Crushing Debt: The 4 main options
. I read it cover-to-cover on the weekend and found it a surprisingly compelling read. There’s plenty of material on sovereign debt and the fact that Canada is hardly immune from what’s going on in Europe, the U.S. and elsewhere. Debt is also a major theme of another book that won’t be out for another month or so: Financial Recovery in a Fragile World More on that later but back to Trahair’s book, one of a flurry of books published this autumn by Wiley Canada. Trahair has also published an RRSP book called Smoke & Mirrors and another Wiley book, Enough Bull . The former questioned a lot of conventional wisdom about RRSPs and retirement (such as the perception you need $1 million to retire). The latter questioned the equity culture of the financial industry and essentially counselled concentrating on fixed-income and GICs. Being free of all debt a prerequisite for Retirement Because he’s an accountant rather than a financial planner or securities salesperson, Trahair’s insights are relatively objective and no-nonsense. I’m completely aligned with his view that there’s little point in building wealth while you’re still mired in the basement of debt. (To paraphrase a line from my own book ). I wrote “the foundation of financial independence is a paid-for home.” Trahair says the same thing in different words: “If you want a comfortable retirement your goal should be to retire debt-free, including the house mortgage.” To return to the situation my friends were facing a year ago, here are the four options they had; I’ve used Trahair’s headings and have paraphrased and condensed his content: 1.) Paying off your debts yourself. This is the old-fashioned route I’d hope most of us would take, providing we still have employment income and we’re not too deeply in the hole. My friends had long passed this option, however. The objective here is to pay off all your bills, both principal and interest. You stop accumulating expensive assets and try to sell some of them; you get a debt-consolidation loan and/or try to renegotiate your debts with your various creditors.
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