Canadians weighed down by debt

Debt can be brought under control or even eliminated but first, you need to figure out your spending

Donna MIhalcheon is a licensed insolvency trustee and senior vice-president at BDO Canada Limited in Vernon who wants to help people find ways or reducing or getting out of debt.

Donna MIhalcheon is a licensed insolvency trustee and senior vice-president at BDO Canada Limited in Vernon who wants to help people find ways or reducing or getting out of debt.

Easy access to credit cards, online shopping 24 hours a day and failure to plan ahead means that household debt is at a record high, with many Canadians living paycheque to paycheque.

Donna Mihalcheon wants to see people take control of their finances. The senior vice president at BDO Canada Limited in Vernon said there are options for people when it comes to paying down debt, and educating themselves is the first step in taking control of their financial future.

“There are a number of factors, such as the ability to get credit, compounded with a huge lack of understanding of what minimum payments do or don’t do,” said Mihalcheon, a licensed insolvency trustee. “What happens when you turn 65? It was a failure to plan, just living in the moment.”

Household debt has also been given a big nudge thanks to online shopping.

“It’s so easy to buy today — you can sit at home and have a nice glass of wine at night, so you buy without any thought on your budget.

“People are struggling with their debt, anywhere from $2,000 to significant amounts, and they are getting lots of harassing phone calls from creditors, and robbing Peter to pay Paul.”

Mihalcheon advises people to abide by the adage, if it seems to good to be true, it probably is.

“There are a large number of scams that people get into, such as RRSP schemes. People fall for that kind of thing, and there are also a number of outcomes from some tax preparers where they weren’t done properly. Get it done right.”

But there are ways of reducing debt and avoiding new debt, including budgeting, comparison shopping and debt relief options such as debt consolidation, consumer proposal and even bankruptcy in some cases.

“The last option is bankruptcy, which is OK too because it clears up the creditors and gives you a fresh start.”

Mihalcheon advises her clients to start with a budget. You can’t begin to get out of debt or to start saving money if you don’t know what you’re spending each month.

“What do you spend on cigarettes per month? At the coffee shop, I watch people spend $5 each time. Track your spending.”

Mihalcheon advises people trying to get a handle on their debt to do it in small chunks — tackling it all at once can be overwhelming.

She compares it to losing weight — trying to lose 100 pounds quickly is a lot more daunting than doing it one pound at a time.

“If you try and do it all at once you’ll never do it. We use an acronym called SMART: specific, measureable, achievable or action, realistic and timely.

“If people say, ‘I want to be happy,’ it might be achievable but it’s not timely. Saying ‘I want to save $50 a month,’ it’s very achievable, or ‘I want to save $50 per month on the first of every month,’ is specific so then you need to have a pre-authorized deposit locked account.

“My debtors want to have a credit card, but find a good one; today with the internet, you can do so much research.”

And Mihalcheon can’t stress enough that when it comes to getting a handle on finances, everyone needs an emergency fund.

“If you’re paying off the mortgage, you still need to put money away for an emergency,” she said, adding that not everyone needs to be a homeowner and for many, renting is the better option. “Siphon off something, $25 a month or $50 a month. Think what happens, somebody gets sick, someone loses a job, a vehicle breaks down, you have to have money in reserve.”

Mihalcheon works on behalf of debtors to get them rehabilitated, to make any debt repayment, to get them a fresh start; she also works on behalf of creditors to get them what they’re legally entitled.

If you are having a hard time paying your tax debt, a licensed insolvency trustee such as Mihalcheon can negotiate with the Canada Revenue Agency on your behalf to create an affordable repayment plan and stop any legal action taken against you.

You might be eligible to enter into an agreement with the CRA to make a payment arrangement, which would allow you to make smaller payments to them over time until you have paid your entire debt.

“We go through your options and see what’s best for you. You can’t negotiate with them but I can file a proposal and we can maybe get them to say yes.”

Mihalcheon has been in accounting for more than 30 years and calls herself blessed, having learned the value of a dollar at an early age.

“I had a father who didn’t believe in debt, he lived through the Depression, and I had it preached to me — his philosophy was you don’t borrow, you pay for what you get.

“We raised our kids the same; when they were little, they would say ‘I want this,’ so I sat them down with the Sears catalogue. I told them if you want something for $90 you have to save for three months.

“Handing over cash is painful, using a credit card is painless — I take money out of the bank and spend cash, so there are all these little tricks.

“Don’t get caught up in the buying thing. If you can’t not online shop, don’t turn your computer on. Do the budget and stick to it. From there you can comparison shop, there are such good tools, and our website has great stuff on there.”

Mihalcheon recommends a number of web sites with resources for helping people learn how to get a handle on their finances: BDO’s web page at is filled with information, and she also recommends the Financial Consumer Agency of Canada at as well as