Big Surprise! My Best Financial Tip is…

November 15, 2012
You Are Worth It

If you haven’t heard or read about it already, November is Financial Literacy Month in Canada. As a personal finance blogger, this month excites me for two reasons: 1) the blogosphere and various news sites fill up with all kinds of new financial information and advice, and 2) it gives me an opportunity to share what I already know with all of you.

Now, because I’m not a financial adviser or planner, I have no authority to give you any “real” advice. I can’t tell you to what percentage of your paycheque should go towards this or that, or offer the best ways to save for your retirement, or even help you invest in any particular stocks. And I’ve already shared my best budgeting secrets with you, this year. So the best piece of advice I can offer has to come from what I know…

Big surprise! My best financial tip is… you guessed it: get out of debt.

What kind of debt am I talking about, exactly? Well, this is where I have to tell you to trust any gut feelings you have about your own financial situation. You could have $500 on a store credit card, $5,000 on your regular credit card, or $20,000 in student loans. The dollar amount is not what I’m talking about here. But if any of the following three points describe you in some way, I would encourage you to trust your gut and make a plan to change your financial future.

You should make a plan to get out of debt if:

1. Debt is your first expense on payday

For the past 17 months, I have spent many a night before payday calculating where nearly every penny had to go, with debt repayment at the top of the list. It is painful to see how quickly each paycheque vanishes, after putting some towards debt, then considering rent, other bills, food, savings, etc. If you’re like me, there isn’t much leftover, after the necessary expenses are all accounted for.

This is where the debt trap usually starts. You have to put something towards your debt on payday but then, since you don’t have much leftover, you can easily rack it up again. It’s a vicious cycle but is one that I believe is possible to beat. Wouldn’t it be nice to have a payday come and have every single one of your hard-earned dollars be truly yours? Can you imagine putting $500 into savings instead of towards debt?

2. Debt is holding you back from living the life you want

How many times have you had to tell your friends that you can’t afford to go shopping / do something fun / travel somewhere new, because you’re broke? And how many times have you felt sad / jealous about the fact that your friends just bought their first home, when you’re still scraping by to pay your rent? I’m not writing this to make you feel worse. I’m making this point because I’ve been there. Heck, I’m still there!

My savings is nowhere near where I’d like it to be and homeownership is a fairy tale fantasy, at this point. However, I am putting anything extra that I can towards my debt, so that one day I can do all of the things I want to do. When the day comes that debt is not your first expense on payday, you can finally start accomplishing some of your short- and long-term goals. Until then, it’s sad but true: debt will hold you back.

3. Debt stress is taking a toll on all areas of your life

Have you ever avoided looking at your credit card statement? Or seen how close you were to your limit and felt sick with worry about it? Yes, it hurts to think you’ve done that to yourself… but what you’re feeling there is stress. Because of the first two points I’ve made here, it’s not hard to understand why you might be stressed. But think about all the other ways that stress is affecting you.

Have you lost sleep over it? Are you irritable? Are you fighting with your family/partner/friends more often than you’d like? Admitting that you have too much debt (even just to yourself) is not easy. I was in denial for years and it wasn’t until I paid off my credit cards that I felt I could tell my family. But making a plan to get out of a debt (and sticking to it) will lift a huge weight off your shoulders – this much, I know is true.

You are worth getting out of debt for. You are worth saving for. You are worth investing in. And I can promise you one thing: you will never, ever, ever regret making a debt repayment plan and sticking to it.


  • Michelle November 15, 2012 at 9:36 am

    We’re really working on getting out of debt. I hate my student loans!

    • Cait November 18, 2012 at 11:01 am

      I can imagine!

  • Rob November 15, 2012 at 9:47 am

    Great advice, Cait, and I strongly agree with all that you say.

    I would make one fine distinction about debt in general though, based on personal experience. There is what I call “bad debt” and “good debt”.
    Bad debt is what you have been referring to in your blog.
    Good debt (imho) are things like student loan debt (where you are investing in yourself and your career), mortgage debt (where you are investing in home equity), and investment debt (where, for instance, you take out a loan on an RRSP contribution – and then do 2 things: pay off the loan in full within one year, using in part the resulting tax savings – this is an investment in your retirement).

    Obviously, as you say, first be sure to pay off the bad debt (especially the debt with the highest interest rates) before taking on any good debt (which you feel that you can comfortably manage).

    • Cait November 18, 2012 at 11:00 am

      I somewhat agree with this but still think that all debt is bad debt. If I had a mortgage, I’d be writing about how accelerated payments + prepayment options would be added to my budget, so I could pay it off sooner.

      • Rob November 18, 2012 at 11:53 am

        Oh I agree with you 100% regarding the desire to pay off debt as fast as possible. I guess the point that I was trying to make was that one can’t always be totally out of debt prior to deciding on taking on new debt. There is debt to address “needs” vs debt to address “wants”.

        As you may know, I recently retired and I came across these questions in a great book that I’m currently reading about retirement:
        Were you financially ready to buy your first home?
        Were you financially ready to be married?
        Were you financially ready to start a family?
        Were you financially ready to have your children attend university?

        So one may never (in their view) have “enough money” prior to doing any of the above activities but the key thing to remember is to be patient, disciplined and focused in working to gradually fully pay off debt. It’s a matter of balance in one’s life as well as knowing one’s financial abilities and limitations.

        So one may consider debt to be bad but I (with discretion) tend to consider the right kind of debt to be a means to achieving life’s desired worthy ends.

  • Jordann @ My Alternate Life November 15, 2012 at 9:57 am

    Getting out of debt is an important first step but often also the scariest step. It’s easy to build wealth, it’s hard to pay down debt. This is a good list that lays out the drawbacks of debt, and reminds me why I wanted to become debt free in the first place.

    • Cait November 18, 2012 at 11:01 am

      It’s easy to build wealth!? Haha, I could use your tips on that!

  • Budget & the Beach November 15, 2012 at 10:16 am

    Always a good reminder to set your priorities right. I have about $1400 left to go. Even though it’s doesn’t seem like a lot, it still weighs me down and takes aways what I could be putting that money towards; retirement!

    • Cait November 18, 2012 at 11:01 am

      T, that’s so exciting! You’ll have that paid off in no time :D

  • Catherine November 15, 2012 at 10:46 am

    I totally agree! I would add also know how to manage your money in debt or not b/c if your debt free but suck and money management what’s the point? We’re working hard on it!

    • Cait November 18, 2012 at 11:04 am

      Good point, Catherine!

  • A November 15, 2012 at 1:15 pm

    J & I were talking at last night about #2 – not living the life you want. We feel like we’re behind everyone else, because two of our three closest couple-friends bought houses this year, and the third couple is having a baby. We don’t have a single penny in our house fund yet, and babies aren’t even going to be considered until we’re at least 33. (Not that I want a baby at all – but even if we wanted one now, we feel like we could not possibly afford it.) Our friends took honeymoon trips to Tahiti, have gorgeous brand-new four bedroom houses, and go out to eat all the time! We don’t have or do anything like that.

    Then we think about the fact that ALL of those friends have quite a bit of debt and are taking it on to “afford” the life they want. We’re taking the road less traveled, which is more painful in the short term, but hopefully will help us get a lot further in the long term. I try to keep Dave Ramsey’s mantra in mind — live like no one else, so later you can live like no one else!

    The car is paid off as of today, as you know, so we’re ready to start saving money to be able to pay for the life that we want! In full and in cash :] xoxo

    • Cait November 18, 2012 at 11:04 am

      I’ve never heard that quote before! But I love it. Congrats again on paying your car off, A! Hope you guys celebrated this weekend, xo

    • Ashly Kissman November 19, 2012 at 10:42 pm

      I can totally relate! My husband and I think (slash fear slash come to realize) will be “behind” our friends and other family members in buying houses, going on crazy vacations, and yes maybe even having kids… it’s all because we want to be financially responsible. So many people only LOOK like they are living the best life ever, but if you really talk to most of them they are in mounds of debt!

  • Mandy @MoneyMasterMom November 15, 2012 at 1:23 pm

    Great Advice Cait. Getting out of debt requires a plan a discipline. Sounds like you have both.

    • Cait November 18, 2012 at 11:05 am

      Thanks, Mandy!

  • Canadian Budget Binder November 15, 2012 at 2:03 pm

    Great post Cait!
    You know I think we will add our best financial tips but overall it boils down to getting out of debt and building wealth. Getting out of debt is something that we focused in our journey and will continue to do it for the rest of our lives as I’m sure there will come a point where we will owe money to someone again. Keep up the good work. Excellent Post! Mr.CBB

    • Cait November 18, 2012 at 11:05 am

      I think about that too – that I’ll owe money again, at some point in life. Hopefully this journey will prepare me for that. Thanks, Mr. CBB!

  • Savvy Scot November 15, 2012 at 6:42 pm

    Getting out of debt is also hard… I read a great tip once to always start by paying off your smallest debts first.. initially you make progress faster and the feeling of achievement is encouraging!

    • Cait November 18, 2012 at 11:06 am

      I can definitely see the advantage of doing that but think it should be calculated by what has the highest interest rate first. Get rid of the unnecessary interest payments!

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  • Athena November 16, 2012 at 7:17 pm

    I think getting out of debt is so important to so many people. I’m also a big fan of making sure people save if they can, if anything. So many of life’s moments can take you by surprise so its important to try to be prepared. Good job Cait!

    • Cait November 18, 2012 at 11:08 am

      Agreed. I’ve paid off a good chunk of change but have only a fraction of what I’ve paid off also in savings. That being said, I have had to pull $20 here, $50 there, etc. for unfortunate surprises. And I would’ve been screwed, had I not had that there. Thanks, Athena!

  • B. (Below Her Means) November 16, 2012 at 9:25 pm

    -waves arms in the air at number 3- I couldn’t agree more. It’s painful how debt can poison all areas of your life and confidence. Get rid of it!

    • Cait November 18, 2012 at 11:09 am

      Isn’t that the worst!? Our money should be helping us, not hurting us.

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  • K.K. @ Living Debt Free Rocks! November 18, 2012 at 2:00 pm

    I know the sick feeling of being in debt. I have about $2300 left to pay off and I’ll be done and debt free before the end of December. I never want to be in debt again and don’t intend to ever again have to postpone my life/things I want to accomplish. This lesson was truly learned over the last 3 1/2 years.

    • Cait November 21, 2012 at 8:21 pm

      K.K. you’re going to be debt-free this year!? That’s amazing!

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  • Country Girl November 20, 2012 at 8:34 pm

    Like. Like. Like.

    Debt sucks – it’s like a soul-sucking stress monster and when you can shake it off, it feels great. The only positive thing about working your way through debt is the learning experience, being able to get out of debt really shows you what you’re capable of doing if you make a plan and stick to it.

    • Cait November 21, 2012 at 8:21 pm

      I am grateful to have learned a few lessons along the way… very much so. But I cannot wait for my debt to be gone, gone, gone, once and for all!

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  • Stephanie January 9, 2013 at 6:06 pm

    I’m so glad my parents paid the major part of my education. It enabled me to be debt-free and also make some savings. I’m also glad I had a “click” moment when I started university and couldn’t withdraw from the atm because I didn’t have at least 20$ in my account. That experience told me that I never wanted to lived without any form of savings.

    You’re right, clearing debt should be everyone’s priority regarding finance. Only then can you actually “make” money :)

  • jelly andrews February 1, 2013 at 3:26 am

    Being in debt is really stressful. And getting out of it is really not that easy. I guess the bottom line is to avoid spending more than what you have.