:

Do you think it is wise to borrow money (say a revolving line of credit - RCL) in today's market with all the job uncertainty? asked by Anonymous, retired (previous banker), Windsor, ON

A:
Great question - and the answer is it depends on what you are borrowing for, how much you are borrowing, and the degree of uncertainty in your area of employment. If you’ve been a teacher for 25 years, have a tiny mortgage and no other debt - and want to borrow $15,000 for a modest kitchen renovation - then it’s probably an acceptable plan as long as you’ve got the cash flow to pay it back. However, if you are very new to the workforce in a sector experiencing huge layoffs, and you’ve got a big student loan that you are struggling to pay, borrowing makes little sense. read more »
 
 

Mar 25, 2012

Q:

I am a single mom of a preschooler, carrying a lot of debt. I attempted to declare bankruptcy but was unable to because of a loan that I hold jointly with another person, and that person is unwilling to take the credit score hit. I would like to buy a home for my son and I, but I have no idea how to bring the money together for a down payment. Please help me! asked by Anonymous, customer service rep, Toronto, ON

A:
I have a preschooler myself and cannot imagine the challenge I would face raising him alone. You should be proud of yourself. Just asking questions like this one can help you model good financial behaviour for your child. read more »
 
 

Mar 24, 2012

Q:

I'm a single mom with two kids. My ex-husband got me in a bad financial situation - low credit score (the lowest) and in debt about $35,000. I want to pay at least $150 monthly towards reducing this debt. Is there anybody that can help to make a plan for me? asked by Anonymous, Oakville, ON

A:
You may be a good candidate for credit counselling. Beware debt settlement companies though; even the government is warning people of these. With respect to your current proposed payment schedule, I applaud you wanting to reduce your debt, but you do need more of a concrete plan to really pay down that debt. At a monthly payment of $150, even if you only pay 5% interest, it’s going to take you nearly 70 years to pay that amount back, costing a fortune in interest. read more »
 
 

Jan 30, 2012

Q:

I have a question regarding my husband's credit score and how to improve it…We would like to purchase a home in the next 2 years and want to make sure that we can get a mortgage… asked by Anonymous, management consultant, Mississauga, ON

A:
First of all, you did exactly what I would have told you to do for the first step. Good work! The two big things to improving a poor credit score are time and good behavior; those together will heal your husband’s credit. As for items that went to collections, if they were written off, they will eventually drop off his credit; however, they may still show for some time which could affect a lender’s perception of your husband as a borrower, even if the three-digit number looks good. read more »
 
 

Jan 29, 2012

Q:

I'm starting over at 47 and attempting to buy a house on my own. My only debt is credit card debt ($23,000) and my list of assets is low, since I sold everything to move. My current bank wants a co-signer and will not assume the debt from another institution. What are my options here? asked by G., emergency dispatcher, Edmonton, AB

A:
Please don’t buy a house, at least not now. I applaud your efforts to be independent, but $23,000 of credit card debt is, in my opinion, significant for one person to carry and not good footing upon which to enter home ownership, especially if you’ve got only one income. read more »
 
 

Jan 27, 2012

Q:

How do you get away or break the cycle of payday loans? Help! asked by Anonymous, Toronto, ON

A:
The good news is you can break the cycle. The bad news is you’ve got to be willing to be financially uncomfortable for at least 30 days to do it. Here’s how… read more »
 
 

Jan 27, 2012

Q:

My husband and I are 60 years old. We have $130,000 in debt between a mortgage and vehicle. We have about $300,000 in other investments and are selling a building and hope to realize about $300,000 in that sale. We are concerned that we may not have saved enough? asked by Anonymous, part time secretarial, Cold Lake, AB

A:
Great question. I love the example you are sharing here because so many people in the financial world feel that a couple such as yourself with $300,000 in investable assets (soon to be about $600,000) in their 60s must be debt-free. You and your husband are a very accurate example of what I am seeing with retirees with whom I work. You’ve got assets, but you’ve got debt too. If a financial pro attempts to help you manage one without the other, you could get less than desirable results and put yourselves at unnecessary risk during your retirement years. read more »
 
 

Jan 26, 2012

Q:

My husband and I are $98,000 in debt and cannot get out. Do you recommend going to a credit counseling organization that claims it can cut your debt by 45%? If so, which company is legit? asked by Anonymous, sick and in accident, Blenheim, ON

A:
NO! You have to be very, very careful who you are dealing with when it comes to these offers to “reduce” your debt. Some of these companies offer legitimate assistance in providing consumer proposals to your creditors. This is where both you and your creditors enter into an agreement to accept a lower amount than you currently owe, to be repaid over a predetermined amount of time. read more »
 
 

Jan 21, 2012

Q:

I've gone with an all-in-one account, but now everything is lumped into one and the debt is increasing instead of reducing. I lack discipline obviously, and I want my $101,000 debt to be paid off in 5 years! Is that realistic and how can I do this? asked by Anonymous, Edmonton, AB

A:
Okay, this is one of the BEST questions I’ve been asked so far. The reason being is that I have a lot of experience with this type of product and I am a huge fan. I have a massive bias, but I do for a reason. All-in-one accounts work, but they only work if you are shown how to use them. I’ve recommended them to clients as part of my planning process for years, and during that time, have figured out some very effective ways of managing cash flow so that these things do what they are intended to do (reduce your debt!). read more »
 
 

Jan 21, 2012

Q:

Due to health concerns, I am currently not working. I also went through a divorce about 5 years ago and incurred credit card debt. Is it smarter to sell investments at a loss to pay off credit cards or to hang on until the investments break even and pay the interest on the cards? asked by K., currently not working, St. Albert, AB

A:
Great question. People often wonder which is worse: pay the interest or take the loss (and pay the tax, depending on the investment). Not working doesn’t mean not earning. If you are receiving no taxable income - meaning you could withdraw from investments at a lower than normal tax rate - it is possible that it could make sense to cash out investments to pay down some or all of the debt. However, before you do anything, make sure you know how a withdrawal will affect your tax rate and/or any benefits you may be receiving. read more »
 
 

Jan 6, 2012

Q:

I bought a house one year ago and since then, I have been unemployed twice. I am 60 years old and have found out that if I don't work in the next 5 years, I will have very little CPP even though I have worked for the last 34 years… asked by Anonymous, unemployed, Toronto, ON

A:
Oh dear, I can see why you feel trapped. I know what you mean about being in the same situation whether you own your home or not; I suspect this is true for typical monthly expenses, but home ownership comes with a lot of extras which aren’t necessarily predictable. Because of this, you may still have to consider selling, though this will entail realtor and legal fees - so you have to ensure you have enough equity and don’t end up owing more in the end. read more »
 
 

Jan 6, 2012

Q:

We financed a new car last year (for 5 years) but have realized we can't afford it. What we still owe is $3,000 more than what we can get for it. Should we sell at a loss anyway? asked by Summer, Vancouver, BC

A:
Thank you for this question. It seems to me that car companies are in the monthly payment business – and not the car business. I see a lot of people fall prey to their car payment being the biggest issue in their debt service picture. I’ve actually contributed to a piece on this in the past that you might find helpful. read more »
 
 

Dec 3, 2011

Q:

I am confused as to where to start to pay off debt that I let get out of control: 3 credit cards, an outstanding loan from a separation and custody battle, and a car payment that I cannot afford...all together about $50,000 and I make $48,000 a year... asked by M., receptionist, Kelowna, BC

A:
Thanks for this question. Good for you for having the automatic loan payments. As for which debt to pay off first, here are my thoughts... read more »
 
 

Dec 2, 2011

Q:

My husband and I are struggling with debt. We have so many bills to pay, but never enough money. We were about $30,000 in debt a year ago and have got it down to $20,000, but we are still drowning. We don't own a home nor is our credit good enough for it... asked by Anonymous, Lethbridge, AB

A:
Rest assured, you are not alone - many young couples start with debt; frankly, due to the way the world now works, it is almost a given to be in the position you find yourself in. This, of course, doesn’t mean that you can’t change it, and the steps you’ve taken in the past year are a great start. Your story sounds a lot like the story of a young couple featured in a past debt makeover. My best advice to you is to have a look at Amanda and Ryan’s story and my advice to them. Take from their story the tips that make sense for your situation. read more »
 
 

Nov 15, 2011

Q:

I am currently on maternity leave from my job as a receptionist. Our baby is due in December. My husband is on assistance until his ankle heals from surgery and will be back to work in January. How can we save money on such a fixed income with a child on the way? asked by K.M., receptionist, Kingsville, ON

A:
This is a great question that many couples who are about to have their first child consider (and most aren’t facing two limited incomes at the same time). At some point, if things are too tight, you may have to consider returning to work a little earlier than expected. I know no mother likes to hear that, but there is a fine line between staying home to love your new baby, and putting your family in financial jeopardy. read more »
 
 

Oct 5, 2011

Q:

Six years ago, my son was diagnosed with Schizophrenia. He had $22,000 in a student line of credit which he had his dad co-sign and also took out disability insurance. My son is now permanently mentally disabled and cannot afford to repay his loan... asked by Anonymous, small town, ON

A:
I’m so sorry to hear about your family’s situation; it’s very upsetting. Unfortunately, there isn’t much good news. read more »
 
 

Oct 4, 2011

Q:

My boyfriend and I recently got accepted into a housing program funded in part by the government which allows moderate income earners (approx $30-$70K/yr) to enter the housing market. No down payment is required, and the property is sold below value to make it affordable... asked by Ms. Moo, interior designer, Calgary, AB

A:
Okay, first slow down. Don’t add a child to this situation just yet. If your cash flow is so tight that any emergency drains your bank accounts when you don’t own a home, what will you do when the home needs extra funds and the car needs tires at the same time? I really hate to see people so intent on climbing that first rung of the property ladder that they break their neck as they fall off of it! read more »
 
 

Aug 4, 2011

Q:

I have not been able to return to my normal work since a devastating family abduction and death in 2000, leaving both my mind and body unable to cope with the pain and the memory. As a result, I have had to use all my savings and have no retirement money any more - just living day to day... asked by R., Summerland, BC

A:
Oh dear, this is a lot you’ve had to deal with; thank you for your honesty – I feel greatly for your loss and struggles. Despite this horrible past, I truly believe that it’s never too late to make the most of any situation, including yours. My younger sister (age 30) was injured when she was 21 in a workplace accident and has suffered a serious neurological chronic pain condition called RSD. While I have never had to deal with the pain that either you or my sister have had to deal with, I can tell you that my experience with my sister tells me that doing nothing (no work, nothing to keep your mind focused) seems to cause - at least in her case - more pain and problems. Can she work full time? Not on your life, but she’s found a balance in her life with some work that she can control and it has made huge improvements in her pain levels. read more »
 
 

Aug 3, 2011

Q:

I need advice for my 22 year-old daughter. I recently spied her three credit card statements gathering dust in her room. She is a student with a part-time job and has racked up $2,200 on these cards and left it sitting there for months. With an 18% interest rate, this debt will never get paid down. What could she do to get out of such a high rate? I really do not want to bail her out. asked by J., Richmond, BC

A:
First of all, this isn’t surprising or unusual, but it is something that we can all prevent from happening (and can fix when it does – with a little discipline and determination). A consolidation loan would not have taught your daughter what she needs to learn about managing credit, so I for one am glad the bank said no. My professional opinion is that consolidation loans don’t deal with the issue and generally beget a pattern of consolidation for a lifetime (which gets really expensive, no matter the rate). read more »
 
 

Jun 22, 2011

Q:

My husband and I recently filed for bankruptcy for the second time. We have limited income, three teenagers, and a mortgage we were allowed to keep (though the costs to maintain it are high). How can we make this work so that we never make this mistake again? How can we live within our means and still have enough money for food? asked by Anonymous, clerk, Charlottetown, PEI

A:
What a brave and difficult question. In this country, few of us consider food to be something we may not be able to afford. I don’t know how you ended up in this situation, but I’ll do my best to offer some perspective based on what I do know. read more »
 
 

Jun 7, 2011

Q:

I found out that my ex messed with my finances; therefore I am now in a consumer proposal. I need to get a $15K loan to purchase my car which is coming off the lease shortly (I make 50K a year). Where can I get an unsecured loan for this type of situation? asked by Anonymous, customer service rep, Montreal, QC

A:
I’m sorry to hear what has transpired for you. Here’s how to start dealing with it. read more »
 
 

Jun 7, 2011

Q:

How do I go about setting up and sticking to a budget to get my husband and myself out of debt? We have considered going bankrupt to stop the creditors from calling us, but really hope there is an easier and less embarrassing option. asked by N., receptionist, Langley, BC

A:
Human beings naturally suck at budgeting, so I know you are not alone. Lots of people enter relationships these days and bring along some pre-existing debt; it can be a real challenge to manage all of the different accounts. read more »
 
 

Jun 7, 2011

Q:

What is the quickest way to pay down a credit card that got away on me! I cannot afford to pay it off, but must have a plan! asked by Anonymous, Sudbury, ON

A:
This happens to a lot of us. We were just going to use it for emergencies and then… read more »
 
 

Apr 20, 2011

Q:

Can you tell me how to rebuild my credit after bankruptcy? I was discharged 2 years ago. Are there credit cards that I can apply for and be accepted with low limits, so I can raise my credit score? asked by Anonymous, on disability, Ottawa, ON

A:
Many people discharged from bankruptcy can get what is called a “secured” credit card. A secured credit card requires a deposit into an account held with that same lender. These cards typically have quite low limits; the highest I’ve seen is $500. So let’s say you want to obtain a $500 limit secured credit card, then you’d have to deposit $500 into a savings account with that lender and that money would act as collateral against your credit card. If you failed to make a payment, the credit card company would know that they could just take the funds from the collateral account. Ask your bank if they offer them; if not, take a look online, as you may need to choose a more virtual provider. read more »
 
 

Apr 20, 2011

Q:

I am a single mother but I have a great career and a good salary. However, I am in debt and it seems that I'm constantly playing a game of "catch up". I spoke to a financial advisor, hoping for some kind of game plan along the lines of money makeovers you have done in the past. Instead, he gave me advice that would be fine and dandy if I weren't behind in my payments. Where do I find a professional who can give me a very specific outline of what I need to pay and when to get out of debt? asked by Anonymous, instructor, Pitt Meadows, BC

A:
This is such a good question - thank you so much for asking it. You are not alone. Many people wish they could have the type of plan provided for Amanda & Ryan for their debt and spending, as alas, this type of planning is not a common skill. Unfortunately, there is no official type of professional that provides the kind of planning that you saw in the article. read more »
 
 

Mar 24, 2011

Q:

I purchased a new vehicle within the last two years and am finding it hard to make the monthly payments. The vehicle was financed for 60 months. What are my options? asked by Anonymous, admin, Coaldale, AB

A:
The bad news is that vehicle debt is one of the hardest to do anything about after you’ve signed on the dotted line. The reasons are twofold: new cars, in particular, depreciate rapidly and most people buy based on the monthly payment, rather than the total purchase price. (Yes, there are all kinds of fun ways for the car dealer to make almost any car affordable for your budget. The payment may even appear to be manageable, but that doesn’t mean that you can really afford that ride!) read more »
 
 

Mar 24, 2011

Q:

I want to make more money fast, using the internet. I can't invest any more money...do you have any suggestions? I have tried affiliations, marketing for other companies, etc.. I have many talents and skills. asked by L., car delivery, Saint-Jérôme, QC

A:
The short answer is this: If money was easy to make, we’d all be rich and a coffee would be 50 bucks a cup. However, I do agree there are ways to make money using the internet. I certainly make some of my revenue by using the internet, but I have something to sell. If you have talents and skills, perhaps you can create content or a service around your skills? What do you have to sell? If you look at people who are most successful at monetizing their skills online, most of them would agree that you need to have content. You need to have something to say and you need to know why people would want to listen to you. read more »
 
 

Mar 16, 2011

Q:

My fiancé and I had a whirlwind romance and now have two children in a very short time (and 25K of credit card debt). There just doesn't seem to be enough money. Would it be wise for us to consolidate our 7 credit cards worth of debt? We really want to rebuild our credit rating. asked by Jennifer, stay-at-home mom who may return to work, Barrie, ON

A:
Great question, Jennifer. A lot of people are facing multiple debts these days and wondering if consolidation really works. The answer is consolidation usually works and it usually doesn’t work in the long term. What do I mean by that? Well for one, I hate the term ‘consolidation’. If you asked any of my clients, they would tell you that word has been banned from their financial vocabulary (at least during our discussions). Consolidation to most people means to take a bunch of debts that have accumulated (usually because there was not enough money at the end of every month or they experienced a period of financial difficulty) and roll them all in to one debt with a hopefully more manageable monthly payment. However what no one seems to do – and the reason I hate the term – is address how the debt came to be in the first place. Consolidation treats the symptom and leaves the cause to fester. So you need to figure out how that debt came about in the first place. read more »
 
 

Feb 14, 2011

Q:

I would like to get out of debt faster ($25K). Any tips for a young lady who wants a fresh start? asked by Anonymous, Edmonton, AB

A:
Well first of all, I’m impressed. It takes a serious dose of courage to see your financial ship sinking and be brave enough to let go and come up with a creative solution (rather than going down with the ship). Too often people feel that they have to hold on to their home at all costs. I realize you have kept ownership of your property, but you are renting it out. Good for you! Many of us place a huge value on home ownership, but sometimes in our haste to get there, we pull the trigger too soon and fail to lay the proper foundation before we buy. Not to worry, it’s never too late. read more »
 
 

Feb 9, 2011

Q:

I started a business in 2008, but it hasn't been able to completely support me yet. I'm now in debt of $10,000 and having trouble meeting the minimum. Should I use my daughters’ savings of $5500 or use the monthly $300 they get, or both? asked by C., self-employed, Calgary, AB

A:
First of all, good for you. Starting a business can be a great way to reach a goal of financial independence. However, starting a business can also mean living with a fluctuating income until your business really gets off the ground. Of course, it is ideal to be ready for this variable income by paying down debt, making sure you’ve got access to inexpensive credit (like a line of credit) and stream lining expenses before you start the business. Doing all that would leave a newbie business owner better able to stretch their dollars. read more »
 
 

Oct 15, 2010

Q:

Borrowing money to fund a portion of a down payment on a house - good idea or bad idea? Are there any other options? asked by Lady Martini, Waterloo, ON

A:
My first instinct is to say: “No! Please do not borrow money for a down payment!” (And you know what they say about woman’s intuition.) So I think my first instinct is right. read more »
 
 

Sep 16, 2010

Q:

I have two sons that have been raised with little to no financial support from their father. I am also involved with a man that for the past nine years paid high child support above his income level. The financial burden of those overpayments fell on me. I don't want to file for personal bankruptcy, but do need a financial plan in place to bring my debt down. Help? asked by Anonymous, admin support, Edmonton, AB

A:
Thank you for being courageous enough to share your situation with others. It sounds like you’ve worn the financial burden of two families for some time. I can imagine how hard that must be. What I want you to hear clearly is this: “Please take care of yourself.” In the end, if you continue on the path you have started, you will wear your credit score down, with the debt in your name. Remember, the greatest gift you can give your two boys is a financially independent mother. While this might be a little tough to take, please hear my answer. read more »
 
 

Aug 24, 2010

Q:

Hello, I really have a problem with managing debt and trying to get out of it. Every time I plan to pay off my debt and get on track, I go off and spend more... asked by drbmw90, buyer/planner, Brampton, ON

A:
Please don’t give up. You may not be headed in the direction of the life you say you want, but trust me when I say, it is a choice. Reaching out to ask this question is a sign that you are ready to make that choice. read more »
 
 

Jul 25, 2010

Q:

I worked hard, I got a good education and I make a great living, yet I feel like I’m not making very much progress managing my cash flow and paying down debts. How can this be? asked by Jennifer B., account executive, Brampton, ON

A:
It doesn’t matter what money you earn but rather what money you keep, and more importantly what you do with what you keep. So stop focusing on where you think you should be and begin to start the process of living up to what you can be. read more »
 
 

Jul 13, 2010

Q:

I used to work full time but am now a mother of 5 without daycare. How do I get my credit rating back up when I fell behind on a few payments and am trying to catch up now? Also, any suggestions on ways to work from home and how to find such work? asked by debs2129, homemaker, Dollard-des-Ormeaux, QC

A:
Without knowing too much about your family situation (other than you miraculously manage 5 kids – kudos to you!), I’m going to base this response on you being a single mother. Should you be married, however, the information still applies. read more »
 
 
 
 
 
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