March 11, 2011 -- Dale Barkman contributed to an article in The Vancouver Sun
Education overdue, say those who have grappled with debt
Credit cards, budgeting identified as key topics for personal finance training
By James Kwantes, Vancouver Sun March 11, 2011
VANCOUVER - When Kelly Ledwidge lost her hotel job two years ago, she turned to credit cards to make ends meet.
Easy credit financed her wait for Employment Insurance payments, and later, helped her pay the bills while she went back to school to retrain.
She knew the situation was less than ideal, but the minimum monthly payments were quite manageable. The only problem was, they weren't making a dent in the debt.
"It wasn't a matter of anybody phoning me and saying, 'You owe, you owe,'" Ledwidge said in an interview. "It was just a matter of doing my own calculations and realizing it was going to take me about 30 years to pay it off."
She's now back on her feet with a new job as an administrative assistant and a debt repayment plan -worked out with the help of the Credit Counselling Society -to pay back the nearly $13,000 she borrowed.
"It took less than a year to incur the debt, but it's going to take four-and-a-half years to pay it off," she said.
Better personal finance training in school could have made a difference, Ledwidge said.
So she applauds the push for financial literacy education that is one of the main recommendations of a recent report released by the federal Task Force on Financial Literacy.
The report comes on the heels of news that the national debt-to-income ratio has reached a record 150 per cent. Canadians pride themselves on a high degree of fiscal responsibility, but that debt-to-income ratio is comparable to U.S. levels before the over-leveraged American housing market collapsed. Only 51 per cent of Canadians have a budget and 31 per cent struggle to make bill payments, according to a 2009 Statistics Canada survey.
The task force recommends that the Canadian government make financial literacy an "essential skill" and that personal finance be taught from the elementary to secondary levels and beyond.
It also recommends that Ottawa provide funding and resources to the voluntary organizations that already fill some of the gaps on financial literacy.
Dale Barkman, a Burnaby chartered accountant who runs an annual 10-week course on personal finance and stewardship through his church, says credit card management should be a top priority in the school system.
He's not an old man, but Barkman remembers a time when it was difficult to obtain credit -when card applications weren't distributed via blanket mailings to anybody with a pulse. Students should be taught the importance of paying off credit card bills monthly, he said.
Impulse buying and how buying decisions are made are other areas Barkman identified as critical to financial literacy education. Delayed gratification can be good for your personal bottom line, he pointed out.
"We want things now, and everything has to come immediately," he said. "So people get in way over their heads because of the buying decisions they make."
A solid financial footing also provides options later in life. For example, people who aren't living paycheque to paycheque are less likely to feel stuck in a dead-end job in their 50s, he pointed out.
Other topics he would like to see included in the school curriculum are budgeting and tracking credit card statements, as well as monitoring what comes and goes from bank accounts.
His seminars also stress the value of giving: "We're an incredibly wealthy nation. Even if you're in financial difficulties, you probably have an income that -by world standards -is the envy of 95 per cent of people."
For Gordon and Marta Boettcher, establishing financial literacy meant the difference between continuing to rent and buying their own townhouse.
The Port Coquitlam couple didn't have a budget, spent haphazardly and regularly tapped into their line of credit and credit cards to pay for bills and car expenses.
They were "pretty desperate" when they signed up for Barkman's seminar, Gordon said in an interview.
The Boettchers applied enough financial discipline -including budgeting and consolidating debt -to put themselves in a position to buy their townhouse three years ago.
As for the school system, Gordon Boettcher believes that money management is as valuable a skill as addition and subtraction, and much more vital than some of the more obscure subjects taught in school.
"You don't learn how to take care of your finances," he said. "You don't learn the basics of how to live life. Money, you use it all the time."
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