Sunday, August 28, 2011

Book review: Debt-Free Forever

Debt-Free Forever
Take control of your money and your life
Gail Vaz-Oxlade

Til Debt Do Us Part is my favourite show on SLICE (ok, it’s likely my favourite show ever) and Gail Vaz-Oxlade is definitely the reigning queen of personal finance, so it was with great anticipation that I finally read her book Debt-Free Forever. The delay was due to a long waitlist at the library and while Gail misses out on the revenue from an incremental book sale, I think she’d give me bonus points for borrowing a copy for free instead.

It’s hard not to give her book an A+ rating and I did take every word that Gail wrote to heart. That being said, it wasn’t the right book for me. After finally paying off my debt last December and diligently using money envelopes to save up for my spending needes (which serves the same practice as her money jars) since last August, I’ve already adapted most of the good day-to-day money management habits that Gail endorses. At this point in my quest for financial fabulousness, I’m more interested in how to make my money work for me.

Who doesn't go shopping with their money jars in tow?
Trust me, it makes you spend less!

If you’re currently in the red or scared of the b-word, then Debt-Free Forever is the ideal no-nonsense book for you and Gail sternly walks you through a path to be debt-free forever. Grab a pen and calculator while reading this book as Gail will teach you:

1.      How to face-up to your debt
2.      How to prioritize your goals
3.      How to build a comprehensive & balanced budget
4.      How to snowball your debts to pay them off faster
5.      How to shop consciously
6.      How to plan for the long term & rainy days

There were definitely a few things that Gail motivated me to look into. The first is my credit history. While I was reading this book, CIBC contacted me to inform that they had reason to believe my personal information had been compromised and they were issuing me a new VISA. Following Gail's advice, I then put a flag on my name with Equifax Canada and TransUnion Canada so that these bureaus would have to contact me first if anyone requested a copy of my credit report… and while I was at it, I asked both agencies to send me mine. After all, Gail says it’s free to get your credit report once a year and every savvy woman should keep track of her score.

The next piece of advice was to plan like a pessimist. At the moment, I don’t have life insurance as other than my furry friends, I don’t have dependents. What I’ve never really thought about is disability insurance. I know that I am covered through work, but I have no idea how the policy is distributed or defined. Gail points out that you need to know “what’s the definition of disabled and how long you will be paid.” There is a big difference between being covered for “own occupation” (ie. the job that you are currently doing) and “any occupation”. The latter is a tricky situation as the insurance company may agree that you are no longer capable of doing the job that you had when you became injured, but because you are still capable of being a parking lot attendant they will not pay you insurance. Yikes!

Gail says that if you write your own name and those of four friends on pieces of paper, drop them in a hat and then pull one out, there is a 92% that that person will become disabled in some way. There is no way of knowing if that person could be you. But there is a way to know what your insurance policy covers and a way to plan for your future should such a dire situation occur. The first step is to request your complete and most recent disability insurance policy from your HR rep as you really cannot afford not to.

After a year of using my money envelopes, I have to admit that they are getting a pretty worn out and Gail’s jars are just that much cuter. As of today, I’ve made the switch and my Grocery & Household funds and subsequent Mad Money funds are now in masonry jars as my honourary toast to the money maven Gail.

Confession time: The Eye Candy is the one who printed those spiffy labels.
Even he knows follow Gail's rules 100%.


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