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Crushing Debt

When it comes to the debt crisis, whether personal or global in nature, David Trahair offers comprehensive insights in his recently-launched book, "Crushing Debt: Why Canadians Should Drop Everything and Pay Off Debt." Trahair, a chartered accountant, speaker, and a former director of Credit Canada, is also the author of the national bestseller, "Enough Bull."

If you're looking for a simple, quick-fix solution for getting out of debt, this book is not for you. Rather, if you're looking for an in-depth view on debt, it's stark implications for everyone, along with sound advice on overcoming debt, Trahair's book offers valuable insights and practical, hands-on tools.

The slim, 141-page volume spans nine chapters (plus helpful resources and index) and is written in a personable, clear style. Trahair, who understands where many readers are coming from, shares his own personal experience in overcoming debt. Encouraged by his publisher to write this book, he wanted to make people aware of the worldwide debt problem that is getting worse "every minute," and offer information that is relevant.

Bankrate Canada spoke to Trahair about his book and the impact of rising global and personal debt.

Q: How does your book differ from others on managing debt?
A: I said to the publisher, 'Let's go beyond a simple book on how to get debt free quickly and easily. Let's step back and look at it from a macro point of view, how to get prepared for what may happen, and how to get through this environment that we're in.'

When you look at the statistics on the incredible amount of household debt, many Canadians are in serious trouble, yet debt is the biggest taboo -- nobody wants to talk openly about it. People internalize the problem and that just makes it worse. So here's a book that they can take home and read under the covers and get some basic information on how to improve their situation.

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Q: What is your greatest cause for concern?
A: The main message that I'd like to get through is don't be afraid of your debt situation; avoidance is the worst thing you could possibly do. When it comes to people who sell investments for a living, who talk about the magic of compounding -- put $10 away a week and you'll get rich -- when you're in debt, compounding is working against you. Debt is the financial institutions' investment; they're making money off you being in debt. And I tell people, the sooner you make getting out of debt a priority, the better off you'll be. But sadly, recent surveys show that people are more inclined to take debt into retirement -- that's crazy. The government's been warning people for years that interest rates are going to go up and they will. They literally almost can't go down.

Q: What would be your top go-to chapters for personal debt solutions?
A: For a personal situation, I would say Chapter 7, "How to Get Out of Personal Debt," Chapter 8, "Your Credit Score," along with Chapter 9, "Gaining Control Over Your Money."

I think for people who are in trouble, understanding the credit scoring system and how the credit bureaus work is vital. There's a story in there, from an individual who wrote in, entitled, "Why is Daddy so Sad, Mommy?" and it perfectly illustrates that even if you do have a perfect credit score, you could be in bad financial shape. And I think that's leading a lot of people down the path to devastating financial end because they think the bank gave me access to this amount of money, so I must be able to afford it. No, that's wrong.

Q: Debt issues can be overwhelming, so where should readers start?
A: It has to start with tracking where your money has gone in the past. If you don't like spreadsheets, at least take last month's bank and credit card statements and analyze where the money has gone. In the book, I recommend that people download their information from the bank and use a spreadsheet to summarize the whole year. It's tremendously empowering information as far as I'm concerned.

Just focus on the spending, don't worry so much about the net worth statement. Most people seem to be amazingly consistent; their spending patterns are a result of their DNA, their upbringing, their habits, and that doesn't automatically change. So if you find out what you've done in the past, you're likely to continue to do that in the future, unless the stark numbers shock you into making some changes.

Diana Cawfield is an award-winning freelance writer, specializing in finance.

-- Posted March 19, 2012
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