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Retiring a Debt?

A classic rant from 2007 about spending too much and going into debt.

Retiring a Debt Plan

So what do you do when you retire a debt? I have heard a bunch of folks make the following interesting remarks when they have retired a major debt (car loan, credit card debt, student loan, or mortgage):

  • “Now I can afford to go on vacation”
  • “We can order those new drapes for the living room”
  • “We can afford to buy a new car”

All of these statements have the common theme of putting yourself BACK into debt after climbing out of a debt hole.

To quote a well-known philosopher,

ARE YOU OUT OF YOUR MIND!!!!

 If you have worked hard enough to retire a debt, celebrate that, but don’t use it as an excuse to tie yourself back up in debt! Adding debt load is not your goal, and shuffling debt load shouldn’t be either.

Figure out what you can do with the extra money to save, or try to retire another debt (after you have had a modest celebration of retiring this debt). Seems obvious to me, but then again, maybe I have done the same?

Buy, Buy, Buy!!!

Seems spending has recovered in the Retail area, as we can see from this graph.


The increases in Ontario (+2.0%) and Quebec (+0.6%) accounted for almost the entire advance in retail sales, with the automotive sector mainly responsible for this increase. The increase in August in Ontario almost totally offset the decline in July, which followed the strongest quarterly growth since the first quarter of 2002. In Quebec, growth in retail sales cancelled out most of the decline in July, which followed the strongest quarterly growth since the second quarter of 2001.

So spending on Cars in Ontario and Quebec are helping things along? I guess this is good, but what will these numbers say in the next few months with the sudden explosion of cross border shopping? My bet is a steep drop.

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Retail Sales Explode for May

And I am not cleaning that mess up! This has caused the Canadian Dollar to continue it’s upward reach compared to it’s Yankee Cousin.

Total retail sales rose 2.8% to an estimated $35.0 billion in May. Gains in seven of eight retail sectors boosted sales, making May the fourth monthly increase in a row for Canadian retailers. The last time sales increased more than 2.8% was December 1997, when sales advanced 3.7%. When sales of new, used and recreational vehicles and parts dealers are excluded, retail sales jumped 2.3%, more than offsetting April’s 0.3% decline.

Wonder if this is another bubble forming? Hope not

Some of the odd areas where sales have gone up? Auto sales (from April to May) are up 4.0%, and this is at the height of the gas prices? Clothing sales are up over 4 percent as well (but I could have guessed that with my daughters spending).

With a Canadian Dollar rising to parity with it’s American Cousin, what does this mean? Nothing (YET), but stay tuned this could get very interesting, that is for sure.

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Shopping at the Boutique

That is the code phrase a friend of ours has for when she goes to the Salvation Army thrift store to buy clothes, “I’ve been shopping at the boutique”. Why do folks like me shop at the thrift stores that seem to be opening all over the place? Because we are cheap? I can’t afford to shop at the Gap every time? I think the answer is YES to all and a few other reasons too.

If you have four kids (and three of them daughters) keeping them in new clothing could easily bankrupt us (if our kids were insane clothes horses like the ones on MTV, luckily they aren’t). They are growing and active kids and a lot of times clothes are grown out of or ripped so quickly, I’d go insane if I’d bought them brand new.

My wife has made shopping at thrift stores almost a science, and her only comment to me was that you need to be very patient and know when new “deliveries” come in. My kids have not made too many complaints about wearing “used” clothes, in fact they are starting to go there themselves, which is a good thing. They also buy new clothes but mostly with gift money from their relatives.

Most of these thrift stores have a charity component to it, so that is a good thing as well. We typically dispose of our “lightly used” clothing in the Salvation Army red boxes or whoever is collecting at the time.

Finally if you ever see me complaining about it isn’t cold enough in Ottawa, please feel free to leave a very rude comment. I can only say I thank my mechanic every morning this week for convincing me to put a block heater in my Honda!

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Warranties a Final Thought

So, this week we have talked about Warranties and are they worth the money you pay and of course the answer is, “It depends” (don’t you love it when I am weasley?). Here are the important things to remember:

  1. How likely is the thing you are buying to break and need warranty work (if it is my car, the answer is 100% likely)?
  2. How expensive are the repairs?
  3. How long is the original warranty for the thing you are buying?
  4. Will your credit card extend that warranty if you buy using that card? Amex, and some of the Gold cards do that?
  5. Is the warranty with a reputable company?
  6. Where do you get the warranty work done? With my GM car, I have to take it to the dealership (I’d rather take it to my mechanic, but GM only will cover work done in their OK’ed mechanics).
  7. Compared to the price of the thing you are buying does this warranty make sense? A $10 warranty on a $50 device means you are paying 20% more for the device? Um, no!
  8. Value is what you are searching for, is it worth the money you are going to pay? If it gives you peace of mind, that has a value as well.

As, I have said before, let’s just make some informed decisions folks!

Warranties

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