Tag: Debt Posts

While many people advocate going to school and getting an education, the reality is that education costs are more expensive than most people realize. Canada thankfully provides reasonably priced educations compared to the rest of the world, but it is far from free. Given that I grew up in Chilliwack, and that I had to move out to Vancouver to attend UBC, I spent approximately $11,000 per 8-month period, which included housing on the UBC campus along with a university food program (which tasted fairly similar to prison food, I imagine). Of those costs, approximately $3,000 went towards tuition, $1,000 for books, and the rest towards accommodation, clothes and food. Given that the average engineering summer job back then paid around $2,000 per month, it was essentially impossible to pay for a full year of school by financing it with the money you made during the summers, at least in […]

The senate passed the deal to raise the debt ceiling today, which means the United States can pay their bills and not default. But truthfully, that’s probably the worse thing that could have happened, since the US has delayed dealing with some very hard problems. First, let me comment on the ratings agencies. Right after a deal was announced, two of the three major rating agencies reaffirmed the United State’s AAA credit rating. These are the same ratings agencies that also gave AAA ratings to the credit default swaps and other securities that were the underpinnings for the 2007-2008 financial crisis. Saying the United States is in good fiscal shape is like saying Icarus was the world’s best astronaut. S&P hasn’t weighed in on their rating yet, but I suspect they’ll give a AAA rating as well. It doesn’t really matter – either way the markets have reacted negatively and […]

I’m scheduling this post for when I’m out tomorrow for a while, so it’s possible the US may find some common ground on the current US debt negotiations. I don’t it though. Right now things aren’t looking very good for the United States, and the time is almost out where a solution can be reached and implemented before the debt ceiling expires. Negotiations continue to stall, and both sides seem unwilling to deal with some of the harder issues, like coming up with a long term financial strategy that will reduce the deficit and the debt. I actually thought there was only about a 10% chance that the US might default previously, but I’d say we’re probably looking at 50/50 right now. Either way, I think the ratings agencies should severely punish the US for the state it is in. What use is there in waiting until after a default […]

It’s no secret that most of the organized governments in the world are essentially broke. The current debt to GDP ratio in the United States is almost 100%, a fairly incredible number that continues to rise. That number alone indicates that the US is in poor financial shape, and it’s not even that accurate a number. For example, the US has a number of off budget items that are technically debt as well – all the Freddy May and Fannie Mac purchases, Social Security (the US has been taking the money every year and basically putting an IOU in its place) and Medicare. If you factor in all of those items, realistically the debt-to-GDP ratio of the US is more like 500%. The United States only has a brief amount of time to get their financial house in order. Already the debt load in the United States is crippling the […]

One of the things I’ve come to realize over the last year is that in most cases, debt is horrible thing. Granted, many businesses look towards debt as a way to fund capital purchases in their beginning stages, and I have no problem with small business loans. But all the other debt that people are addicted to is ultimately bad for the economy in general. There are many people who believe that the reason housing prices are skyrocketing in North America, as well as education costs, is due to the availability of cheap credit. I’m one of those people. Stated another way, housing and education costs would be forced to come down if people couldn’t take out massive loans in order to fund them. It seems almost self-evident if you think about it – a product or a service that people can’t afford to pay for must eventually come down […]

The following graph formed the basis for Glenn Beck’s video talking about hyperinflation, but I thought I would repost it here. Inflation, by definition, is the expansion of the monetary base in a country. While conventionally most people associate rising prices (as measured by the consumer price index – CPI) as inflation, that’s just the symptom of inflation — the root cause in the expansion of the monetary supply. Most people concede that price increases tend to lag inflation by a year or two. So any inflation of the money supply today probably won’t be felt in terms of prices for another year or so. This graph represents the United States M0 money supply – basically the amount of bills in circulation plus the amounts in reserve. You can clearly see the inflationary effect of Bush and Obama’s stimulus packages at the end. It’s also worth noting that up until […]

While I’m not officially debt free yet, I’m close enough that I’m going to do a post about it. Strangely enough, making those calls today to pay off my loans felt a bit anti-climactic. I’m sure it’ll sink in over the next few days, but right now it doesn’t really feel that much different. It’s amazing how debt changes your life though. Had I been debt free years ago, I probably would have quit my job in Vancouver and branched out on my own then. But unfortunately, when you have nearly $1,000 worth of monthly debt payments, you really can’t afford to take that much risk. The only way I was able to leave my full-time job early and branch out in January was because I essentially worked two jobs for the previous six months, banking nearly $10k in the process. That gave me enough runway to ramp things up […]

Placed call #2 a few seconds ago. My BC student loan of $682.47 is now officially gone too, freeing up a whopping $30 a month back into my pockets. Happy trails, student loan. I have one last student loan remaining, valued at $1,630. I’ll try to knock it off sometime soon as well.

I’ve been waiting for a rather big cheque to finish clearing in my account this past week. I woke up this morning, logged into my online banking, and noticed it had cleared, so I decided I would finally make the call I have waited almost ten years to make, and pay off my first student loan. At one point I had nearly $40,000 in student loans, something that seems almost insurmountable when you finish school. But unfortunately, that is the high price of an education nowadays, and banks sure don’t seem to mind capitalizing on that. Back in March I paid the final $8,000 of my car, and today I placed the call to pay off the final $9,348.45 of my Royal Bank student loan. So assuming the transaction occurs tomorrow, I’ll be free of that massive beast once and for all sometime tomorrow. I was actually a bit surprised […]

I just wrote myself a $12,000 cheque, which represents money saved up on various web projects over the last year or so. Since leaving Vancouver, I’ve been living fairly frugally (in fact, I probably have only paid myself about 25% of what I was making in Vancouver), mainly because I wanted to once and for all be done with my student loans and finally be debt free. In March, I dropped the last $8,000 on my car, finally becoming the official owner of a 2006 Mazda 3 Sport. Given that the car I had before that was a totally junky 1993 Toyota Tercel, I’m obviously pretty proud of myself for buying a new car and paying it off 12 months early. My car really matches my personality — it’s always ready for an adventure. So tonight I’m going to stroll down to the bank and make a big deposit. Once […]