Editorial

Bank of Canada influences New Year's resolutions

Krystal Kehoe - Investigative Editor

The holiday is officially over and this year’s resolutions have been made. Unlike previous years, this year I vowed to get my finances in order as my first priority (who says more exercise always has to be top of the list?!).

With the Bank of Canada set to increase interest rates in 2010, I’m not the only Canadian nervous about how the interest rate will impact my future.

But Laurie Campbell, executive director of Credit Canada, said “not to panic” in an article written by Ross Marowits of the Canadian Press (“Spenders on clock as rates set to rise”, The Kamloops Daily News, Dec. 29, 2009). The article suggests “people look for strategies for dealing with the spending spree as soon as the holidays wind up.”

But doesn’t dealing with overspending at a later date always lead to problems? Cake today...vegetables tomorrow...

I admit that I did not abide by my pre-determined budget this past Christmas. And I did tell myself that everything would be okay after the New Year. But unfortunately for students it’s hard to recoup from overspending with virtually no disposable income.

Any budget adjustments often mean unrealistically skimming from fixed expenses—leading to even more problems down the line. But we can all worry about that after graduation right? It’s programmed into students to think that any financial issues will be dealt with later on. Therefore the recommendations from Canadian economists to “[tackle] high-interest credit cards” before interest rates rise and to save for emergencies won’t do us students much good.

Over the holidays I went for a long walk with my brother (a graduate of UBC) who agreed that government loans are not that bad, it’s the student credit lines from major banks that are less understanding. Credit lines should take priority when it comes to paying down student debt.

The increased interest rate will directly affect credit line repayment plans. So while mortgage renegotiation's may look dim in the near future for many Canadians, students will see an increase on their monthly payments on bank loans. And no matter how much warning they give us that increased payments are on the way, students have a very hard time paying down their debt to avoid large monthly payments after graduation.

So how will I get my finances in order? I’m going to do the only thing I really can do, that is stick to my student budget the best that I can and plan to keep living on a student budget long after graduation. Kraft Dinner today...vegetables tomorrow...