Cutting credit card debt

Telling a relative they’re doing a bad job with the family finances is tough. But if that person isn’t up to the task, then Bruce Sellery says it’s time for an intervention.

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Question

My wife organizes the family finances. She likes doing it and is better at it than I would be. That being said, as our kids get older I’m getting worried about our debt. Our total credit debt has hit almost $60,000 and we don’t have much equity built up in our home despite having lived here for almost 20 years. Any thoughts?

Answer

Your wife is doing a terrible job. Terrible.

She may be the love of your life, a wonderful mother to your children and still able to rock that little black dress. But she is doing a terrible job organizing your family finances.

How do I know? Your results suck.

You’re paying somewhere around $10,000 in credit card interest every year to “rent” this money. That is an enormous amount.

Sure, there might be extenuating circumstances that explain why you are where you are, but the fact is that you should be worried about your debt. I know I am. And in all likelihood you could a better job on the family finances than your wife, because she couldn’t be doing a worse one.

I know that sounds harsh. But your situation is dire. It probably took a fair amount of time to dig that a hole that big and it won’t be easy to pull yourself out of it. But you need to start now. Like, right now. Here’s how:

Show your wife this column
You need to make a plan now to get a handle on your money. What you’re doing isn’t working. The cost to your family’s future is enormous and it is time to make a change. Please.

Calculate your net worth
You need a complete picture of your financial health. List amounts for what you own: your assets. And then what you owe: your liabilities. Subtract the liabilities from the assets—which in your case will leave you a negative number. A net worth statement brings everything together so you can look at it in one place, and that is key for you.

Search online for “credit counseling” and “non profit”
A quick online search will help you find an organization near you that provides free assistance. For example, Credit Canada serves folks in Ontario and the Credit Counselling Society focuses in B.C.

You are looking for a non-profit service that will provide debt counselling, not a company that will charge you a fee to consolidate your debt.

Make an appointment and do what they say
Credit counsellors will help you develop a repayment plan, or potentially, explore your options when it comes to consumer protection or bankruptcy.

This issue is urgent. Go to your appointment with your wife. Take notes and then take action.

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Please send your money questions to Bruce Sellery at ask@moneysense.ca.

4 comments on “Cutting credit card debt

  1. So tell us how you really feel. Ouch. I am not sure if I was the woman in this article I would be open to fixing this issue after the lambasting.

    Reply

    • Connie – I hear you. This is definitely on the "tough" side of "tough love". But clearly she hasn't been open to fixing the issue in the past, so I think it is time to try a new approach.

      Reply

  2. Certainly agree with Bruce Sellery's comments. Unfortunately this couple is not working together on their finances and, like many others we see as professionals, they seem to be living beyond their means Check out http://bit.ly/lO1UVA for a great quiz to help you focus on your goals and get on the same page with your spouse or partner, if applicable. @debtcoachcanada

    Reply

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