Wednesday, February 23, 2011

Debt-Free Forever

In some ways Gail Vaz-Oxlade reminds me of a sports coach who empathizes with players’ feelings one minute and calls them pathetic weaklings the next. Her book Debt-Free Forever delivers tough-love messages, hope, and wake-up calls for the debt-ridden.

Most financial books are aimed at helping those who are well-off optimize their finances and investments to make even more money. This book is aimed at the other end of the spectrum where people have multiple maxed out credit cards but still can’t resist the latest iThing or pair of boots. If you’re ready, Vaz-Oxlade has practical steps to right your financial ship. “If you’re still waffling, put away this book and go buy something else you don’t need.”

Vaz-Oxlade delivers practical advice for spendthrifts in a blunt but engaging style. Most people who overspend know they need to spend less and just telling them to spend less is unlikely to help. This book lays out practical steps for people to change their habits.

Tough Messages

If you have some reason why you can’t start improving your financial life right now, the author invites you to “insert your pathetic excuse here”. The decision to take out a pay-advance loan is “dumber than a sack of hammers”. If writing down your spending “sounds like too much work, you’re a dope.” Those unwilling to work hard when they need more income are “lazy doofuses”. These parts of the book amuse me the most.

House Maintenance

“The rule of thumb is that you should be budgeting between 3% and 5% of the value of a home for annual maintenance.” In 2010 I replaced my roof and I still didn’t get to a total of 3% for maintenance for the year. This rule of thumb seems off to me unless the author and I have very different ideas of what counts as maintenance. But it certainly is true that new homeowners need to expect maintenance costs.

Stopping Pre-Authorized Charges to a Credit Card

If you can’t get some merchant to stop charging you each month, you might try cancelling your credit card. However, this won’t always work. Vaz-Oxlade says “If you want your account to actually be cancelled, you must report that card lost.” Clever idea.

Finding a Better Job

“Don’t quit your job before you get another one.” It’s amazing how many people can’t follow this simple advice. The best time to look for a job is while you have a job. You seem more valuable to employers and you’re in a better bargaining position. If you’re already making $20/hour, it’s easy to ask for $25/hour from a new employer. If they say no, it’s no big deal. But if you have no job, you might just have to accept an offer of $15/hour.

Visualizing Goals

The author stresses finding some way to create a visual reminder of your goals that you see every day including some sort of checklist where you can check off the steps along the way. I can see the importance of this. Deciding to spend less isn’t a one-time decision. It involves many choices day after day. Having a visual reminder can make it easier to do the right thing at times of weakness.

The Point of Thrift

“The point isn’t to eliminate every small pleasure from your life. The point is to choose those pleasures consciously”.


“You want to blow $50,000 on a wedding? Then have $50,000 in the bank. It’s that simple. But to go into debt for a wedding is just about the stupidest thing I can think of.”

Disability Insurance

This section was quite muddled. The book suggests that the reader write down 5 names, put them in a hat, and draw one. It then asserts that there is a 92% to 98% chance of that person becoming disabled (presumably at any point in his or her working life). I’m not sure what the hat had to do with anything unless the author really intended to quote the probability that at least one of these 5 people would become disabled. In any case, this just sounds like scare-mongering. Disability insurance makes sense at a reasonable price and doesn’t make sense otherwise.

RESP Subtlety

Suppose that Grandma opens an RESP for her grandchild. Grandma is called the subscriber. If she hasn’t named a “contingent subscriber,” when Grandma dies the RESP money will likely go to her estate with government grant money lost and taxes to pay.

Losing Your Job

I’ve had friends lose their jobs and I never really know what to say to help other than to help them find new jobs. This book has several pages covering emotional and practical aspects of job loss that I think could be helpful for many people.


This book is aimed at those who handle their finances poorly. This is definitely not me. However, I was pleased to get some insight into the way that spendthrifts think and how to help them if they want help. For that reason this book could be of interest to those who wouldn’t benefit directly.


  1. Huh? What is the connection between an RESP and being Debt-Free, the book's title? Or house maintenance, or disability insurance?

  2. @Canadian Investor: The book is mostly about getting out of debt and staying out of debt. Without an RESP (or other savings for children going to school), you are likely to go into debt when your children start university. Without setting aside money for house maintenance, you'll go further into debt every time some expensive repair is required. Without disability insurance, you'll go into debt if you become disabled and can't work.

  3. That disability statistic doesn't make sense to me either. Of the hundreds of people I've been acquainted with, perhaps four or five have ever been disabled permanently. Over the years though, maybe 10% will at some time suffer from a disability. Upon reflection, higher than I would have expected, but not up in the 90% range.

  4. @Gene: I find these scary statistics usually leave me puzzled. I find it hard to believe that disability insurance companies make payments to over 90% of their customers.

    Even if we assume that the statistic was meant to be at least 1 out of 5 people 92% to 98% of the time, this corresponds to an individual probability between 40% and 54%. This seems very high as well.

  5. @Mark: I think you're right about her following. There are a lot more people who need help with the basics than who seek help with more advanced topics.

    @Chad: You're right that people need to learn to handle their money well. I'm not sure of the best way to do this.

    1. The first rely above is to My Own Advisor's comment:

      "This book is aimed at those who handle their finances poorly. This is definitely not me." I got a chuckle outta that, you certainly know your stuff.

      I think it will be a good seller though, Gail seems to have a loyal (and growing) following.

      Have a good weekend!

    2. The second reply above is to Chad's comment:

      I've read the book and would recommend it to those Canadians who struggle with money and debt management concepts. District school boards abroad keep talking about improving financial literacy, but I don't think they're setting up students for success. Science, Gym, and Geography offer some great lessons, but at the end of the day it's very important to learn how to managed cash flow.