Get a plan, you may be in trouble 


So Harper and his Conservative government wants to cancel the existing childcare plans with 10 provinces and create his own with a $100/month per child bribe to Canadians. Don't get sucked into this plan as it is most likely, if you're anything like most Canadians, that this $100 will go towards credit card companies and banks - not child care. The average Canadian with 6 year olds and younger is going to have a mortgage around what - $200,000? Their credit card debt will be around - maybe $1000. Well according to reports it is much worse than that:
 
"In total, (young Canadian families) now owe roughly $340,000, spread across a mortgage, three lines of credit and two credit cards. Every month, $920 goes to pay interest on the cards and bank lines, and another $1,460 toward the mortgage." report 

Why is this important? Why won't the $100/month be much appreciated by young families? Classic economics suggest that when you put more money into the economy a possible impact is inflation. What does inflation lead to? Higher interest rates. What does a 1% increase in interest rates, spurred on by additional money in the Canadian economy - big changes. So get a plan these changes could mean trouble for young families. 
 
So take that $340,000 in debt for the average young Canadian - actually just take $200,000 in debt add 1% increase in interest rates - let's say from 5% to 6%. What does the increase in monthly payments work out to be? $116/month. Keep in mind that is for $200,000 in debt well below the average. If you have credit card debt, lines of credit and a mortgage and are more like the average Canadian at $340,000 your increase in monthly payments will be $198/month. This is bad news.  
We could pretend that inflation will not occur, with putting more money into the economy, higher health costs, gas costs, heating costs, and the Alberta $400/citizen pay-out and assume that the $100/month will go to daycare - not my plan, but it does seem to be Harper's Conservative Party plan. So what are our other options: 
 
1. Fight the Conservative Child Care Plan - petition, write your MP, join the Child Care Advocacy Group and let him/her know that you don't need this money to pay increased interest payments. 
2. Start paying down our mortgage and consider locking in, is it possible that interest rates could go down with a Conservative Government in power. Look at the history in these charts available from Andex and make up your own mind. 
3. Have more kids to pay down your debt - yeah right that is going to work. 
4. Take our tax return and spend it on your mortgage. 
Anyway I gotta run to go give the Child Care Advocacy Group my support in anyway that I can. Keep your eye on those interest rates. 

Posted: Tue - February 7, 2006 at 09:01 AM          

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