Reality check TV – Gail Vaz-Oxlade fixes finance fiascos
“Consumer debt is the most ridiculous thing I’ve ever seen in my life. Who mortgages their future income for the sake of a pair of shoes? It is ludicrous what we are doing. Ludicrous that we think that we work so hard we are deserving of a vacation we can’t pay for.”
Gail Vaz-Oxlade wants to shake Canadians out of financial complacency.
The host of financial makeover television shows Til Debt Do Us Part and Princess and author of numerous financial education books and columns is using her no-bull approach to financial responsibility. Testament to the success of the show is how it engages an audience that typically shies away from finance management.
Vaz-Oxlade has been helping people with their financial troubles for more than 20 years. Throughout her career as a financial literacy writer, columnist, author and television host, it is Vaz-Oxlade’s ability to use English, rather than “finance-ese”, to teach money matters that resonates so thoroughly with her audience, a surprise only to her.
“I’m surprised that I am in fashion, that my style of straight talking, no crap has come into style. I wasn’t the first person to do it (think Simon Cowell), but there are a whole bunch of people now out there that are telling people the truth and not bothering to couch it in the PC language that would make it more palatable. We are straight up saying it.”
In order to avoid creating more pecuniary princesses like those on her show, Vaz-Oxlade’s latest book, Money-Smart Kids, teaches financial principals to children. “There is a lack of education, which is one of the reasons I wrote the new book. This idea you can schloff this off on the school system is ridiculous. Sometimes it’s hard being the one sole voice our there saying it’s not going to work. It cannot work, because first of all you cannot teach Grade 5 and 6 about budgeting and credit because they don’t care.”
What to do when in debt
But for those of us who could have benefitted from Money-Smart Kids growing up and are now drowning in consumer debt? “The first thing is to take a deep breath and realize that what you are doing is wrong,” says Vaz-Oxlade. “The behaviour you are displaying is the behaviour of a child. You are a child with a hand in the cookie jar and you want to eat all the cookies right now.
“The second thing is it doesn’t matter how much you are saving: If you have an equal amount of debt on your balance sheet, you have squat. If you have $5,000 in savings but you are carrying $5,000 in consumer debt, you are an idiot, because you actually have nothing. Give up on the delusion.”
This June, TransUnion analysis of Canadian credit trends revealed that the average consumer debt—excluding mortgages—is $25,597. Vaz-Oxlade thinks one reason Canadians are so burdened with consumer debt because “Nobody taught us this stuff. Some of us came to it naturally because we are highly organized.
We would never dream of spending money we use a money budget and tracking mechanism. But it is a pretty small percentage of the population. Everyone else is flying by the seat of their pants.”
Vaz-Oxlade’s advice for someone who is starting from square one depends how old they are. “If you are in your 20s, you need to save about six per cent of your income, because you have time on your side in terms of compounding interest. If you are in your 30s are you have saved nothing yet, you need to save about 10 per cent of your income. But if you are in your 40s and you have saved nothing yet you need to save about 18 per cent (the RSP contribution limit).”
Recoiling at the prospect of having to save a Sisyphean 18 per cent—Vaz-Oxlade says to me, “See how great that is? That is the message we should be getting out to kids. What do you want to do? Do you want to wait and have such a great time in the next 10 years that you then have to put away almost 20 per cent of your net income to retirement planning or do you just want to get started now and start saving?
“I’m not saying you have to put your life on hold so that you have scads of money for when you are old and crotchety. That’s not what I am saying. You need to be saving a little something, but more importantly you cannot spend money you haven’t made yet.
None of what I am saying is rocket science. It totally is common sense.”
Ultimately, Vaz-Oxlade’s message boils down to individual responsibility. “Living within your means is the thing you are supposed to do. That is what you have to do; you have to manage your personal economy so you are doing OK regardless of what the rest of the world is doing.”
As Vaz-Oxlade tells Nicola in the Season 1 finale of Princess, “I cannot wave a magic wand over your head and make everything right. You have to make the commitment, you have to put your ass in gear and get moving.”