It’s been close to a year since I last posted on this blog. Without getting into too much detail; lots of life changes and a lack of motivation were at play. To be honest, I had accomplished a lot of what I had set out to in my two years of blogging, and I wasn’t going to force content.
However, this morning after reading an article on CBC something ignited in me that needed to be released. The article is based on a report from TransUnion (credit monitoring group) that claimed a million Canadians couldn’t afford a 1% increase in interest rates…
Really? The straw that breaks the camel’s back is shockingly lite.
To put this into context a 1% increase would mean an additional $50 monthly payment for 40% of borrowers in Canada that use a variable rate. It’s possible that close to one million people in Canada couldn’t afford this additional $50 monthly payment and would have to slash expenditures, or risk not being able to pay certain debts.
Perhaps the irony in all of this is interest rates have been at historic lows for the last few years. With lower interest rates resulting in lower interest, shouldn’t we be better off?! Lower interest rates have actually resulted in higher debt levels, which to be fair, is the intended impact of the government when lowering interest rates (increase spending in the economy).
So, yes, part of this blame can be put on government policy, but the ultimate responsibility rests on each individual.
Live Long, and Cheaply
Want to know who’s really not sweating rising interest rates? Homeless people!
Their financial conscience is as clean as my colon after a glass of milk (FYI – I’m lactose intolerant). I’m sure the million Canadians mentioned above would kill for a fresh start without the massive house and even larger mortgage. In fact, that’s exactly what happened in the US during the financial crisis of 2007/08 and a lot of them actually DID choose homelessness over the mortgage.
I first learned about living within my needs at university. Given my limited credit history I didn’t have credit cards, or lines of credits available. I relied on the fixed amount of money in my account. Besides the safety net of bank of mom and dad, which I had already hit up for tuition, I had to manage for myself to find the cheapest beer and most filling food to sustain the party life I was accustomed to. It’s been a valuable lesson, especially in terms of realizing the limited amount of stuff I need to have a meaningful life.
We tend to view success as the accumulation of stuff. This has driven us to buy the most expensive/impressive stuff we can (or can’t) afford in an effort to prove our worth. The truth of it is most of the world couldn’t care less what the tag on our handbag says.
I’m not 100% sure of what the answer is to reverse this type of thinking, especially since I’ve been guilty of this very same thought. Personally speaking, I’ve been mindful to challenge these types of assumptions by changing my interpretations of what it means to be successful.
For those confident enough in themselves to live within, or below, their means, theirs is a life without financial worry. Interest rates will rise and fall and be as insignificant to them as a silent fart.