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Tuesday, December 21, 2010

Debt situation: How I plan to save 184.11$ in annual interest money

I am not going to be debt free anytime soon. But I can certainly make things happen to save an extra 167.65$ in interest money! I won't close the door to a 167.65$ saving, even if it's only 167.65$. But saving more than 150$ in interest money is interesting enough - and that's the exact reason for this post - because saving money is interesting right?

Remember my debt situation? 47 221.68 in debt and 2 497.30$ in annual interest money paid on the 47 221.68$ debt? Not that I am looking forward anytime soon to decrease that 47 221.68$ debt of mine, but I am certainly willing to see the amount of the interest money decrease, even just a bit.

How do I plan to proceed? By using up all up 30% of the margin money that I have available at TD Waterhouse.

I currently used 2 000$ of my margin money to participate in the initial public offering of Horizons Gold Yield Fund (HGY.UN). I also use 4 985.74$ to pay off my 8.75% TD Canada Trust line of credit. And now, I am going to use 6096.10$ of the 30% left available to pay on my 10 000$ line of credit at 7.27%!

Here's how my debt situation will look after:

Line of credit: 9 498.17$ at a low interest rate of 4.75% (RRSP credit line rates) = 451.16$ in annual interest
Line of credit: 4 900$ at a low interest rate of 4% (credit line rates) = 196$ in annual interest
7 946.31$ on a TD Canada Trust credit card at a low interest rate of 4.9% ending in April 2011 (result of a credit card balance transfer)
= 389.37$ in annual interest
Student loan: 7 891.46$ a low interest rate loan at 5.50% (student loan rate) = 436.87$ in annual interest
Line of credit: 3 903.90$ at 7.27% (credit line rates) = 283.81$ in annual interest
13 081.84$ at a low interest rates of 4.25% (margin money coming from TD Water house): = 555.98$ in annual interest

TOTAL: 47 221.68$
TOTAL in annual interest: 2 313.19$

Before, the annual interest rate was of 2 497.30$. At 2 313.19$, this allow me to save 184.11$. Little savings are better than no savings at all. Don't you think so?

5 comments:

  1. Hi Sunny...I love your blog. Its the first thing I think of reading when I want to research financial stuff. I want to say that you are my inspiration for opening up a TD Waterhouse trading account. I havent done any yet, cause I am scared of losing money. Sunny, pl. be careful of using your margin account in full..thought you didn't want to use it all. All the best.

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  2. Hi there! Margin is interesting, but I won't use it in full because I understand the risk associate with it. If the stock market crash like back in 2008, I will be stuck. That's why I set myself the limit of 30% of usage on the margin money, not a penny more, not a penny less. Not like I have millions hide somewhere that could help in case I need to pay off my margin and all my debt... Thanks for the kind advice. Very important - especially for small investors - not use the margin in full.

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  3. This is such a great resource that you are providing and you give it away for free. I enjoy seeing websites that understand the value of providing a prime resource for free. I truly loved reading your post. Thanks!

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  4. Happy Holidays!

    By the way with the New Year coming up are you planning on adding a TFSA to your portfolio? Would like to see you talk about your thoughts on TFSAs in your blog.

    - EG

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  5. Happy holidays! I am currently doing the Boxing Day!!!! Your idea is interesting. I did some stuff with my TFSA lately, you might like to read previous post. Put I will get back to it. Nice post idea.

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