You’ve got to love a bad Shakespeare reference.  Or, not.

I’m fascinated by how people talk about paying down debt – some refer to it as “debt reduction,” and others use language like, “debt eradication,” or “debt elimination.”

Personally, as mindsets go, I’m with that second group. To me, debt reduction is something that you’re doing on the way to achieving a goal of debt elimination. I don’t really understand why anyone would stop at reducing their debt. Yes, I am biased. But, if reducing debt is your end goal, isn’t that like going on a diet by skipping dinner and eating a cheesecake?

One thing’s for sure – whether you’ve decided to go relocate to DebtFree land, or just be a tourist there, having a plan is critical.

One of the best – and most blogged about – strategies for getting rid of debt is the debt snowball, a term that originates with Dave Ramsey and that has been adopted and adapted by any number of personal finance gurus. My personal favourite adaptation is the Debt Avalanche, which brings together the rational financial practicality of the “traditional” debt snowball; and the psychological warm fuzzy of Dave Ramsey’s more immediately gratifying approach.

(Note: This is my overview of the three methods of snowballing debt – if you want to read another take (or 20!), try googling “debt snowball,” “debt avalanche,” “dave ramsey,” or read the archives of just about anyone on the $M blogroll.)

The basic process is the same across these methods – the difference is in the details. All three variations have these steps in common:

1. you need to make a date with your budget and determine some important information:

- what is your minimum monthly payment for each debt

- how much additional money can you pull out of the budget to assign to additional debt repayment

- what are the amounts and interest rates of your various debts

2. each month, you pay the minimum payment on all of your debts, and take the additional money that you found in your budget and use it to pay an additional amount on one debt (how you choose this is what makes the difference between the methods).

3. you continue to make this minimum+extra payment on the debt until it is gone. Then you take that amount (debt 1 minimum + original extra amount) and call it the “new extra amount” (or whatever floats your boat)

4. the new extra amount is added to the minimum payment for debt 2 until it is gone. Then you repeat steps 2 & 3, adding the ever-increasing “extra” amount to minimum payments on subsequent debts until all of your debt is repaid.

Because you’re servicing all of your debts, the impact on your credit score is positive; because you’re repaying debt more quickly than by making only minimum payments, the impact on your personal financial bottom line is also positive.

If you had the following three debts that you wanted to erradicate:

credit card – $18000 @ 12%

student loan - $15000 @ 6.5%

mortgage - $150000 @ 5.25%

How do you know where to start? This is the distinction between the three methods

Really, what it comes down to is what criteria you choose for prioritizing your debt. All three of these methods work, the differences between them are (relatively) minimal. Ramsey’s is favoured by people who want the psychological benefits of seeing progress in debt reduction by reducing the number of debts. People who favour the highest-interest version are most concerned with the total cost of the debt – the less interest you pay, the better. The Debt Avalanche is trying to capture the logic of both of these approaches by first giving you a push in the form of eliminating a debt, then giving you the benefit of reduced cost of the debt. Which is better? As always, that depends on what your priorities are.

Probably the most interesting commentary I’ve seen on this issue in a long time came in the form of a comment on the original Debt Avalanche posting on Consumerism Commentary back in July. Troy, commenter # 29 offers a compelling argument for another criteria for prioritizing your debt: risk. Take a look:

No one ever give risk enough weight. Not paying off revolving debt carries risk. Juggling several debts carries risk. All debt carries risk. The interest rate is A factor, not THE factor. Balance is A factor. Risk is also a factor. Risk of rate changes, universal default, etc.

The best way to eliminate debt is to pay off the RISKIEST debt first. Sometimes it is the one with the highest payment, sometimes the highest interest rate, sometimes the highest balance.

You must also consider life situations. If you are trying to reduce your debts to qualify for a better rate on your new home purchase, lenders care about your MONTHLY debt obligations, not your TOTAL outstanding debt. Paying off a low interest (5%) car loan with a $700 monthly payment will make a much larger impact than eliminating a 20% $4,000 credit card balance. If that car payoff gets you a .25% better interest rate on a $200,000 mortgage, it is “mathematically superior” to pay attention to your own situation and pay of the loans with RISK.

So, while the idea of making inflated payments on your debts, one debt at a time is an excellent one for (relatively) quickly getting rid of debt; there really is no such thing as a solution that is the “best” strategy for everyone (despite Troy’s assurances!). No surprises there – you have to make these decisions based on your situation, and your needs. As those change, so will your plan.

Have a safe trip to DebtFree land! See you there!

Get out! (of debt, that is)

Q: Now that I’m in debt, how do I get out of it/fix it/reduce it/ stop the harassing calls/etc. etc.?

A: Getting out of debt literally means reducing your debt to zero, and keeping it there (no surprises there, I’m sure). There are several ways that this can happen. (Note: these methods have analogues all over the place, but the names, rules, etc. are specific to Ontario, Canada… just so you know.)

Method 1: full repayment on your own

If you can afford to repay your debt completely, without changing the terms of your debt, then you just have to grit your teeth and do it. Perhaps the most effective way of doing this is by throwing as much extra money as you can afford to at your debt repayment budget (this is the “debt snowball” that will be the focus of our next discussion). The larger the payment you make, the faster the debt disappears, and the less interest you pay. Provided your payments are on time, this method of repayment will have a positive impact on your credit rating & score. There are literally dozens, if not hundreds, of debt-reduction blogs out there, where you can participate in the journey of individuals and families as they eradicate their debt (and live without incurring additional debt).

Method 2: full repayment with Debt Management Plan (DMP)

If you can afford to repay your debt completely, but you’ve gotten behind or otherwise need some help getting out from under interest charges, a DMP might be the solution. You will need to work with an accredited credit counselor (see the resources page for the Ontario Association of Credit Counsellors, for example) to establish this. You arrange with some or all of your creditors to stop or reduce the interest accumulating on the debt, and to make a single monthly payment to the credit counselor that is then distributed among the creditors. A typical DMP lasts for 3-5 years, depending on your level of debt, and remains on your credit report for 3 years following completion.

Method 3: full or partial repayment through a Consumer Proposal

If you are really in trouble with debt in collections, and/or you are not able to repay the full amount of the debt, a consumer proposal may be the answer. You will require a bankruptcy trustee to create this legally binding agreement between you and your creditors. If the majority of your creditors agree to the proposal (51% by amount owed, not by number of creditors), they’re all deemed to have agreed. Interest will stop accruing, and your payments will go to reducing the principle. If necessary, you can negotiate to pay less than the full amount owing (if you are proposing less that 50% of your total outstanding, you may have to consider Method 4 instead). A CP usually includes only unsecured debt (credit cards, personal loans, income taxes, etc.), not secured debt (mortgage, or car loan, for example).

Method 4: bankruptcy

In some situations, bankruptcy may be the only option to resolve your debt situation. This is, of course, a solution of last resort, as the consequences for your credit rating and your personal finances are significant. On the plus side, it offers you a fresh start. In a bankruptcy, you will pay an “accounting fee” of approximately $150-200/month plus half of your income over the maximum allowable income for your family size. Therefore, the more money you make, the higher the cost of bankruptcy (i.e., the more of your debt gets repaid. Your trustee will file your income tax return(s) that cover the period in which you are bankrupt. Your possessions may or may not be sold to pay off creditors (it depends on what it is, how much its worth, and how much of it you own); a bankruptcy trustee will have to go over your assets and liabilities with you to say for sure what will stay, and under what circumstances.

If overspending bears some resemblances to addictive behaviour; then, for many people, debt reduction is like going cold turkey while simultaneously going on a diet and joining a gym to train for a marathon. It very definitely requires a whole new way about thinking about money we earn, and money we owe. But, it absolutely can be done. If you’re serious about getting out of debt, then you need to do something concrete about it. Here are some good first steps:

- talk to your partner/family members about the financial situation. Think: constructive and cooperative (“what can we do to change this”); not confrontational (“you spend too much money!”)

- make a list of ALL your debts, including the ones you don’t want to think about

- don’t avoid creditor calls, but don’t allow yourself to be pressured into making promises you can’t keep, or payments you can’t afford. (See the resources for information about dealing with collection agencies.)

- start tracking your spending and identifying areas where you can spend less

- make a budget

- set goals for spending and debt reduction

- make another budget

- if you cannot find the solution on your own, make sure you speak to a banker (re: consolidation loan), credit counselor, or bankruptcy trustee as soon as possible to begin working on a solution!

If you need some inspiration, check out blogs like Blogging Away Debt, or No Credit Needed. Heck, start your own blog, documenting your debt-reduction journey — nothing like making your goals public to make you accountable.

There is also a thriving social networking movement to support people getting out of debt. For example, you might want to check out: debtgoal.com, which is a free online debt management plan that provides an opportunity to participate in a community of folks who are also deep in the debt-reduction/elimination trenches.

Most importantly: be honest about your debt – know how much you’ve got, and how you got into debt. If you can get your head around that, you can start to get rid of it. Make a commitment to yourself, your family, to what or whoever you need to be/feel accountable to in order to keep going when it gets tough. Because it will get tough. If it was easy, none of us would be in debt, would we?

At the risk of being cliché, I’ll remind you what Confucius said: “A journey of a thousand miles begins with a single step.”  He never said it wouldn’t be uphill.

[…continued from January 29^th’s post…]

As we have done (and will do) regularly around here, we are coming back to the real key to financial bliss, and ultimately, to using debt wisely: being a conscious consumer.

This is where Martin Lewis really hits the nail on the head, I think: the root of the problem of massive, expensive, “bad” debt is that consumers are facing off against a multi-billion dollar advertising machine that exists solely to convince us that wants are needs, that bigger is better, that promotions are really bargains, and that it’s alright — even positive — to live hundreds or thousands of dollars beyond our means. Advertisers have years of training and of research to help them hone their pitches to push our buttons. Consumers, on the other hand, often have no training in how to be critical consumers. We’re conditioned to respond to advertising, peer pressure (as though supermodels and I will ever be “peers”!), and to spend uncritically.

What does this have to do with debt? Everything.

“Good” debt tends not to be the type of thing that one can enter into spontaneously. Mortgages, student loans, even intelligent car purchases are not things that we do because of a counter display at the mall. “Bad” debt, on the other hand — the high-interest, not-an-asset, uncritical purchases that we make — is often spur of the moment, regularly unconscious reaction to the values taught to us by people trained to part us from our money.

So, what if you pay with all your impulse purchases with cash? Does that make them “okay”?  That depends on what’s on your credit card. Do you pay your utility bills, or buy clothing, or groceries, or pay for other necessities on your credit cards? Do you carry a balance?

If you do both of these things, then your impulse purchases are still causing you to incur debt, by causing you to “use up” available cash with the unnecessary stuff, and putting necessities on credit. Beyond being “bad” (that is, expensive) debt, this should be a big, red flag that you are potentially in (or headed for) real financial trouble.

The punchline: We are taught that debt is bad, but we end up incurring debt because it is necessary to do what we want/need to do in the world. Believing that debt is bad leads to believing that our debt is a source of shame, rather than a tool to be employed constructively. So, we don’t talk about debt. Therefore, we don’t learn about debt.  Add to this the billions of dollars in advertising that exists solely to make us believe that wanting something is the same as needing something, and you can see how problems happen. Overspending is compounded by poor, uninformed borrowing choices, which eventually make the hole deep enough that it’s easy to justify continued overspending on the basis that “it’s not much more. It won’t make much of a difference.” This, folks, is what is known as a debt spiral.

Say it with me: Not all debt is bad. In fact, for most of us, some debt is inevitable. But make sure to be smart about it: make it as inexpensive and affordable as possible, and get rid of it as quickly as possible.

Now you can have a crush on Martin Lewis, too.

Q: Why do we get into debt?

A: We overspend.

No, really. It’s that simple.  The real question is, ‘why do we overspend?’ And that answer is, perhaps, a bit less simple.

I admit it: I have a crush on Martin Lewis. He’s a British blogger, and self-proclaimed “saving expert,” and his analysis of people’s collapse into the terrifying “debt spiral” (as presented to students, parents, and faculty of the London School of Economics) really resonates with me. Allow me to paraphrase:

Martin says that the debt problem can be traced back to an outdated middle-class ideal that we hold that is embodied in the saying “neither a borrower, nor a lender be.” The underlying message, of course, is that “debt is bad.” If what this did was cause everyone to live below their means, there would be no problem at all — there wouldn’t be billions of dollars owed to credit card companies, marriages and lives would not collapse because of financial stressors, and life would go on just tickety-boo.

Clearly, this is not the result of our great-grandmama’s frowning on borrowing. And, as all hopefully know by now, working from reality is the only place to start a journey toward personal financial resilience and health. Martin knows this, too. In fact, far from saying that “debt is bad,” Martin says that it’s both inevitable, and potentially positive.

It’s inevitable, because for many of us, assets like education and an owned home cannot be purchased without incurring debt. And yet, most would argue that these purchases are investments, and an at least acceptable reason to go into debt.

Basically, Martin is arguing that debt can be leveraged to create assets that can then be leveraged to further improve our economic situation. The conditions are that the debt needs to be as inexpensive as possible, and entered into (wait for it) as intelligently as possible.

Is anyone surprised by these revelations? I didn’t think so.

Inexpensive debt means low interest rates. Intelligent debt means that the net consequence of incurring the debt is positive (or, that you can reasonably assume it will be positive). This is why education, and houses can be good debt — the interest rates are generally among the lowest you’ll find, and the long term appreciation or leverageability of the assets is good. It’s also the reason why a car has the potential to be an asset, despite its chronic depreciation: if the car is financed inexpensively, purchased intelligently (i.e., as a critical consumer), and is leveraged to improve your financial situation (facilitates earning a living in a way or at a level that is not possible without the car), it’s an asset, and a good debt.  A gas-sucking pig of an SUV financed through a(n expensive) finance company, and purchased to make you look cool when you drive 2 blocks to work? Not exactly an asset, nor is it good debt.

[…continued tomorrow…]

Q: When is a bargain not a bargain?

A: When you are buying something you don’t need just because it’s on sale.

We all know this. Just like we all know that advertising, sales, and “bargains” are designed to make us forget this simple fact. And, boy, do we forget it.

I am (distantly, thankfully) related to someone who genuinely believes that if something is on sale for $1 off, and she buys 10 of them, that she has actually come out $10 ahead. She is a disciple of “the more you shop, the more you save” advertising campaigns. If you don’t see why this is funny, you really need to keep reading.

A bargain involves getting something at a good price. Simple enough. But, when you break it down a bit, there are some conditions that aren’t explicit in that statement. First, strictly speaking, the “something” that you get would have to be something that you need, as opposed to something that you want. You can absolutely get a good deal on an unnecessary purchase, on a “want.”  But, it will never be a bargain, because it wasn’t money that you had to spend. You could have chosen to spend $0, so no bargain. This, of course, is not to minimize the satisfaction of being able to meet a want at a reduced price. Just don’t call it a bargain.

Second, and this should be a no-brainer for the truly frugal among us: a “good price” requires taking into consideration the entire cost of the purchase. Many of us know people who have driven all over town to save $0.25 here, $1.00 or $5.00 there. At some point, the cost of chasing sales exceeds the amount saved. Choosing not to have a car has been extremely instructive for my family on this point. Because our transportation is almost exclusively feet, bikes, or public transit, the monetary cost of our transportation decisions are very small. The result is not that we travel all over town chasing sales, however; the result is that our analysis of the true cost of a particular sale is tied to the time it takes us to partake. If we consider the “true cost” of a purchase in terms of how many hours of work it “costs” us (for example, a new X-box bundle on sale for Christmas was $450 before taxes. If you make $15/hour, you’re looking at 30 hours of work (almost 4 full 8-hour shifts, without accounting for income taxes, etc.) to pay for the console. Factor in the fact that the 3 stores in your town are sold out, so you have to drive to the next town (25 km/30 minutes) to purchase it. Suddenly, you’ve also incurred the cost of driving (say, $0.40/km times 50km), and at least an hour of your life (not counting the mileage and time spent visiting the first three stores)… so now we’ve added an additional 2.25 hours to our actual cost, bring us up just over 4 full workdays for our purchase.  Is it worth it? I don’t know. That’s up to you.

The point is that the sticker price is only the beginning. A low number doesn’t necessarily make a sale into a bargain. Here are some other ways that bargain beliefs are misused to make us feel good about spending.

Buying something you don’t currently use, just because it’s on sale is NOT saving you money. If that over-priced pasta sauce that you’ve “always” wanted to try is finally on sale, and you want to buy a jar, go ahead. Just don’t kid yourself that you actually saved anything by doing so, unless the sale price is actually cheaper than the brand you’d normally buy.

Stockpiling is only good to a point. I’m guilty of this myself, especially where fresh produce is concerned. A good price on something is only a good price if you buy what you use and use what you buy. Intending to use it doesn’t count. So when you (as I did recently), buy extra lettuce, because “it’s such a good price;” only to throw half of it into the green bin when it’s turned into slimy mush in your produce drawer, you have saved nothing. In fact, since you’ve just effectively doubled the cost of what you did use, you probably spent more than you would have without the “bargain” price. This doesn’t just apply to perishables. Buying 20 hand towels, because they’re on sale doesn’t make sense, unless you use an abnormal number of them between laundry days, or you’re planning on selling or gifting them.

Buying something that you might use… someday… As with most things, this really depends on what you’re buying, and under what circumstances you might use it. Buying a dress that is 4 sizes too small that is more formal than any occasion you are likely to attend as an incentive to lose 15 pounds is not a bargain, even if it’s on sale for 95% off. Buying an extra first aid kid because Canadian Tire has them for a good price might be smart; unless you already have more of these than you can use, in which case, see the point above.

The bottom line is that, like everything else about your personal finances, whether something is really a bargain is a judgement call. But, when you’re making that judgment call, don’t pretend that something you want is actually a necessity; and don’t kid yourself about the future utility of something you’re buying so you don’t miss out on the sale.

Money, capitalism, and advertising agents are often demonized as the “roots of all evil.” That’s probably an unfair characterization. Like debt, spending money, and being wooed by advertising are not inherently bad things. The challenge is doing it in ways that are conscious, and intelligent. Don’t spend money because Wall Street tells you to. Choose to take advantage of an opportunity to maximize your spending power on an unnecessary item, instead. As long as you’re driving your financial bus, you should be able to feel good about your purchasing decisions – bargains or not.

Budgeting is discussed ad nauseum on personal and business finance blogs. It seems as though everyone has a method for guaranteed success. Why? Because budgeting is like saving – most of us are aware that it is something that we “should” do. But, far fewer people do it well.

Making a budget is simple; making a good budget requires a bit more effort, as well as a healthy reality check.

To make a realistic budget, track your spending for a couple of weeks – you might be surprised at what just trickles away. Then, make a budget that reflects what you’d like to spend, what you think you “should” spend. Then, make one that reflects what you actually spend.

Making a budget you can live with requires bringing those two spending plans in line: you can’t spend what you don’t have; and you can’t pretend you don’t spend money that’s being spent!

Part of achieving this fit involves determining how much of the money you spend is on “wants” versus “needs.” A common example is that we need clothing, but we want designer jeans. The “wants” are the places that may have to be reduced to ensure that your “needs” are met.

I’ve heard more than one person say, “I don’t need to budget, I only spend what I have.” Assuming that’s the case, then they are MUCH more organized about their money than I could be if I did it in my head. They must already know what they have, what they spend, and/or have found a way to compartmentalize it. For the rest of us, a budget that has the following characteristics is the first step toward successful money management:

- your budget should be written down (on paper, on the computer… it doesn’t matter where)

- your budget should make sense to YOU. It doesn’t have to be like everyone else’s. You’re the one who will be using it. Make sure it works for you, or you won’t monitor it and work with it

- your budget needs to be complete – it needs to include all incoming and outgoing money

- your budget needs to be realistic – in addition to being complete, it needs to reflect the way you actually live. If there are specific goals you have with regard to spending in certain categories, keep a “ideal” and an “actual” budget, and compare them at the end of the month.

- your budget needs to be flexible: things happen, give yourself room — and permission — to shift things around. But, make sure you’re keeping track of these shifts… if you end up shifting money from your “savings” to your “entertainment” each month, you need to make a decision about whether to change your actual budget to accurately reflect your lifestyle; or whether to make a lifestyle change to come into line with your ideal budget.

Set yourself up for success in budgeting by being realistic about what you have, and what you need. You’ll still hear plenty of opinions from others about the “foolproof” method they use, but once you’ve gotten cozy with your own spending and needs, you’ll come to realize that budgeting is deeply personal — only a budget that is generated from within your experiences and priorities is ever going to work for you. So, smile politely, and get on with creating the budget that works for you.

Most people know that living below your means — spending less than you make — is an important part of balancing the household budget. But, another great strategy is to live after your means: don’t spend money that isn’t already in your hands.

For example, suppose you are paid on the 1^st and 15^th of the month: do you pay the Hydro bill that you receive on the 10^th from your pay cheque on the 1^st, or the 15^th? Managing your money is much easier if you’re paying that bill from your paycheque on the 1^st (or, better yet, from the 15th of the month before!), because bills getting paid is not dependant on money that hasn’t arrived. You will have less stress, and your household budget will always show enough money to cover expenses.

Living after your means makes living below your means much easier, as you begin to think differently about money – maintaining your positive cash flow becomes motivation to spend less.

Jesse Mecham is the creator of “You Need a Budget” software that operates on this living after your means principle. In order to use the software most effectively, you need to have (or create) a cash buffer of one month’s worth of expenses. So, when you’re living your life in December, you’re spending money that was earned in November.

Living after your means is not the same thing as creating an emergency fund in the amount of several months worth of expenses — in an ideal world, you’re doing both of those things. You can follow the same process for developing your “budget buffer” as you would for your emergency fund: put away a specific amount for this purpose until you’ve hit your target goal (in this case, the amount of one month’s regular expenses, including contributions to savings, investments, emergency funds, etc.).

Living below your means, and living after your means are extremely effective ways to make your household finances work with a minimum of stress, regardless of what your household income is. In both cases, however, we often require a tune-up to our money mentality. People who have a history of overspending and/or credit card dependence often find cutting spending to a cash-only basis painful — at least psychologically. Like most habits that are more fun than good for us, it can be difficult to change, but it’s not impossible. Rethinking your budget to get one month ahead of yourself can be a similarly challenging change, but the rewards are significant: imagine never having to juggle bills or hope your car can run on fumes until payday. Imagine not having to use your credit card or payday loans to bridge the gap between paydays. Living after your means means money management without the daily/weekly/monthly stress of trying to live for 14 days on a 10 day paycheque.

How to get a month ahead: some ideas

1. if you’re already saving, it may be a simple matter of diverting some portion of your savings to create the buffer fund. Remember, all you need to do is get 1 month ahead on your expenses — don’t go increasing your budget to include a bunch of spending you aren’t already doing. If you do that, you’re setting yourself an impossible task.
2. Wait for tax time. If you’re expecting an income tax refund, use that as the basis for your buffer fund. Similarly, you could use cash received as bonuses or gifts.
3. If you’re not already saving, and you’re not expecting a windfall any time soon, you’re going to have to examine your budget for places that you can create a surplus that can be directed to this purpose. It doesn’t matter if it’s a large or small amount — the only difference is the time it will take you to reach the target goal.
   • try cutting costs by bringing your own lunch or coffee, driving less, turning your thermostat down a bit, doing laundry in cold water and/or hanging clothing to dry, or carpooling or public transit-ing to work

Remember, this is NOT an all or nothing proposition: on your journey to living after your means, you are still helping to alleviate your financial stresses — if you are only 1/2 a paycheque ahead, that’s still 7 days that you have buffered. Make it a challenge - see how many “days” you can add to your buffer each pay, until you’ve hit the month.

What are some of your strategies for building a buffer and living after your means?

Happy  New Year!

2009 has arrived, for many, in a whirl of post-holiday debt, and anxiety about the economy. This is virtually guaranteed to add fuel to the New Year’s Resolution fire, as people attempt to deal with the possibility of job loss, and recession.

What’s your New Year’s Resolution? If you’re like many of us, at least one of your resolutions will have something to do with money: make more of it, save more of it, reduce your debt, budget better…

How do you ensure that you keep your money resolutions year round? Recognize what these resolutions really are: a statement that you will pay more attention to what you do with your money. Reducing debt, getting a handle on credit cards, saving money, tracking your income and expenses better are all about thinking about money differently, so that you have to worry about it less. Make sure you’re thinking out loud, too: talk to your family members about your goals and strategies for the household finances. Communicating about money is always the first step, no matter what your goal.

Look for resources within your community: money management workshops, credit counseling, your local library. Check out our blogroll and list of favourite resources for some additional ideas.

One of the most interesting things I’ve learned in a couple of years of facilitating money management workshops is that talking about money is a necessary step in the journey to change our money management practices for most people. I have participated in many groups in which complete strangers find themselves in conversations about deeply personal financial matters that they’ve never discussed with anyone, ever, within the first several minutes of the workshop. Workshop groups have been moved to tears while listening to a participant describe their struggles with debt – not because the story is a difficult one to hear, but because it resonates with their own experience: it is their story, too.

So, if you find yourself making New Year’s resolutions about money, and don’t know how to move forward with them, consider finding people to “think out loud” with about money issues. Find a place where you can talk about money, or learn new money management skills. If there isn’t one in your community – find one online, start a group in your neighbourhood, write a blog about your journey. Get together with friends or strangers over and talk about the place of money, debt, and financial anxiety in your life. Just do something. You might just find that those other resolutions get easier to keep if you do.

Have a happy – and prosperous – 2009!

$martMoney is a financial literacy/money management blog that has grown out of the discussions and resources we use for savingsPLAN, a matched savings program (or, individual development account) that provides an asset-based approach to poverty reduction in Hamilton, Ontario, Canada.

This blog provides article-length tips, hacks, and information about personal finance (mostly), some of which are also published in our neighbourhood newspaper, the North End Breezes. We are grateful to them for their assistance in getting information about how to continue to develop and improve personal financial savvy into the hands of our immediate neighbours. This blog is our way of sharing this information and building community with people who are farther afield.

Over the next several weeks, look for posts on a range of money management topics; as well as some in-depth information about what asset development is, in the context of poverty reduction; and information about Welcome Inn Community Centre (where the savingsPLAN program is one of several highly effective, asset-based initiatives addressing poverty in one of Ontario’s most populous urban areas).

Disclaimer: The aim of both this blog, and of the savingsPLAN program is to share money management information, techniques, strategies, resources, etc. in order to assist people in improving the resilience of their households in economic ways.  Using the information provided here is done so at your own risk — we are not responsible for financial successes or failures other than our own. We strongly recommend that you seek the advice of credit counsellors, bankruptcy trustees, financial planners, etc., as appropriate to your situation.