The Story of Andrea and Daniel

No matter where you are in your life, you can always benefit from financial planning and setting goals. The following is a real example of a couple who were addicted to shopping. They found themselves in a deep financial hole and struggled to see daylight.

I met Andrea and her husband in 2000.  They were a family of four including two children.  She wanted to know how to go about selling some company stocks to put towards making a car payment.  I advised her against selling the stocks but proposed instead that she ask her bank for an overdraft on her account.   She took my advice and kept her stocks.  For the next two years I met with them at RRSP season and encouraged them to make contributions to their RRSP accounts.

In 2002 I got a call that they were in some financial difficulty and would like to talk to me.  I told them to bring a note book, all their bills and their bank balances. That day that we met, the appointment was for one hour and it lasted three.  They were in serious financial difficulty.  Their rent had not been paid for the past two months and they were facing eviction. They had no money in their chequing account and, except for their RRSP which they had already started dipping into. They did not have any other funds.

Their combined income was $95,000.00. Their credit cards and other debts totalled $18,000.00.  You would think that with such an income they would be able to meet all their expenses.  But they were impulse shoppers, and, lacking a family budget, they both used their debit cards to purchase what ever they wanted.  Their needs were left to what was left over.  They ordered take-out dinners as well as eating out several times a week.   The children were involved in very expensive sports; they also had two cars, monthly car payments and all the expenses that came with owning two cars.

From 2002 to 2006, we met every week.  They had to bring their rent up-to-date, get a loan to pay off their revolving debt and they were encouraged to keep a list of all their expenses.  Keeping track of their money on a daily basis was one of the most difficult things they had to do.  When they spoke of wanting to make an unnecessary purchase and I told them that if they spent the money in their chequing account, the rent cheque would be returned, their reply to me with such panic in their voices would be “But we just have to.  Our son is such a great basket ball player and he must have those shoes.”  This young son was 8 years old.  The carrot I held out to them was “With the income you make, you will be able to purchase your own home if you stay on the plan we created.”  Daniel was on board but Andrea could not stop shopping.  Finally the only way we could control her was not to allow her access to the chequing account but to let her have her own account for groceries and personal spending. Under my guidance, Daniel managed the family accounts, paid the bills and made all decisions on savings.

He opened Registered Education Saving Plan for the Children, reinstated their Registered Retirement saving plan, and opened a house saving account and another one with a reasonable amount for the children’s activities.  Within 18 months, the two year loan was paid off and an additional $949.00 was being saved monthly.  By the spring of 2006, the $423.00 Company stock was worth $13,425.  $10,000 went towards the down payment for the house and the balance continued to grow in the RRSP.  That will be part of her retirement income.

With constant direction and encouragement, their savings increased and in 2005 they made 15% down-payment on a new home.  Their savings continue and now the plan was within reach I saw a complete 180 degree turn as their entire attitude became focused and disciplined.  The children became part of the planning now that they each had their own bedroom; meals were prepared at home and discussions were held every evening at the dinner table.  Four years after I started working with them, they moved into a brand new home and I am happy to say that they are enjoying their home.  I meet with them once a year to plan new goals and modify old ones.

I never thought they would understand what I was trying to teach them…the magic of financial planning and goal setting. But they surprised themselves and they even surprised me. They still live in their house and are on plan.

Yes, you can succeed if you stay focus and set  attainable financial goals.

How the Journey Started

My interest in money and debt control began at a very early age. Growing up in Dominica my parents were very industrious and placed very high values on money management and debt control. I remember my parents were caring for an elderly woman and one day my mom said to me, “Tessa-Marie there is nothing worse in this world than being old and poor.”  That statement made a huge impact on my life. I have never forgotten those words. Because of my mother’s comment, I have always taken control of my finances and managed my money effectively.

There was a time when my family was going through some financial hardships. My husband’s company downsized in the 80’s and during that time I had to pull out all the stops to make ends meet. But, a key decision I made was to control our debt load and managing our money effectively, no matter what.  It took some innovative ways and very hard choices in what we did for vacations, children’s entertainment, grocery shopping. In those days I would shop at a discount grocer to get our groceries at a really great price.  For vacations we would pile the children into the car and visit my husband’s family in Montreal or go across the boarder to Buffalo.

During that time I knew exactly what was in the cupboard, fridge and freezer.   We never duplicated anything.   We made a grocery list based on what we would prepare for the week or weeks taking into consideration what we already had. I made low-cost wraps for lunches filled them with tuna or eggs and because it was not the regular, higher priced bread. The children loved the cheaper wraps and so did their friends. During these hard times we ate well but always looked for ways to save.

 Through all this we were still able to maintain a very small savings plan.   I remember our first Retirement Savings plan contribution was $5.00 weekly into a Daily Interest savings account. The same was done for our vacation, Christmas, and emergency accounts. It was not much but we kept going.  As our circumstances changed for the better we also changed our plans and increased all of our saving and we still have them to this day.  So, no matter where you are at the moment, financially you can always look at what you are doing and make some adjustments. Even a small amount will make a difference. Our $5.00 weekly contribution to our Christmas account ended up being $260.00 to spend for Christmas that was better than $0.  This also meant we did not have to use a credit card during Christmas.

I began my formal financial planning career in 1989 when I joined the TD Bank. During my twenty years with TD Bank I held various positions. When I became a Financial Advisor at the bank I began noticing the lack of money management and debt control of regular customers and friends. I started to educate and encourage everyone I met to manage their money more effectively. Eventually, this increased my client flow from one client telling friends and relatives to the point that one of my colleagues made a remark that I only had five clients and I kept recycling them.  What they failed to realize was that these five family members, through referrals, represented an additional fifty to sixty people. This was done through word-of-mouth recommendations by siblings, aunts, uncles and other relative family members.   I started helping them prepare for retirement savings, education savings, planning for weddings and first homes.

I made the decision to write controlling the Debt Monster with the idea that I could help more people manage their money more effectively. In my future blogs I’ll share some stories about the people I’ve helped and the financial planning skills I’ve taught them.

Tessa- Marie Shillingford is the author of Controlling the Debt Monster.  She is Personal Financial Planner, with a designation from the Institute of Canadian Bankers, and a Financial Counselor certified by the institute of Canadian Banker.  Tessa- Marie was employed by TD Canada Trust for twenty years in the retail section of the bank.  During her tenure at TD Canada Trust she held various positions interacting with customers of the bank.   As a Financial Advisor and Manager of Financial Services she led a group of Financial Advisors in helping customers of TD Canada Trust successfully manage their finances. Details of her book… Controlling the Debt Monster, can be found at http://www.controldebtmonster.com/