By Mario Bartel, Black Press
Kelly Chow doesn’t look like Scrooge.
But his cautionary words would clamp shut the wallets of even the most frenzied Christmas shoppers.
Chow is a trustee in bankruptcy for BDO Canada. He’s the guy people get sent to see when they’ve spent too much money and can no longer pay their bills.
Unfortunately, said Chow, the weeks and months after the holiday buying binge are often his busiest.
According to the Bank of Montreal, Canadians will spend an average of $1,517 this Christmas, a lot of it on credit.
That will be added on to the $20,000 the average Canadian already owes, not including their mortgage.
When those credit card bills start arriving in January’s mail, it can be a tipping point for some, said Chow.
They make the minimum monthly payment and figure they’re on top of things.
They start using credit cards to pay off other credit cards, or they borrow against the equity they’ve accumulated in their house.
But there’s a price to be paid for such bad habits, said Chow. Often that’s an appointment with him.
“Credit cards divorce the pain of spending with the pleasure of buying,” said Chow. “It makes it easy to fall into a bad cycle.”
Chow said we’re conditioned to spend money. Shopping is pleasurable. Never more so than during the Christmas season; gifts make people happy.
“It strokes your ego,” said Chow.
But not managing expectations and exceeding a budget can bring dire consequences.
“Credit can be a short-term fix,” said Chow. “But like most things in life, it will only get worse.”
Chow said most people with debt problems will do anything they can to avoid a meeting with him, including accumulating even more debt.
“We’re like the undertakers of the economy,” said Chow. “Nobody wants to see an undertaker.”
To avoid that fate, Chow has several simple suggestions:
• Resist online shopping. It’s too easy and makes the consequences of that spending seem too remote.
• Track income and expenses. Spend only cash you have on hand. Debt is like spending your future.
• Make a budget for holiday spending, and stick to it. Chow said a good way to start is by examining “needs and wants.”
• Be open and frank about money.
“The money discussion should not be taboo at any time of year,” said Chow.