Wednesday, October 22, 2008

Rates Cut, Loonie Falls

I know the world economy is in a crisis right now but so far it hasn't affected me at all. Until now!

From the CBC
Loonie Sinks as Bank Of Canada cuts borrowing costs again
also
Loonie slips under 80 cents US, stocks tumble

I've been enjoying listening to radio and reading news reports about the financial crisis. I especially enjoy hearing my favorite financial 'no debt' guru Dave Ramsey go off about the bail out and everything else that is going on. I've been enjoying it partly because it is somewhat entertaining and because there has been no real impact on me. Well that all changed yesterday when interest rates were cut again here in Canada. Add to that the Canadian dollar or Loonie as us Canucks refer to it, lost more ground against the U.S. dollar. Both of these things however are great news for me! I get paid in U.S. dollars so the lower the Loonie the bigger raise I get. Also, our mortgage is variable rate (I know this isn't Dave Ramsey's way but things work a bit different here in Canada so I justified it!) so that means we're paying off more principal. When we got this mortgage we decided to always pay what we would if we were on a fixed rate which is considerably more. So with our self-imposed fixed monthly payment that means the lower the interest rate is, the more principal we will pay each month. Which in turn means reducing the mortgage term. All good!!

So far this economic crisis is working out for us. I'm guessing it'll catch up to us eventually but living with no debt (except the house) sure makes it much easier to weather the storms.

GL

3 comments:

preston,  10/23/2008 2:50 PM  

Glenn,
I was in Walmart yesterday and heard "So Much for Substitutes" over the intercom system. You've made it big!

Cheers,
P

kathryn 10/23/2008 8:36 PM  

we've long been fans of the variable rate mortgage - we also pay weekly, both good ways to pay down faster.

Melanie 10/25/2008 2:49 PM  

Hmmm... I've always preferred a fixed rate mtg. I like predictability. However, after I bought my house interest rates dropped quite a bit, so I refinanced my house and continue to pay the higher payment, so I am always paying something extra on the principal. It's a good plan. LOL

One analyst said that the lending situation wasn't all bad, and that gas prices should come down. So far, seems he was right. Prices are slowly dropping.

I haven't noticed a huge difference to me personally yet, either, although I don't imagine that will last forever.

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