JB-  That was one of my questions for you – Are credit cards a bad thing?

DC-  I think that they’re abused so often, I would have to say in many instances, yes.  Again, a blanket answer is impossible, in that a lot of people use credit cards judiciously and they basically serve as an interest-free float, they use them, they pay them off every month.  That’s what I do.  I find from a convenience perspective they’re unbeatable.  I mean, I travel a tremendous amount and so to be able to use a credit card everywhere I go and then just pay it off and have it documented, etc. it’s a great asset and it’s a great deal for me.  But I think unfortunately a lot of people carry balances and you’re carrying them at extremely high interest rates, that’s problem number one.  That’s the problem that always gets the attention of the media, but there’s a second problem that’s as big.  People are much more inclined to buy things with a credit card than they would be if they had to pay cash.  So what’s already a problem – lack of self discipline – is compounded when people have credit cards.  And of course that’s something that the ATM has also done.  The ATM makes cash constantly available and therefore people are always able to go get more money and they spend it.  And you know, for years people have been saying, “You spend about as much as you have in your pocket” and so if people carry around less money they are less inclined to spend frivolously and make impulse purchases.  But nowadays people always have cash because they can always gain access to it.

JB-  Yeah, there are a lot of people these days who say, “I don’t carry cash anymore, I just have plastic”.

DC-  Exactly.

JB-  What do you do?

DC-  Well I’m kind of the opposite strangely.  I carry a fair amount of cash with me and I don’t have an ATM card.  And I don’t know anybody else in Canada that can say that.  I don’t use an ATM and I’ve never been to one in my life.  I still go to the bank and line up and go to the tellers and get cash out.  I don’t do it to introduce self restraint into my life because I’m pretty self disciplined anyway on that front.  Just out of habit I’ve never really felt a need.  And I do use my credit card when I travel, again, you have to when you travel, it’s the only convenient way to go.

JB-  Is that the secret then?  Keep it simple?

DC-  I think it is.  It’s funny because I’ve been asked a lot in financial planning magazines, like in the higher end financial publications, “Did you talk primarily about the simple things in the world of finance because that’s what you felt the average reader was able to pick up on?”  I said no.  And there’s some truth to that but I didn’t speak about the tricky things because they don’t work.  Things like fancy option strategies or tremendous leverage or doing all kinds of things with the new financial instruments, I could have explained those and I like to think I could have even demystified them, but they’re not effective.  The really good things in the world of finance are the straightforward things like staying away from debt, like starting when you’re young, like maximizing your RRSPs - all those types of things - shortening your amortization, pay yourself first.  They’re old fashioned, they’re trite, they’ve been often heard but they’re all so effective.  And I think that in my methods to just drive them home again and make people realize this stuff is not that challenging to understand BUT it is, I will admit, challenging to implement because again it requires restraint and that’s a very difficult thing.

JB-  So who is “The Wealthy Barber” for?  It’s considered a self help book.  Is it for someone who is in trouble managing their finances or would this work for, let’s say, an 18-year-old?

DC-  Yeah, I’ll be honest with you.  I wrote the book initially targeting the 20 to 45 market.  And I felt that blanket advice at that age was quite appropriate.  We all had a lot of the same objectives, the same opportunities, and it was tough to cover off every scenario.  Strangely and surprisingly the book did extremely well with older people as well.  They bought the book, in some instances, to give to adult-aged kids, but a lot of them bought it to read what they did wrong, to read what they did right, try to learn a little bit.  It’s challenging trying to write a “Wealthy Barber”-like book for the older set to teach them how to get through retirement planning because the blanket advice is not appropriate.  Every situation varies enough that that kind of format would probably not be effective.  But I think it’s for everybody.  I think everybody at a relatively young age needs some financial guidance.  Our education system has not addressed it very aggressively.  And there’s very few people I meet at age 27 or 33 that are well versed in most financial opportunities.  There are some, by the way, and for those types of people I don’t think “The Wealthy Barber” is a particularly appropriate book.  It may confirm some of the things they are already doing properly, but I think if you’ve taken a lot of finance courses in university and you’ve studied personal finance, I don’t think “The Wealthy Barber” is going to help you too, too much.