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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?


Anonymous said...

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.

Sunny said...

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.

Anonymous said...

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!

Anonymous said...

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

Sunny said...

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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