Keep Calm and Pay Off Your Debt and #MoneyTalk
The Bank of Canada upped their key overnight rate by 50% this week! How will consumers possibly withstand this huge jump? Yes, that is how I interpret a lot of the talking heads reactions. If the ¼% increase of this week is impacting your life, you are in some serious trouble financially. Most of the experts are more concerned about the return to less opportunistic rates. It is time to pay off your debt, or figure out where you go from here.
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I did like one talking head that pointed out that the passed two rate drops were both ¼%, however the banks both time only lowered rates by 0.15%, yet most banks have already jumped their “prime” rate by at least ¼% in reaction. Some banks had already raised their rates, and this is why I own shares in banks (horrible to customers, but good investment). Someone else pointed out that the interest rate on Savings Accounts doesn’t appear to be rising, at some banks.
Remember that other lenders may jump on board as well and raise their rates. Can your car loan or lease go up? You might want to check the fine print, but your HELOC and unsecured lines of credit are going up.
Is this the cold shower the economy needs to cool things down? No, not yet, if rates return to around 4% then we will see housing markets going into the crapper, but that could be where we are headed. The economy has been stimulated for a long time, time to calm down.
Keep calm and pay off your debts, as I have said so many times before.
What if this is actually similar to the 70’s, wonder what today’s 20 year olds would do if their mortgages were 15% annually, and inflation was running at 10% or higher? Yes, I am just stirring the pot, but still an interesting question.
Is Money too Tight to Mention ? Not yet, but it might head there soon. Still one of my favourite tunes from Simply Red.
Allow me to give an alternate perspective on raising interest rates. Increased interest rates will finally teach a generation about the importance of paying down debt. How does anyone know about the power of compound interest, when rates stay at 2% (a doubling period of 36 years)?
The other interesting topic that I haven’t heard discussed is what does this mean to the biggest debtors, the governments? How will all level of Governments “balance” their budgets with higher interest rates? Higher taxes, is my guess, but I am not an economist.
Writings Past Little While
Haven’t been really writing much, but I have been rewriting and updating a great deal of my back catalogue (well worth checking out). Check out my Twitter feed if you wish to see some of the best of, but I did write about Unlocking Your Phone, What Comes Next? Waiting until December 1st is the first thing, unless you go to the Apple store and buy your phone Unlocked.
I am still astounded that Bell (another terrible to customers, but good investment) hasn’t simple foregone their profits on unlocking, but that is why I am not in marketing.
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