My money coaching practice has no room in it for judgement. Many of my clients do enough of that for themselves – frustrated, embarrassed, referring to themselves as “no good with money” and “irresponsible”. The fact is, we all screw up in various areas of our lives. Some of us repeatedly get into lousy relationships. Some of us can’t get along on the job. Some of us chronically drink a little too much booze. Etc.

And some of us have dropped the ball regarding our finances for reasons ranging from pure exhaustion (managing our money is one more demand on our time) to hopelessness (so why bother).

Over the past four years of access to privileged information – how people handle their money, their worries, the foibles – I’ve learned that it’s rarely as simple as, “well, here’s the smart thing to do, so just do it already!”

This has expanded to macro economics, and my politics. I’ve learned to dig a little deeper on issues like poverty. It’s not usually as simple as, “well you seem young and healthy, so get a job already!”

Today’s National Post gave some discouraging news: 1 in 8 canadians live below the poverty line. Now before you dismiss that as likely a generous ‘poverty line’, here’s how it’s defined:

• for 2 people, a combined income of $21K
• and for a family of 4, a combined income of $32K.

For my fellow vancouverites – can you imagine a family of 4 surviving on $32K in this city?

I cannot absorb that fact, and think it’s somehow ‘their fault’ and ‘they’ should get their act together. I’ve seen how complex it is for those of us with plenty of money to ‘get our act together’. And just like my great joy, and privilege, is to do what I can, compassionately, to equip and empower my clients around their finances, politically, I’m re-aligning towards: which politicians are oriented to equipping and empowering the poor? the marginalized? those among us who for whatever reason don’t seem able to do what seems obvious to those of us on the outside?

This is our last week of Eat at Home Month! Like most participants, I’ve fallen off a couple times, but got back on.

I’ve modified my original goal to account for my Real World (ie. I can eat out once/week on an ad hoc basis).

Several times I’ve reverted back to thinking ‘I’ll just grab a sandwich at a deli’ and then caught myself, made a lunch or supper, and I figure I’ve saved well over $100 bucks in just three weeks. Yahoo!

On the topic of food — I often struggle between what is indulging in luxury (and I have nothing against Audis!) and what material beauties I can feel good about owning/striving for, given the masses of human lives at stake because they don’t have nutrition or proper shelter. Tonight (enroute to the Coen brothers new movie No Country for Old Men, fyi) I lusted after a beautiful vehicle, with accompanying jealousy -nay, covetousness – towards the 20-something driving it.

I had this thought: what if I created a list of luxuries, ranging from $100+jean, dinners out, audis and permitted myself to purchase them only after first donating an equivalent figure to a social justice cause? What would happen if I lived this as a lifestyle? Would I feel a deep sense of satisfaction, or would my lifestyle be chronically hampered and I’d be bummed out?

In all the shopping hype across the border, a quiet revolution may go un-noticed.

November 23 is Buy Nothing Day!

One of my clients from the US has – with little more than cheerleading from me! – gone from a pretty dark place with his finances to increasingly bright daylight. I’m thrilled for him. One part of the picture has been his debt, which originally overwhelmed him. He chose to take charge, though, and started gathering information (remember I’m not a debt expert. I was helping in other areas, but he took the debt research on as an invaluable project). Here are his straight-shooting words of advice (again, remember, this is in the US):

Here is a post that is going to win me absolutely no friends with the credit card industry or even my colleagues. But what the hell…here it goes.

Are you delinquent with your credit card debt? Is the credit card company dunning you? You should know that it is highly unlikely that they will compromise this debt. If you want to save your credit rating, do your best to make a deal. BUT…if you are not as concerned about your credit rating (translation…this ain’t the only debt on your record), then here is my advise….IGNORE THEM. Simply tell them once, kindly, not to contact you. If it is a consumer type debt, then under the Fair Debt Collection Practices Act, they have to comply. They will then take one of 3 possible actions against you:

1. They will refer your debt to a collection agency which is good news for you),
2. They will refer it to law firm to file suit against you (which is even better news for you) or
3. They will sell your debt to a third party (which is great news for you.) Here is why…

1. If the credit card company refers your balance to a collection agency, the agency typically has some settlement authority with which to make a deal with you. They usually have far more authority to compromise your debt than the collector at the credit card company did. If you can make a deal at this point, you might want to consider it. But, if you want to screw with them a little, then just tell the nice collector from the agency to not call you anymore and wait for the debt to go to a law firm or a debt buyer.

2. Law firms – typically don’t like suing on credit card debt. Why? Because if you present any kind of a defense to it, you may actually get out of paying the debt altogether. I know of several judges in Michigan that hate this kind of debt coming into their courtroom. Moreover, unless the debt is really really high, it is unlikely that the credit card company is going to send a witness to trial. If you demand a trial and don’t back down, the law firm will go to some pretty great lengths to make a deal with you.

3. Credit card purchasers. This is the Tri-fecta for a debtor. First of all, these credit card purchasers usually do NOT get the back data on their debts. Thus when they take you to court, tell the judge that you want “discovery.” This means that you want the debt buyer to come across with a copy of the contract that you signed when you opened the account. They almost never have this information. When you demand this discovery and the law firm comes up short,l they will bend over backwards to make a deal with you. There is a sizable debt collection law firm in West Bloomfield that does a brisk business in credit card collections. When debtors demand discovery, this firm will usually come across with a paltry offer or simply dismiss their case.

There you have it. Credit card debt is highly manageable depending on the level of risk you are willing to take and also depending on who is collecting the debt. If you can stand the heat, I would suggest that you wait until the debt falls into the hands of a third party. You can make your best deal at that level.

Passive income is more or less what it sounds like: income generated without the active involvement of the recipient. The term usually refers to income from rental property, but it can also include income from royalties, residuals, patents and licensing agreements. Proceeds from a vending machine are passive income; so is the rent from a basement suite.

It usually involves an initial outlay of time or money and continues to generate a return without further investment. However, passive income excludes interest, dividends and capital gains, all of which are considered portfolio income. For tax purposes, losses from passive income cannot be offset against other types of income.

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