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Monday, May 3, 2010

My debt situation on date of May 3, 2010

Credit line 1: 10 000$ at 4.75%
Student loan debt: 8 309.46$ at 4.75%
Credit card 1: 8 001.66 at 4.9% for 6 months (until October 2010)
Credit line 2: 5 000$ at 3.5%
Credit line 3: 4 880.89$ at 8%
Credit card 2: 1 283.63$ at 3.9% ending… on May 6, 2010!
TOTAL: 37 475.64$

Dealing with credit card balance transfer can be kind of… confusing. One of my credit card balance transfer offer is ending… on May 6, 2010. I taught I would have until the end of the month to figure out something…. But not, after verification with CIBC Visa… Oups!

It’s my mistake but no problem. I currently hold more than 37 000$ in debts. Time have come to pay off some debts, don’t you think so. I party hard with my money, made investment crazy and so. It was fun. But now I am looking to clear off the 1 283.63$ balance I hold on the credit card number 2. On May 6, I should be able to make a payment of 700$ on that debt. After what, I will only have left 583.63$ to pay. So it shouldn’t be too bad. I won’t be able to invest again in June just like I wanted. But in a way, paying off some debts is not a bad thing. In the upcoming months, a paying debt-investing-paying debt-investing scheme might turn out to be a better sequence than just investing-investing-investing and only paying the minimum on debt.

I had been paying the minimum on debt because the dividends I earn largely cover the interest gain on the money I borrowed. But I guess I am at the point where some debts need to be paid off.

First step is to pay off the 1 283.63$. After what, I will have to look after the 8 001.66$ at 4.9% that is ending on October 2010. What am I going to do?

Ok, I know, I previously say I was going to use margin to pay off debt at a cheaper interest rate. The interest rate for T D Waterhouse margin is 3.5%. 3.5% is a very low interest rate and seem very appealing at first. But margin is kind of complicated and I just don’t like margin at all. It would stress me too much to have to deal with margin. NOW I understand why Derek Foster suggested not to use margin. It’s too complicated stuff for small people like myself. Margin is mostly made for super-rich, those who can afford risk. I can’t. And margin is too complicated. Anyhow, at this time, I am not ready for margin. Not at all. Margin = frightening and scary! For now, I prefer to keep things simple.

So here’s the plan, I am going to pay off the 1 283.63$ credit card debt. Until September 2010, I will make the minimum payment on my debts. And by September, I am going to ask for a credit line. Where? I don’t know yet. But thing is, I cannot place my request now because my RSP credit line is recent from March 2010 and also, I just applied for the 3 000$ credit card limit increase at TD Visa. I cannot ask for too much credit at the same time either so I guess that waiting for 5 months before asking for any other credit is a good option, from my point of view. And if my credit line request is being decline than, I may turn to margin as only left alternative.

The 1.99% credit card balance transfer I received for one year is tempting, but its involve opening new credit card which, after the first year, will turn into the regular 19% or so interest rate… I don’t think it really worth it.

Today was my first day ever without my metro pass… and I survive to it! It was raining this morning but not that much. I guess I am about 40 minutes walking distance from work, not more. I don’t know for sure because I want pay my credit card and stuff among the way. And when I came back home the weather was just amazing. Walking on a daily basis will just make a lot of good to me. As much as paying off some debt.


Anonymous said...

I use margin. It's not complicated at all. You just have to sign up for an account and then you can buy stocks on margin. It's like a credit card, and the interest is very low! As long as he dividends cover the interest payment, you are good. But they might not give you a margin account because you have too much debt. You can try.

Sunny said...

I am getting confuse easily. To try ot not to try margin... I may give it a try to pay off my 5 000$ credit line at 8% interest. But that might be all. Still thinking. TD had been very good with me so far. They usually never refused me anything. :) We'll see how it goes.


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