A saga where I rant about loans and debt

Denise - you won't read this. It's sooooooo over your three paragraph limit. ;-)

So yes, I've been thinking at lot about money and DEBT lately. lol It makes me laugh to write DEBT. In one of the personal finance books I have it says that when you are making file folders you should mark them "Student Loan DEBT", "Credit Card DEBT". It makes me laugh.

Anyway, yes. Debt. I have it. I have lots of it. Most of it is student loans. They are a supreme pain in the ass (oh the rants that I have...) but in truth, probably the best interest rate I'll ever have on any loans (prime + 2.5% which at the moment is equal to 7.5%). I have three separate student loans. The government changed the student loan program part way through my degree. Actually I did have 4 student loans. One was with my hometown's credit union. I hated them. I did my best not to deal with them. But my last year of university they were the *only* institution that I could go through. It wasn't a huge loan, only about $3800 I think. I paid it off in just 1.5 years. Which is actually pretty good considering I was not making a lot of money at the time. The only reason I was able to pay it off so quickly is because in my job we received work bonuses of a few thousand dollars twice a year. I once was able to put $2000 on it at once. That was a fun cheque to write (but at the same time depressing because most other people used their bonus for fun stuff, sigh). And I was soooo happy to get rid of that loan. The loan officer was incompetent. No seriously, the branch manager actually had to call me and apologize for her fuck ups. And I'm not the only person that had problems with her. I made my last payment on that loan December 2004. Good way to end the year.

My other loans are more substantial. I called all three institutions (no I can't consolidate) and got my balances as of today. It's a bit scary but I was pretty sure I knew how much they were. I was close. I was $500 under in my estimate for the NSLC loan and $350 over in my CIBC estimate. It almost balances out. I was only off by $150. Which considering how much we're talking about isn't too much. I knew my RBC loan because I can see when I log into my bank account.

So here are the numbers (scary!):
RBC - $17,090.26
NSLC - $11, 473.69
CIBC - $10, 659.32

Total: $39,223.27


Between the three of these I'm gaining interest of a rate of about $7 per day. That's about $210 a month. It's $2555 per year. Interest. Bah! I figured it out today. If prime stays at it's current rate and my payments stay the same I'm only going to make a dent of $32oo in total on the principal of these loans. Again, OUCH!

(Although this is a good time to point out that I now have a new job and for once in my life - my annual salary more than my debt. But it's a contract and it runs out in July. Cross your fingers for me. Word through the grapevine is that most contracts are being made permanent. And to my former bosses who told me I'd never make more money than they were paying me - hahahaha. Proved YOU wrong!)

(And another note - I never did have a line of credit. Of course, with that much student loan debt, no one will now give me a loan of credit like they might have when I was in university which would allow me to manage the credit card debt (see way below) much better.)

Ok right, back to the not so good paying job that I had. Because it really didn't pay that well and I could not afford to make all my student loan payments. I have just started making payments on all of them and that amount would have been equal to 42% of my take home pay. And I still had to eat, pay rent and other bills. It just wasn't happening. No I did not default on my loans. The Canada Student Loan Program has this wonderful life-saving program called the Interest Relief Program. It's for people like me who did not make enough money to make payments on their loans. Basically the gov't covers your interest payments so that your loans don't *increase* and you are not obligated to make any payments on the principal at that time (although it would be the smart thing to do if you can - I think I did once). It saved my ass. Many people use it when they, you know, have kids and stuff. I won't be able to. Not that I plan to have kids. Kids are SCARY and as such, not on my life list of priorities (surprisingly my mom agrees with this and is encouraging me not to have children - perhaps this says something about me???).

After I paid off the horrible credit union loan I was able to start actually making payments on something else. I decided to focus on the CIBC loan for two reasons. First, it was the next smallest. Second, my RBC loan is tied to my NSLC loan and interest relief has to be approved through and applied to the NSLC loan before it can be applied to anything else. And when it's applied to the NSLC loan it's automatically applied to the RBC loan. Make sense? Good.

But at first I couldn't afford to make full payments on the CIBC loan. But I didn't want to use up even *more* interest relief. But hey, there was another option for me! I could make interest only payments. Now interest only payments suck. There's no ifs, ands or buts about it. Money comes out of your bank account every month but your loan debt stays the same (it's kinda like a Hotel California-type thing). It's depressing. BUT it showed the bank that I was trying. AND it was important to me that I was making *some* payment. I didn't like being on interest relief. I don't like having all this debt hanging over me. I hate it actually. So for about a year I made interest only payments. Now, in THEORY I could have gone on interest relief and then made that payment manually every month and then it would have applied to the principal. Yes, that would have been smart. But you see, I'm smarter because I know myself. I can't make these payments online and I knew there was no way I would have hauled my butt to the bank every month to make a deposit. Because I didn't HAVE to. So yes, while perhaps not the most financially smart option, it was the one that worked best for ME. But sometime in the last year, forgive me for not remembering when, I started making FULL PAYMENTS on this. Yay!

Then last month was the first month that I began making FULL PAYMENTS on all my loans. It's ok because I can afford it. It's a change having hundreds of dollars due every month and it kinda sucks but I can afford it. The only slight issue was that I wanted to change my NSLC payment from the first of the month (rent and RBC loan also due) to the middle of the month (CIBC loan and other lesser bills due). So I had to make an NSLC payment for Dec 1 and then again for Dec 15. It kinda sucked but I could swing it. It helped that December was one of those rare 3 pay period months. So now I'm making payments on all of them. Yay!

But not so YAY! Unfortunately I also have credit card debt. Yes! I carry a balance on my credit card. Very easy for you to turn up your nose but hear me out. You don't have to tell me all the reasons that this is bad. I know them all. I don't have a line of credit. And in case you weren't paying attention above - I didn't used to make a lot of money. My regular paycheck did exactly cover things like eye exams (no insurance at that job either). And then I moved in February to a new province. Oh and I was unemployed for 6 months. Get the point??? Good.

It's not insane credit card debt. Not like some people I've heard of. Far less than what the average American has in credit card debt (which is about $8000). I haven't heard any stats for Canadians so I don't know how I compare to my fellow countrymen, errr countrypeople. In total it's about $2500. Not horrible, but not great either considering that year ago it was under $2000 (about $1800 I think - relocating to a new province and city is expensive!). A year ago I had hoped that I would be credit card debt free by the end of this year. I don't think that's going to happen. I'm hoping to be free on at least one of my cards...hoping. I have a few plans in mind. I do get my internet expenses covered through work so when I get checks back most of that cash can be used towards it (some cash will be coming out of the next one for my passport application). Also, I should get a work bonus next month. I don't know how much it will be. Whatever amount it is, it will be deposited right into my savings account until after I file my taxes. It's my first year filing in this province and I was on unemployment for 6 months and I've been told that messes up your taxes. However I did have one month's worth of work AND one of those lovely bonus cheques from my last job and that was in a province with higher tax rates. I may be ok, I may not. If it turns out that I am ok then I'll take that money and plunk it on the bigger balance credit card (yes I know that you are supposed to pay off the smaller ones first but the bigger balance also has the higher interest rate).

This is a freaking novel so I'm stopping now. Although I could rant on about all this for a good deal yet. I'm sure I'll be back. lol Although I'd be willing to bet that no one reads this from start to finish. Except maybe Ilan cause Ilan's like that.