Short answer: Your current employer doesn’t need to know that you declared bankruptcy, except in very special cases. There may be situations, however, when filing bankruptcy may affect your application to take on a new job.

Read Transcript

Will My Current Employer Find out I’ve Filed for Bankruptcy?

As part of the usual bankruptcy process, your employer is not told that you’ve filed a bankruptcy. If they want to, they could do an insolvency search, but they’d have to have a specific reason to do so.

The only time your trustee will notify your employer that you have filed a bankruptcy or consumer proposal is if you are facing a wage garnishment and want it stopped. In that case, your Trustee would notify your employer’s payroll department to put a stop to the garnishment deductions taken from your paycheque.

Can I Lose My Job If I File Bankruptcy?

It is illegal in Canada for an employer to fire someone simply because they filed bankruptcy.

Certain professions, however, have professional conduct standards that require someone to disclose if they are bankrupt.  Often these are professions that involve management of money and trust accounts such as an insurance/investment broker, lawyer or accountant. In some cases, their professional designation may be affected. In others, the type of work they can do is limited until after the bankruptcy is discharged. 

We explain later in this post how a consumer proposal can remedy the employment challenges faced by a bankruptcy filing.

In general, if the debts you owe are personal in nature and not the result of fraudulent or irresponsible business activity, an insolvency filing shouldn’t impact you professionally, but it’s still important to check.

If I File for Bankruptcy, Will I Be Able to Get a Job?

In most cases, your ability to obtain employment should not be impacted by an insolvency filing, whether that’s a consumer proposal or bankruptcy.  While in general you are not required to disclose that you have filed bankruptcy or a consumer proposal, some employers may ask if you are currently bankrupt as part of the application process. They may also choose to conduct an insolvency search or credit check as part of the hiring process. This is more common if you are applying for a position that involves significant financial trust.

Can I Still Be Bonded If I Declare Bankruptcy?

If you are an undischarged bankrupt, it might also be hard for you to get bonded. If you handle money for clients as a part of your employment, your job might require what is known as a fidelity bond. Fidelity bonds protect your employer from a loss for their clients as a result of an employee’s behaviour. Being an undischarged bankrupt can make it difficult to be bonded if this is a job requirement. If you are unable to be bonded, an employer may choose not to hire you for these types of positions.

As an undischarged bankrupt, you can also be prevented from holding certain roles such as a director of an incorporated company, a credit union, a co-operative, or a condo corporation.

What Happens to My Wages in Bankruptcy?

You keep your wages in a bankruptcy. Your Trustee does not seize or control your income directly. However, you are required to submit a monthly income and expense report to your Trustee. This information is used to calculate if you earned enough to go over the government set income limit in a bankruptcy. If you do go over this limit, you will be required to make additional surplus income payments. 

Consider a Consumer Proposal

Many concerns regarding the impact of a bankruptcy on employment do not apply in the case of a consumer proposal. A consumer proposal is a repayment arrangement made with your creditors, to repay a portion of what you owe.

In fact, professional designation holders often file a consumer proposal as an alternative to bankruptcy. Since someone who has entered into a repayment arrangement through a consumer proposal is not bankrupt, they are generally excluded from professional guidelines. As such, a proposal can often solve some of the situations that arise in terms of your employment and looking for debt relief solutions. However, any professional should first check any regulations with their professional designation body or society.

Unlike in a bankruptcy, a consumer proposal filing can also allow you to hold director or executor roles.

Every situation is unique, which is why it is important to discuss your personal debt relief needs with a Licensed Insolvency Trustee. Your trustee will carefully review your financial situation and provide you with the best course of action without unduly affecting your employment.

The post Will Bankruptcy or Consumer Proposal Affect My Employment? appeared first on Hoyes, Michalos & Associates Inc..

Or watch the podcast on YouTube

What is Second Career Ontario?

The Second Career program provides financial support to cover the cost of tuition, books, transportation, and child care while you retrain for a better career. The program can also provide a basic living allowance while you are getting new skills-training.

To qualify, you must:

• Be a Canadian citizen, or a permanent resident, or be recognized as a Convention refugee
• Have been laid off from your job, either because your plant or department closed, or there is a lack of work, or you have had to leave your job due to documented medical reasons.
• Not be working now, or only working in a temporary position to cover costs.

Once you’ve determined eligibility, you will work with your employment counsellor to determine whether you’re suited for, and actually have an interest in, pursuing one of the career paths that is in high-demand. You will also have to show how long you have been unemployed and how much effort you have placed into looking for work.

How to retrain your skills and manage your debt

Retraining can help you access better employment opportunities. A higher, more steady income makes it easier to make ends meet comfortably without relying on debt to survive.

If you already have debt, it’s important to make sure your debt situation doesn’t get worse.

Here are some tips on how can you manage that debt while you are in a retraining program:

1. Keep up with your minimum payments to avoid future problems with your credit report
2. Prioritize debts if you don’t have enough to pay them all. Your rent, mortgage & car payment are likely your top priorities.
3. Use any grace periods. Some mortgages may allow you to skip a payment. Postponing payments is OK for a short period, but know you need a plan to get back on track afterward.
4. While we don’t recommend them, if you have any loan insurance now is the time to use it.
5. Talk with your creditors – ask for an interest rate reduction, negotiate lower monthly payments or ask to postpone a payment or two.
6. Cut back on any unnecessary expenses and avoid further debt as much as you can.
7. Talk to a professional like a Licensed Insolvency Trustee about your debt relief options & whether it makes sense to file before or after you return to work or increase your income. By eliminating your debt now, you can ensure a more comfortable retraining process.

To learn more about what an employment counsellor does for their clients and how Second Career can benefit you, tune in to today’s podcast or read the completed transcription below.

Additional Resources

• The Working Centre website
• Employment Ontario website
• Second Career Ontario
• Find an Employment Ontario agency in your area

FULL TRANSCRIPT – Show 221 Retraining for a Second Career while Dealing with Debt

Doug Hoyes:       What causes people to accumulate so much debt it can sometimes lead to bankruptcy? In a lot of cases not having a good job. According to our Joe Debtor bankruptcy study, 55% of our clients indicated that job-related issues contributed to their financial difficulties. What are job-related issues? Well, the biggest one, of course, is losing your job and that’s a very common occurrence these days. Companies get bought out or go out of business or work dries up and you lose your job.

If you have up-to-date skills and if your skills are in demand, that’s not a big problem; you could find another job. But what if you’ve worked at the same company or the same job for a long time and your skills are out of date, or what if you have specific skills that are no longer in demand, or what if you’re new to the area or returning after a long period out of the workforce, how can you get back into the workforce?

That’s a question a lot of my clients ask me and the answer is they need to pursue a second career. They need retraining to get the skills that are in demand but there’s more to it than just taking some courses. Even if you have skills, you’ve got to prepare a résumé and submit job applications. How can you do that if you don’t have access to a computer and the Internet because, let’s face it, today everything is done over the Internet?

It’s a fact that many people today are struggling to pay bills on a lower than average income. For many of my clients, they turn to debt to survive. Upgrading your skills and finding a better job could solve this problem but where can you get this retraining? And if you’re out of work and have no money, how can you pay for retraining? Good questions. And today I’ve got a brand new guest with the answers, so let’s get started. Who are you, where do you work and what do you do?

David Shumaker: Yeah, great. Well, good morning and thanks for having me here, Doug. I really appreciate talking about what we do. My name is David Shumaker and I’m an employment counsellor at The Working Centre in downtown Kitchener.

Doug Hoyes:       And tell me a bit about The Working Centre. What does it do?

David Shumaker:  Yeah, well, it does lots of different things. So I like to think of it as an umbrella that has lots of different pieces under it. It’s been around for about 35 years in the heart of Kitchener and it really exists to address issues of homelessness and unemployment and underemployment.

So we have a number of different projects that allow people to volunteer in the community, so to belong in that way but also to build their skills, but we also have employment help and financial help, which is part of what I do — the employment piece — helping people with their résumé, cover letters, helping them if they’re not familiar with the job search process.

Doug Hoyes:       So, very practical skills is what you’re helping people with?

David Shumaker: Very practical. Yeah and, exactly, but more than just practical, at the heart of what we do is people and relationships, so we want to take people very seriously, not do for them but walk with them as they’re trying to discover the next steps of their journey.

Doug Hoyes:       And you’re a not-for-profit agency so explain to me what Second Career means?

David Shumaker: Yeah, so Second Career is one of the programs that we help to offer and it’s an Ontario government program that offers people who’ve been laid off or who’ve lost their jobs through no fault of their own, to retrain and get back into the workforce, and it offers, if you qualify, some living support as well, as you’re retraining.

Doug Hoyes:       And so who would typically qualify then?

David Shumaker: Yeah, so there are a number of, kind of, criteria and we can talk about that over the time we have.

Doug Hoyes:       Well, yeah, so give me the, kind of, the overview then. Who would be the typical person that would qualify for something like this?

David Shumaker: Yeah, so it’s broken into, kind of, two steps; what is called eligibility and what’s called suitability. So I’ll just talk about each of those, so that, kind of, describes the typical person. Eligibility are some basic things. Are you a Canadian citizen, are you a permanent resident or are you a recognized convention refugee, but, also, have you been laid off from your job, either because of your plant closed or your department closed or a lack of work? Okay?

But it also could cover other things like you had to leave your job because of documented medical reasons, like you can no longer do your job and you have a physician’s note that says that that’s the case. Yeah, those would be some of the most common reasons that people leave.

Doug Hoyes:       So that’s eligibility and then what does suitability mean?

David Shumaker: Yeah, great. One other piece of eligibility I forgot to mention is that Second Career helps with skills training but it has to be in training in an area where there’s a high demand, and we can talk about that a bit later. So those are some of the markers of eligibility.

For everyone who is eligible, those, kind of, of minimum benchmarks, not everyone then becomes suitable. And the way I like to think about it is Second Career, as they go through all of these applications of people who are applying for the funding, they, kind of, rank and they prioritize those who’ve been out of work longer, okay, those who’ve been on their layoff job for a number of years.

So there’s a number of suitability markers, like how long have you been unemployed, how long have you been looking for work — because those aren’t necessarily the same thing — is the job that you’re going into, is it something that you need a certificate or a licence for, in other words, is it regulated in the province of Ontario, because if it is, you get more points? Think of it as a points system and the idea is to accumulate points past a threshold that will then make you suitable for the program.

They also prioritize people who have fewer skills from the get-go, for example, people who have, let’s say, a high school diploma are prioritized over people who have a university degree, okay? The idea is to help people to develop their skills and to move onto jobs for which there is a demand.

Doug Hoyes:       So I want to talk more about the program but you’ve mentioned demand again, so it is for jobs that are in high demand.

David Shumaker: That’s right.

Doug Hoyes:       What does that mean?

David Shumaker: Yeah, so the government of Canada, they do what’s called labour market research and what they do is they do a survey and they find where are there lots of job openings but there aren’t a lot of people who are applying? So that would be in demand.

Doug Hoyes:       Gotcha. And like off the top of your head right now, and we’re recording this in November of 2018, so if someone’s watching this two years in the future then this will be a different answer, but what kind of jobs are in high demand right now and, in particular, in this area?

David Shumaker: In this area, yeah. There are a number and as we go through the process with people we have a list of those, but some of the ones that come to mind, a huge one is being a transport truck driver. That’s in huge demand.

Doug Hoyes:       Gotcha.

David Shumaker: And I see that in the news all the time.

Doug Hoyes:       And that’s something that requires some training. It’s not something I could just go do. You’ve got to have a special licence and that sort of thing.

David Shumaker: That’s right.

Doug Hoyes:       So you would help with the training. Okay, so let’s walk through then how the program actually works then. So, you know, you’re a counsellor, so how do you walk a client through the process, what sort of questions do you ask, you know, how do they decide what they want to train and all those kind of things? So let’s say I’ve come to you for the first time, and how is it that I’ve come to you? I’ve heard about you guys? Do you get referred from various agencies? How do people find you originally, typically?

David Shumaker: Yeah. There are two main ways. One is when people lose their job they often go on unemployment insurance and so at the unemployment insurance office our counsellors, or counsellors from other employment Ontario agencies in the area, they go and they give a presentation about all the options of the employment Ontario agencies, including job search, résumé help, but also Second Career.

Doug Hoyes:       Gotcha.

David Shumaker: So they would be referred to us through that encounter and then the first step would be to go to what’s called an information session which we hold at the Working Centre once a month. So people sign into that and basically what we would do is I help facilitate that. For an hour and a half we give a presentation about here’s what Second Career is. We go through all those things that we’ve talked about, eligibility, suitability, the financial help that’s on offer if you qualify, and that gives people, kind of, a first blush of what this program can offer them and what they can do with the program. So that’s the first step.

If they like what they hear, if they think that they qualify, then what they would do is they would set up an individual appointment with a counsellor like myself or my co-workers.

Doug Hoyes:       And so I’ve gone to the initial meeting and, yep, okay, based on what I’ve heard, I probably qualify, I might be suitable, I don’t know for sure, so I come in to meet with you.

David Shumaker: That’s right.

Doug Hoyes:       And then what happens at that initial meeting?

David Shumaker: Yeah, so it’s, kind of, a couple of things. One is I just take the person very seriously where they are, to get to know them. Tell me about your story? What brought you here today? Yes, I know it’s Second Career but what are some of the other life forces that are in effect? So just that I get a fuller picture as possible so I know how to help or how to refer them to other services that they might find helpful.

But then what we do is we go through that suitability and eligibility piece to make sure that we’re not wasting their time, right? And we fill out — it’s just this suitability and eligibility — we fill it out and if they’re good to go then we move onto the next step which is thinking about the financial pieces.

Doug Hoyes:       Okay. So let’s say I come in and I’ve, you know, got a high school diploma and I’m in pretty good health and I’d really like to be a truck driver and it turns out there’s a big demand for that, and so you say, “Okay, well, it looks like you’re eligible, it looks like you’re suitable,” now what do we do?

David Shumaker: Yeah. So we, kind of, lay out, kind of, all the requirements. So there’s lots of paperwork. It seems like a lot of paperwork but that’s just so we can keep our ducks in a row because part of my job and my co-workers’ job is to shepherd through the process so it’s a successful application because we send it, then, to the Ministry of Training Colleges and Universities. They assess each of the applicants’ applications that come in.

But part of that is gathering a lot of information. First of all, I just help the person to know if they’ve really made a good decision. Okay? Is truck driving what you really want to do? So we have a conversation about that, okay, but next is the person has to do some research on their own, okay, so, for example, they have to contact the school or schools, the training programs that they’re interested in applying to, okay, and so in some cases actually going to the school, talking to a counsellor there, one of their intake counsellors or the registrar or something like that.

Also applying to the school, right, because obviously a Second Career application won’t be successful if you don’t get into the program.

Doug Hoyes:       Right. That’s what this is all about. And so you’re, kind of, like the coach there.

David Shumaker: I see myself as a coach, yeah, a shepherd, yes.

Doug Hoyes:       So I’ve never applied for these programs, I don’t know how to fill out all this paperwork.

David Shumaker: That’s right.

Doug Hoyes:       I don’t know what schools are out there, I don’t even know what kind of jobs maybe I’m eligible for, I don’t even know what I’d like to do. I mean, I liked doing my old job but I’ve been laid off from that, so you’re, kind of, there coaching me on, “Well, this, this. Here’s a few other options.”

David Shumaker: Here’s some options, exactly, yeah.

Doug Hoyes:       “Here’s the paperwork that needs to be filled out.” Okay, so let’s say we pick that particular truck-driving school in my example and so you send me off to talk to them and they say, yeah, as a matter of fact we’ve got classes starting in such and such a time and here’s how the costs work and whatnot.

David Shumaker: That’s right.

Doug Hoyes:       So I come back to you and I say, “Oh yeah. This looks like the thing for me. How am I going to pay for it?”

David Shumaker: Yeah. So a great question. So what happens is they get accepted into the program, they have a special letter that’s part of our dossier, the application, and that third piece that I, kind of, alluded to earlier is the financial piece. So the way that Second Career works, and it’s really quite a benefit, is there are two parts to the financial piece. One is covering the cost of tuition and books and fees itself, so that’s one piece. So if you’re suitable and eligible, most likely you will also have the tuition books and fees and other sorts of costs associated with training paid for, okay?

But then the second part of that financial piece is what is called the basic living allowance or BLA, and what that means is if you qualify — and not everyone does — if you qualify, then through Second Career you can get some of your basic living expenses covered; things like rents or a mortgage, food for your family up to a certain amount and your utilities up to a certain amount. Other things wouldn’t be covered, for example, and so people need to know this.

This is one of the things that I find most often, is that I try to help people that have eyes wide open when it comes to the financial piece because Second Career won’t cover your credit card, your debt, it won’t cover your car loan or your car insurance or any other sorts of outstanding credit that you have. It can cover childcare expenses if that pertains to you.

Doug Hoyes:       So if someone comes in and they say, “Okay, obviously I need to pay the tuition, the books and the lab fees,” or whatever it is that this course entails, no problem, that would be covered, “But, oh, by way, because I’ve been unemployed for the last six months, I’ve got a bunch of debt. I’ve had to use my credit card and whatnot to survive.” Then that’s not something your program can help with. That’s a totally separate thing. So I think before we close the show, I’ll give a few comments on what people can do who are in that situation, who’ve got a bunch of debt and are going through a retraining situation.

David Shumaker: And that would help me, yeah.

Doug Hoyes:       Perfect. So we’ll finish with that. But that’s good to know then. So tuition, books, fees and, if you’re eligible, basic living allowance, you know, to cover rent, food, that sort of thing, will work. So, again, I keep going back to this truck driver example.

David Shumaker: Sure, because that’s helpful. Yeah.

Doug Hoyes:       Just because I can actually visualize that in my head.

David Shumaker: Yes.

Doug Hoyes:       So a truck driver program lasts for — I don’t know, how long — a couple of months, three months, six months? How long would a typical program be? Do you have any idea?

David Shumaker: Yeah, so it’s about an eight-week program.

Doug Hoyes:       Eight-week program. Okay, so a couple of months.

David Shumaker: Yeah.

Doug Hoyes:       So let’s say it’s going to start on — I don’t know — February 1^st is when the program starts, so for those two months the program will help me – Well, obviously it’ll pay the tuition, the rent and obviously my living expenses if I qualify. And then at the end of the two-month program, well, hopefully I’m now in a position to get a job and, you know, it was a success.

What is the typical timeline then from when — and I realize this is different in every case — so I’m asking you a question you can’t answer but that’s my job here, right? So what is the typical timeline from when I first talk to you, to when I could be starting the actual program? It’s not going to be one day, obviously. I mean, you have to wait till the school year starts or the next course starts. What’s a typical timeline?

David Shumaker: You know, yeah, that’s a good question. I’m not sure there is a typical. Most of the time we try to encourage people to have as much lead time as possible because as you can imagine, leading up to especially semester beginnings like at Conestoga or the private career colleges in September and January, they are scrambling to process as many applications as they can, so we try to encourage people to give some lead time, but it varies.

I’ve seen people who have started planning a year out and I’ve seen people who have come in with two weeks to spare. We try to make that happen, no guarantees. It all depends on how quickly the person can do all the research that they need to do.

Doug Hoyes:       But the more lead time the better?

David Shumaker: The more lead time the better to really do that research well. May I also go back and say one thing about the living expenses that might help people. There are some cases in which Second Career won’t cover the BLA, the basic living allowance, and people need to know this as well, as they’re putting together their financial picture. One is if you’re on EI, okay, and you’re going to be on EI throughout the duration of your program, then EI becomes your basic living allowance.

Doug Hoyes:       Yeah, you’re already getting it.

David Shumaker: You’re already getting it, right?

Doug Hoyes:       Right.

David Shumaker: The other is if you’re going into a part-time program. Part-time programs, Second Career won’t cover BLA for that because the idea is that you can go to school part-time and then work part or fulltime to make up those expenses.

Doug Hoyes:       Right. So it’s help for people who really need the help. That, kind of, makes sense.

David Shumaker: That’s exactly right. And that’s part of the application assessment. That’s right.

Doug Hoyes:       And it makes sense. If I want to go to Conestoga and the course starts in September and it’s now February, well, obviously I can’t start till September so there’s going to be a lead time involved then. So if I’ve been laid off and I’m not working and I want to be retrained and the perfect program for me starts in September but it’s many months in advance of that, is there any support that your organization offers during that period before I can actually start working?

David Shumaker: There’s not direct financial support, no, other than — well, it is quite tangible support — is that probably what you need is to be working. Yeah. So we can help with the job search to do, kind of, what’s called an interim job before you start school that can help defray some of those expenses for you. Yeah.

Doug Hoyes:       And so you’ve got contacts with local employers, the temp agencies, you know how the job boards work at the employment centre, all that kind of stuff.

David Shumaker: That’s right. Mostly what we focus on is what’s called self-presentation, right? Does your résumé really tell your story? Highlighting your strengths. Does your cover letter also tell that story? Yes, we have connections with employers but mostly we start with your own network.

Doug Hoyes:       Put your best foot forward, really.

David Shumaker: Exactly. Helping with interview skills and things like that.

Doug Hoyes:       Yeah. I mean, if I had to apply for a job today – I haven’t applied for a job in, I don’t know, well, at least 20 years because I’ve been – Well, no, it’s probably more like 25 years. So, I don’t know, like I don’t have a résumé that’s up-to-date. I’m pretty sure I could wing it but I don’t know what kind of questions people ask at job interviews. So should my résumé be one page long or ten, should it have pictures on it, should I do little doodles at the top? Is that what employers like? Should I put it on the Internet?

So, I mean, I don’t know any of these kind of things, and I consider myself to be reasonably sophisticated, so I assume there are some basic things like that that, “Hey, we can show you some – You know, here, we’ve got some templates, we’ve got some computers you can use to prepare them.” So I agree that is a pretty tangible thing then that you could help people through, as well as showing them what the end goal is.

So the programs that I’m going to qualify for will be things like, I mean, my example of truck driver school which is an eight-week program, some of the private colleges if I want to become a, you know, maybe a medical assistant or something like that.

David Shumaker: That’s right.

Doug Hoyes:       And then Conestoga College, those would typically be two-year programs?

David Shumaker: Yeah, and that’s a good point. I should have mentioned that earlier. Thanks for that. So it would cover two-year programs or less.

Doug Hoyes:       Two-year programs or less. Okay.

David Shumaker: Yeah. So programs that lead to – So we just talked about truck driving which is, of course, eight weeks and there are some six-week-type programs, but all the way up to two years. So it wouldn’t cover university degrees. We don’t cover four-year programs.

Doug Hoyes:       Gotcha.

David Shumaker: But anything that leads to a certificate or a diploma. So, also, it wouldn’t cover a thing if you just want to take a class. It has to be a course that leads to some end.

Doug Hoyes:       So what if I haven’t finished high school?

David Shumaker: Oh, it’s a good question. So it may or may not matter, depending on the retraining program that you’re interested in. When you go and approach that program then they will do an assessment. They will say, “Yeah, will this person be a success in our program? Yes, no problem,” even if you don’t have a high school diploma. I’ve seen some people go through retraining and they didn’t finish their high school.

But in some cases a person might say, “No, you need to go back and do what’s called upgrading,” okay, so you may need to work on your English a little bit more or your math skills because you’re going into, let’s say, a technical area. In that case, if you qualify, Second Career can cover your BLA and your retraining for those upgrades.

So, in general, Second Career covers up to two years but with upgrading, it could cover up to three years. If you have to go back to Saint Louis, for example, in the area, to finish your high school diploma and then go into your two years.

Doug Hoyes:       Yeah, and if I’m finishing high school, then the cost of high school itself is covered anyway, right?

David Shumaker: Yeah.

Doug Hoyes:       I don’t have to pay to go to high school but the ancillary stuff would then also be covered then?

David Shumaker: Yeah, and we’d have to look at that on an item-by-item basis. That’s right.

Doug Hoyes:       I gotcha.

David Shumaker: But thanks for drawing that out because that’s an important distinction.

Doug Hoyes:       And so what are you seeing in the world right now? I mean, how long have you been doing exactly what you’re doing at this particular job?

David Shumaker: Yes, well, I’ve been at the Working Centre for three years.

Doug Hoyes:       Three years, okay. So have things changed in those three years? Is the economy better or worse? Is it easier to find a job? Are there different kinds of jobs? Have you noticed any trends out there?

David Shumaker: Yeah, that’s a good question. Definitely I think that, as we say at work, that the labour market’s actually very hungry right now.

Doug Hoyes:       Hungry?

David Shumaker: Very hungry. In other words, that there are more jobs in certain sectors than there are people who are applying for them. Keep in mind though that where the labour market’s hungry often is in manufacturing jobs still and –

Doug Hoyes:       That’s interesting because I would think, “Well, everything’s all offshore now, everything’s made in China, there’s no manufacturing. It’s only service jobs here. You can only get a job, you know, working at the coffee shop.” But you’re saying, “No, in this area, in particular, in the Kitchener, Waterloo, Cambridge, Guelph area –

David Shumaker: That’s right. It’s not what it used to be certainly many decades ago or even a decade ago.

Doug Hoyes:       But there are –

David Shumaker: With plant closures but there – I’m sorry to interrupt.

Doug Hoyes:       But there are still lots of manufacturing jobs?

David Shumaker: There are manufacturing jobs and also service-sector jobs. It’s also very hungry in that area, yeah.

Doug Hoyes:       So if it’s a manufacturing job, are there specific skills that are required or is it more, “No, we need general labourers. We just need to help you present yourself to get that job.”

David Shumaker: That’s right. So there are many, kind of, entry-level jobs and general labour, machine operator, for example, in those. Yeah.

Doug Hoyes:       And so if my long-term goal is to go to university, so let’s say I’m 40 years old and I was working at the same company for 20 years, they’re no longer around so maybe what I’m going to do is do some interim upgrading, maybe, you know, do some college, take some courses, whatever, but longer term I’d like to go onto university, what advice would you give me? Obviously the Second Career program doesn’t cover university.

David Shumaker: That’s right.

Doug Hoyes:       How can I set the stage for that though, if that’s what I really want to do?

David Shumaker: No, that’s a great question. One, it just starts with conversation and we sit down with the person and talk about short, medium and long-term goals. If you know your long-term goal is to university, okay, then we, kind of, reverse engineer. What do we need to get there? Is it a financial piece? Is it upgrades? You know, you need to finish high school or you never took math and physics in school and now you want to go into, let’s say, the healthcare field where you’ll need those sorts of chemistry, biology, whatever.

We just, kind of, reverse engineer. What is it that you need to get to that long-term goal? And then just offer as many options as possible. For example, if the finances is a piece, then we think about OSAP, you know, the Ontario Student Assistance Program, to take out loans.

Doug Hoyes:       Oh, I see, yeah.

David Shumaker: Or working for a few years to save up money.

Doug Hoyes:       So, again, you’d be my coach to –

David Shumaker: That’s right.

Doug Hoyes:       And I think just figuring out where I’m trying to get to is half the battle a lot of the time.

David Shumaker: I really think so. Really, I mean, this is just a very human issue, right? It’s not just a labour market, it’s not just an economic issue, it’s a human issue.

Doug Hoyes:       It’s real life.

David Shumaker: It’s real life, that’s right. We spend a good part of our lives working so hopefully it’s work that gives us life but also gives life to the world, right? It’s not just about making money. So, yeah, just helping people to, kind of, plumb what are their deep desires? Here’s a chance. Actually unemployment can be a real chance for a person to — especially in mid-age — to really think about what is it that I really have wanted to do but I have been in, kind of, the gristmill and haven’t been able to. So here’s a chance.

Doug Hoyes:       Yeah, you have to look at it as a great opportunity.

David Shumaker: That’s right. That’s right.

Doug Hoyes:       This is fantastic because if my company hadn’t closed down, well, I’d still be there doing that job I, you know, sort of, like but don’t really love it.

David Shumaker: That’s right.

Doug Hoyes:       But now since I’m a free agent why not take this opportunity to truly get a fresh start? So it’s all good from that point of view.

David Shumaker: That’s right.

Doug Hoyes:       So just to clarify then, so Second Career is a program of the Ontario government?

David Shumaker: Yes. So you earlier said “Your program,” but it’s not our program. We’re just one of the many employment Ontario agencies who help –

Doug Hoyes:       Who help support that?

David Shumaker: That’s right. That’s right.

Doug Hoyes:       And so you get funding from donations and other agencies and the government also helps with some of the funding?

David Shumaker: Well, with the employment, the funding comes from the Ontario government.

Doug Hoyes:       Kind of, as part of this program.

David Shumaker: That’s right.

Doug Hoyes:       Because you’re, kind of, serving as the intake group and making sure that people are qualified so it’s obviously simplifying it greatly for the government at the other end.

David Shumaker: We hope so.

Doug Hoyes:       They’re getting people who are qualified, well, as you said, eligible and suitable for it.

David Shumaker: That’s right.

Doug Hoyes:       So that’s what works. And we’ve got a new government in Ontario as of earlier this year — I can’t remember exactly when it was — do you expect any changes in this program or do you expect that, no, it’s going to be there for a while?

David Shumaker: Yeah, I suspect it will be there for a while but technically I don’t know if there are going to be changes.

Doug Hoyes:       You can’t see the future, I understand that.

David Shumaker: Yeah. I will say, though, that it’s, kind of, the nature of this program to change a lot anyway. So even for my co-workers who’ve been doing Second Career for much, much longer than I have and who I rely on because of their expertise, they feel that you never quite have a handle on it because, and in a positive way what happens is the Second Career program is responsive to the needs of people and it’s responsive to the needs of the labour market, so some of the rules change over time.

So oftentimes we’re sending an email or calling over to the Second Career office at MTCU just to clarify if this person might be a good candidate. So some of those rules and some of those requirements do change over time. So I suspect that won’t change, the fact that they change. How the new government will affect that, I can’t say.

Doug Hoyes:       But it’s a constantly evolving program anyways.

David Shumaker: It’s a constantly evolving program. Yeah.

Doug Hoyes:       So that we know it will change. So what final words of advice then do you have for people who are listening, who have gone through a job loss or maybe they’re actually still working but are looking for some kind of retraining, and I know you already gave one piece of advice which was, the more lead time we can have, the better.

David Shumaker: Yes.

Doug Hoyes:       What other types of advice would you give people in that situation?

David Shumaker: Yeah. So I can think of a few. One is just don’t be discouraged. It can be a really discouraging time. I’ve been out of work before and it can be really defeating because so much of our identity is bound up with our work. So really try to surround yourself with supports of people who love and care for you so that you don’t get discouraged, but also really come in and let us help, not only us but also other employment Ontario agencies in town like Agilec or YMCA or Lutherwood. There are a number of really great organizations.

But the two most practical ones, I think, apart from that are when it comes to Second Career specifically is as you’re considering it, number one, don’t assume that you don’t qualify. If after going through and if after hearing what I have to say, you think, “Oh, that doesn’t apply to me,” well don’t automatically make that assumption, because you may.

But the other piece of advice is don’t assume you do qualify. It’s, kind of, the opposite side of the coin, is that some people come in, they have all of these hopes and expectations put on this one program and they find that they’re terribly disappointed when it doesn’t work out because of any number of reasons. So just have a realistic expectation and then let’s work together.

Doug Hoyes:       Yeah, so have an open mind about it.

David Shumaker: Have an open mind about it, yeah.

Doug Hoyes:       So how can people find your organization and you, if they’re looking to start this process?

David Shumaker: Yeah, so the most top-level way is just to go to Ontario.ca and search for Second Career. That gives more information about the Second Career program.

Doug Hoyes:       And that’s the government website?

David Shumaker: That’s the government website. That’s right. Our website is theworkingcentre.org, okay?

Doug Hoyes:       With a the in front of it?

David Shumaker: Theworkingcentre.

Doug Hoyes:       Theworkingcentre.

David Shumaker: And centre is C-E-N-T-R-E. And on that website you’ll see information on all of the different programs that we offer, not only employment-related but also volunteering and others that are really building community in the heart of Kitchener.

Doug Hoyes:       That’s excellent.

David Shumaker: So, yeah, I could also give you a phone number if that’s helpful?

Doug Hoyes:       Yeah, sure. Give us the phone number too.

David Shumaker: Yeah, so it’s 519-743-1151 and that will just take you to our host desk and they can direct you to where you need to go.

Doug Hoyes:       Excellent. Well, I’ll put links to all of those things in the show notes.

David Shumaker: Perfect.

Doug Hoyes:       David, thanks very much for being here.

David Shumaker: Thank you very much, Doug, I appreciate it.

Doug Hoyes:       Thank you. Now, you did mention about debt and how the Second Career program doesn’t cover debt, so if you’ve got credit card debt, if you’ve got a car loan, it’s not going to cover that. So I’ve got a few tips for people who are dealing with debt while they’re going through a retraining period.

So number one would be, if you’re able to, keep up with the minimum payments, so that will avoid future problems with your credit report. So obviously you’ll be like, great to pay off all your debt but, well, if that’s not possible then at the very least keep up with the minimums.

Secondly, I would say prioritize your debt. So, you know, which debts are the most important if you don’t have money? So clearly, you know, paying your rent, you know, maybe your mortgage, maybe your car payments are going to be priorities. You don’t want to lose your car if you’re going to need it for work so that might be something that you prioritize.

You may also want to use any grace periods that you’ve got. So some mortgages, for example, may allow you to skip a payment. Obviously that’s okay for a short period. It’s not great for a long term and you’ll need to have a plan to get back on track after the fact. And, you know, I certainly don’t recommend paying a lot of money for loan insurance but if you’re already got loan insurance that covers a job loss, well, now would be the time obviously to use it.

Number four would be to talk with the people you owe money to, so get on the phone with them and say, “Hey, look, I’m not working right now, can you give me a break on the interest? Can you lower my monthly payments? Can I defer a payment or two?” They may not say yes but if you don’t ask you definitely won’t get any help with that.

These are all certainly good tips for a short period of time. So as we talked about with the truck driver program that I can start in two months, well, maybe if I can, you know, keep things together for a couple of months, get through the program, then I’ll be fine. If it’s going to be a longer period of time than that, then perhaps some of these suggestions aren’t going to be as applicable.

In any case, and you’re probably already doing this, cut back on any unnecessary expenses. You don’t want to be getting into any further debt if that’s not possible, and if you’re in a situation where, yup, I’m going to go through a retaining and it’s going to take a period of time, but I’ve got all this debt and I don’t want people calling and taking me to court and threatening me with wage garnishments – And of course wage garnishments aren’t a problem if you’re not working. There are no wages to garnishee but once you start working again, well, then you’ve got a potential problem. Great, I’ve got this new job, I’m making all this money, but unfortunately a couple of my creditors got judgments against me and now they’re in a position to start garnishing my wages.

Well, as you said, you want to be proactive. I think it’s the same with debt. You want to talk to a licensed insolvency trustee at the start of the process, not the end, because it may be possible to do something during the retraining period. For example, the answer might be, well, I’m going to be in school for the next year, why don’t I go bankrupt now, eliminate all the debts, my income is low and because the cost of bankruptcy is based on your income, the perfect time to go bankrupt is when your income is low.

Now that may not be the correct answer. For some people, when they’re not working, they don’t have any money or whatever money they have has to go to things like rent and food, so maybe a bankruptcy doesn’t make sense. Why pay money to protect yourself when you don’t need the protection yet? But, again, by meeting with someone in debt at the start, we can say, “Well, maybe the answer for you is to do a bankruptcy now. Maybe the answer is to do a proposal once you’re working again. Maybe there’s some other option.” But being proactive, I think, is always the answer, so that way you know what the plan is going to be, because you also made the comment that there’s a lot of stress. You know, our identity is tied up with our job and so when I’ve got a whole lot of debt, and I don’t have a job, I’m really, really stressed out.

Well, you’re helping with the job piece. Okay, we’ve got a plan. You’re not going to have a job tomorrow but we’ve got this plan for retraining, there is light at the end of the tunnel and I think it’s the same with debt. We’ve got a plan and it may take a period of time to execute, it may be better to wait, it may be better to do something right now but by thinking through it in advance, we can come up with the right plan.

So that would be my advice for dealing with debt. So there you go. That’s our show for today. We’ll have a full transcript and links to everything we talked about today, including how you can find David and The Working Centre here in Kitchener, and similar resources for people in other areas. That’ll be over at hoyes.com. That’s H-O-Y-E-S.com. Thanks for listening. Until next week, I’m Doug Hoyes. That was Debt Free in 30.

The post Retraining for a Second Career while Dealing with Debt appeared first on Hoyes, Michalos & Associates Inc..

Below we provide information into how bankruptcy can impact designations and licenses for accountants, lawyers, human resources professionals, certified financial planners, real estate agents, insurance brokers and insurance agents, and medical doctors. In all cases, the key is to be honest with your licensing body or board about your filing.

Bankruptcy Impact on CPA Designation in Ontario

Filing a personal bankruptcy or consumer proposal as a chartered professional accountant (CPA) in Ontario does not mean you will necessary be suspended from membership. You are required to report your bankruptcy to the Office of the Registrar at CPA Ontario. Every case is reviewed on its merits. The Registrar will consider the reasons why you filed insolvency and will then decide whether to do nothing, impose restrictions, remedial activities, or suspend.

Learn more about what happens when you file for bankruptcy as a chartered professional accountant in Ontario.

Bankruptcy Impact on Lawyer License in Ontario

As a practicing lawyer in Ontario filing for bankruptcy, you will need to report your filing immediately to the Law Society of Upper Canada (LSUC). A lawyer filing for bankruptcy will face certain restrictions in their ability to practice. While bankrupt, a lawyer may not receive or hold money in trust; have signing authority or co-signing authority on any trust account; or practice real estate law. You will also need to report on your financial situation to LSUC during your filing.

There are less restrictions if you are filing a consumer proposal, however, LSUC does encourage you to report a consumer proposal in any case. Find out more about what happens when a lawyer files for personal bankruptcy in Ontario.

Bankruptcy Impact on a Human Resources Professional

As a CHRP, CHRL, or CHRE designate filing for bankruptcy or a consumer proposal, you must notify the Office of the Registrar of the Human Resources Professionals Association (HRPA) immediately of your filing. This requirement applies to both new and existing members.

A bankruptcy or proposal filing does not necessarily mean you will have your membership revoked or suspended. The Review committee will consider your cause of bankruptcy and your conduct as a Member. They will also consider whether your bankruptcy puts any client, employer, or any other parties’ interests at risk as a result of your filing. After carefully reviewing your case, the committee can decide whether to take further action.

Read our specific article for more about the potential impact of a bankruptcy or proposal on human resource professionals.

Bankruptcy Impact on Certified Financial Planner Certification

A certified financial planner (CFP) in Canada filing bankruptcy or a consumer proposal does not necessarily mean you will lose your certification with the Financial Planning Standards Council (FPSC). You are required to notify the FPSC within 15 days of your filing.

If you’re a new applicant or a CFP applying for renewal, you will need to declare your bankruptcy or proposal when you fill out the Declarations and Professional Obligations section of the renewal form. The FPSC will consider your reason for filing and situation and decide whether to deny a new or continued certification.

For more information, read our post about what happens when a certified financial planner files for bankruptcy.

Bankruptcy Impact on Real Estate License in Ontario

Filing a personal bankruptcy or consumer proposal in Ontario as a real estate agent does not necessarily mean your registration with the Real Estate Council of Ontario (RECO) will be revoked. You must inform the Registrar’s office within five days of your filing. RECO will consider, in detail, your overall financial picture and reason for filing in order to determine whether you can perform successfully as a real estate agent.

Learn more about the process for a real estate agent filing for bankruptcy.

Filing for Bankruptcy as a Medical Doctor in Ontario

Filing for bankruptcy as a medical doctor in Ontario will have no impact on your ability to practice medicine. However, given your high monthly income, a consumer proposal is a more sensible option to eliminate your debt obligation than to file for bankruptcy. Surplus income rules make bankruptcy a costly option for medical professionals.

As an alternative, a consumer proposal allows for lower monthly payments and ensures you keep any assets you own.

For more information on why a consumer proposal is a better option for doctors, see our article on filing bankruptcy and doctors.

Filing for Bankruptcy as an Insurance Broker in Ontario

Filing a personal bankruptcy or consumer proposal as an insolvent insurance broker in Ontario will not necessarily have a negative impact on your registration with the Registered Insurance Brokers of Ontario (RIBO). The Qualification and Registration Committee at RIBO will review your file and determine whether your insolvency filing will impact your licensing.

For more details, read our post about what happens if an insurance broker files a bankruptcy or consumer proposal.

Bankruptcy Impact on Insurance Agent License in Ontario

Filing for personal bankruptcy as a life insurance agent in Ontario does not necessarily mean your license with the Financial Services Commission of Ontario (FSCO) will be terminated, nor does it mean you cannot become a life insurance agent. A life insurance agent is required to report a personal bankruptcy filing to the FSCO immediately. The FSCO reviews bankruptcy filings on a case-by-case basis and will decide on the future of your licensing based on your reason for filing, your creditors, and your financial situation.

Learn more about what happens if you file bankruptcy as an insurance agent in Ontario.

Always confirm with your professional board or body

If you are considering filing bankruptcy or making a proposal to creditors, it is always prudent to check with your professional designation licensing board or governing body to determine the potential implications before filing.  Talk with a Licensed Insolvency Trustee to see which option, a consumer proposal or bankruptcy, might make sense in your specific situation.

The post What Happens To My Professional Designation If I File Bankruptcy or Consumer Proposal? appeared first on Hoyes, Michalos & Associates Inc..

If you are about to file for bankruptcy or a proposal as a real estate agent, you must inform the Registrar’s office within five days of your filing and include the following documentation:

• A signed and dated statement including the specific reasons that led to your filing
• Form 69: Assignment of Bankruptcy
• Form 79: Statement of Assets, Liabilities
• Form 65: Monthly Income and Expense Statement
• Form 84: Certificate of Discharge (if applicable)

If you have filed for bankruptcy or a proposal in the past and were discharged, you will need to still disclose this information if you are a new applicant to RECO, including the above forms. Again, a bankruptcy or proposal filing will not prevent you from registering, however, you may be asked to voluntarily enter into conditions upon your registration.

Can I Become a Real Estate Agent if I File for Bankruptcy?

Again, under normal circumstances, bankruptcies and consumer proposals do not prevent registration with RECO. While insolvency events must be disclosed when you apply for registration, discharged or otherwise, your reason for filing in your application, along with your creditors and your overall financial picture will be looked at in detail to determine whether or not you can perform successfully as a real estate agent.

For specific information on how bankruptcy impacts your professional designation, you are encouraged to contact the Registrar’s office at RECO.

If you are struggling to keep up with unsecured debt payments, you can contact a Hoyes Michalos Licensed Insolvency Trustee to review all your options for debt relief.

The post Will I Lose My Real Estate License if I File a Bankruptcy or Consumer Proposal in Ontario? appeared first on Hoyes, Michalos & Associates Inc..

Alan worked for the biggest company in Canada, Nortel, for 20 years, and he survived many rounds of layoffs until, at age 47, he was laid off.  Even though everyone knew the company was in trouble, layoffs are almost always a shock.  The Big Cajun Man tells us what it was like to live through that time, with a wife and four kids, and he explains how he survived 11 months of unemployment before starting a new career.

It feels like crap, it’s not easy to do but you got to get up in the morning and you’ve got to do something every single day.

On today’s show we addressed a very common issue: What can you do when you lose your job?

Alan gives us lots of practical advice, including:

• Realize that no-one is indispensable; you could lose your job, so be prepared.
• When looking for a job, have your “elevator pitch” ready, so you can explain your qualifications in 20 seconds or less.
• Always be networking; you never know who will be the source of your next job.
• Don’t put all of your eggs in your employer’s basket.  Many Nortel employees had all of their savings in Nortel stock, so when Nortel went out of business, they lost everything.

Debt management tips when facing a job loss

If you find yourself facing a job loss, take some proactive steps to manage your debt:

1. Cut back on unnecessary expenses so you don’t increase your debt while out of work
2. File for Unemployment Insurance or any other benefits you are entitled to
3. Create a new budget that reflects your lower income
4. Make at least the minimum payment on all debts
5. Prioritize your debts between must pay and can delay.  This should be a temporary stop-gap. Stopping payment indefinitely will lead to debt problems.
6. Ask your creditors for interest relief or a payment deferral
7. If you can’t pay your bills after returning to work, talk with a licensed insolvency trustee about your debt relief options.

Resources Mentioned in Today’s Show

• The Big Cajun Man’s (Alan Whitton) Canadian Personal Finance Blog
• The Blunt Bean Counter Blog

FULL TRANSCRIPT show #160 with Alan Whitton

Doug Hoyes: What’s it like to work for the biggest company in Canada only to have it go out of business and leave you unemployed and looking for a new job at age 47? Northern Telecom Limited, or commonly known as Nortel, at the start of this century was so big it accounted for about one third of the entire value of the Toronto stock exchange. It was worth almost 400 billion dollars and had over 94,000 employees.

By 2009 it was bankrupt, which at the time was the largest bankruptcy in Canadian history and its pensioners, shareholders and employees suffered enormous losses. Of course Nortel isn’t the only company to go bankrupt, here we are in September 2017 and the bankruptcy of Sears, another company with a long history, is in the news and I’m sure there will be many more corporate bankruptcies in the future. This is a story that won’t go away.

What’s it like to go through the largest corporate bankruptcy in Canadian history? What’s it like to think you’ll be working for the same company for your entire life only to lose your job at the height of your working career? Those questions and a lot more with a man who lived through it today on Debt Free in 30, so, let’s get started. Who are you?

Alan Whitton: So I’m Alan Whitton also known as the Big Cajun Man.

Doug Hoyes: The Big Cajun Man here in the house on the podcast.

Alan Whitton: Oh yeah.

Doug Hoyes: And we will talk a little bit more about how people can find you. You have one of the most read blogs out there in the blogosphere. But why don’t you take us back to what it was like and kind of give us the quick version of it but what was it like at that time, so, the actual day you find out?

Alan Whitton: Well, so the day I – I actually knew three days beforehand because I looked in my calendar and saw meeting with my boss that the wording was completely wrong and it was all in capital letters and I looked and there were a whole bunch of others of those meetings.

And I went okay so I’ve lived through 18 different layoff scares and we’ve learned important things about HR books large blocks and I went oh crap, this looks like it’s it for me. And it happened this time. And after going through 18 of them it was really surreal because I just sort of went, oh this is weird.

Doug Hoyes: When you say going through 18 of them you mean previous rounds of layoffs that you survived.

Alan Whitton: Yeah. From 2001 on. In fact one of the layoffs they actually had our layoff packages sitting there and then another group had decided oh no, we’ll take those people and they took most of us over. So, it was –

Doug Hoyes: So it was a number of years of uncertainty.

Alan Whitton: Oh yeah.

Doug Hoyes: So when it finally happened was it a shock or was it more of like well, we knew this day was coming?

Alan Whitton: It happened – when it happens to anybody – I think there’s few people that go oh yeah, I was fine. I was sort of completely blurred and I went and actually stopped on the way home at my church because my wife worked there and my minister was there. And he was the one who sort of aligned everything and said, so I’ve known you for about nine years and every time I talk to you, you talk about how you’re about to get laid off. So, now it’s happened, can we move past that now? And I went oh yeah okay I guess I’m no longer that one-line story I’m about to get laid off.

Doug Hoyes: And it actually happened. And clearly your life didn’t end because you’re here and you’ve since gone on to gainful employment and so on.

Alan Whitton: Yeah.

Doug Hoyes: So, it was widely expected but it was still a shock.

Alan Whitton: Yep.

Doug Hoyes: But it happened. So, okay so let’s say there are people listening to use today who are working maybe for a big company that’s been successful in the past and now things are a little sketchier or maybe they’re working for a small company. I mean when you lose your job, you lose your job. It doesn’t really matter if it’s a big company, a small company or whatnot.

Alan Whitton: Yeah.

Doug Hoyes: In your case you’d been there for a long time?

Alan Whitton: 20 years.

Doug Hoyes: 20 years. So, it was your home. Frankly the only real job you’d had I’m guessing in the adult sense of the word.

Alan Whitton: Uh huh.

Doug Hoyes: So, what are the things you would tell someone who was either in that position or potentially would face it? And frankly everybody listening to this will potentially face it because it’s very rare these days that someone is at the same job for the same company doing the same work for more than a few years. So, for a working life things are going to happen, things are going to change. So, walk me through the kind of advice or things people should be thinking about in that situation?

Alan Whitton: Well, everyone is expendable.

Doug Hoyes: Everyone is expendable.

Alan Whitton: No matter how you look at it, no matter how safe you think you are anything can change in a company. I mean Nortel, everybody thought okay strange things are happening but we’re going to recover, we’re going to recover. We’re such a huge part of, you know, the entire lexicon of Canada.

Doug Hoyes: Which you were.

Alan Whitton: We were. But it just goes to show how fast things can go into the toilet. So, be careful, be always ready, have your resume needs to be within two to three months of whatever you are. And it needs to be up to date and you need to be able to do that elevator talk with people and say, you know, be able to say in 20 seconds what’s great about you and why they want to hire you.

Because once you get laid off and you start trying to look for jobs you’ll find out there’s a lot of people looking. And there’s a lot of people a hell of a lot younger than you are looking for jobs. And a mean a 47-year old former programmer that’s been doing project management, there’s a lot of those out there and it’s hard to differentiate yourself.

Doug Hoyes: And so what was your 20 second elevator pitch?

Alan Whitton: Good God.

Doug Hoyes: Or what it be today or what would be the kind of thing that you would put in that?

Alan Whitton: My experience level is across the board. I’ve worked on different projects in the government now and at Nortel Communications understanding of all, many technologies. The breadth of my understanding is the major selling point I’d always had. Depending on who I was talking to I’d talk specifically about their areas.

Doug Hoyes: It’s interesting though because I’m just thinking in my mind what would be my 20 second elevator pitch? And I don’t know, I haven’t thought about it. I could give you a pretty good 15 minute one. Let me go on this rambling sojourn of my whole life. But 20 seconds is – that’s really tight, that’s tough to do.

And I definitely like the idea of having a resume handy because frankly it’s not that hard to do. You probably had to make one up when you got the job you’re at. So, go back on your computer and maybe it’s once a year, every six months, on your birthday, on Canada Day, I don’t know when you do it but set yourself some kind of schedule. I guess the answer is every time something changes you get a promotion, you change whatever, get it updated so that if you were to get laid off tomorrow no problem, I need 10 minutes to put, you know, end date 2017, boom resumes ready and out it can go.

Alan Whitton: And the danger is if you’ve been at a company a long time, you get lazy. You go oh, well I don’t need to have an updated resume, I’ve got a good job. I mean I might need it to apply for an internal job, no you need it. And it needs to be out there too.

Doug Hoyes: Well, even if you don’t ever need it for an external job presumably there’s some kind of performance review, salary review, things that happen in a big company, you might as well have the information at your finger tips.

Alan Whitton: Yeah, understanding and remembering what you’ve done too, like having, using something like LinkedIn even having a resume there that you can start from is important.

Doug Hoyes: And with LinkedIn it’s out there, everybody can see it.

Alan Whitton: Yeah but assuming that people can see it just because it’s on LinkedIn isn’t enough. You’ve got to be networking. And if you think you’re about to get laid off you better start networking now.

Doug Hoyes: Or a year ago.

Alan Whitton: Yeah because everybody’s – everybody can be someone who can find you a job. I mean in my case the job I ended up with in the government I ran into a guy I used to work with at Nortel and his daughter and my daughter were graduating from middle school. And I just saw him and said, he said hey, how’s it going? And I said, I might be looking for a job and from that, that’s how I ended up with the job.

Doug Hoyes: You never know where it’s going to come from.

Alan Whitton: Exactly.

Doug Hoyes: So no one is indispensable, have a resume handy, always be networking, have your elevator pitch ready. That’s pretty good, that was just one point that I asked you for. So, give me some other advice then from your time going through this.

Alan Whitton: Well, so I go to church and we had one guest minister one week who said we’re all three paycheques from living on the streets. If you’re, you know, even if you’re not thinking you’re going to lose your job, you need to go through your finances and go what happens if I get laid off next week? What happens if I get off next week and there’s no severance because there’s a lot of companies now that are not paying severance.

Doug Hoyes: They just disappear.

Alan Whitton: They just disappear off the face of the earth you don’t get no more money. Oh, I have an emergency fund. Can your emergency fund withstand you, if you’re the only breadwinner, deal with that?

Doug Hoyes: Yeah and I disagree with your minister. It’s less than three paycheques for most people I’m guessing.

Alan Whitton: Well, you’re in the business so I would say –

Doug Hoyes: Perhaps I’m skewed because of the people that I end up helping but, you’re right, it’s a perfect thought experiment to do. So, ask yourself that question, if tomorrow when I go to work or the next day I go to work they say oh sorry, the company is no more, it’s just shut down, that’s it, it’s done, what would you do the next day? Do you have money in the bank? At the very least, do you have a line of credit you could use to pay the rent? I hate to go into debt for something like that but if you’re already maxed out on all your debt you’ve got no wiggle room whatsoever.

Alan Whitton: My wife’s comment on that when I pointed that out to her was emergency preparedness. And I mean you war games, it you sit down with someone and you just maybe bounce it back and forth with them and say what can I do? Just have something in mind because you better than I do, you’re in the business. People are going to walk in off the street. I mean I know people who have two incomes and someone lost, you know, two of my incomes, so two times my income level who ended up in pretty dire financial straights because one of them lost a job.

Doug Hoyes: Yeah and part of that is because it’s very difficult to downscale your expenses immediately. because what are your big expenses? Well, I pay the mortgage or the rent, I pay for my car well tomorrow if I lose my job I can’t just get rid of my house in a day, I can’t get rid of my car lease in a day. So, yeah okay maybe I don’t eat out as often, that saves me a few bucks but it’s very hard to instantly downscale your life.

Alan Whitton: And what if your kids are going off to school? And you said we’re going to help you, we’ve got your RESPs here ready. And now you’re looking at all this money and you’re going, you know, I could really use that money instead of you getting a RESP and going off to school. Why don’t you go get some OSAP and I’ll take some of that money?

There’s all of that – and that was actually part of what happened with me was my oldest daughter was going off to university and my two younger daughters were still in high school and I’ve got a son who is 3, 2 at the time.

You know, it was sort of a perfect storm of lousiness that happened because there was a health issue, there was being laid off and then there was dealing with all this and with the kids and all that. And if you think oh, yeah I’m going to be stoic and I’m going to – no, you’re not because this will take the legs out from anyone whether you think you’re going to pull it off or not.

Doug Hoyes: Because you just don’t expect it to happen. So, okay so let’s continue on with your points then. So, I mean this sounds to me kind of putting all your eggs in one basket type of thing then.

Alan Whitton: Yeah, you better get – in my case with Nortel, I lost money. I didn’t lose as much money as a lot of my co-workers did who had things like – they had a lot more stock and they wanted to – they thought they were going to be millionaires because they had options, they had this and that. For me I never got into the options game, I never had much there.

But I believe I got this from the Canadian Capitalist or someone, you can’t – you’re already far too invested in your employer. If you’re getting stock from them, if you’re getting all this other stuff from them, you better get out of their business. You’re getting paid by them, in my case I got a pension from Nortel as well. I should have had none of their stock or very little of it. Now luckily I ended up selling a lot of it along the way to pay off bills, pay for cars, but you can’t put all your eggs in your employer’s basket. You’ve got to be much more diverse.

Doug Hoyes: Yeah and that’s good advice in general. So, you ask people so tell me what’s on your personal balance sheet? Well, I own a house end of story. So, I don’t have anything in a RSP, an RESP, a TSFA or anything like that, I own a house and I got a lot of debt. Well, that is having all your eggs in one basket as well. So, totally agree with that, that sounds like obvious advice. So, you lose the job, obviously you’ve got to find another one.

Alan Whitton: Right.

Doug Hoyes: So, give me some tips on, you know, looking for a job.

Alan Whitton: Everyone you meet is someone you could network with. Talk to them and say well, you know, are their jobs at your place? Now the danger is when you get unemployed you end up hanging out with other unemployed people because you’ll go to services and things like that. I was lucky enough to have a fairly good service. But when you’re talking with other unemployed people, that’s not networking, that’s commiserating.

You need to talk to people who have jobs who will be able to say yeah, we got jobs here or no I’ve heard from Bob that he’s got jobs over there. And when you start looking for jobs and you’ve your resume ready, remember what your social media is. This is your references, Facebook, every tweet that you’ve put out there, every employer is going to look at this now, when I was looking for jobs back in 2008 not as much.

Doug Hoyes: Not so much. Twitter wasn’t a thing back then.

Alan Whitton: But all of those crazy things you’ve done in your life, all the weird pictures that are on Facebook when you were down in God knows where, you know, there’s a funny picture of that.

Doug Hoyes: So I’m just going to pause the tape and delete all my tweets right now. I guess we’ll be back in five hours.

Alan Whitton: I’m lucky that I’m close enough to retirement now that I think more likely than not they just say can you just go away? Here, here’s a retirement package.

Doug Hoyes: But that’s much better advice for a millennial who’s, you know, 30 years old and has lived through the social media age the whole time and does have that whole online history. You know, you and I, we’re in our 50s, you know, perhaps not so much. But everything is a potential reference. So, you know, always be networking, you hit on that. What else in terms of looking for a job. Everyone’s a potential source, what are the other places that you would be looking, what else would you be doing?

Alan Whitton: If you go to a job fair, please don’t wear flip flops.

Doug Hoyes: Don’t wear flip flops, that might be the title for this episode. Now you’re giving me an exaggerated example.

Alan Whitton: No, I’m not. I’ve been to job fairs.

Doug Hoyes: Because no one is going to go to a job fair wearing flip flops.

Alan Whitton: You think oh, I’m just talking about young ladies and things. No, no I’ve had people walk in with flip flops and their flash t-shirts at job interviews. And you go okay, I dig the fact that I work in technology and I understand free spirits are out there, I got no problem with this kind of stuff if we’re going to keep you in the back, that’s fine.

But first impressions are amazing things. If you’re going to a job interview don’t cut anybody off. If you’re taking the bus, give up your seat. You never know who is going to end up interviewing you. And that has happened to me more times than not where I’ve walked into situations where I’m going oh look who’s interviewing me, the guy who I called a so and so, so and so. Boy this is going to go really, really well.

Doug Hoyes: Yeah, I hope he likes my spunk. It might not be the answer. Well and you’ve actually seen people wearing flip flops to job fairs and job interviews. I mean I can tell you a similar story of a muckity muck reception where somebody was dressed the same way. I mean do you not know who you’re here to meet? Do you not understand the big picture?

Alan Whitton: And I realize we’re old farts. And my father told me you dress well and all that and first impressions are lasting impressions. And unfortunately that’s one of my few skills I have in life is my first impressions of people after I give you 10 or 15 seconds, is right most of the time unfortunately. You know, if I’m seeing you walking in with flip flops on and you’ve got a look on your face of I don’t want to be here, well, that – you know, those of the four thousand resumes I got, that one was easy to deal with because that went into the shredder before it even got on my desk.

Doug Hoyes: Yeah, don’t count yourself out right at the start.

Alan Whitton: Well, yeah don’t do things like that. Just, you know, you’re applying for a job, you’re trying to convince these people that they want to hire you. And in my case, I’m an older guy and I got interviewed by people that were 15 years younger than me, I’m trying to convince them that they want to hire me. Well, they’re going to be going well, why would I want to hire an old fart like you? You’ve got to convince them that you’ve got skills that they want, make sure the skills are way highlighted and you can get that point across as opposed to me.

Doug Hoyes: Yeah and the age thing is interesting because in some cases being old is a disadvantage but in other cases being old is an advantage. You’ve got to find your spot. Like if you’re going to get a job working at the LCBO, you know, you can’t be 16 years old. And in fact, for a job like that yeah, probably the older you are, within reason, the better. Okay, you’re dealing with a sensitive product here and so it becomes more of a thing. And that’s just an example off the top of my head but you got to play to your strengths, right?

Alan Whitton: Exactly.

Doug Hoyes: And so if experience is, you know, I’m old that means go for the jobs that –

Alan Whitton: Well, especially where I am right now with project management. Having a broad understanding of all parts of the project and then being able to say, when someone says here’s the project plan and you go okay, here, here, here, and here are all areas of risk. Where’s the risk plan for that? And they’re going oh, I didn’t think of that as risk. And you’re going these are the things that can go wrong and they’re going well, how do you know that?

Doug Hoyes: Because I’m old, I’ve been through it, I’ve seen it.

Alan Whitton: Yeah, exactly, 25 years, I’ve gone through this and because of some toad we couldn’t put a cement pad over there because someone said you couldn’t so you lost six months with that. Well, what are you going to do about it?

Doug Hoyes: Yeah and that’s where experience really comes in.

Alan Whitton: Very much so.

Doug Hoyes: Okay, so what other tips have you got then? I mean normally what we do at the end of the podcast is we go through all the practical advice but we’re just going to do the whole thing as practical advice here today. So, any other tips you’ve got for people who have either been through a lay off or are going through a job search?

Alan Whitton: Well, it feels like hell, like I was actually out of work for 11 months.

Doug Hoyes: Wow.

Alan Whitton: And I was lucky enough that I actually got severance from Nortel, I was in the last group that actually got paid out or had the potential to be paid out. The people that got laid off after me are still fighting to get 5 cents on the dollar on things. So, it feels like crap, it’s not easy to do but you got to get up in the morning and you’ve got to do something every single day. You’ve got to look for the jobs and you can’t let yourself go. Jobs are out there.

I mean millennials in some ways are lucky in a weird way because they’ve got three part-time jobs. They get laid off from one they still have two part-time jobs. But then they’ve got to find a job when they’ve two jobs to already take care of. So, I mean the job hunt now I don’t know if I’m in tune with it because I’m eight or nine years out of it.

Doug Hoyes: And the comment you made about millennials is exactly right because I know tons of them who are in exactly that situation. I was talking to one last week and it was like well, I’m lucky because each of those three jobs is flexible because, you know, one of them’s in retail so I’m working in the evenings. One of them’s, you know, an office job which is more during the day, one of them I do on the weekends.

And so you’re right in one sense they’re protected because well, if you lose one job you’ve only lost one third of your income. But it’s not a great life having three jobs, having to bounce from one to another, trying to coordinate schedules, I do a four-hour shift from 5am till 9am in the morning, I got to take a bus across town, I go back home, I sleep for two hours, get back on another bus for another hour and do another four-hour shift somewhere else. It’s not an easy life. But I think, you know, the main point is you’ve got to be looking ahead and at some point things with change you want to be ready for it. Is that the pretty simple summary of it?

Alan Whitton: Yeah. And I mean at the end of it all when you reach our age, I don’t know if you have the same level of cynicism as I do but I mean I posted this tweet a couple of weeks ago. It’s a bad line but I started off wanting a career, it ended up all I really wanted was a regular paycheque, right? Like when I was younger I was thinking oh, going up here, I’m going to be a manager, this and that. Yeah, you know, it was kind of fun. I worked with some amazing people, I had a great time.

But holy cow at the end of it all it really was the paycheque that you wanted. Finding the jobs, it’s not easy but you’ve got to be prepared and you’ve got to be ready and it can happen at any moment. Like you don’t know what you’re going to find out tomorrow morning. Not to use too many scare tactics but especially with the millennials, how you deal with having any part-time job is to put together with the full-time job you have, how do you look for a job when you have other things going on in your life? It is not an easy thing.

Doug Hoyes: No, it’s definitely difficult. So, I want to morph into the final topic which is a little bit more about your website and what you’ve done with it. So, obviously, you know, you no longer work for Nortel, you’ve mentioned that you’re now working for the government, you’ve reinvented yourself, you’ve got the big website now which I think has 100 million views a day.

Alan Whitton: Huge.

Doug Hoyes: I believe is what it gets. So, it’s the Canadian Personal Finance blog, when did you start that?

Alan Whitton: I started that the month after my son was born in 2005.

Doug Hoyes: Now did we have the internet then? I’m just trying to think back that far.

Alan Whitton: So, it wasn’t that long before that the World Wide Web had been born.

Doug Hoyes: So it was just invented and you came up with a blog. So, people know you as the Big Cajun Man. What’s the deal on that?

Alan Whitton: That was a rude turn of phrase that I was at a golf, playing golf with a few friends and some, a cohort, a friend came by and saw me wearing a silly straw hat and said what does that idiot think he is, some kind of big Cajun man?

Doug Hoyes: So it’s an insult and now it’s become your second name.

Alan Whitton: Yeah it got stuck to me by my friends. I have some wonderful friends that way.

Doug Hoyes: Excellent. Well, there’s nothing wrong with that, why not then? So, give us the overview of what’s on the blog.

Alan Whitton: A lot of do as I say not as I do advice. You know, after having three kids go through university, using the RESP program, having a son that’s on the autism spectrum, dealing with the RDSP program, investing, going through a layoff, which happened three years after I started the blog. So, there’s a whole bunch of really raw posts about getting laid off that I’ve left as intact because it’s interesting for me to read as much as anything else.

And in some ways this is sort of an open letter to my kids saying, you see all these crazy things I did, don’t do that or yes do this and if anybody else gets some stuff out of it, I really want to help the people with disability savings plans and things like that because there’s so many people out there that are trying to make an extra buck off them. And I just can’t stand that.

Doug Hoyes: Well and I think that’s an excellent topic so I’m going to ask you back and we’re going to talk about RDSPs because we’ve never discussed that before on the show. So, what you’re saying is the blog – and how many posts do you have on it?

Alan Whitton: About 3,000.

Doug Hoyes: Three THOUSAND, so, if someone has a few months to kill you’ve got lots of time. But it’s organized in such a way that if what I’m really interested in is, you know, RESPs or RDSPs or, you know, getting laid off or whatever I can click the button, find that tag and read those posts.

Alan Whitton: Yeah, for most of it. It’s still a big rag tag in spots. I’ve got to work on the searching. I always mean to do things about it. But once you have 2,500 or 2,700 posts you start going back over them and you start deleting a lot because you go what the heck was I thinking about that? But I used to write like every day five days a week and then sometimes on the weekend and you end up building this huge backlog that I’ve been spending a lot of time just reading. I haven’t been posting that much lately and it’s because I’ve been going back and cleaning things up.

And a lot of that is appearing now on my Twitter feed, you’ll see a lot of my best of and older stuff. It’s advice to help you out. It’s the things I’ve done. There are some really smart people about investing, there are some really – you’re a great bankruptcy trustee. The Blunt Bean Counter will give you accounting stuff up the wazoo and he has helped me out tremendously with the RDSP and a few other things.

I’m not going to give you that kind of advice because I’m not that kind of expert. I’m just the Joe on the street kind of guy who’s gone through a hell of a lot of interesting stuff. And I’ll usually say I have no idea what I’m talking about here and I’ll ask for advice. And it’s surprising, I’ve got some really smart readers who’ve applied back going, hey dummy you’re doing it the wrong way, which is great.

Doug Hoyes: Yeah because the comments on the blog are just as good as the articles itself because they chime in.

Alan Whitton: I like it when people put in comments. Like one of my RDSP posts has like I don’t know 250 different comments from people saying I can’t get it done, how do I do this? And we usually try and help them out. And my wife does a lot of help work with me on the RDSP side of things. So I mean the blog itself, it’s not a business really. I’d love to make millions of dollars like I am right now.

Doug Hoyes: Yes, of course, of course, we assume you’re making a million dollars a week on it.

Alan Whitton: Absolutely but it is what it is.

Doug Hoyes: So why don’t you just sell out, you could put – you’ve got all these different posts about all these different things. Go to whatever the biggest RESP company there is or RDSP company or whatever and say hey, I got this blog, it’s been going for years and years, it’s got 3,000 posts on it, tons of people read it. I’ll just put whatever you want on it, give me a few million bucks and off we go.

Alan Whitton: Yeah, I really couldn’t wake up in the morning and look at myself after that. I already joke about the fact that I’m a six figure blogger, I make enough money in my job to do this. I want to help people with this stuff and there’s a lot of people that need help with this stuff. I mean you’ve dealt with enough people on the debt side of things, all my debt stuff ends up being relatively straight-forward answering. You get to deal with the real grungy part of things.

There are enough people out there who are media savvy and understand how this all works and are really going to blind you with some really good stuff. I’m just going to write with you what I can. It’s not always going to be the best writing, I’m trying to fix a lot of that. I’ve actually – when you have 3,000 posts there’s a lot of rewrite you do.

Doug Hoyes: But I think you raise a very good point and that is there are many different sources. You raised the Blunt Bean Counter, who I believe is a chartered accountant.

Alan Whitton: He’s a partner [unintelligible [00:28:54]

Doug Hoyes: And a partner at a big firm or wherever. So, obviously he’s got a lot of really good technical advice. And so obviously you need people like that. I hope that’s why people come to see what I do as well. Your advice is from actually being out there and doing it.

Alan Whitton: Yeah and I mean having four kids has been an amazing thing in my life but you learn a lot of stuff about the importance of –

Doug Hoyes: Vasectomies, too late now I guess.

Alan Whitton: Well, I already had one and that didn’t work, which explains my son. One of these days I’m actually going to put that post up there. But no, Reece appeared two years after my first vasectomy.

Doug Hoyes: Excellent.

Alan Whitton: The second one worked a lot better.

Doug Hoyes: There you go. So, well, so you’ve lived life then, which is exactly what you’re saying.

Alan Whitton: Yeah and it’s a slice of life at times.

Doug Hoyes: No pun intended.

Alan Whitton: A painful one anyway. But I’d like to be able to put a lot more expertise, a lot more polish on these things but it’s not really what I do and it’s not my expertise. My expertise is just sort of getting stuff out there and having people argue about it.

Doug Hoyes: But that’s how you learn is by – you learn by doing it. So, okay so how can people find you then? Where is the blog?

Alan Whitton: The https:

Doug Hoyes: It’s S now?

Alan Whitton: Oh yes I just kicked it over to S. I’ve lost a whole bunch readers because Google’s wiped me out of their index. So,//canajunfinances.com. So, it is – it sort of went with Big Cajun Man. Tom [Drakerty] had Canadian Finances at the time so I went alright, well I’ll call it canajunfinances and thought it was hilarious. And of course no one finds it now. But you can look for some of my, you know, a lot of my posts if you just do a search for, you know, like five steps to a RDSP you’ll find one of my posts on that. I’m out there.

Doug Hoyes: And how can people find you on Twitter?

Alan Whitton: So there’s @bigcajunman is the actual Twitter feed out there. I’m on Facebook as well. There’s a Canadian personal finance page on Facebook. I’m on pretty much every social media. So, if I actually tried to wipe myself on social media I’d be spending about four or five months.

Doug Hoyes: MySpace, you’ve got a MySpace page?

Alan Whitton: I had a MySpace page. I’m old enough to know what that means, having dancing bananas on everything, it was fantastic.

Doug Hoyes: All the millennials are going, what is that like Geocity?

Alan Whitton: Geocities and those little torches that you had on the webpages, that was fantastic.

Doug Hoyes: That was awesome, so, excellent. Well, I think that’s great. And as I said, there’s a ton of stuff on there. If you want to get into an issue from the point of view of someone who’s been through it and we walked you through a whole bunch of things that were on the blog now then. That’s a fantastic way to do it. So, Alan thanks very much for being here.

Alan Whitton: Thank you.

Doug Hoyes: Definitely appreciate it. So, I’ll put full links to the Canadian Personal Finance blog to the show notes but again it’s at canajunfinances, see it is pretty funny, canajunfinances.com. full show notes, links and a full transcript can be found at hoyes.com that’s h-o-y-e-s-dot-com.

That’s our show for today. I’m Doug Hoyes, thanks for listening. Until next week, that was Debt Free in 30.

The post How One Man Survived a Layoff After 20 Years at Canada’s Biggest Company appeared first on Hoyes, Michalos & Associates Inc..

My clients don’t have a debt problem; they have an income problem.

Minimum Wage vs. Living Wage

If minimum wage isn’t enough to survive, the solution would appear to be quite simple: raise the minimum wage. That’s exactly what the Ontario government is proposing to do, raising the general minimum wage from $11.40 per hour to $15 per hour on January 1, 2019. So won’t that big increase in the minimum wage solve all of our problems? No, because, unfortunately, a minimum wage is not a living wage. According to Living Wage Waterloo Region:

A living wage is the hourly wage a worker needs to earn to cover their family’s basic expenses within their community.

The minimum wage is basically the same across Ontario, whether you work in downtown Toronto or a less expensive small town, and it is not in any way related to what it actually costs you to live. A living wage is calculated for each community, based on actual living expenses, so the living wage in will vary from city to city, based on actual costs. For 2017, the Living Wage in Kitchener is $15.42 per hour, which is higher than what the minimum wage will be in 2019. Clearly, the minimum wage is not a living wage.

So what’s the solution?

Minimum wage just isn’t enough. I recommend that, instead of trusting something as important as wages to the government, each of us should use our purchasing power to support businesses that agree to pay their employees a living wage, and not simply pay them a minimum wage. If even a fraction of a business’s customers were to stop dealing with a business that didn’t pay a living wage, every business would either pay a living wage or go out of business. Full details on how a living wage could work is discussed in today’s podcast.

Resources mentioned in this show: 

• Ontario Government Minimum Wage Press Release, May 31, 2017
• Ontario Ministry of Labour, Minimum Wage as of June, 2017
• Canada Revenue Agency, Payroll Deductions Online Calculator
• TTC Metropass
• Statistics Canada, proportion of workforce earning minimum wage
• Royal Bank, 2016 financial statements
• Royal Bank CEO salary, Financial Post
• Average Royal Bank employee earnings, customer service advisor
• Canadian Centre for Policy Alternatives, A Growing Concern: 2016 Child Care Fees in Canada’s Big Cities, by David Macdonald
• Debt Free in 30 podcast #114 with David Macdonald Basic Income: Is it a Silver Bullet for Poverty?
• Living Wage Waterloo Region: What is a Living Wage?
• Ontario Living Wage Network
• Hoyes Michalos Makes Living Wage Commitment

FULL TRANSCRIPT show #146

Today I’m going to address a controversial topic, one where no-one is in agreement and where it’s hard to know who’s right.

Today’s topic here on Debt Free in 30?

The Minimum wage.

Why in the world would I want to take an episode of a show that’s supposed to be about debt and talk about the minimum wage?

Because debt and income are linked.

Here’s how:

People who have more debt than they can handle are often also the people who have lower incomes.

We know this because of a study our firm conducted earlier this year that found people who have so much debt that they have no option but to file a consumer proposal or go bankrupt, also have incomes that are almost 40% less than the median income in Ontario.

That’s a fancy way of saying that my clients don’t have a debt problem; they have an income problem.

If they could earn a bit more, they may not have to rely on high interest rate debt, like payday loans, to survive.

That’s one reason why many experts believe a higher minimum wage could solve a lot of debt problems.

On May 31, 2017, the Ontario government announced that they are proposing the largest increase to the minimum wage in Ontario’s history, raising it to $15 per hour.

As of today the general minimum wage is $11.40 per hour.

Under the new plan the minimum wage is scheduled to go to $14 per hour on January 1, 2018, and to $15 per hour on January 1, 2019.

So that means that in the space of a year an half, exactly 18 months, the minimum wage will go from $11.40 to $15, or just over a 31.5% increase.  That’s a huge increase.

What’s it like to live on the current minimum wage of $11.40?

Well, if you are a single person, earning $11.40 per hour over a standard 37.5 hour week, your gross pay per week is $427.50 per week.

But of course from that you have to pay your share of CPP and EI, and taxes are deducted, so your net pay would be $366.23

So in a four week month, a single person working a 37.5 hour job would have take home pay of $1,464.92

I think we can all agree that that’s not a huge amount of money to live on.

The consequences?  Many people use credit cards and payday loans to pay for what their minimum wage job won’t cover.

A higher minimum wage could help people stay out of debt.

That’s one reason why many experts believe a higher minimum wage could solve a lot of debt problems.

Let’s run some numbers.  If you are making minimum wage, what does your monthly budget look like?

If we use round numbers:

INCOME  $1,465

EXPENSES:

Rent  $700

Hydro and gas $100 per month

Cell phone; assuming you don’t also have a home phone, you’re probably paying $100 per month

Food and personal expenses $300

Transportation – TTC Metropass – $146  https://www.ttc.ca/Fares_and_passes/Prices/Prices.jsp

So that’s $1,256 per month in livings expenses, which leaves you a cushion of $209 per month.

So that’s sounds good, right?

Perhaps, but think about it:

• $1,465 in monthly income over a 20 day month is just over $73 per day. If you are off sick for 3 days, or if you don’t get called in to work for three days, you have lost all of your cushion.  In fact, you are in the hole a few dollars.
• Can you find a place to live for $700 per month, where hydro and gas only costs $100 per month? That might not be possible.
• Can you cover all of your personal expenses, like food, and clothing, for $300 per month? In some months, sure, but if you have to buy a new pair of work boots or a winter coat, your cushion is gone.
• And what about unexpected expenses? Like medical costs?  If you need to buy prescription drugs, there’s no room in the budget.
• And of course there’s nothing in the budget for entertainment, or anything else.

I’ve given you a simple example of a single person, but what if you are a single parent and have expenses related to your children, like daycare?  It would be even harder to live on minimum wage.

I think we can all agree that it’s very difficult to live on minimum wage.

And that’s the point that advocates for a minimum wage are making.

You can’t live on it, so people on minimum wage have no choice but to ignore paying for things like prescriptions they need, so they get sick, and a much greater burden is placed on the health care system.

They have no choice but to turn to high cost debt options to survive.

A low minimum wage hurts the person on minimum wage, but it also hurts society.

But there are other experts who say minimum wage will harm low income earners, and they make three main arguments to support their position:

Argument #1: minimum wage laws hurt the very people they are trying to help, because by increasing the cost of wages you will the supply of jobs.

If you force a business to pay higher wages, they won’t be able to afford to hire as many employees.  Workers might even get laid off, and the only thing worse than a low wage is no wage at all.

Argument #2: If everyone’s pay goes up, prices will have to increase and low-income workers will be no better off than before

If a coffee shop must pay its workers 30% more in wages, they will have to increase the price they charge consumers.  The same goes for food prices, gas stations, buying goods at Walmart etc.

Argument #3: It’s generally younger workers that earn minimum wage and raising the minimum wage will harm those trying to gain experience:

According to Statistics Canada:

In 2014, 49% of employees aged 15 to 19 years and 15% of those aged 20 to 24 were paid at minimum wage.

Among students, 29% were paid at minimum wage, versus 5% of non-students.

Compare this to older workers, where the rate of minimum wage jobs is in the single digits:

So about half of all workers between 15 and 19 years old earned minimum wage. Is that a problem?  Some experts say no, because a teenager has very little work experience, so earning minimum wage is a good deal for both employer and employee.  The employer gets a low-cost worker, and the employee gets a job where they earn money and gain valuable job experience that will help them earn more in the future.

The concern is that if you raise the minimum wage, those teenagers won’t be able to find a job, so they won’t get work experience, so they will never be able to earn a higher income.

So who is right?

Well, I see both sides of the argument, but I want to discuss a third alternative on today’s show.

I think we should consider a third possibility, a different solution that is not often discussed by either side of the debate.

This new approach stems from the argument that big corporations are making lots of profit, but they aren’t paying their workers a decent wage.

So it’s not a minimum wage issue, it’s a ‘decent’ wage issue.  Employers, especially big employers making big profits, should be paying their employees a decent wage.

You always hear stories about the big banks, that make lots of money.

That’s true.

Canada’s biggest bank, the Royal Bank, earned $10.5 billion in profit in 2016.

Their CEO was paid just over $11.5 million in 2016

Other big bank CEOs also earn millions of dollars per year.

What does a bank employee earn?  A customer service advisor can earn between $24,000 and $44,000 per year.

Even if we take the high point of that range, that means the bank’s CEO is earning over 260 times what a regular employee makes.

So, the argument goes, a big corporation can afford to pay their rank and file employees more, and they could do it if they would just pay their CEO and top management a bit less.

I guess that’s true, although the Royal Bank has 80,000 employees, so even if they paid their CEO zero that would only free up $144 per year per employee, but I understand the point:

A minimum wage levels the playing field.

It forces big companies to share some of their profit with the workers whose work allows them to earn those big profits.

But wait.  There’s a flaw in this argument.  Not all big corporations are paying their employees minimum wage.  Some are paying just above minimum wage, so they won’t be impacted by an increase in the minimum wage.

That’s why many critics say that it won’t be big corporations that will be impacted by an increase in the minimum wage; it will be small businesses that will be most affected.

Let me illustrate with an example.

Let’s assume that you are the operator of a not for profit daycare centre in your community.

You realized there was a need for affordable daycare, so you got a local church to agree to let you use their basement during the week, for free.  They even agreed to cover all utilities.  You found some local companies who agreed to donate food and supplies, so your only significant expense is wages for your staff.

You have ten employees.

They all make minimum wage.

Over the next year and a half, the minimum wage is going up by over 30%, and since your only significant operating cost is wages, your costs will be going up by over 30%.

What do you do?

Obviously you only have two options:

1. Raise prices, or
2. Cut staff.

Your customers, the parents, can’t afford a 30% increase in what they are paying.  They are all typical workers, with typical jobs.  They can afford the existing daycare costs, but there’s no way they could afford a 30% increase.

According to a recent study by the Canadian Centre for Policy Alternatives, written by David Macdonald, who was a guest on this podcast back on show #114 in November, , the average daycare cost for a preshooler in cities like Kitchener, Markham and Ottawa are around $1,000 per month.  In Toronto its $1,150 per month, and in Toronto daycare for an infant costs almost $1,650 per month, and for a toddler it’s $1,375 per month.

Let’s use the lower number of $1,000 per month.  A 31% increase is $310 per month.

If you had your child in daycare, could you afford an increase in daycare fees of over $300 per month?

Probably not, which is why you realize that the only way to continue to break even in this daycare centre you are operating is to cut your employee costs.

You might be able to raise the fees you charge the parents a bit, but to cover your increased expenses you will need to reduce staff.

The math is simple: If you have 10 employees and need to cut costs by 31.5% to pay for the new higher minimum wage, you need to cut 3 employees, and you will still need to raise prices by a bit to break even.

Which three employees would you cut?

Or do you just tell all of your employees that they can keep their job, but they all have to work 30% less hours?  So instead of a 40 hour week, you now only get 28 hours per week?

And what about the children?  How can you cut 30% of staff hours and still provide the same level of care?

You can’t.

Instead of three of the staff taking the kids to the park before lunch, they may have to sit around and watch TV, because that’s easier to do with fewer staff.

That’s why critics say that a higher minimum wage does not help anyone.

Some staff members either lose their job, or work less hours.  The customers either pay higher prices or get less service, or both.

That’s the problem with an increase in the minimum wage.

Math.

Our Joe Debtor study proves that people with lower incomes are more likely to have debt problems, so raising the minimum wage sounds like a no-brainer, but it’s also true that if a business has to pay too much in wages, they can’t employ as many workers.

So what is the solution?

To start, I think we have to make a distinction between big, profitable corporations, like the big banks, and small businesses, like the daycare centre.  While a big corporation can probably afford to pay more, a smaller business probably can’t afford to increase wages significantly.

So does that mean we should have a different minimum wage for different sizes of business?

No, that would be an administrative nightmare.  You can’t have the minimum wage changing every time a business hires a new employee.  That would just create an extra layer of government bureaucracy, and that can’t be good for employees or taxpayers.

And is it fair that the minimum wage is the same in downtown Toronto as it is in a small town where living costs are a lot lower?

That’s the problem with a government-legislated minimum wage.  In order to be fair, it has to be incredibly complex.

Here’s my thought:

Instead of having the government decide how much a business should pay their employees, why not leave it up to the public?

How would that work? With a concept called living wage.

A living wage is exactly what it sounds like:

A living wage is the hourly wage a worker needs to earn to cover their family’s basic expenses within their community. It is calculated based on the needs of a two-parent family with young children, but would also support a family throughout the life cycle so that young adults are not discouraged from having children and older workers have some extra income as they age. In Waterloo Region, the 2017 Living Wage rate is $15.42 an hour.

The living wage is different in each community, and that makes sense, because living costs are different.

Here’s why I prefer the living wage as compared to minimum wage:

First, it’s different in each community, so it can take into account living costs that vary by city.

Second, it’s based on an actual calculation of living costs, not a random round number, like “$15 per hour”, which bears no relation to actual living costs.

Third, the calculation is done by an independent third party, not by the government, so the number is more likely to be based on actual costs, and less likely to be based on politics.

Fourth, it’s not a law.  It’s guidance for employers, employees, and the general public.

To me, that’s the most important point.

I’m an employer.  My company, Hoyes, Michalos & Associates, employs dozens of people.  We have 24 offices operating in 24 different communities.  How can I, as an employer, know what a living wage is in each town and city I’m in?  That’s why a living wage program is very helpful to me as an employer.

I know that in Waterloo Region, which includes Kitchener, where our head office is, the living wage for 2017 is $15.42 per hour.  It’s higher in some communities, lower in others.

So as an employer in Kitchener my goal is to pay my employees at least $15.42 per hour.

Here’s the key point: Even after the Ontario government raises the minimum wage to $15 per hour in 18 months, it will still be below the Living Wage today!

The minimum wage may help, but it still doesn’t get employees to where they need to be.

Even worse, it allows businesses to say: “I’m paying the minimum wage, and that’s good enough!  I don’t need to pay any more than that!”

So the unintended consequence of a minimum wage law is that it pays employees less than a living wage, and gives businesses an excuse for not paying more.

That’s why I think all businesses should set a goal for themselves of paying a living wage.

That’s what we’ve done at Hoyes Michalos.

http://www.newswire.ca/news-releases/hoyes-michalos-makes-living-wage-commitment-615697293.html

Hoyes Michalos signed a Living Wage Employer Declaration as a Champion level employer with Living Wage Waterloo Region on March 8, 2017.

We have committed to paying a living wage to all of our employees.

So that’s great, you say, but what about the small business, like the not for profit daycare centre, that can’t afford to pay $15 per hour, and they certainly can’t afford to pay $15.42 per hour.  Isn’t a living wage even worse for them than a minimum wage?

No.

A living wage is voluntary, so the business, and their employees, and their customers, have a choice.

Here’s the final piece of the puzzle:

As a customer, you can decide whether or not you do business with a company that has made a commitment to their employees to pay a Living Wage, or a business that hasn’t.

If every consumer decided that they would only deal with Living Wage employers, companies that didn’t pay a living wage would go out of business.

So if your big bank doesn’t pay a living wage to their staff, you could decide to take your business to a local credit union.

If the big chain grocery store you shop at doesn’t pay a living wage, you could choose to shop at the smaller, local, owner-operated grocery store that does pay a living wage.

Perhaps paying a living wage is not possible in some businesses.

It may be that a fast food restaurant that employs mostly high school kids can’t pay $15.42 per hour.  That’s fine, as a consumer you can decide that you still want to buy a hamburger at that place, because you like hamburgers, and because they are creating jobs for teenagers.

It may be that the daycare centre can’t afford $15.42 per hour.  Again, it’s up to you as a consumer to decide if you want to deal with that business.  Perhaps the daycare centre agrees to pay 90% of the Living Wage, and the clients agree to pay slightly higher fees.

As a consumer, you get to decide.

Do you want to buy goods that are manufactured in Canada, where the employer paid a Living Wage, or do you want to buy cheaper goods made in China where people work in sweatshops and only make a dollar or two an hour?

As a society, we can’t have it both ways:

If as an employee you want to earn a Living Wage, you have to be willing to deal with companies who also pay a Living Wage.  If everything you buy is from China, you aren’t creating any jobs in Canada.  It’s as simple as that.

So what am I saying?

Only buy stuff manufactured in your home town?

No.

What I’m saying is that, as a Licensed Insolvency Trustee, I know that we have an income problem in this country.

I don’t believe the government can solve the problem.

They may mean well, but I worry that a high minimum wage mandated by any government will backfire, and hurt the people they are trying to help.

That’s why I think that we, as consumers, should decide where we spend our money.

Check out the businesses you deal with.  Search them online.  Go talk to the manager.  Ask them if they pay a Living Wage.

If they do, great.

If they don’t, ask why not?

Get your friends and family involved.  Use social media.  You’ve got Facebook friends, use them.

If only 10% of a businesses’ customers stopped dealing with that business, that business could be in serious trouble.  You don’t need to get every customer to boycott a business.  If just a few of you speak up and move your purchasing power, businesses would be forced to change.

Am I right?

Do consumers have the power to change what businesses do?

I don’t know.  We’ve never tried a Living Wage experiment where consumers are actively involved in changing the behaviour of businesses.

I’d love to see charities and other organizations like churches and unions getting involved spreading the word.

I think it would be a great experiment, and I think it could actually help the people who really need the help, and that’s the working person.

So to conclude, I think the solution to our income problem is in all of our hands.

I think we can make a difference.

But it’s up to us.

That’s our special edition of Debt Free in 30 today.

You can leave your comments on Twitter with hashtag #DFI30, or email me at dfi30@hoyes.com, or leave your comments on YouTube or on the show notes page over on hoyes.com.

Full show notes, including links to all of the sources I mentioned on today’s show can be found at hoyes.com, that’s hoyes.com.

Thanks for listening, and thanks for thinking about this important issue.

Until next week, I’m Doug Hoyes, that was Debt Free in 30.

The post Why Minimum Wage is Not a Living Wage appeared first on Hoyes, Michalos & Associates Inc..

How Does Bankruptcy Affect a Mortgage Broker or Mortgage Agent?

The Financial Services Commission of Ontario (FSCO) requires that a mortgage broker or agent disclose a voluntary assignment in bankruptcy. Applicants must also disclose a previous bankruptcy and if they are currently an undischarged bankrupt. You must provide the following documentation:

• Your trustee’s name and address;
• The location of your bankruptcy filing;
• Assignment of Bankruptcy or Receiving Order;
• A list of creditors;
• Certificate of Discharge, if and when available; and
• An explanation of the circumstances of the bankruptcy

FSCO will review your disclosure thoroughly and the impact on your mortgage license or application will depend on the reasons surrounding your filing. Specifically they will review:

• The nature of your filing and your ability to abide by the law
• Whether you have acted dishonestly, recklessly or with intention to avoid responsibility for your debts
• Any failure on your part to provide full disclosure with respect to prior registrations or licenses, bankruptcy or criminal conduct

You may also be subject to an investigation by FSCO and the information from the investigation will be considered when determining your ability to continue to act as a mortgage broker or agent. It is important to note that sharing false information on your application is an offence and will affect the any licensing decision.

How a Consumer Proposal Affects a Mortgage Broker or Agent in Ontario

Unlike with a bankruptcy filing, a consumer proposal has less of an impact on your license as a mortgage broker or agent. FSCO still encourages you to report a proposal filing, but that filing will not bring your licensing into question. FSCO treats a consumer proposal filing with much less scrutiny than a bankruptcy.

As you likely earn commission-based income, you may earn more than the allowable surplus income limits in a bankruptcy. High income can lead to higher bankruptcy payments and a longer bankruptcy.  As an alternative to bankruptcy, a consumer proposal can be better for both your license and your monthly finances.

For more information regarding your situation and the potential impact of a bankruptcy filing on your license as a mortgage broker or agent in Ontario, we recommend contacting the Financial Services Commission of Ontario directly.

If you’re a mortgage broker or agent facing debt problems, contact a Hoyes Michalos Licensed Insolvency Trustee for a free and confidential consultation to review all your debt relief options.

The post Can I Still Be a Mortgage Broker or a Mortgage Agent if I File for Bankruptcy in Ontario? appeared first on Hoyes, Michalos & Associates Inc..

You will be asked to share this information when you fill out the Declarations and Professional Obligations section of the new applicant or certification renewal form. If you have already submitted your form, but have filed for bankruptcy since, you will need to still notify FPSC within 15 days of your filing.

Along with your renewal form, you will need to include the following:

• Your reason for filing;
• The date you filed;
• And any outcome

You will also have to attach documents related to your bankruptcy or proposal filing. The FPSC will review your case and decide whether or not you should be denied new or continued certification.

Can I hide my bankruptcy or consumer proposal filing from FPSC?

No. Not disclosing your bankruptcy or proposal filing as member of the FPSC is a breach of the Standards of Professional Responsibility and can result in disciplinary action by FPSC including revocation or suspension. For specific answers to your questions on the status of your professional designation and filing bankruptcy, you are encouraged to contact the FPSC directly.

If you are overwhelmed by debt, contact a Licensed Insolvency Trustee to meet with you for a free consultation to go over all your debt relief options in detail.

The post Effects of Filing Bankruptcy or Consumer Proposal as a Certified Financial Planner in Canada appeared first on Hoyes, Michalos & Associates Inc..

To help us better understand the costs and consequences of a guaranteed income program, I talked with David Macdonald, senior economist with the Canadian Centre for Policy Alternatives. The CCPA has released a detailed study on basic income called A Policymaker’s Guide to Basic Income.

What is basic or guaranteed income?

We asked David to describe the concept of basic income:

The idea is that cash transfers are a way that we can alleviate poverty and have other beneficial effects. And the idea of basic income is that you get a cash transfer that you didn’t have to apply for or the application for it is fairly minimal.

Benefits: Is it the Silver Bullet?

While there are many possible ways to administer such a program, David talked about the two basic forms:

1. Every child, senior or adult receives an identical cheque in the mail (or via direct bank deposit). Income is then clawed back through the tax system.
2. The second approach is a negative income tax or targeted program. Almost every basic income program in Canada (such as the Guaranteed Income Supplement) is structured this way today.

There are many benefits to a basic income program. The most measurable of course is reducing the percentage of Canadians living below the poverty line. However there are other, harder to measure advantages including higher education levels, a reduction in medical expenses, particularly mental health costs, and a reduction in crime rates.

Costs and criticisms

Of course the two most common criticisms around basic income are the cost and the possible ‘disincentive to work’.

David talked about the 33 federal and provincial basic income programs already in existence. The cost of any basic income program will depend partially on how the program is implemented. Will it become a 34th program targeted at specific groups, or a more universal replacement plan for existing programs?

As to the disincentive to work issue, again David explains that it comes down to how the program is designed.  If the clawback is not too high, in other words for every extra dollar you earn you keep say 50%, then the risk of abuse is low. Similarly, if there is a time delay between when your income increased due to say extra hours worked, and when your benefits were reduced, the disincentive is also limited.

The downside of cancelling existing programs is that there are winners and losers and that becomes the challenge. As David points out:

I think that a basic income is often seen as a silver bullet to eliminating poverty and I think that hopefully [the CCPA] report points out that it can be very helpful for some groups but it’s not as useful for other groups….

There’s a multiplicity of solutions to poverty not just a single one.

I know from experience that more than one-third of all insolvencies in Canada are caused by some form of income reduction. A basic income would certainly reduce the risk that individuals will take on excessive debt to pay for necessities like rent and food. However paying for the program will likely increase taxes overall. If not done correctly, this could lead to an increased insolvency rate among working Canadians who see their take home income reduced.

For more of our discussion, listen to the podcast or read the full transcript below.

You may also like to listen to our Podcast with David Bond to hear his thoughts on basic income and the treatment of capital gains tax in Canada.

Resources Mentioned in the Show:

• A Policymaker’s Guide to Basic Income – study by David Macdonald
• Basic Income – Rethinking Social Policy – by CCPC
• Canadian Centre for Policy Alternatives

FULL TRANSCRIPT show 114 with David Macdonald

image credit Richard LeSesne / State Archives of Florida, Florida Memory / 

Doug Hoyes: Today we are going to explore a topic we have never discussed here on Debt Free in 30. It goes by many different names, including guaranteed annual income or basic income and it’s been in the news more frequently since June when the Ontario government appointed former senator Hugh Segal to provide advice on the design and implementation of a basic income pilot in Ontario as announced in the 2016 Ontario budget.

So, what is basic income? How would it work? Who would qualify for it? How would we pay for it? These are all important questions so for the answers I’m joined by an expert who released a detailed research study on basic income. So, let’s get started. Who are you, where do you work and what do you do?

David Macdonald: My name’s David Macdonald, I’m senior economist for the Canadian Centre for Policy Alternatives, which is a think tank in Ottawa. Yeah, we look at a variety of public policy issues like a basic income.

Doug Hoyes: And so you have prepared a document called A Policymaker’s Guide to Basic Income, which was released early in October in 2016. Let’s talk about basic income then, can you start by giving me what your definition of basic income is? And I realize there are other terms for it as well, guaranteed annual income and so on, but what’s your definition of basic income?

David Macdonald: Yeah so there’s quite a few different terms that are applied to this idea. The idea is that cash transfers are a way that we can alleviate poverty and have other beneficial effects. And the idea of basic income is that you get a cash transfer that you didn’t have to apply for or the application for it is fairly minimal. And that there’s no real rejection of people, so there isn’t a subjective process where you say this person should get this money and that person should not. Usually it’s basic income test of some kind. But basic income generally doesn’t have a rigorous application process it’s more of an automatic mechanism and the only real requirement is citizenship, so you’re a Canadian citizen, and therefore you’re entitled to these types of transfers.

And the other piece is that the money is no strings attached in the sense that no one is looking over your shoulder and checking your bank statement to see whether you spent too much on tuna and not enough on rent or vise versa. So, that’s the basic parameters of a basic income.

Doug Hoyes: So, in simple terms it could be a cheque or a bank transfer that goes to every Canadian of a set amount every month. And we’ll talk more about the specific advantages and disadvantages, obviously one of them being that it’s simple.

In your research paper you go through a whole bunch of different possible scenarious, because of course the devil’s in the details, as to how this would actually work. And you discuss two basic forms of basic income and then there’s kind of subcategories of them. So, I’d like you to give us a quick overview of each of those two. So, the first one is one size fits all approach, so how would that work?

David Macdonald: Yeah, so these are basically the extremes of basic income. There are infinite ways of structuring it in between but the two extremes are everybody gets the same amount. So, whether you’re rich or poor, whether you’re a child, a senior, an adult, it doesn’t make any difference. Everyone gets an identical cheque in the mail. And then you can say maybe that gets taxed back at the end of the year, something like that, that’s the one size fits all.

And then the other approach, the other extreme, is what could be called a negative income tax or more of a targeted program. And the basic incomes that we have today or the transfer programs that we have today, are almost all structured as negative. Well, in fact they are all structured as negative income tax. We used to have the universal childcare benefit, that I think would be more like the universal cheque in the mail to every, you know, it’s a per child amount, but that was cancelled in July.

And so, these are the two extremes, everyone gets the same amount or targeted approach where if you make nothing then you get the maximum amount and as you make more the benefit decreases so it’s somewhere in the middleclass the benefit completely tapers out and you don’t spend any money at the upper middleclass or the richest Canadians.

Doug Hoyes: And obviously there’s implications for the cost of that, which we’ll talk about as well. So, looking at this from a big picture point of view why are we thinking about basic income? What are the problems that we think we have that we think a basic income might go towards solving?

David Macdonald: Well, it’s actually not a new idea of transferring money to people in an attempt to reduce poverty as well as other beneficial effects. And in fact it was very much in vogue in the 1970s, 60s and 70s. And in Canada we actually ran a pilot project in Dawson Manitoba, which is a small town in Manitoba in the 1970s where a basic income transfer was put into effect.

Now it’s seen more traction in the last couple of years in large part due to its incorporation in election platforms. And when parties are elected then they start implementing pilot projects not full blown basic incomes but picking a particular town and saying okay, we’re going to make sure that there’s a basic income that everyone gets, a floor if you will on incomes. And so, in Ontario they are just now developing their pilot project, which will likely run for three or four years and they’ll pick a town somewhere in Ontario and say this town, everyone in that town is going to get a minimum income or basic income of whatever. And so the details are just being worked out now so there’ll be an important report that will be put out likely in the next month or so that will detail exactly what they want to do in the pilot projects in Ontario.

But again, this is not a new idea but it’s an idea that’s gained some traction in terms of its impact particularly on poverty reduction. So, poverty is just a line in the sand in essence, it’s a certain amount of income and if you’re below that income line then you’re considered low income and if you’re above that line then you’re not considered low income. And that’s how poverty is measured. And so, if poverty is just a measure of income then one of the ways you can increase income is by transferring money to people and therefore reducing the poverty rate as a result.

Doug Hoyes: And other than reducing poverty, what other positive potential benefits are there to a basic income or is that really the only major benefit there is?

David Macdonald: Well, it’s one of the more measurable ones. I think it’s a lot easier to measure. Certainly in the 1970s when pilot projects were occurring in Canada and the US, in Dawson Manitoba some of the results were that people were more likely to go back to school. So, instead of working, they’d go back to school. You saw in some sense, in some cases, reduced medical expenses, particularly improved mental health as people had more income and also a reduction in crime rates. And so there are also, in addition to reducing poverty, there are also other impacts.

And they’re a little harder to measure. And so some of the pilot projects that are planned, I mean particularly in Ontario will track things like health expenditures, incarceration rates, mental health, education rates and those sorts of things to see what other impacts a basic income might have.

Doug Hoyes: So, we can see a bunch of obvious advantages to a reduction in poverty, people more likely to go back to school, better education, crime goes down and so on. But there are I think two obvious disadvantages and presumably these are the criticisms that most people would level when you mention a basic income, number one, the disincentive to work and number two, the cost. So, can you give me your thoughts on each of those? So, disincentive to work, pretty easy to understand, well if the government’s going to send me a cheque for $1,500 a month and that’s enough to cover my rent and my groceries, why would I bother getting a job or if I maybe have two part-time jobs, why would I bother working at the second one? I don’t need it anymore. Is that a valid criticism?

David Macdonald: Yeah, I mean it’s worth pointing out that we have 33 basic incomes already. We don’t – this isn’t an idea that was an idea in the 70s and we never applied it. In fact all of the income transfer programs that we have outside of EI and social assistance are basic incomes already. And so, now they’re applied differently so if you’re a senior for instance you get substantially more than if you’re a single adult.

So, in Ontario for instance the basic income of the combined programs, so these 33 programs if you’re a single senior in Ontario, the floor in your income is $17,700. And so, you cannot make less than that in Ontario in essence as long as you’re filing your taxes and therefore you gain access to these programs. You don’t have to work, you don’t have to have done anything in particular, you don’t have to have paid into a particular pension plan. That is the floor in your income already in Ontario.

If we look at single adults in Ontario, the combined federal, provincial basic income programs would result in a basic income of $600 a year. So, that’s really very little. And if you have children then you gain access to programs like the Canada Child Benefit, which is basic income that’s, you know, has a starting amount and as you make more, then the benefit gets clawed back.

So, one of the big questions around basic incomes is how does an idea of a basic income fit in with the 33 that we already have? Do we want to change the 33 that we already have, do we want to add a 34th? Do we want to cancel the 33 that we have and replace it with a single basic income? That’s some of the things that the paper looks at.

Now back to your original question of cost and disincentive. Certainly one of the downsides of a basic income is that it costs money. If you’re going to transfer money to people well that money has to come from somewhere. So, the question is how can you do that most effectively in the sense that you’re not wasting money, you’re not spending more money than you need to in terms of reducing poverty and getting the other potential benefits, health, crime and so on? And I think what’s clear from the paper it’s very easy to design a basic income poorly such that it costs a lot of money and doesn’t have the impact that you might want it to on poverty reduction or has a very expensive impact on poverty reduction.

In terms of work disincentives, I think this is true to some degree. Although with the basic incomes that we have there’s such a disconnect between when you worked that extra amount of time and when your income might be effected. I think the disincentive is fairly limited. So, in most cases the basic incomes are structured such that for every new dollar that you make in earned income, you would lose a portion of the benefit. And so, usually that portion is under 50%. So, you make an extra dollar but you lose 50 cents on the benefits. So you’re still 50 cents better off and that’s more of the sort of high end is 50%. I don’t think you’d really want to go much higher than that because then I think you get into some disincentives as you say.

But most of the basic income programs at present have a lower claw back than that. And the other thing to remember of course is that the basic income that you get in this year is based on the amounts that you made in the last tax year. And so, if someone today say were to work an extra, you know, couple of shifts this week and make an extra 100 bucks.

Well, they wouldn’t actually see the impacts of that on their basic incomes for probably six months. Well, their taxes were filed, they went through the system, they got caught up in the basic income system and so you probably see that change in June. Well, that’s a pretty big delay and the change wouldn’t be dramatic. And so, I think that the work disincentive, yes absolutely if you go over a certain claw back I think it becomes an issue. But there’s such a time difference between you working an extra couple of shifts and your basic income changing that it’s not quite as important as people might think.

Doug Hoyes: Yeah and I guess they key point is this is not like unemployment insurance, or employment insurance as we call it now, where every week I submit my information and that effects what my employment insurance cheque is going to be next week. This is probably going to be done on an annual basis based on last year’s taxes, kind of like child tax credits are I guess, they change once a year. So, it’s not a day to day fluctuation. Now back to the issue of cost then so you said we currently have 33 different basic income support programs in Canada. Can you give me like two or three examples of what the big ones are?

David Macdonald: Sure. The big ones are the Canada Child Benefit, which goes to families with children. Old Age Security and the guaranteed income supplement, which are supports for low income seniors. And then sales tax credits, so the GST tax credit, the HST tax credit, the carbon tax credit in B.C. so, each one of those there’s a federal component to each one of those and in most cases there’s a provincial component to each one of those. So, the provinces themselves will have a program for low income seniors for instance in addition.

Doug Hoyes: Got you. So, we already have a bunch of these programs. So, if a basic income program, a universal basic income program was to come into affect let’s say in Ontario just as an example, you’ve got two choices. One choice is add it to what’s already there, the second choice would be to reduce or eliminate some of the things that are already there and use those savings to pay for some of the costs. I think you quote in your study, you know, if for example we were to leave everything the way it is and give everyone an extra thousand dollars you would need to raise the GST from I don’t know 5 to 9% or something. Am I quoting you correctly there as to what the cost would be to make an incremental change like that?

David Macdonald: Yeah, exactly. And so if you decided we need a 34th basic income on top of the 33 that we already have and that 34th income would be designed in such a way that everybody gets a thousand bucks in the mail, man, woman, child, rich, poor it doesn’t make any difference, everyone gets a thousand bucks. That would cost you about 29 billion after you clawed back, well, not clawed back, but after you tax that money at the high end, which is a fair amount of money. And so, you’d have to increase GST from 5 to 9% or you’d have to increase income taxes by a fifth to pay for that.

So, this is an example of one of the approaches to basic income that would cost a lot of money. You would reduce poverty rates by about two points from 11.7 to 9.7, so that’s positive, lifting about 700,000 people out of poverty. But it would be very expensive using this approach. And I mean it’s not hard to see why it’s expensive, you’re sending cheques to rich people that don’t need the money. So, you’re not getting poverty reduction by sending cheques to rick people. It’s simpler to be sure but that comes at a dramatic cost to treasury.

Doug Hoyes: So, final big picture question for you then, what’s the solution. So, if I was to give you a magic wand and say okay, you are now the Prime Minister, the Premier of the province, whatever and our goal is we want to reduce poverty, we also want some of these other benefits, you know, lower crime, some of the other advantages of a basic income but obviously we don’t have unlimited resources – this costs money. What would you do?

David Macdonald: Well, I think the most – I mean the paper looks at a bunch of different scenarios where you start cancelling programs that already exist. You cancel the basic income programs that are already exist, you cancel EI, you cancel social assistance. And whenever you start cancelling programs to fund a new basic income, you end up with winners and losers. And usually the losers are single senior women unfortunately because they have a fairly high basic income. And so if you start cancelling programs and moving that money to other places, those folks become losers. And I think that that’s going to be a pretty unpalatable political decision. So, I don’t think anyone’s going to cut transfers to single senior women.

And so, what I think is most likely is it will see some sort of 34th basic income on top of the 33 that we already have. And I think that in order to not have it be tremendously expensive, it will likely be targeted by the negative income tax approach, which is to say you set a floor so folks can’t work for ever reason, they don’t have any income, they make a minimum amount. And once they start working, that amount gets clawed back a bit, say 50 cents on the dollar or something like that. And that approach I think is the most likely that we’re going to see.

And what’s interesting is the different age groups see differential impacts and so particular for adults in their middle ages, 50 through 65, they don’t gain access anymore to the child benefits ’cause the children have moved away. Disability rates go through the roof for low income people in their 50s. So, people have worked hard jobs all their lives and they can’t work anymore for whatever reason or their spouse can’t work. And so you see very high disability rates. And those folks can’t get access to the senior’s benefits yet ’cause they’re not old enough. And so, that I think is a place where you’d see basic income be the most effective is for folks from 50 to 65 who are in low income, less effective for families with children and less effective for younger workers in part because they make too much and therefore you see a claw back on the basic income.

Doug Hoyes: One of the big advantages of a basic income if it could replace other programs is other programs that require a lot of follow up. Like E.I for example, you’ve got to look each week to see what your pay was to determine what your pay is going to be next week. That requires a lot of bureaucracy, a lot of costs. I think in your paper you say that some programs cost up to 10% of the money dispersed. So, for every dollar that gets disbursed, there’s 10 cents worth of administrative and bureaucratic costs. If you had a basic income where everyone gets the same cheque, there is almost no cost to that because well, if you’re a citizen here’s your cheque. We don’t have to look at any requirements.

So, by adding a 34th program don’t you lose the benefits of consolidating some of the programs that we have? But at the same time you’re adding more cost to it, doesn’t that make it perhaps politically impalpable to even do that?

David Macdonald: Well, the 33 basic incomes that exclude E.I and social assistance are very cheap to administer ’cause they’re just based on last year’s income. And so you create a 34th program that’s also based on last year’s income and it would be very cheap to administer ’cause there isn’t that up to date, you know, you don’t have to keep the record particularly up to date.

You’re absolutely right though that particularly social assistance and E.I have high management administrative costs that are around 10% of amounts dispersed. So, if you pay out $100 on social assistance it’s going to cost you $10 to administer that program in contrast to the basic incomes where I mean it essentially costs nothing, right?

And so, there is definitely an argument that we could save some of those costs if we replace social assistance or E.I with the basic income particularly those two pieces of it. The other 33 are pretty cheap to administer. And I think there’s some intuitive appeal to that particularly for social assistance. I mean caseworkers will go through your credit card statements and figure out if you spent too much on groceries this month and not enough on rent. I mean that happens.

And it costs a lot of money to hire the people that go through your credit card statements to make sure you didn’t spend too much on food. And that money could be potentially better spent on just supporting people and allowing them to make their own decisions. That’s the intuitive appeal of eliminating say social assistance and E.I and replacing it with basic income.

One of the challenges of course is that you do actually want a rapid response mechanism for social assistance and E.I. You don’t want to have to wait a year to get your E.I benefits. I mean you lost your job, right? You need income replacement not a year from now or a year and a half from now, you need it now. You need it a week or two after the end of employment. And same for social assistance, right? I mean if you for whatever reason your social assistance run out and you can’t work, you’re disabled, whatever the issue is, you can’t wait a year and a half for that money to start coming in, you need to have that money coming now.

And the more you want rapid response, well it’s going to cost money ’cause someone has to staff those phones to make sure that, you know, your proof of employment is coming in correctly and so on. And so, I think that you could probably save some money there by replacing those with a basic income. But it would certainly never be the same cost as a basic income that allows you to wait for a year and a half before it starts to fill in.

Doug Hoyes: And so, I guess the answer in part is we have to target the help where it’s needed most. I mean you identified the people aged 50 to 65 who are kind of in a grey zone. I mean once you’re 65 you become eligible for a lot of different things, OAS, GIS and so on. When you’re under the age of 50 you may still have children, you’re receiving child tax credits, child benefits and so on for them. But between 50 and 65 your health starts to fade but you’re not old enough to be getting the specific pensions perhaps so rather than a basic income that covers everybody, do we need things that are targeted towards the specific areas of needs so we do the most benefit but keep the costs under control? Is that a possible approach or is that really what we’re already doing?

David Macdonald: Yeah. Well in essence there isn’t anything that covers people from 50 to 65 except for the sales tax credits, which say in Ontario are worth about $600 a year. So, that’s a very, very minimal basic income. And that’s one of the groups, particularly single adults and couples without children that are not seniors. That’s really the area where we don’t have a lot of basic income support at present. And they would be the folks that would benefit most from a basic income. And so, if you were to target that age group, you’d probably get the biggest bang for your buck.

And back to your point, in essence the 33 basic incomes that we already have are targeted, they’re targeted by income for sure so as you make more you get less from the benefit. But they’re also targeted by age group so that it’s – so, seniors of instance we know that without the basic income programs for seniors that senior’s poverty rates would be dramatically higher and they were in Canada in the 70s, 60s and 70s prior to the implementation of some of the basic income programs.

And so, I think that it’s often seen, a basic income is often seen as a silver bullet to eliminating poverty and I think that hopefully this report points out that it can be very helpful for some groups but it’s not as useful for other groups, particularly young workers who have higher market incomes and therefore see a bigger claw back from it. And so, when we’re trying to address poverty, there isn’t a single answer, there are several answers, one of which is basic income for sure but others of which might involve better programs on the labour market side. So, things like, you know, lower youth unemployment, programs to drive up wages, higher minimal wages for instance. There’s a multiplicity of solutions to poverty not just a single one.

Doug Hoyes: So, thanks David, that’s a good summary point. Basic income is not a silver bullet. If it was that simple we would have done it a long time ago. David, thanks for being here today.

David Macdonald: Thanks for the call and hopefully we’ll talk again on it.

Doug Hoyes: So, what’s my take on basic income? I agree that poverty is a huge problem. I’m a Licensed Insolvency Trustee and my firm, Hoyes, Michalos & Associates does thousands of consumer proposals and bankruptcies for people who turn to debt to make ends meet and eventually found themselves in deeper trouble. We meet every day with people who got into debt because of an unexpected reduction in income. Sometimes this is due to medical issues that mean they were no longer able to work, sometimes it’s because their pension income just doesn’t go far enough.

However, for 37% of healthy working age Canadians, the main cause of insolvency is job related, either job loss or reduced income. There’s no doubt in my mind that a basic income could reduce the potential for some people to become insolvent. A basic income would be a form of insurance, lessening the need to turn to credit to pay for rent, buy food and to provide the basic necessities of life.

However, as we discussed with David Macdonald, the cost of the basic income program is a big issue. And since there is no consensus on how it would work, it’s impossible to determine the true cost. An underlying principle of the basic income approach is the redistribution of wealth by flowing funds, through the government, to those with low incomes.

While David pointed out the savings that could be achieved from the cancellation of existing support programs dispersed through federal, provincial and municipal governments, this is not enough to fully pay for the program. That means in all likelihood an increase in taxes.

But I also see the problems that high taxes cause people. In fact 42% of debtors owned a tax debt at the time of their filing, either a bankruptcy or a consumer proposal, with an average tax debt balance of almost $22,000. I’m not talking about the top 1% or the top one tenth of 1%, these are tax obligations of the average working Canadian, often a self-employed person, themselves only earning an average income. So, if we need to raise taxes to pay for a basic income, that may increase the number of people who end up going bankrupt due to unpaid taxes.

Do you see the problem? A basic income will keep some people out of bankruptcy, but if taxes go up it may push others into bankruptcy. There is no easy answer. I think with all problems it’s important to treat the underlying problem and not to treat the symptom of the problem.

Poverty is not one problem with one cause. There are many causes of poverty, which is why a one size fits all solution won’t work. The causes of poverty for a 25 year old are much different than for a 75 year old. I’m sure everyone listening to me today knows at least one hard working young person who works two part-time jobs. They get four hours at one job and then race across town to get four hours at their second job. They get in their eight hours but it takes 12 hours to do it because they’re back and forth on the bus four times a day. And if they don’t get called into work that day, they get nothing.

They need a full-time permanent job, not a series of part-time temporary jobs. The solution is that we need good jobs for our young people, that’s the real problem and that underlying problem won’t be solved with a guaranteed income.

The situation is different for a 75 year old experiencing poverty. They’re more likely to have physical challenges or be on a fixed income and perhaps unable to return to work. A good job won’t help them because they can’t do it. They need access to medical care and perhaps homecare, access to transportation services if they aren’t mobile and other solutions unique to seniors. A basic income won’t get them the medical care they need or other support services.

I’m not saying a basic income is a bad idea. My point is this, we as a society, need to determine our most pressing problems and then figure out what’s causing those problems. Then we need to find solutions to those problems.

A one size fits all solution like basic income maybe part of the answer but it’s not the entire answer. If one of the causes of youth unemployment and poverty is an education system that’s not working, the solution is not a basic income, the solution is to fix our education system. If inadequate pensions are a cause of poverty among seniors, the solution is not to treat the symptom by creating a basic income, the solution is to fix the pension system.

I’d like to end this podcast by giving you all of the answers to all of our problems but I can’t. These are complex issues and there are no easy solutions. Hopefully our discussion today makes us all think and that’s good. Let’s keep the discussion going because if we all put our heads together we can come up with solutions.

The post Basic Income. Is it a Silver Bullet for Poverty? appeared first on Hoyes, Michalos & Associates Inc..

Informing CPA Ontario of Your Bankruptcy

According to Section 8 of the CPA Ontario Regulation 4-3 Obligations and Standing, once you have filed with a Licensed Insolvency Trustee, you have 15 days to notify the Registrar, in writing, of:

1. Becoming a bankrupt
2. Making a proposal to creditors
3. Becoming the subject of a formal proceeding as an insolvent debtor; or
4. Having a business of which you are an owner placed under a receiving order, as defined in the Bankruptcy and Insolvency Act

You will have to include all and any documentation available related to the filing. You will also have to include all documents related to your financial circumstances, like income tax returns, financial statements, financial records, and a consent allowing CPA Ontario to directly access information and documents related to your filing from the licensed insolvency trustee, the superintendent in bankruptcy, or the official receiver.

How the Registrar Determines Your Standing

The Registrar will consider the reasons why you filed insolvency, your conduct as a Member, as well as, whether you are putting the interests of your client, employer or any other party affected by your bankruptcy filing at risk.

The Registrar will also look at the number and nature of your creditors, potential criminal liability, your current financial situation, the expected date of your discharge from bankruptcy, and whether you are able to perform your duties as a chartered professional accountant.

Given all the information and documentation provided, the Registrar can decide to:

1. Take no further action;
2. Require you to take part in one or more of the following:

• complete prescribed courses or examinations;
• work with an advisor, counsellor or tutor;
• complete a period of supervised practice or employment;
• restrict your practice or employment in a specified manner for a specified period of time;
• any other terms and conditions the Registrar deems appropriate; or

3. Suspend your membership until the fulfillment of terms and conditions imposed by the Registrar.

There is a lot of information for the Registrar to consider before making their decision and each situation is unique. If your bankruptcy is not the result of criminal activity or financial fraud, it’s more likely that you won’t face a suspension, but may be required to carry out one or more of the duties listed above.

For more detailed information on how bankruptcy will impact your professional designation, you can contact CPA Ontario directly.

If you are struggling to repay your unsecured debt, contact a Licensed Insolvency Trustee for a free consultation and review of your debt relief options.

The post Effects of Filing Bankruptcy or Consumer Proposal as an Accountant in Canada appeared first on Hoyes, Michalos & Associates Inc..