How to Check Your Credit Report for Free in Canada – TransUnion and Equifax

Contact Information and Credit Report Forms

Did you know you can check your credit report for free? You can get instant copies online by paying a fee. However, a government mandate on privacy means you can check your credit score for free, you just have to jump through some hoops and send in some documents. It’s not easy to find all the necessary information so we’ve compiled the forms, instructions, and lists here at DiscussEconomics for your review.

Read more »

You Don’t Need to be Rich to Invest

Some say, “all but the most sophisticated people will spend a life time paying off their debt.”

Is that true? If so why? Is debt a fact of financial life? Can only the rich afford to invest?

The word ‘sophisticated’ does NOT mean rich or well off. For example, does debt include mortgage payments? Technically it does, but the more worrisome part of most people’s debt load is the debt on depreciating liabilities or non tangibles. Want two examples? Depreciating liability: car. Non tangible: Putting a weekend away or a meal out on your credit card and still paying for it a year later.

Tips for Personal Budgeting

Read more »

Financial Statements – Terms and Explanations

Definitions on Income Statements

Here is a brief synopsis of key financial terms for introductory finance majors and business folks regarding income statements and balance sheets. Firstly, defining some terms:

Income Statement : A statement measuring a firm’s financial performance over a period of time. Generally, it records revenues and expenses to derive income over a specified period

Balance Sheet : This analysis sheet provides a “snapshot” at a point of time of the firm’s health in terms of total assets (what do they own), total liabilities (what do they owe), and equity (how much of the firm’s assets are financed by the owners).

Read more »

Canadian Housing Market Trends – 1.99% Variable Interest Rates Return

The prime interest rate that banks can borrow from the Central Bank still sits at 1%. Mortgage rates are generally pegged to bond rates, but the overall economic sentiment around borrowing impacts what consumer pay for their home borrowing. The Investor’s Group rolled out another attempt at 1.99% variable 3 year mortgage in early May. Who can qualify depends on a number of factors, having CMHC insurance is usually a pre requisite to cover any possibility of loss for the lender. Overall, what does this mean for the economy in Canada?

There are signs of overall economic strength, but also stagnation. The recent figures on the job market saw a increase in unemployment. That doesn’t stop many from jumping into the market for record setting interest rates. Money is cheap and those who want a home won’t pay any less in interest payments than they can now. But that’s also the risk. At 1.99% you can’t go ANY lower, and everyone expects rates to increase, and perhaps jump in the short term. But we’ve been hearing this kind of talk for years now, talk of increasing interest rates, talks of housing bubbles, yet nothing has happened as of yet.

It’s true, interest rates WILL increase eventually, and variable mortgage holders will be the first to feel the affects. That means if you can barely scrape by with your current housing selection, then consider downsizing your expectations and take on less debt. But it’s not just borrowers that need to pay attention to the market trends.

Read more »

How is the Phillips Curve Related to Labour Market Behaviour?

This Phillips curve formula: = π -ε (u-u*). Remember, in the labour market, nominal wage is assumed to move quickly and the labour market will always be in equilibrium. The equilibrium amount, N*, is considered to be full employment in the labour market. The unemployment rate is then considered by the following: (u-u*) = (N*-N)/N

Consider the transition period between the short run and the long run, there is no more flexible wage in the labour market. Instead, wage is sticky (slow moving). Slowly adjusting wages will lead to some unemployment rate, that is not the full employment level of the unemployment rate u*. Read more »

Deriving the Aggregate Demand Curve

Check out this graph:
aggregate demand curve
For a given nominal money stock, a price level decrease increases the real money stock. This shifts the LM curve outward, and the interest rate goes down and income increases. Therefore, along the AD curve, a price level decrease )holding the nominal money stock constant) is consistent with an income increase, and the AD curve slopes downward.

Mathematical Derivation of AD Curve

Read more »

Consolidating Loans Intro – How Does it Reduce Debt Faster?

Q. I’ve heard alot of about consolidating loans but don’t understand it fully, can you give me just a brief explanation?

A. Great question, everyone on the Internet (scammers, some legit, banks, credit cards, everyone) wants you to consolidate your loans with them? So what’s the deal.

Read more »

Why Does the Russian Ruble Decline Amidst The Problems in the Ukraine

The Russian army is moving into the Crimea region which is Ukrainian sovereign territory. All of the political and military pandering aside, the Sberbank moved the exchange rate to 38.50 rubles to Dollar. That’s an unprecedented high. Why is the shift happening?

Two reasons.

1) Nobody wants to buy Russian assets at the moment which means demand for Russian rubles is low. Low demand means no pressure of appreciation against foreign currencies.

But perhaps the biggest reason,

2) Foreign investors and Russians themselves don’t trust the ruble and are moving immediately to dump assets and convert their currency into a safer vehicle. In order to dump Russian currency you need to buy foreign currency buy selling rubles. first. This puts pressure on foreign currency, or rather, floods the market with Russian rubles. More rubles increases supply and depreciates the currency against the dollar (and others like the Euro).

Read more »

Money Creation – Where Does the Money Come From?

How Banks Create Money continued

One of our popular posts located here talks about ‘how banks create money’. You should read that link before this one as it is the necessary part 1 of this series on money creation. A lot of people think it’s a huge conspiracy that banks would create money out of thin air. Fact is they don’t, and our entire financial system is based upon the responsibility of banks to lend correctly. Furthermore, in the capitalist system, in the simplest form, the troubled banks would be permitted to fail and close its doors, however, because most nations aren’t true capitalists economies (free market) because of the intervention of the central bank, you’ll note that the government through the central bank is doing more to ensure consumer confidence is settled by the guarantee of loans in banks and the banks themselves.

Here are some notable comments from the previous article on How Banks Create Money that are worthy to be posted in article form (from Keir in the UK.) we’ve had folks from all around the world respond to this post so please feel free to comment.

Keir notes:

Read more »

Internal Rate of Return, Cash Flow, and NPV

Calculating and Interpreting Internal Rate of Return (IRR)

This post continues a discussion about cash flow, net present value, and interest rates and NPV, which you can read by clicking on the specific links. This post deals with the topic of internal rate of return.

IRR is an indicator of the efficiency or quality of an investment, as opposed to net present value (NPV), which indicates value or magnitude. It is the interest rate that results in a zero NPV when used as the discount rate. Or it is the discount interest rate for which the present worth of all cash inflows equals the present worth of all cash outflows. It is called internal rate of return because the money invested in this project generates (internally, within the project) exactly this rate of return. In particular for bonds, the IRR is called yield to maturity (YTM).

The IRR Rule

Read more »