The Glass Is Half Full Talk Show

Crushing Debt- Why You Should Pay Off Your Debt

• Richard Killen / David Trahair • Season 1 • Episode 3

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In this episode of The Glass Is Half Full, Richard Killen a Licensed Insolvency Trustee interviews David Trahair, Chartered Professional Accountant, a personal finance writer and trainer. He is also an author of six books on personal financial issues including three national bestsellers. He was a columnist for CPA Magazine from 2014 to 2018.

In the interview, they cover the following:

-          The type of debt that gets Canadians in financial trouble

-          Why 44% of Canadians do not pay off their credit card each month!

-          Credit card Interest Compounding Explained

-          What happens when I retire if I have no savings?

-          I’m in financial trouble, what can I do to improve my situation?

-          Cutting expenses- Do I Really need a car? 

-          Rewards on Credit Cards- Are they worth it?

-          Does it make sense to use a balance transfer to pay off a credit card?

-          Home Equity Line Of Credit (HELOC) and Reverse Mortgages Explained 

 

Contacts:
 David Trahair
 CPA, Writer and Author
 (416) 723-9075
info@trahair.com
https://trahair.com
Personal finance resources and online training to help anyone to take control and achieve their own economic dreams.


 Richard Killen & Associates Ltd Scarborough West
 https://www.g.page/killenscarboroughwest
 Licensed Insolvency Trustee and Licensed Consumer Proposal Administrator
 2130 Lawrence Ave, E  #402, Scarborough, ON M1R 3A6, Canada
 Tel: +1 416-285-9511
 https://rkillen.ca
 Personal bankruptcies, consumer proposals and debt counselling. 
 Contact us for a fresh start (888) 545-5365
 This may be the most stress-relieving call you will ever make!

Richard Killen and Associates have 10 locations across the Greater Toronto Area.

 

The Glass Is Half Full

To be a guest on the show, please visit https://theglassishalffull.tv/be-a-guest/

Richard Killen:

Welcome to The Glass Is Half Full Talk Show. Let's face it. Life can be tough in many ways. Here on the glass is half full. We focus on how life is tough financially. Dealing with these financial realities can be a challenge. Essentially, we have to find ways to do more with less, less money, that is. The show is focused on helping you discover ways to achieve that goal. Even if you don't have a lot of money to work with. We'll be meeting people from many different walks of life. They'll share their stories and expertise, looking to do more with less and maintain a positive attitude while you're doing it. Welcome to the glass is half full. Now let's join Richard and his guests in the studio. Today we're joined by David Trahair. David Trahair is a Chartered Professional Accountant(CPA, CA), and a personal finance writer, trainer and e-Learning content developer. He is also an author of six books on personal financial issues including three national bestsellers. He was a columnist for CPA Magazine from 2014 to 2018. In his book Crushing Debt: Why Canadians Should Drop Everything and Pay Off Debt outlines the evils of debt and how easy it is for debt to spiral out of control with examples of real-life stories of debt disasters. If you are a Canadian who is already struggling with debt, Crushing Debt will motivate you to face your financial problems and will show you step-by-step the most appropriate solution to getting out of your personal debt hell. Filled with proven advice, Crushing Debt is a call to action on an urgent and debilitating problem for far too many Canadians. In your book, Crushing Debt, you say that not all debt is the same. Can you provide us with an overview of that and perhaps just maybe pay some special attention to the type of debt that gets more Canadians in such financial trouble?

David Trahair:

Sure. Well there's two basic types- there's installment debt and revolving debt. Installment debt is any debt that requires a partial repayment of principal. So, a mortgage is an example of installment debt, a car loan is an example of an installment debt and what that means is that if you just stick to the payment schedule you automatically have paid off the debt at the end of the term for a car loan and the end of the amortization period for a mortgage. So, by definition, you're forced to pay it down. The other type is revolving.

Richard Killen:

This includes both principle and interest, and everything gets paid off?

David Trahair:

That’s correct, both principal and interest. So you're paying the cost of borrowing as well as the original amount that you borrowed. Revolving debt is different than that. Revolving debt just requires you to pay usually a small amount every month to cover the interest. So, for example, a line of credit, even if it's a home equity line of credit, you get a certain amount of credit that you can borrow and all you have to do is make the monthly payments or whatever the payment terms are and you're good. If you stay below the total amount you can borrow, you're not required to pay down the principal. Credit cards are another example. You can borrow up to your credit limit and then you only have to pay the minimum payments every month and in some cases that's not even enough to cover the interest, let alone pay down the actual debt. So, I believe that the real problem is with the ease of availability of this revolving debt, the ease of availability of getting credit cards, for example, because people aren't forced to pay it off, they end up just trying to cover the interest, just paying the minimum payments, bumping up to that credit limit and then just staying there. I think that's the main distinction is those two types- the ease of availability of the revolving credit is the big problem today as I see it.

Richard Killen:

You mentioned in your book, the concept of“borrowing binge,” it’s the way you refer to it. It would appear to me that the revolving credit as you described it, it lends itself more to this idea of a borrowing binge than fix credit.

David Trahair:

For sure. For sure, because it’s essentially cheaper to get. You think about your cash flow you're allowed to go and buy something that you don't have the money to afford to buy and then all you have to pay is a small monthly amount thereafter. if you bought a car or a house, your payments are much larger because a good chunk of that is the principal that you're required to pay back. The other interesting thing I find is that this concept of good debt versus bad debt. I guess it's similar to the revolving and installment in some ways. I mean, good debt is generally seen as installment debt, for example, a reasonable mortgage to buy a home is usually considered good debt because you're acquiring something that hopefully is going to appreciate in value, so you're making a good investment as long as you can afford it. Another example of good debt is often student loans, you know, you're borrowing to get educated so you can make more money in the future. Bad debt often is revolving debt. So you get a credit card, you know you can't afford to pay it back, and you go on a great vacation down the Caribbean that you want to go on but you can't afford to pay off that credit card when you come back. It's expensive revolving credit, without any associated assets, no investment that you've got, it's just-- just fun.

Richard Killen:

You mentioned in your book that the Canadian Bankers Association did a survey that indicated that 56% of people using credit cards pay them off monthly, leaving 44% that don't. Which means they're carrying debt from one month to the next, right?Do these numbers surprise you in any way?

David Trahair:

Yes, I would say they surprised me. I would have thought fewer people pay it off. The problem with that statistic from Canadian Bankers Association, which is the spokespeople for the big banks, is that it's based on survey data. So, they've surveyed people and asked them whether they pay off their credit cards. So, you must take it with a grain of salt. What I would like to see is, I would like to see the banks’ general ledgers showing me what the receivables are, and the banks will obviously know- it's their business.

Richard Killen:

You want to see what produced those numbers?

David Trahair:

Exactly I want to see the raw data. How many credit card revolvers are there? But if we assume that number is right, then 44 percent is a terrible number. I mean that's approaching half the population can't afford to pay off their credit cards. You know I've been writing about and thinking about personal finance for almost a couple of decades now and I can't think of a worse investment than revolving credit card debt. It’s often at 20 percent or even more than that, it’s the worst investment you could make because that interest is compounding against it.

Richard Killen:

If it's if it is debt. In other words, if it is not paid off.

David Trahair:

Correct.

Richard Killen:

If it's paid off at the end of every month, most credit cards don't pay any interest at all.

David Trahair:

That's right. I mean, you know, if you can afford to pay it off every month, the credit card is a great thing. You buy something, you don't have to pay for it for three weeks, there's no interest charges. But if you can't afford to pay it off, the table is totally flipped into, I would say, one of the worst investments you could possibly make. Great investment for the financial institution that you owe the credit card debt to because they're recording interest receivable at 20% or more and compounded usually monthly. So compounding is great for them, it's great for the investor- the person who's advancing the money, but it works against you when you owe.

Richard Killen:

Perhaps because I'm a simple country boy and all that, you could explain the idea of compounding to me.

David Trahair:

Sure. I investigated this for an article I wrote for CPA magazine a couple of years ago and basically what it means is, say you've got a 24% interest rate on your credit card. Many credit cards use an average daily value method of calculating the interest. What they'll do is, at the beginning of this credit card period, say you owed$1,000, then they literally calculate how much you owe them every day during that period. So, you buy something for a hundred bucks then your balance goes up to eleven hundred, you make a payment, it goes down. So, they get the average daily balance for that month, then they multiply by the twenty four percent interest rate per year, times whatever the number of days and the period is, say, thirty thousand.

Richard Killen:

Essentially a month's worth if you're right, two percent.

David Trahair:

Yeah, two percent or thirty divided by three hundred and sixty-five and they add that to the amount you owe at the end of the month. So essentially this method means that interest is compounding monthly, because the interest gets added to the balance and in that next month it's included in the balance that you're paying further interest.

Richard Killen:

So this becomes the famous story of paying interest on interest.

David Trahair:

It’s interest on interest. It’s terrible when you owe, it's great when you invest. Compounding interest is great when you invest in, like a GIC. In fact, you want a more frequent compounding period when you invest, but when you're on the other side, it reverses. That's the worst thing.

Richard Killen:

The GIC is where the bank's paying you rather than you paying the bank.

David Trahair:

Exactly right.

Richard Killen:

Many of the people listening to this might very well be baby boomers like me and are more than a little interested in what happens with retirement. If during your working life, you're in the habit and you actually over that time spend more than you've made, what's the effect on retirement?

David Trahair:

Well the projection for retirement for people who are spending more than they make while they're still working is a horrible thing to consider because if- I mean personal finances are pretty simple, right? You've got your take-home pay, that's the money you get to put in your bank, and then you've got your spending. So, you're offside if your spending is greater than your take-home pay and that results in credit card debt. If you're in that situation and then you think about when your income gets cut off, i.e. when you retire, your income is going to go down significantly, often spending doesn't automatically go down significantly when you retire. Many people continue to spend a similar amount after they retire or it might even go down a little bit, so if you haven't saved anything then really you're banking on the two main pension plans in Canada- Canada Pension Plan and old age security. So, let's throw some numbers out right, Canada Pension Plan pays about thirteen thousand dollars a year if you've paid it enough over your max in your life.

Richard Killen:

The maximum.

David Trahair:

Right. But most Canadians come nowhere near that. The average amount for people who turn 65 in 2019, beginning of 2019, was only about 7,000 from Canada Pension Plan. People can't bank on the max because they might not have paid in enough for the required number of years. Let's say seven thousand dollars from CPP. Old age security, six hundred and seven bucks a month, right now, about seven thousand a year, so an individual must live on thirteen hundred a month? Yes, about fourteen thousand a year combined CPP average and old age security. If it’s a couple you double that. If you haven't saved anything else you got to live off that, okay, and most people, it's insufficient, it's not enough money.

Richard Killen:

So, the part-time job at Walmart.

David Trahair:

then that's when you ended up having to go back to work even if you didn't want to. Um, so I mean that's why I think people like you and I need to try and educate people about the dangers of spending more than they make now, uh, and try and bring in how bad this is going to be in the future. If they don't get things back on track,

Richard Killen:

it's very hard for us to truly imagine the future that's the problem. Or make it real.

David Trahair:

That's the problem. And if we don't, then I suppose it's very hard to overcome. They had the habits of a lifetime. That's right. I see this, I see this as you probably, as you probably understand, understanding my business, I see a lot people coming in to see us in their seventies and eighties even. And it's largely because their lifestyle hasn't changed. They've been able to change their lifestyle that much. Sometimes it's, I find is beyond their control. It's a little hair going on there. There's all kinds of family demands and things like that. That's still happened to people in the spread of the fact that they're now senior citizens. But yeah, but if the habits had been different earlier, they might be, that's a finisher. You know, it's uh, it's very much a personal thing. I like to say that, you know, we, we all lie on this big scale. We're either very cheap and frugal. Uh, the other end of the spectrum is those that spend a lot of money. So all of us lie somewhere on this scale, like any other Belker exactly like a bell curve. So, you know, I think the best thing we can hope for is some sort of happy middle ground because the people, the ultra frugal people who never spend a dime, never borrow, don't have kids cause it too expensive, don't go on vacations like in a dye with a multimillion dollar given I'm not here. I got two kids. You know, what's, what's the point of that life? That's too extreme. But this end of the scale, which I used to think was really an American problem. It's not as, as you probably know better than me, the lots of Canadians that are spenders. Um, and I think, let's call it a universal problem. Okay. That universal problem. So I think the best we can do is try and get these spenders to loosen up a bit and try and move up the scale closer to to this. And they don't have to become this. Maybe mean tighten up a bit. I guess tighten a bit with it. With the finances. Exactly. It's very, very difficult to do. It is, I know it's difficult. We're bombarded with everything and hardly anybody is bombarding us with the idea of saving money. No, no. I mean it is keeping up with the Joneses, advertising this, you know, social media I think is the worst thing ever invented almost for personal finance because you see this ideal life of all these people who are perfect and rich and can afford all these things. And you try and do that by borrowing. So David, if a person is in financial trouble, what steps can you take to turn the situation around? Well, the first thing I recommend is that the person, or maybe it's a family we're talking about, it start to track where their money is currently going. In my opinion, whatever you track tends to improve. Like for example, uh, your, your Fitbit or your or your, uh, uh, fitness tracking watch. If you're aiming for 10,000 steps in a day, are much more likely to do that because you know how many you've done. Similar thing with personal finances, uh, because we aren't required to do this, there's no government authority requiring us to track our personal spending. We've got to track our business expenses for tax purposes, but not personal spending because we don't have to do it. Most people don't. And I think that's a big mistake. I think if people just took the time to track even for a few weeks or a one month period, ideally you do it on ongoing every month, but just for one month track where the money in your family went. Uh, now this is harder for those people with multiple accounts, multiple credit cards, multiple bank accounts. That makes it very difficult because you've got so many different sources that you have to summarize. Uh, but, and a lot of times I recommend people put them together. That's right. You want a comprehensive summary, you know, don't just want what you spent cash on, but what, what did you spend with your credit cards, your bank accounts and cash. Um, and I know it's labor intensive and most your viewers aren't, uh, accountants, but that information is golden because that's your personal fingerprint. That's, that's very personal to you or whoever is doing the tracking. And I think that's step number one to try and convince people to sort of tighten up, right? Because if you see where the money's going, then you'll know, okay, here's the big money drains. Then the next time it comes to spend that it might twig you to say, Oh, actually that's going in this category. This is an area we should cut back. So, so personal financial tracking, whether it's doing it manually, if you're lucky enough to have a computer with spreadsheets, maybe download your banking information. There's a website called mint.com that I have no affiliation with, uh, owned by Intuit where you link your bank cards and your credit and it does the tracking for you. Any method you can use to get a summary of where your money's been going I think is step number one.

Richard Killen:

So essentially what in doing that you're, you're making it real for yourself. Right? Exactly, exactly. It's not some numbers to, a lot of people probably are just that numbers. Yeah, yeah, yeah. They become real when you translate the number into a large coffee at Tim Horton's or something like that. Yeah.

David Trahair:

And, and you know, you know, I'm all for cutting out the small things, but Rudy, if you want to make significant progress, it's the big things that you should really be thinking about. If you can cut them back. Um, for example, those people that have a house with a mortgage, you know, it might make sense to consult a mortgage broker to try and get a better mortgage deal the next time when your mortgage gets renewed. Um, you know, think about the big expenses. Think seriously about your car strategy, right? Cars are huge cash pigs for most people, whether you buy or lease, they're going to suck money out of your pocket for the rest of your time that you own that car. So think seriously about the car that you're going to get. Do you need a car? Can you, can you use the alternatives, ride sharing, things like that. Um, so yeah, I'm all for thinking about the small things, but personal, financial tracking or detailing your spending, we'll show you where the big opportunities are.

Richard Killen:

I think, don't you think that, um, for a lot of people, perhaps a lot of, a lot of our viewers here, um, things, the, the, the concept of, for instance, do I need a car? Yeah. That's not something they're going to ask themselves. And, and, and in a, in a real way, I think I understand this, okay. If, if you've, you've got to get to work and you gotta go, you gotta get there at seven 30 in the morning. Yeah. Um, I'm not saying it can't be done by bus or anything like that, but, uh, the realities, you know, if you've got kids and sometimes just doing the shopping and things like that, you may not need a, uh, you know, Mercedes-Benz to do it. But um, yes to say, do I need a car? But then most people are going to come away saying, yeah, I do. Yeah, no feelings downtown and everything is, you know, generally footwork. If you're living the center of a city, that's the only dessert. Often a strong argument because of the cost of maintaining it. But if you're in the semi suburbs or suburbs and all that, that having a car is almost a necessity.

David Trahair:

That's right. But then it becomes, okay, well what car am I going to get? I think that that's where a lot of people I think get into trouble. They need a car and no questions. Right? Then it becomes, well, how are they going to buy that car? Most people don't have$25,000 whatever's sitting around. So it's either a car loan to buy it or leasing a, and I think, you know, I deal with this in one of my other books, the car lease versus buy decision leasing is not necessarily bad. It's just more complicated than buying. There's more factors that you need to consider. I think the problem that people get into with leasing is if they go through the calculation, they say, okay, I can afford a car with a car loan of say$450 a month and I'm going to pay that car loan off over four years. Keep the car for eight years. They get for payment for years. Brilliant. So they don't go and lease that same car for say$300 a month. They go and lease a more expensive car for, for what they can afford to pay for four months and then sentence themselves at least payments for the rest of their life. That's what I think is leasing a bad name. Uh, but yeah, no, no doubt about the fact that, uh, for many people the car is a necessity. Uh, but it is a big item. If they track their spending and all the costs associated with, with owning and maintaining and running a car, oil, gas maintenance, insurance, it's often a big chunk of cash for most people. And the bigger the car, the bigger the cash out. It certainly isn't one of the major items in there in a family budget, a monthly budget. Um, yeah. One of the things you hear about, just segue after something else heard for a minute. Um, the idea of a reward card or reward cards will serve him. You have some thoughts on that? Yeah. Well basically for non credit card revolvers, for people who pay off their credit cards every month, then as a myriad of options that a cashback card travel card and you might as well get the car that's the best for you. Uh, use the rewards, right? It doesn't cost you anything because you're paying off that balance. But the, the value of a rewards card is often around 1% of the amount that you spend for a credit card revolver that is paying interest at 20% or more. That's a terrible trade off. Okay. So my suggestion for credit card revolvers, those that can't afford to pay off the credit cards is get rid of any kind of, uh, you know, gold card or any kind of benefit card. Call the bank up and say, replace my, my gold card with a base card. No bells and whistles. Often the interest rates half or less, it often is. Yeah. Uh, because you know, you're getting tricked essentially by thinking you're getting all these rewards, but there you're accepting the idea that the interest rates are higher. Yes, exactly. Probably not paying any attention to it. Probably not, but a, but if you sat down and did a pure mathematical analysis, a rewards card where you, where you have to pay them the 20% of the terrible investment, this doesn't make any sense now that maximum compute does, it does not compute. No. No. How about, the other thing was we hear a lot of, and see some of them, certainly my business is the balance transfer offers. Yeah. A balance transfer offer. And the thing with respect to that is it's a very competitive market. These deals are always changing, but a balance transfer offer will come from another credit card company. You might get junk mail from your credit card company asking you to transfer balances from another credit card. And essentially what the new company will be doing is saying, look, you owe$10,000 in your credit card. If you transfer that to us, we'll charge you 0% for six months. Sometimes it's better 12 months, sometimes it's 2%. Um, so you immediately reduce the interest that you're paying. Say it used to be 20% on the, on the computer previous credit card down to three years, 0%. The problem is that period expires. And that's why these other credit card companies are offering that to the person because they know the person's unlikely to change their, their, uh, attributes change their ways, their habits. Right? Exactly. So after that six month period, that credit card company is going to be the one that's charging 24%. That's why they will be willing to take that financial hit of offering them this seemingly great deal.

Richard Killen:

Is it, um, we just hit on something there? Yeah. The idea of getting into that rut. The habits. No, no. Nothing. Not that so much. But, um, I've had my, I haven't had, I have had the same car and home insurer for the last 52 years. I think I'm in a rut. Well, maybe we're shopping around one. So have you worked yet? But I have a tendency not to be interested in shopping around. Okay. Reasonably satisfied with the, with everything. I don't think I'm overpaying. I may be, I don't know. But um, you become, um, certain amount of inertia sets in certain, you know, it's human nature. Same thing must happen with credit cards. Right. And this is why the credit card company, you can afford to offer six months, no interest. Right. Because once you're there for six months, I'm not going to move. That's right.

David Trahair:

Yeah. Because I mean, life is busy. People have kids to raise and the drive and everybody all over the place going grocery shopping and most people at the end of the day, there'd be, I don't want to sit down in front of a computer and, and search for different credit card options or whatever it is. And that's the advantage the financial institutions have is this inertia among consumers.

Richard Killen:

Sneaky devils. Well they know how to make money, right? Yes. Yeah, they do. Yep. I like the liquor to hear your views on even the is um, how do you pronounce it? He lock the new home equity loan home equity line of credit. Line of credit in this case. Yeah.

David Trahair:

They are becoming very, very popular. Uh, essentially it means if you, if you own a house that's worth this and you have a mortgage of about this amount, there's room that you could borrow a home equity line of credit. And because the financial institution is lending you money and they have a claim on your house, if you, the interest rate is lower. Okay. Then a regular unsecured line of credit. So this is almost irresistible for many Canadians, obviously because the housing market's been doing pretty well. They've got room they borrow for who knows what, a house renovations, but maybe trips.

Richard Killen:

It seems to me to be very attractive to the senior citizen types like me.

David Trahair:

Well, for anybody with cash flow issues, it's very directed

Richard Killen:

and it seems to me with the, as you, as you get up in years that maybe you want to take those trips, that you've never had a chance to take them on that, right?

David Trahair:

Yeah. Yeah. Well this brings up the whole area of reverse reverse mortgages. Yeah. Right. We're, uh, which is the same thing, isn't it? Well, it is. It's not typically, it's not technically a home equity line of credit. It's a different product. The problem is that's very expensive. The interest rates are high. There's many fees you have to pay and there's hardly, there's no competition. It's the home equity home equity bank, I think it is, um, is the only one that offers a reverse mortgage. So you can't shop around. Uh, so the problem is you can, while it's attractive to get that money up front, they're charging you a higher amount of interest so that when you move or pass away that that reverse mortgage is often a very high balance. So it's a very ineffective way or an expensive way to get cash out. It's much better to apply for a standard home equity line of credit at a much lower interest rate. And again, this gets into your credit score and end your income and all that

Richard Killen:

you run across people beyond the age of 65, we'll say, who likely had retired or about to retire or whatnot. Uh, and certainly their, uh, their income is going to be heavily, heavily based on, um, on the, what do you call it, the income? Well, no pensions, you know, and they call that the superannuation in, um, the, these, um, these people seem to have a great deal of difficulty in getting, um, any kind of credit really, even with equity in a home. Have you ended up?

David Trahair:

Uh, yes, I know because the banks have their checklists and their ratios to look at with respect to your, uh, the income usually according to your, uh, your a tax return, right? You go to conform to these ratios. So I mean, if we, if we can recommend to people, I recommend to people even before they retire wildly, I still have the job is the best time to apply for a home equity line of credit, then that is much easier because as you say, you go into retirement, your income goes down. You might not be eligible for to

Richard Killen:

it than that though. Um, there's there, there's the, the negative side of lending, right? And not every loan will work. It's work, work out the way it was intended to, for sure. People were running into problems and all that. And the lender very often has to take action to recover, recover his money, right. Which will take the form of a collection calls and lawsuits and things like that and negative stuff. Right. You know, this is what I see every day, right. People coming to me when these things are happening. Um, and one of the things that I've seen is the difficulty people have had to solve their, their problem through some form of consolidation and whatnot because now they're on these, they're on the fixed income pensions and creditors are very reluctant to lend money to somebody with only that kind of income because that kind of income can't be ceased. Gotcha. Okay. That makes sense. And I'm probably not something that you see all that much at your end of all of this, but no, but it does affect how people might look in a home at a home equity loan type of thing or a reverse mortgage or something. They may be the only place they can get my yes. Reverse mortgage or even though it's expensive and there's many fees, if it means being able to afford groceries, then no for it. Right. Or that trip to Spain perhaps. Okay. Um, David, thank you very, very much. It's been very, very informative. And, um, I'd like to remind everybody that, uh, you can get much more of this. You can find out all about David's other books as well as, um, was that when again, uh, crushing debt, crushing debt, which you didn't explain to me, are we crushing the debt or is debt crushing? You can read it both ways. So it depends who you are, whether it gets crushing you or I'm telling you in the book how to crush your debt. A lot of double entendre in that. I'm sure the rest of the book is just as good. Yeah. Also, um, you, you, uh, you operate a blog. Yeah. I have a website. It's a Traer, T R a and then hair.com. I never talk about heritage, but anyway, thank you very, very much for, uh, for all the information you've imparted through us. And well, thank you. Thank you.

Speaker 4:

[inaudible].