I had the chance to review the latest book by CA and best-selling author, David Trahair, called Crushing Debt: Why Canadians Should Drop Everything and Pay Off Debt.
In Crushing Debt, bestselling author David Trahair warns Canadians that consumer debt is becoming an urgent problem for all Canadians.
[quote]Excluding mortgage debt, the average Canadian owes over $25,000 in consumer debt, which poses massive risks not only for the individuals carrying that financial load, but for our entire financial system. [/quote]
Trahair clearly outlines the evils of debt and how easy it is for debt to spiral out of control with examples of real-life stories of debt disasters. If you are a Canadian who is already struggling with debt, Crushing Debt will motivate you to face your financial problems and will show you step-by-step the most appropriate solution to getting out of your personal debt hell. Filled with proven advice, Crushing Debt is a call to action on an urgent and debilitating problem for far too many Canadians.
Trahair shows how much debt the “Big 5” banks have and how “highly leveraged” they are.
One part of the book that stood out for me was his analysis of a typical Canadian bank’s profit. We know that most make about a billion dollars in net income per quarter but when he looked at the RBC with retail loans of $221,828 million the allowance for loan losses was only $2,997 million.
Their current retained earnings is $22,706 million (this is 7.7% of all their retail loans).
[box type=”info”]Did you know that the assets of the CHMC would make it bigger than the National Bank of Canada![/box]
He has a chapter explaining how to get out of personal debt in Canada.
In this chapter he shares 4 ways to get out of debt and explains what is required
- Pay off debts yourself
- Use a credit counselor
- File a consumer proposal
- File for bankruptcy
I like how he shares his personal stories and stories of others throughout the book. These are valuable case studies that let you learn from other’s mistakes.
Another major point he makes is that saving money is as good as making money!
Example, if you were in the top tax bracket in Ontario in 2011, you would pay a marginal tax of 46 %.
If you saved $1,000 in a month, this is the equivalent of earning $1,852 in income. You would need to pay $852 in tax ($1,852 * 46 %) to be left with $1,000.
[box type=”download”]I recommend this book as a read for someone interested in the current debt crisis in Canada and for someone looking to get out of debt.[/box]
David Trahair is a Chartered Accountant, speaker and author. He currently operates his own public accounting firm and gives seminars on his books to CAs in B.C., Alberta, Saskatchewan, Manitoba and Ontario. He frequently appears in the media, contributes regularly to financial publications, and is the author of several books, including the bestsellers Enough Bull and Smoke and Mirrors. He was also a director of Credit Canada, a non-profit organization dedicated to helping people deal with credit problems, for six years. www.trahair.com