By Sheryl Smolkin
Talbot Stevens is so confident that his book “The Smart Debt Coach” can save you money, that he is offering a free refund to anyone who doesn’t think they can save at least $1,000 by applying the basic principles he discusses.
The book is written in the style of a “self-help novel” like David Chilton’s The Wealthy Barber and Jon Chevreau’s Findependence Day. The main characters are Joe, Michelle, their friend Kim (physician and single mom) and financial advisor Bruce.
When Joe’s sister Lisa asks his family to join them on a Caribbean holiday, they are reluctant to do so because it will mean further maxing out their credit cards. Then Joe realizes Lisa saved the money in advance for the trip and he wants to learn more about how she accomplished this on a lower family income.
She explains that on the advice of their parents (which Joe ignored at the time) for over 10 years she and her husband have been working with Brian, a financial advisor. Since his death they continue to get similar advice from his nephew Bruce.
It turns out that Bruce (a widower) is the parent of one of the kids on the hockey team that John and Michelle’s son plays on. Kim (divorced) is also a hockey mom. While watching the games week after week, they quiz Bruce on basic financial concepts and eventually John and Michelle retain him privately.
And so their journey to a better financial future begins.
Bruce goes through a goal setting exercise to help them establish priorities and negotiates a contract which clearly sets out the responsibilities of both the financial coach (Bruce) and the clients (Joe and Michelle).
One of the first strategies Joe and Michelle learn about is “Debt Swapping.” Essentially this means if you have high interest credit card debt plus unregistered investments, you can cash in your investments, pay off the debt and then borrow at a lower rate to re-populate your investment account.
This is a win-win because they will pay less interest on the investment loan and they can write off the interest expense against any investment income.
But based on the maxim that “a penny saved is a penny earned,” Bruce also illustrates how avoiding credit card debt and other unnecessary expenses represents real money in their pockets. Furthermore, their advisor demonstrates they are not getting the full benefit of their RRSP contributions if they spend their tax return instead of topping up RRSP accounts.
Like the wealthy barber, Bruce encourages John and Michelle to “pay themselves first” by setting up automatic withdrawal of monthly RRSP contributions and increasing contributions every year by a specified percentage. He says that in most cases saving 8% of income and inflating deposits yearly by 3% produces a larger retirement fund than saving 10% without ever ramping up savings.
He also motivates them to be more frugal in other areas and buy a slightly used truck instead of a new one to reduce monthly car payments. Some more complicated strategies recommended later in the book include taking out short-term loans to top up RRSP contributions and using a second tax refund from RRSP top ups to fund registered educational savings plans for their children.
In addition there are chapters on other smart debt strategies, a common sense way to beat the market and how being a landlord can pay dividends.
However, by the time I read about 80 pages I found myself skimming to try and pick out the relevant financial information without having to wade through the somewhat contrived story. I was also disappointed that there was not a point form checklist of the basic ideas I could use for future reference.
The book is extremely readable and the advice is good. While it is far from a romance novel I was not surprised that after all those hockey games (spoiler alert), Bruce and Kim are a couple by the end of the book.
Unless you are already doing everything Stevens suggest (and few of us are) it is unlikely that you will be able to honestly collect on his money back guarantee for the book. Even if you don’t read it cover to cover, you will discover some new strategies you can use to map your own road to a healthy financial future.
You can purchase The Smart Debt Coach for $15.67 on the Chapters Indigo website.