Weekend Business – Feb 8th

Highest Debt Level Ever
Credit bureau TransUnion released their quarterly report recently on the credit history of 25 million Canadians. They’ve found that excluding mortgages, we each owe on average $27,485 of debt, which is up $1,500 from last year and a record high. The average balance owing on a Line of Credit (LOC) grew by 2.6%, installment loans (such as my farm loan) grew by 6.7%, and car loans were up by 8.9%. I don’t think it’s a big deal though. It’s true that our debts are $1,500 more than last year, but according to StatCan our earnings year-over-year has also increased by 3.2%, or roughly $1,500 so everything balances out 😀 No surprise then to also note that delinquency rates are declining, meaning less people are defaulting on their payments :0)

weekend business, Canadians taking on a lot of debt

Photo by Ryan Remiorz , THE CANADIAN PRESS

What does this mean for you? It depends on how you’re using your debt. I’m borrowing over $15K more from my LOC and margin account than last year. Not counting my mortgage I have over $150,000 of debt today. Most people are scared to take on debt, but using the right kind of debt at the right time can be a very useful tool. I couldn’t have increased my net worth by $12K last month if I didn’t have all this debt to leverage my investments. But on the other hand, if I had bought a new car and taken on a car loan then that would actually negatively affect my net worth. So again, it all depends on what constitutes your debt and what you’re using it for.

With the success of their iPads and iPhones, Apple have been making billions of dollars in profit every month. Currently they have about $137 billion of cash sitting in the bank, including short term investments. This is the biggest cash pile of any company in the United States. And it’s not doing anything productive or profitable for the company. They currently have a dividend of roughly 2.2% but an activist investor, David Einhorn, who manages a hedge fund and holds a lot of Apple stocks, is encouraging Apple to give more money back to shareholders. This can be done by either increasing the dividend, or offering preferred shares with a higher yield, but don’t allow for company voting rights. I’m in favor of more dividends, so we’ll wait and see what Apple decides to do 🙂 Many investors are chasing after yield, if Apple gives in to these demands then I might just buy some more Apple shares. Who knows, maybe one day I’ll even accumulate enough for them to DRIP haha (^▽^) half joking there.

The Oily Bottleneck
We pump out a lot of oil and gas in Canada but we lack the infrastructure to get these products to the proper markets. This isn’t a new problem but a research paper out of Calgary suggests there is a 2 to 5 year window for us to get our resources to the Asian markets, otherwise we’ll be at a huge disadvantage. Countries in southeast Asia want our oil and will pay us the proper market price for it. But currently we sell close to 100% of our crude to the US at a 45% discount. You’re welcome America 😛 Canadians are losing out on $100 million of oil sales every day 🙁  Think about the tax revenue generated from that alone, and all the healthcare, education, or paying down the national debt we could do with all that money if only…

Frenemies everywhere
A new season of The Real Housewives of Vancouver started airing this week. It’s a bit ironic because the individuals portrayed in the show are often more fake than real. It’s pretty entertaining though, especially if you happen to live in Vancouver and recognize a lot of the shooting locations 😀 You can learn a lot about personal finance from the show, like how being excessively rich can come with excessive drama and consequences.

weekend business real housewives of vancouver



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02/08/2013 6:31 am

At first I thought that sounded like a lot of debt, but then I realized that i have a car loan and student loans that equal around $50,000. AH!

Money Bulldog
Money Bulldog
02/08/2013 6:55 am

Thanks for the mention, I really appreciate the help! That’s a lot of cash have sitting in the business account. I could think of a few ways to use some of it! Have a great weekend.

Debt RoundUp (@DebtRoundUp)
Debt RoundUp (@DebtRoundUp)
02/08/2013 7:18 am

Thanks for including me in your roundup, I really appreciate it. Apple probably has something planned for all of that cash. That is usually why companies stock pile money.

John S @ Frugal Rules
02/08/2013 8:27 am

Thanks much for the mention! Good luck on getting AAPL to part with some of their cash. 🙂 I think they might have some things in store for it, but not for the shareholders.

02/08/2013 8:42 am

You definitely have my share of the debt number. 🙂 I had a couple friends who really enjoyed the show, but I watched 2 and couldn’t stand it. I tried! 🙂

Thanks for the mention and have a good weekend!

02/08/2013 8:48 am

thanks for the mention! I watched the trailer for the queen of versailles and imagine those real housewives run in the same vein. Definitely some valuable money lessons but most of the time I just want to go there and teach them what real life is like!

02/08/2013 9:57 am

Thanks for the mention! Apple is a pretty solid company, but I’m glad I sold last year when I did.

JC @ Passive-Income-Pursuit
02/08/2013 10:02 am

I had no idea that we were getting a 45% discount, thanks Canada. Out of curiosity, are gas prices roughly on par with the US? Specifically the northern part closer to Vancouver? I know the governments probably subsidize at different rates though, so that could skew the numbers.

Thanks for the mention!

02/08/2013 10:15 am

I’ve never actually watched the show – it sounds scary haha. Thanks for the mention!

TB at BlueCollarWorkman
TB at BlueCollarWorkman
02/08/2013 12:33 pm

HOly crap, there’s a real housewives of vancouver? I thought that monstrosity of a show was just an American thing! Sorry it bled over and you guys picked it up. I’m embarrassed for all of us 🙂

02/08/2013 4:26 pm

Certainly using debt as a lever can be a good idea. Look at the debt the Glover brothers took on to buy Manchester United! Not that the fans are happy at all. However debt for investment can be OK and we will use it as appropriate. Big numbers are no longer a problem for us!

Thanks for the mention BTW.

Jon Haver
02/08/2013 5:06 pm

I never knew it spilled over to canada either! Well thank your lucky stars theres only one…my wife watches jersey,beverlyhills,miami and where ever eles they can find triffling woman to get drunk and stupid.

Chris @ Stumble Forward
02/08/2013 8:01 pm

Thanks for adding me to your weekly roundup I really appreciate it.

02/10/2013 8:13 am

Looks like the average Americans and Canadians are all using CCs for living these days and not just special expenses. I haven’t used a CC in over 6 months and its amazing that it took a BK for me to realize and learn that I can live without one. So far that is. I haven’t and hope not to have any huge unexpected expenses where a CC would save me!

Julie @ Freedom 48
Julie @ Freedom 48
02/10/2013 6:24 pm

I think student loans may skew that number – a lot of people are carrying BIG student loans.
I sure hope that’s the culprit anyways…
We have zero debt besides our mortgage… so I can’t help but think that for every Canadian who has zero debt, someone else must have $55,000 in debt (for it to average out to 27k). I think a lot of people (older folks especially) are living debt free.

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