Crushing Debt

Acknowledgements ix
<p>Introduction 1</p>
<p>Where I am Coming From 2</p>
<p>A Word about Books 3</p>
<p>The World is on the Edge of a Cliff 4</p>
<p>It Ain′t Gonna be Easy, But There is Hope 5</p>
<p>Why I Wrote This Book 6</p>
<p>What You Will Learn 7</p>
<p>Chapter 1 Debt: The Snake in the Closet 10</p>
<p>My Own Story 10</p>
<p>Marie′s Story 12</p>
<p>Chapter 2 Why is the Consumer Debt Crisis So Bad? 16</p>
<p>Human Nature 16</p>
<p>The Environment 20</p>
<p>A Financially Illiterate Consumer is a Bank′s Best Customer 24</p>
<p>Consumer Financial Education: Why is It Missing? 24</p>
<p>Look at What Happened in the United States 25</p>
<p>Chapter 3 The U.S. Subprime Mortgage Disaster 26</p>
<p>The Perfect Debt Storm 27</p>
<p>My Trip to Slavic Village, Cleveland, Ohio 28</p>
<p>Why the Crisis Spread 30</p>
<p>Houses "Under Water" 31</p>
<p>The Current U.S. Consumer Debt Situation 32</p>
<p>Could the U.S. Subprime Mortgage Crisis Come to Canada? 34</p>
<p>Chapter 4 Canada′s Government Debt 37</p>
<p>Canada′s Debt 38</p>
<p>Accumulated Versus Annual Defi cits 40</p>
<p>You Say "Deficit," I Say "Loss" 40</p>
<p>How Big is Canada′s Debt? 41</p>
<p>Canada′s Annual Defi cit History 41</p>
<p>Federal Debt or Accumulated Deficits 42</p>
<p>Future Federal Debt Projections 42</p>
<p>Ratio of Federal Debt to Gross Domestic Product 45</p>
<p>A Word about Provincial and Territorial Accumulated Deficits 46</p>
<p>Canada′s Debt versus the Rest of the World 47</p>
<p>Debt to GDP May be a Misleading Measure 48</p>
<p>MGI′s Five–Part Framework to Assess the Sustainability of Leverage 49</p>
<p>A Personal Health Check 50</p>
<p>A Health Check of Canada 50</p>
<p>One More Measure: Canada s Debt Per Capita 54</p>
<p>What s It Like to be Bailed Out 55</p>
<p>Perpetual Government Defi cits 56</p>
<p>Is a Foreign Government Default Inevitable? 56</p>
<p>What We Need to Do Now 58</p>
<p>Chapter 5 Canada s Big Six Chartered Banks 59</p>
<p>Why are They So Worried about Household Debt? 61</p>
<p>An Analysis of the Big Six Canadian Chartered Banks 62</p>
<p>How Much Debt Do the Banks Themselves Have? 66</p>
<p>For A Bank, A Billion Dollar Profi t is Peanuts 66</p>
<p>Return On Equity A Good Measure? 68</p>
<p>What about the Debt–To–Equity Ratio? 69</p>
<p>Why Debt is more Popular Than Equity 70</p>
<p>Did Canadian Banks Get a Bailout? 71</p>
<p>CMHC Financial Situation 73</p>
<p>Conclusion 74</p>
<p>Chapter 6 Canadian Household Debt Levels 76</p>
<p>Canadian Average Debt Levels 77</p>
<p>The Line of Credit Trap 79</p>
<p>Been There, Done That 79</p>
<p>Chapter 7 How to Get Out of Personal Debt 81</p>
<p>It′s the Principal of the Matter 82</p>
<p>Canadians′ Love Affair With Debt 83</p>
<p>The Options to Crush Your Debt 86</p>
<p>Paying Off Your Debts Yourself 86</p>
<p>Are You a Spender or a Saver? 91</p>
<p>Would You Like to Earn $100 by Staying at Home and Watching TV? 91</p>
<p>Credit Counselling: Debt Management Program (DMP) 92</p>
<p>Shirley′s DMP Success Story 94</p>
<p>Consumer Proposal 97</p>
<p>Bankruptcy 98</p>
<p>Choosing Which Route to Take 102</p>
<p>Chapter 8 Your Credit Score 109</p>
<p>What is a Credit Score? 109</p>
<p>How to Find Out Your Credit Score 109</p>
<p>The Credit Reporting System is not Perfect 111</p>
<p>Your FICO Credit Score 111</p>
<p>What Determines Your FICO Credit Score 112</p>
<p>What Your FICO Score Ignores 115</p>
<p>Individual Credit Ratings 115</p>
<p>Warning: The Following Information Could be Dangerous 116</p>
<p>Credit Score Secrets You Need to Know 117</p>
<p>A Good Credit Score Can Save You Big Money 121</p>
<p>Wrap–Up 121</p>
<p>Chapter 9 Gaining Control Over Your Money 123</p>
<p>How to Track Your Spending and Find the Fat 123</p>
<p>Analyzing Your Spending Results 132</p>
<p>How Much Do You Make? 134</p>
<p>How Big a Mortgage Could You Get? 135</p>
<p>The Gross Debt Service Ratio (GDS) 135</p>
<p>The Total Debt Service Ratio (TDS) 136</p>
<p>How Much Mortgage Can You Get? 136</p>
<p>The Government Tightens the Insured Mortgage Rules 137</p>
<p>What about Regular Uninsured Mortgages and Other Debt? 139</p>
<p>Conclusion 140</p>
<p>Resources 142</p>
<p>Index 145</p>