Credit Canada

Finance Minister Jim Flaherty's new rules for credit card companies are too little, too late for Richard Scott.

The Scarborough food service manager has already racked up $40,000 in debt on 13 credit cards that were practically flung his way with no questions asked.

The proposed minimum 21-day interest-free period on all new transactions won't help him, nor will new monthly statements that must show the decades it will take to pay off your balance if you only make the minimum payments.

"The bottom line is this is one small step for financial literacy and we have a long way to go," says Laurie Campbell, executive director of Credit Canada. "We have to do so much more."

Last year, her non-profit credit counselling service assisted 60,000 Torontonians drowning in debt, and they have already seen a whopping 30% increase this year.

Scott and his wife are among them.

Credit is like crack and no amount of federal fiddling will cure the addiction, he says, unless you go cold turkey. And that's what they have finally done.

"We've lived so high on the hog," Scott says with a sigh.

He traces his credit troubles back to 14 years ago when he and his wife moved from their small town outside Cobourg into his stepdaughter's home in Toronto.

"Once you hit the big city, people get excited by shopping and dining and theatre and people get caught up in that," says Scott, 40.

"It's very easy to get credit cards and once they see action on it, it goes from a $1,200 limit to $1,600 very easily and it snowballs and you can always convince yourself that you need something. It's a very long merry-go-round until you find yourself at the end of your rope."

There's not a theatrical show that they didn't see; no fine restaurant where they didn't dine.

He once dropped $400 on a lavish dinner for two at the King Edward Hotel -- a princely sum for anyone, but especially for a couple whose combined income was barely $55,000.

With his wife in the travel business, they splurged on discounted cruises to the Caribbean and even on the maiden voyage of the Queen Mary II. They outfitted their home with fine china and silver, Persian rugs and Victorian furniture. They paid for it all by shuffling their growing deck of credit cards, borrowing an advance from one to pay off the minimum balance from the other, all the while, racking up a higher and higher debt load.

"We've had a hell of a good life," Scott says. "But a hamster on a wheel eventually dies off. We're really tired of the merry-go-round."

Falling further and further behind, the day of reckoning came a few months ago when all their cards were maxed out, their Visa alone had an outstanding $28,000 balance and they realized they'd had enough of following the easy credit road.

CREDIT COUNSELLOR

They looked in the phone book for debt help and landed with a counsellor from Credit Canada. They worked on a budget they can now afford, worked out a repayment schedule with most of their creditors and starting last month began a single $900-a-month payment. He figures it will take them four years to finally emerge from under their debt of conspicuous consumption.

His 57-year-old wife just lost her job and his own company is precarious, but he remains remarkably optimistic about their financial future. Part of the reason, he says, is that he has cut up all their plastic money.

"I don't think they're at fault," he says of the credit card companies. "If you're an alcoholic and someone dangles a drink in front of you, you have to have the willpower to say, 'No.' "

That said, he believes the plastic pushers in our economy make it far too easy to sign up for yet another credit card most can ill afford.

"They send you e-mails where you're approved instantly," Scott complains. "It's too much of a temptation for a lot of people."

Campbell of Credit Canada says too many of their clients simply lack basic money management skills.

She'd like to see funding go toward improving "financial literacy" -- starting with mandatory courses in high schools to teach the fundamentals of budgets, mortgages and borrowing.

"They really don't understand how to use credit cards," she says. "A Vanier Institute study on the state of family finances found debt levels are at a dangerous state in Canada. It's quite frightening."

It's a house of cards that Scott no longer calls home.

"I just wish a lot of people would realize it's very easy to get trapped," he says. "You don't need a $5,000 television. People need to live within their means and sometimes you need to crash and wake up. It's a hell of a good feeling to have no credit cards in your wallet. Our grandparents did it. For me, I've never had more peace of mind than I do now."

*Reproduced with permission - Sun Media Corp.