A new type of creature has infested Ontario. I believe its scientific name in Latin is something like Horribili Reatu Sedes Aranea, which translates to horrible debt settlement spider. It’s a creepy animal, often getting inside TV sets or crawling across the face of things like outdoor posters where it weaves endless webs through mind-numbing advertising.

I’m referring here to what are called debt settlement services, or debt reduction services, offered by a bevy of new companies that have set up digs in Ontario. Be careful if they bite you when you’re looking for help with a troublesome personal debt load. These agencies may wrap you up financially and eat you alive through promises that go unfulfilled – and even through outright deception.

That, at least, is the recent verdict of government watchdogs in both Canada and the United States.

In January, the Financial Consumer Agency of Canada (FCAC) issued a consumer alert about questionable claims by debt settlement agencies now operating in our country.  FCAC warned Canadians to be very cautious about companies that say they can negotiate a deal to magically cut the amount of debt that must be repaid to creditors. This process is often called ‘debt reduction,’ ‘debt settlement,’ ‘debt relief’ or ‘debt negotiation.’

Said FCAC Commissioner Ursula Menke: “Unfortunately, people do not always see the benefits that debt reduction companies lead them to expect – and some people wind up even deeper in debt than they were before. If an offer to reduce your debts seems too good to be true, it probably is.”

High pressure sales tactics.

Unrealistic claims about slashing your debt.

Misleading information about protecting your credit rating.

False claims about government involvement or approval.

These appear to be the operating principles of the debt settlement agencies in question.

Debt settlement agencies frequently tell clients with debt problems to simply stop making payments on unsecured debts (relating to credit cards, personal loans, lines of credit, and the like). Clients are advised to put their money aside in monthly savings and allow it to build to a point where a “lump sum” settlement can be arrived at with creditors at just a fraction of what is owed – in other words, a “pennies on the dollar” settlement.

But often as time goes on and the lump sum builds, creditors are left in the lurch, receiving no money in the framework of unreliable – or even entirely absent – negotiations on the part of the debt settlement agency.

Of course, when trouble brews with creditors, the debt settlement agencies are often above the fray, because they charge their clients big up-front fees, meaning the agencies get their money – often thousands of dollars – long before the judge’s gavel starts hitting wood over the delinquent debt. As well, even in cases where no legal action is taken up to the point where a lump sum settlement is offered, many creditors simply refuse to make a settlement for “pennies on the dollar.”

By this point creditors are often fed up, and the you-know-what hits the fan.

The result can be that you’ve paid the debt settlement company thousands of dollars for the privilege of being taken to court by your creditor – and seeing your credit rating go up in smoke – while at the same time facing the same debt problem you thought would be resolved. There’s news of one case where a person owing $42,000 was charged $7,000 in up-front fees by a debt settlement agency, only to be left with the full debt still owing and the $7,000 in agency fees long gone.

Ain’t that a fine, financial how-do-you-do.

Fortunately, you can protect yourself from questionable debt settlement services. The FCAC suggests four steps you can take in this regard, and I quote them verbatim from the FCAC consumer alert at http://www.fcac-acfc.gc.ca/eng/resources/consumerAlerts/alerts_posting-eng.asp?postingId=393:

• “Do a background check. 
Before you agree to anything, first do some research to see whether the company is trustworthy and reputable. Check with the government office that handles consumer affairs in your province or territory, as well as the Better Business Bureau.

• “Watch out for upfront fees
Many debt reduction companies will require you to pay a large fee in advance before you see any reduction in your debt. These upfront fees can cost you hundreds of dollars or even more than a thousand. Don’t count on a refund if debt negotiations are unsuccessful.

“Be very cautious about paying any fees before you have written confirmation that the company has worked out a deal with your creditors to reduce your debt. There may also be other fees, such as ongoing monthly fees and fees for cheques sent to creditors.

• “Make sure you know what’s happening with your creditors
A company may encourage you to stop all direct contact with your creditors. Instead, the company will offer to handle all communications for you, including sending your payments to the creditors. Sometimes the company may ask you to sign a document giving it power of attorney.

“Be aware that letting the company act without your involvement could mean that you know nothing if problems arise. For example, the company could be making late payments to your creditors. Even worse, it might be making no payments at all.

“Consider your other options
There are other ways to deal with your debts besides debt reduction. Another approach may work better for you.”

Regarding the FCAC’s last bit of advice, need I say that the best option for people seeking help with debt is my not-for-profit-agency Credit Canada, or any of our associated not-for-profit credit counselling agencies with membership in the Canadian Association of Credit Counselling Services (CACCS) or  Ontario Association of Credit Counselling Services (OACCS).  A good idea when seeking help with debt is to look for these logos:

When you see these logos, you know you’re in good hands. OACCS and Credit Canada have been serving Ontario communities for more than 40 years, offering trustworthy services through accredited, highly skilled financial professionals. In fact, during 2011, OACCS members – including Credit Canada – successfully helped almost 195,000 Ontarians in financial need, with more than $730 million in consumer debt under management.

Unlike us, debt settlement agencies are not recognized for exemptions under provincial legislation. Nor do they contribute much – if anything – in the way of educational outreach involving financial literacy, which Credit Canada and OACCS are deeply committed to through community work, and through government and private sector partnerships and initiatives.

To put all this into perspective, let me just say that in matters involving the resolution of personal debt, avoid the spiders, and instead turn your attention to the busy bees in Ontario who are making honey.

My recent credit card statement says, “To ease the strain of the holiday season; we will waive your minimum payment this month”. Isn’t that kind of the bank? They also state though, that interest would be added to my outstanding balance. As my minimum payment amount is 2% of my debts, this means the bank will charge interest on 100% of debt instead of 98%. Something is wrong here. 19% interest on $800 compounded annually is how much?

For years credit card companies have been telling their customers that all they have to pay is the minimum payment on their outstanding debt. According to my statement (in small print) it is going to take me 30 years to pay back my debt if I only make the minimum payment. That means I’ll be in my seventies by the time I’ll pay back my credit card. What a way to spend my retirement, paying for Christmas gifts bought 30 years ago. This is one of the reasons people carry debt for such long period of time.

Credit is often a blessing and a curse. It is fine if you can use your card and pay off the total balance owing at the end of the month. If you cannot pay off the full balance and are just paying your minimum payments, you could have a serious debt problem. Although you may think you have good credit from making your payments each month, you must ask yourself this serious question: “How am I going to pay this off, and how soon?”

If you are not sure perhaps you should speak to a credit counsellor. The counsellor will assess your financial situation and determine what the best strategy would be to pay back the debt. Perhaps you could do it on your own. A little self-discipline and a large payment could be the answer; however this payment needs to be substantially more than the minimum. If you cannot make such a large payment, your counsellor can discuss some other options, including hardship programs.

Contact them now for a free confidential assessment, and get out of the continual debt trap of minimum payments.

Credit Canada has announced the launch of a new TV commercial that is bringing rays of warmth and sunshine to an economic climate otherwise riddled with news of doom and gloom. Called “Dignity”, the 30-second commercial offers hope to consumers burdened with debt that just one step in the right financial direction can make a world of difference.

Highlighting a single mother and her daughter as they rise together in the morning and go about their day, the commercial uses striking black and white cinematography, a warm voice over, and an uplifting musical score to tug at the viewer’s heartstrings, conveying the message that “When you decide to get out of debt, you may be surprised at what you get back.”

“Our objective as Canada’s leading credit counselling agency is to provide hope to people stressed out by debt. So it makes sense that we spread a positive message that there is someone out there who can help people straighten out their finances and get their lives back to focus on more important matters, like family and loved ones,” said Credit Canada’s Executive Director Laurie Campbell.

Production credits:

Director: Jamie Way
Director of Photography: Jeremy Benning
Producer: Kristi McNeal
Production Company: Big Sky Productions
Editor: Barry McMann
Post: Creative Post
Music Composed by: Peter Holmes
Music Produced by: Igor Vrabac and Ken Worth
Music Arranged by: Igor Vrabac
Copywriter: Peter Holmes
Agency: Reason Partners

Follow the link to the commercial, http://www.youtube.com/user/CREDITCANADA?feature=watch
(if you are having trouble opening the link, try placing  your cursor on the link, hit control then click the mouse at the same time).

Let’s talk about people who share what I like to call the “I Had No Idea” experience.

I Had No Idea people come to us every day here at Credit Canada. They are experiencing problems with debt, and they have come to us for counselling. We look into matters and devise a game plan – involving money, lifestyle and attitudes – that will put things straight.

Part of that straightening out process involves tracking and analysis of the I Had No Idea person’s spending habits. This enables the I Had No Idea person to adhere to a budget, which must be strictly followed if debts are to be overcome.

It is usually during the process of analyzing spending habits that the I Had No Idea person at last comes to realize that he or she had no idea.

“I had no idea I was spending that much money at Starbucks,” comes the response.

Or another: “Oh my, look at all the National Enquirers I bought. One for every trip through the grocery check-out aisle. I had no idea. Do you suppose a used bookstore would pay me anything for them?”

Or yet another: “I had no idea all that dough was going to strip joints and cocaine. Why, I could be mortgage free and driving a Land Rover right now.”

Yes, dear reader, a lot of people are quite oblivious to all the coin that flows through their hands, recklessly frittering money away on things that are given short shrift financially – till they are added up.

Speaking of Starbucks, I often use coffee as an example when discussing the matter of thoughtless spending. Say you treat yourself to a $4.00 cup of coffee every day of the workweek. Just tally up what that costs you over the course of a year. How about $1,040.00? Did you have any idea?

I speak about the I Had No Idea people only to bring the point home that awareness of what is spent on all life’s little things can make a big difference financially over time. It’s advice that applies not only to pleasurable habits and nasty addictions, but to everyday living.

Right now, if you take financial stock of every aspect of your life, your family, your home, car etc. – all the material things that support your lifestyle – you probably will be surprised to find that all kinds of opportunities present themselves for saving coin.

Just by way of illustration, here’s an I Had No Idea Top 10 List worth considering.

10. I had no idea I could save so much by cutting back my selects on the lottery.

9. I had no idea I could save so much by shopping at the local farmers’ market.

8. I had no idea I could save so much on movies by joining Netflix.

7. I had no idea I could save so much by getting my wife to cut my hair.

6. I had no idea I could save so much by using a bicycle to get to work.

5. I had no idea I could save so much by using a Brita water filter instead of bottled water.

4. I had no idea I could save so much by unsubscribing to those porn sites.

3. I had no idea I could save so much by dumping my unused cable services.

2. I had no idea I could save so much by weatherproofing my home.

1. I had no idea I could save so much by using VoIP services in place of my cell.

It’s a random list. But you get the idea.

Out with old man 2011 and in with 2012’s cute and cuddly baby wrapped in a fuzzy blanket and soothing with a pacifier. A good friend of mine recently welcomed a baby boy to her family. He is an adorable bundle of joy, cooing and sleepy-eyed while his parents shower him with admiration and loving cuddles. Not being a parent myself I got the full low-down on how stressful 22 hours of labour can be for a first-time mom and a few pointers on how they plan to save a penny here or there when it comes to raising little Jeremy. If you are a new parent yourself consider some of these parental savings tips:

• Breast-feeding is not only better for the immune system and development of the baby, it’s also FREE FOOD!

• Plan ahead, look into RESPs for your child’s future education (and get the government to pitch in a little bonus too)!

• Invest in some jars and make your own baby food with a food processor. It’s much healthier to avoid all of those preservatives and cheaper in the long run.

• Cloth diapers are a good way to save money if you don’t mind some extra laundry/mess. If you decide to opt for a pick-up service then the price may not be much better than buying disposables but it is still better for the environment and wearing cloth lets your baby’s tushy breath.

• If certain genetic diseases are common in your family you may want to consider cord blood stem cell banking. This can be a pricey treatment since you most likely will have to pay for yearly storage but it could also help save your child or another family member down the road. Even if it is not right for you, the science behind it is quite interesting.

• Check out your local library and community centre. There are often free children’s activities like story time that you can take advantage of.

• Wait until AFTER the baby shower to start buying baby items. You may be surprized with how generous your friends and family can be. It’s becoming more and more popular to register for gifts so that others will know that you really like those yellow ducky bed sheets.

• When you do purchase baby furniture, clothing, toys and anything else consider buying second hand instead of new. There are stores that sell gently used items at half the retail price and will also buy back items later on if they are still in good condition.

So while your new bundle of joy may be keeping you up at night, spitting up on your favourite shirt or smelling up the car, at least your pocketbook can take a sigh of relief by following a few of these suggestions.

Happy New Year!

-And on the thirteenth day of Xmas, the mailman gave to me, a credit card bill for free .

So Happy New Year! You thought that you recovered from your New Year’s hangover. Then you open your mail. Everything was good in December and then you decided that you would buy a few things. Besides they were not full price as they were from Xmas sales. You decided what better to treat your friends and family then to break in your new credit card?

After a few days of not having a plan and no budget, you decided no credit card should be left behind. Why not break them all in? Besides you needed the points! You felt that you were assisting the economy. These actions you felt would assist in improving your holiday spirit (and that of others)! Then you decided to buy a few things for yourself: a new HDTV and a Blu-Ray DVD player, that new copy of the Pink Floyd boxset. Hey and why not spruce up your car with ultimate decoration: a new car stereo?  What could it hurt? Your holly jolly feeling lasted at least 12 days. You would not put any thought to the bills until next year. No big deal!

The problem is now, the new year is here. Your Christmas spirit or your holly jolly feeling has been replaced by an excessive headache, shortness of breath and a case of indigestion.  And maybe a feeling of confusion. The reason? Your credit card bills came in the mail. The feeling of joy was gone in about three seconds of seeing your bills.

Right around this time you may be wondering if Santa Claus has something else in his magical sack that he might be dropping off to let you payoff these bills. No such luck. Right at this time you have also clued that you have completely maxed yourself out. And Santa would not be coming back to supply any holiday good will.

To assist you in alleviating your New Year’s headache, Credit Canada might be able to assist you in coming up with a solution.

Credit Canada can work with you in a free hour long counselling session or at one of our free seminars so you can learn about credit, your credit rating and how to make life more comfortable again.

Credit Canada can assist in making out a workable budget. As well with the help of our Monthly Budget Trackers,  eg. The Staying on Track book can help you account for where your money goes every month. As well we can work out how to budget your money better.

If the unsecured debt bills you have ( like credit cards, loans and overdrafts) turn out to be as unbearable as an ugly Christmas sweater, I would suggest giving us a call or sending us an email at infor@creditcanada.com. Or you can do an online assessment at creditcanada.com.

If you are feeling things are becoming unwieldy, feel free to contact us where and when you can and we can work with you to steer things in the right direction.

Regardless of what the state of things are in now, we can work with you to understand the bonuses and the pratfalls of credit and how to get your credit back on track again.

Maybe you are dealing with one hangover while reading this. Let us try to help you with the other.

My friend Bob sent me an email during the Christmas break saying he’s sick and tired of hearing about New Year’s resolutions that few people ever keep. He supplied me with a top ten list of what he calls his true New Year’s resolutions. Here it is.

10. I will read less.

9. I will stop wasting time exercising.

8. I will gain weight. Maybe 30 pounds.

7. I will devote more time to Facebook and watching TV.

6. I will procrastinate as much as possible.

5. I will make a strong effort to be gloomy.

4. I will give weight to superstitions and gamble more.

3. I will devote more time to working weekends.

2. I will take up a new bad habit.

1. I will spend money like a drunken sailor.

Quite a list. I’ve got all kinds of problems with it for obvious reasons, though I’m not surprised by it in light of Bob’s curmudgeonly nature. Still, I’m particularly troubled by resolution number one since, from our perspective here at Credit Canada, resolutions having to do with personal finance are absolute keepers. On that note, here’s a recommended top ten for 2012.

10. I will have a clear, concise financial goal for the year that is put in writing and that includes specific numbers.

9. I will prioritize my debts, paying them down from the most important to the least important.

8. I will open an RRSP.

7. I will enroll in an automatic savings plan through my bank.

6. I will pay myself first by planning for retirement.

5. I will close all unnecessary accounts and memberships.

4. I will collect my change (maybe even buy a cool new piggy bank).

3. I will occasionally give money to others spontaneously in order to observe its power and promise.

2. I will keep track of my spending on a monthly basis, and through its findings create a written personal and/or household budget that applies monthly and yearly.

1. I will manage expectations first by realizing that I’m no drunken sailor.

I think I’ll fire this off to Bob in an email.

Meanwhile, all the best for the New Year.

I found it rather coincidental that on the day I decided to start shopping (Black Friday), my Moneysense magazine came in the mail with a startling declaration.

The editorial ,”Overtaking America”, stated that in the Credit Suisse 2011 Global Wealth Report that we are currently wealthier than the Americans. Apparently, our net worth median income per adult is $89,072; for Americans the amount was just $53,000.

In the bad news department, our household debt ratio is the highest of the G7 countries (including THE USA) except for the U.K.

On Black Friday, people were definitely showing their wealth off. Cash registers were ringing and sales were everywhere. I felt like I was in a scene from Jingle All the way. (Anyways it was pretty crazy and I made the best efforts to get out of everyone’s way).

The frenzy has begun; the starting pistol of holiday shopping has begun and lots of people are off to the races. The rules are simple everyone gets a gift and ugly sweaters might be allowed.

I thought I should share some tips with you to allow you to enjoy your holiday season:

1)Have you worked out a budget of what you need to spend at Christmas?

It is always best to try to do a rough workout or list of these costs as early as possible and flesh out what expenses you will have to cover during that time period including food and gift costs.

With these amounts, you can start squirreling money away between that time period and Christmas for this purpose and check out things off your list as you move along.

The sooner you work out your budget, hopefully the sooner you can recalculate your budget.

As well, with some food items buy them by a certain date so you are not left surprised when they are sold out.

2)Are you using the best digital shopping applications to help you zero in the gifts that you need?

A lot of shopping mall developers have phone applications (in various platforms)  or email alerts to inform you what stores have things on sale and when.

When you want to save money shopping online you can use shopping applications eg. price comparison websites. They can save you a lot of time to find out what quantity stores of what you need when you have no time. A lot of these websites like Red -flagdeals.com, Wishabi or Pricebot partner with retailers so you can filter the information you need on retailer inventory, manufacturer, price etc. As well with these sites it is good to compare sites to make sure you are getting the best deal and see what is in your desired price range.

Iphones have a variety of applications that do the price shopping and legwork for you.
As well with programs like Giftplan which allow you to keep an inventory of information including what gifts you may have purchased for friends and family in the past (including pricing). It can be used for almost anything including Christmas and people’s birthdays.  Android and Blackberry platform phones have similar applications.

3)Have you written down or typed out exactly who you are buying for? Do you really need to buy gifts for everybody and everyone?

Buying for everyone can certainly be expensive and frustrating especially when you leave things to the last minute.

If you have a special talent it may be time to utilize it for purposes of Christmas giving. Showing off your creativity like baking, embroidering, knitting, painting for example might allow you to do things in a fun and inexpensive way.

As well, maybe you might want to discuss with friends or families about buying gifts for the kids or doing a Kris Kringle.

A friend of mine has a brother who has five kids and took the chance to go the last minute shopping route. After paying $1,500 for gifts for his brother’s whole family (two years ago), he decided he might want to put his creative streak to work and make his own cards and gifts for friends and family members. When he thinks he cannot do it, he pulls out the credit card bill to remind him.

4)Have you confirmed shipping deadlines before Christmas ?

If absolutely, positively has to be there before Christmas it maybe best to review terms with canadapost.ca or the website of whatever courier you decide to use for shipping knowing these dates can save you a lot on shipping costs.

Hopefully I have given you some food for thought. I hope these options will allow you to have an enjoyable Christmas holiday and a richer and even more pleasant New Year!

For more shopping tips, please these links:

Victoria’s Secret big with Santa shoppers, http://www.torontosun.com/2011/12/10/victorias-secret-big-with-santa-shoppers

Super T.O. Christmas Shoppers Guide, http://www.torontosun.com/2011/12/10/super-to-christmas-shopper-guide

Christmas Battle Plan: Think Ahead, Shop Effectively, http://www.walletpop.ca/blog/2011/12/12/the-christmas-battle-plan-think-ahead-shop-effectively/

Let’s talk about financial deceit on a scale somewhat more personal than that of Wall Street high rollers.

This year, ForbesWoman and the National Endowment for Financial Education (NEFE) in America commissioned a survey about couples that is worrisome if it fairly reflects what is going on in the world, and particularly in Canada where financial behaviour patterns are not so far removed from those of our broad-shouldered next-door neighbour.

Statistics from the survey seem to support the notion that we may be on our way to becoming nations of liars in matters of personal finance. The facts show that one in three adult individuals (31 per cent) who have combined their finances admitted lying to their spouses about money. Another one-third of these adults said they had been deceived.

The conduct among offenders mostly involved hiding stuff such as cash, minor purchases and bills. A smaller but still significant number confessed to hiding major purchases, keeping secret bank accounts and being deceitful about a debt or earnings.

This is not good news for spouses and partners on the continent. At Credit Canada, we know through decades of experience in debt counselling that financial dishonesty between couples often spells disaster for relationships.

Well, the ForbesWoman-NEFE study itself tells the story.

Sixty seven per cent of couples affected by financial infidelity said the deception led to arguments. Another 42 per cent said it significantly influenced trust. Most troubling, 27 per cent said the deceit led to a divorce or a separation.

Now, an interesting thing about the study is that it revealed income levels have nothing to do with the scope of the financial deceit. The lying occurs equally across all income levels. Which means that if you’re a liar with a net worth of, say, five million dollars, you may concoct more elaborate schemes to hide stuff like Ferraris and race horses, but your behaviour is not outside the norms of financial dishonesty among those with a net worth of, say, $30,000.

Of course, big ticket items usually aren’t the kind of things at issue. As I say, cash, credit cards, loans, others debts, and extra income usually are kept under wraps by the deceitful party. Not surprisingly, victims of the deceit alternately feel threatened, heartbroken, or even terrorized. They may rightly wonder how far the dishonesty goes. Could the house be in jeopardy? Education funds for the kids? What about the nest egg?

Who or what is to be blame for all this? Some say money deception has become a big issue over the last ten years or so due to the easy availability of credit cards and loans. But I don’t buy that at all. A dishonest soul is no more dishonest just because he or she has access to a little more money. Indeed, among people with such character flaws, I believe that if financial deceit were not the issue, some other form of deceit would be.

As we have found at Credit Canada, financial honesty or the lack of it usually comes down to the individual’s upbringing. Did mom and dad demonstrate respect for money through their actions? Did they promote ethics, honesty and openness of communication about finances within the family? If not, then seeds of disrespect and deceit were likely sown early on.

The bad fruit that grows from financially duplicitous soil is not easily sorted out because it usually encompasses an array of psychological problems. The difficulties can involve everything from neurotic power plays, guilt trips and bullying, to plain old secrecy in circumstances of quiet desperation. Compulsions involving gambling and other pursuits often figure strongly in the picture, too.

My belief is that – in most cases – a person’s propensity for financial dishonesty is directly proportionate to his or her willingness to go on living life in a self-deluded way. Frankly speaking, most of us reach a point in life where as adults we know exactly what we are doing when we do wrong, including having full consciousness of the lies we tell.

First and foremost, we must be honest with ourselves before we can be honest about finances. This means taking full personal responsibility for our dark sides. Doing so can be painful, and help from a good counsellor or therapist may be in order. But in the end it is worth it.

Indeed, in the end truth can save relationships, families – maybe even nations.

The great Samuel Clemens – otherwise known by his pen name Mark Twain – once said: “Do not put off till tomorrow what can be put off till day-after-tomorrow.” He was certainly a man of his word. Clemens failed to properly manage all the money he made as America’s greatest humourist in the 19th Century. He faced a crippling personal debt load by middle age.

With a large, lavishly decorated mansion in Hartford, Connecticut, and a long list of failed investments, he packed up with family in tow and high-tailed it to Europe for many years. But alas, he could not outrun the threat of bankruptcy. Only through a gruelling, three-year world lecture tour was he finally able to pay off his debts and enjoy peace of mind.

Well, at least Clemens did the right thing. He is but one example of many talented individuals who, suddenly thrust into the limelight of celebrity, make oodles of dough, then squander it in heartbreaking fashion.

Look farther back in time and you’ll discover the tragic story of Wolfgang Amadeus Mozart, arguably the greatest composer of all time, whose talent brought him riches and the courtship of kings and queens in the mid to late 18th Century. But Mozart fell heavily into debt by age 30, and when he died at just 35 he wound up buried in an unmarked pauper’s grave.

Come forward in time to our era and other examples of free-spending celebrities abound. Indeed, there ought to be a new reality show called Lifestyles of the Rich and Financially Illiterate.

You may remember news from some years ago about the country and western singer Willie Nelson. The taxman came down on him for unpaid bills. The IRS raided Nelson in Texas, seizing everything, including his 44-acre ranch, gold records – even his kids’ bronzed baby shoes. Then quite a story unfolded. Willie maintained all the trouble resulted from mismanagement of funds by his accountant. But it soon became obvious that the outlaw musician’s lavish spending factored greatly into the accounting equation.

He financed the salaries and expenses of a huge entourage. One of his buddies, Paul English, was listed in The Guinness Book of World Records as the world’s highest paid sideman drummer. Meanwhile, reports had it that Willie freely distributed personal cheques to fans who stood outside of concerts asking for money. Of course, it didn’t help that the rough-edged singer self-admittedly smoked enough marijuana everyday to drop a bull elephant.

Fortunately, in the end, Willie’s talent and popularity helped him dig himself out of the hole. Fans rallied to his support when he released his mail-order album, The IRS Tapes: Who Will Buy My Memories? Money from that initiative – plus what he made endorsing the fast food chain Taco Bell – helped him settle a tax bill nearing $17 million.
Other celebrities have come to less fortunate ends. Boxing champion Mike Tyson is a stellar example (in fact, many boxing champions are stellar examples in relation to ill-managed finances).

Consider that at age 20, Tyson was the youngest heavyweight champion in history. He earned $300 million in his heyday, sometimes making as much as $30 million per fight.  But he spent it almost as fast as he made it, throwing money after mansions, cars, parties, clothing, motorcycles – even Siberian tigers. He spent foolishly on jewelry, too. In 2002, he purchased a $174,000 gold chain laced with diamonds. Then news came that he couldn’t afford to pay for the item, which became part of the multi-million dollar debt described in his 2003 bankruptcy report.

Today, sadly, Tyson reveals that he lives paycheque to paycheque.  ”I am totally destitute and broken,” he reported in 2010, adding that he now manages to keep going only through the love of a good woman.

Well, amen to that.

The stories only go to show that if not making enough money was the real problem in most matters of personal finance, then we’d have to rewrite history for the likes of Clemens, Mozart, Nelson and Tyson. The truth is what it has always been. Money is only a tool, and nothing of quality ever gets built when the tool is not properly employed.

As we constantly point out at Credit Canada, it is almost always one’s attitude toward money that determines financial security in the long run.

As the saying goes, a fool and his money are soon parted.