A Story of Great Interest

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I owe a stupid amount of money. We’ve talked about this before and things are even more grim now, as I still appear to be spending more than I’m earning. There are a few reasons for this – namely that I keep my business finances entirely separate from my personal finances, and though I’m busier than ever, not a lot of money from my business makes it into my personal chequing account since I reinvest it in advertising. For instance, I’m currently producing my own video ad and that’s running up quite the tab. C’est la vie.

The point is I’m $22,000 in the hole because I’m the Dumb Ben, but this turned into a great opportunity to research interest rates and get debt savvy. I’d also like to point out my $22,000-in-debt is a little different than $22,000-in-debt for someone who still has Rent. I pay something in the neighbourhood of $100 per month as “rent” on my Debt. I’m pretty okay with that, but obviously, if you’re still paying Vancouverite prices on Rent, $22,000-in-debt is a bit of an emergency. Get on that. As an aside, I know I’m a bit of a financial shitshow. For one, if I don’t have Rent, why am I so poor with money management that I have Debt? I’m a mess. Anyway.

There’s always room for improvement in managing your interest rates. I’m sure many of you reading this carry some sort of balance on a 19.99% credit card. This is a huge no-no. Every $1,000 you have to pay interest on costs you $200/year with no added benefit. There are credit lines for a reason, and as you’ll soon see, even other credit cards can help you manage your Debt.

According to my bank, I owe $7,023.58. There’s $5,000 on a 9.68% credit line, $35.75 on a 7.69% RBC RateAdvantage Visa, and $1,987.83 on a 19.99% Visa Infinite Avion. Obviously, I’ll be moving my Avion debt to my super awesome RateAdvantage – get this! – and I’ll be popping into my bank this week to see if I can do the same for my credit line. If that all goes according to plan, my monthly interest payments are $45. Not bad at all for owing $7,000. Still carrying most of your Debt on a 19.99% credit card? Apply for a credit line. Ask about their low interest credit cards and avoid the ones with high annual fees. You could find something as low as my 7.69% RateAdvantage Visa. You won’t know unless you try. (Annual fee: $39.)

So what about the other debt? I also owe $15,511.47 at 5% interest, which hits me for $64.63 every month. Where’d I get such an awesome interest rate, you ask? I’ll tell you: my brother. Somehow, at 22, he has more money than I do. He’s got $50,000 in investments, but they’re silly investments so I’m trying to help him out. Instead of the 1.x% bond he’s currently investing in, which doesn’t even keep up with Canada’s 2% inflation, I offered him 5% with the condition that I pay it all off by July 22, 2018 – my 30th birthday. If I’m short and desperate, I’ll pull from my RRSP. I have $13,000+ in there, and I know that’s not a lot, but I never plan to Retire. I think I’m covered.

In managing your Debt, you have more resources than you realize. There are credit lines, low interest credit cards, even family members who’d love to help you out. The best part about utilizing people like your parents or siblings is it keeps your money in the family. Just make sure you actually pay people back. Done carelessly, this is the kind of shit that can tear a family apart. Not everyone is as awesome as my brother.

Total monthly damage for borrowing $22,535.05: $109.64. I’m not proud of that number, but let’s see what it would be if I were a total idiot borrowing at 19.99%: monthly payments of $375.40. I save $3,189.12/year just by doing a little research and shuffling some debt around creatively.

Is $109.64/month worth it to borrow that amount? I’m actually a Yes on this. Borrowing that money allowed me to buy the Canon 1D X I run my business on. Borrowing that money allowed me to strengthen my relationships and make new ones. Borrowing that money allowed me to have a shitload of fun. There’s no doubt I’ll pay it back before I turn 30 either. I just need to put $800+ toward it every month and now that I know it’s a goal, I’ll do my best not to backslide.

I really picked a shitty time to start this blog though, eh? Sure, let’s talk about saving money during my three slowest and spendiest months of the year! Jesus Christ.