Help through a financial crisis
Some people are addicted to alcohol, others to tobacco or gambling.
Then, there’s the group Brian Betz refers to as “Christmasaholics” — those who disregard their budgets as Dec. 25 approaches and spend beyond their means on gifts and festive entertainment. When the new year arrives, they often find themselves overwhelmed by debt.
“You don’t have to spend a lot of money to have a great Christmas,” said Betz, a credit counsellor with Money Mentors.
Instead, he said, you can resist the marketing machine and buy less-expensive gifts or make presents for friends and family.
This is the kind of advice Betz and his counterparts at Money Mentors, an Alberta not-for-profit credit counselling agency, offers to clients. They also help with retirement-planning, improving financial literacy and in many situations coaching people through financial crises.
One of the tools they use is the government of Alberta’s orderly payment of debts program, of which Money Mentors is the exclusive provider.
Through it, arrangements are made for people to repay their creditors over time. Legal proceedings are halted, outstanding debt is subject to a single low interest rate and the adverse impact on credit ratings is reduced.
Betz divides Money Mentors’ services into two broad categories: proactive and reactive. The former includes financial coaching and planning that helps avoid money problems; the latter, assistance to help people emerge from debt issues after they arise.
The agency was created in 1997 to administer the province’s orderly payment of debts program after it was privatized. Initially operating as Credit Counselling Services of Alberta, it soon became financially self-sufficient and about five years ago changed its name to Money Mentors to better reflect its services.
Betz said Money Mentors’ costs are funded by creditors, which pay the agency a percentage of the money they recover. Creditors who use Money Mentors’ services may be charged a fee, but this is refunded to those who complete the orderly payment of debts program.
“So for all intents and purposes, it will end up costing them nothing to use our services,” he said.
The vast majority of Money Mentors’ clients are already in financial trouble and in need of help, said Betz. In addition to excess Christmas spending, a variety of factors can contribute to this situation: the loss of a job, family breakup, an accident, or accumulated student loans, among others.
But, he added, the root cause is often a lack of planning.
“You’ve probably heard that people put more effort into planning their annual vacation than they do to manage their finances. We think that is an unfortunate statistic and something we’re trying to correct.
“We always encourage people to develop a spending plan or a budget. Get it down on paper so you know how much you’re spending and live within your means.”
Betz acknowledged that the growing debt load of Albertans and Canadians has made them more vulnerable to financial problems.
“People, because of the low interest rates, are addicted to debt.”
Although the number of people using Money Mentors’ services last year was typical, the situation appears to be changing, said Betz.
“This year has been extremely busy.”
Money Mentors has offices in Red Deer, Calgary, Edmonton, Grand Prairie, Lethbridge and Medicine Hat, with Calgary its corporate head office. There is no charge for the initial discussion with a credit counsellor, which can take place in person or by telephone.
Betz said Money Mentors can’t resolve every client’s financial woes. Where appropriate, it will refer them to other resources, like a bankruptcy trustee.
“We’re here to help them understand what their options are and make an informed choice as to which option is best for them.”
Additional information about Money Mentors can be found online at www.moneymentors.ca.