By 2 Cents on December 6th, 2010 | Category: Debt |  When solving problems, dig at the roots instead of just hacking at the leaves.
~Anthony J. D’Angelo, The College Blue Book
Update: This article was included in the December 13th, 2010 edition of the Carnival of Personal Finance hosted by Mighty Bargain Hunter. Thanks!
There’s little debate that the financial problems we face, both collectively in terms of the economy, and individually in terms of our personal finances, are rooted in debt. We have major balance sheet issues at the public, private and sovereign level. The markets have rebounded significantly, but the real economy has demonstrated a much more muted recovery, and unemployment is still unacceptably high.
Earlier in the year, the debate over economic solutions was focused on the austerity vs. stimulus meme. Austerians wanted severe fiscal cutbacks while Keynesians argued for more stimulus money. The Austerians pointed out that taking on more [...]
Read on and enjoy … How to Solve a Debt Problem
By 2 Cents on October 27th, 2010 | Category: Debt |  The only man who sticks closer to you in adversity than a friend is a creditor.
~Author Unknown
Update: This article was included in the Carnival of Personal Finance #281 posted at Consumerism Commentary. Thanks!
Last week Gail Vaz-Oxlade wrote a really interesting article about The New TD Collateral Mortgage. I was very surprised that I had not heard more about this given that it seems like a pretty big deal to me. As of October 18, 2010, TD will register all new mortgages as collateral mortgages rather than conventional mortgages.
If you’re asking yourself what in the world a collateral mortgage is, you’re not alone. I didn’t know either. Gail goes on to explain it very well in the article. The mortgages most of us have in Canada are conventional mortgages. We have a set amount of principal that we’re borrowing, [...]
Read on and enjoy … Mixed Messages from TD Bank
By 2 Cents on May 13th, 2010 | Category: Debt | Who recalls when folks got along without something if it cost too much?
~ Kin Hubbard
Update: This article is included in the Carnival of Personal Finance #257 – Canadian Bank Notes Edition posted at Canadian Finance Blog. Thanks!
The sovereign debt crisis has been front and centre lately in light of the recent market earthquakes emanating from the European Union. Sunday’s EU bailout seems to have settled markets for now. But the problems have not gone away and if you look at the U.S. Debt Clock , the U.K. Debt Clock, or even the Canadian Debt Clock, you’ll notice that they are all still ticking higher by the second. There is even a debt clock that contends that the true U.S. debt is more than 6 times the reported number if [...]
Read on and enjoy … Debt Clock: What Does Yours Look Like?
By 2 Cents on May 11th, 2010 | Category: Debt | It doesn’t matter how much milk you spill, just so long as you don’t lose the cow.
~ Mark Guilbeau
“Fair is foul and foul is fair.” (Macbeth, Witches, Act I, scene i) The EU is the latest hero in the bailout bonanza. A paltry trillion dollars bought a rip-roaring short-covering rally on stock markets world wide yesterday. So why don’t I feel all better?
Once again, we are perpetuating a cycle that’s running in reverse. In a capitalist system, we’re supposed to reward success and let the failures fail. To use the forest fire analogy that I’ve used before in my discussion of the CMHC and Fannie Mae, we’re still holding up the dead wood and choking out new, healthy growth. If we continue to reward failure, failure is what we’ll continue to get.
Welcome to the Money Pit
“Welcome back my [...]
Read on and enjoy … Financial Spilled Milk: Macbeth Meets Ponzi
By 2 Cents on April 2nd, 2010 | Category: Debt | People are living longer than ever before, a phenomenon undoubtedly made necessary by the 30-year mortgage.
~ Doug Larson
Update: This article was included in the Carnival of Financial Planning #136 posted at Bargaineering. Thanks!
On Monday, several Canadian banks boosted their fixed mortgage rates by 60 basis points (.60%). That’s a pretty big hike all at once. The Globe and Mail ran the following headline: Mortgage Rate Boost Signals Rock Bottom Era Is Over. Can’t you just hear all those folks who just signed up for variable rate mortgages scurrying to lock in fixed rates?
We had to renew our mortgage a while ago when rates were higher and currently have a 5-year 5.49% rate. Unfortunately, (or fortunately?) it’s not as easy to renegotiate mortgages in Canada as it is in the U.S., so we have tried to do [...]
Read on and enjoy … Why Are Mortgage Rates Rising?
By 2 Cents on March 25th, 2010 | Category: Credit Cards | The following is a guest post by Kevin Fleming. Kevin runs CreditShout, a personal finance blog dedicated to educating people on how to manage their finances and reviewing cash back credit cards.
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First I would like to start off by saying that credit cards are only worth using if they are used responsibly. The methods I describe below will only work if you pay off your balance in full each month. Never carry a balance. You will end up paying more in interest than you will ever earn in rewards. If you pay off your balance in full each month, you pay nothing in interest which allows you to really reap the rewards that some of these cards offer.
With that said, there are three keys to effectively using your cash back cards. The first involves choosing a cash back card that rewards your specific buying behaviors. [...]
Read on and enjoy … How to Effectively Use Cash Back Credit Cards and Maximize Rewards
By 2 Cents on February 23rd, 2010 | Category: Debt | No man’s credit is as good as his money.
~ E.W. Howe
Update: This post is included in the March 1st, 2010 Carnival of Debt Reduction. Thank you!
When we take on debt, we’re essentially borrowing from our future earnings in order to have the things we want right now. There’s a cost for that. It’s called interest and it can exact quite a toll on the balance sheet. I’m always writing about how you need to do the math in order to make good financial decisions, so I thought I would give a few examples here of how much various types of debt can cost over time.
In general, there are 3 main types of personal debt that we tend to incur: mortgage, vehicle, and credit card loans. Each carries with it a unique cost structure that’s worth looking at. The chart [...]
Read on and enjoy … The Cost of Debt: Doing the Math
By 2 Cents on February 22nd, 2010 | Category: Debt | He looks the whole world in the face for he owes not any man.
~ Henry Wadsworth Longfellow
I’ve been writing a lot about sovereign debt and the dangers it poses to the global economy lately. Debt in general is a frequent topic in the personal finance blogosphere and it is often painted as the enemy – a nefarious villain, evil incarnate.
I happen to agree with the contingent that says that there is no such thing as good debt. That doesn’t mean you can’t ever have debt. It just means that you need to control it so that it can’t control you.
Debt, by its very definition, is negative. It means below par, under water, less than zero. On your balance sheet, it’s a liability. Liability is defined as “the state of being legally obliged and responsible” or [...]
Read on and enjoy … The Lexicon of Debt: Is Debt Evil?
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