By William Crooks
Local Journalism Initiative
Zach Graveson, a Bishop’s University (BU) graduate (‘19) and current financial advisor, presented “Tools for your Financial Freedom: A Graduate’s Guide to Personal Finance” at BU to over 20 in-person and online attendees April 4. Graveson gave simple and direct advice on debt, budgeting, and investment. The presentation was capped with a question period where Graveson went into further detail on topics such as when to get your first credit card and what priority should be placed on building an “emergency fund.”
Debt
Not all debt is “bad,” Graveson said, it depends on its interest rate – “the cost of borrowing money.” Credit cards and car payments are among the worst kinds of debt. Any debt with a less than five per cent interest rate is “good.” Interest rates of five to 10 per cent are borderline; anything above 10 per cent must be prioritized and paid off as quickly as possible.
A credit card with an interest rate of 20 per cent is like investing in a fund that is guaranteed to lose you one fifth of your money. The only way making payments on that debt would become secondary is if you knew of an investment that paid out more than 20 per cent. “If you know of that investment, I’ll hire you right now,” Graveson said, “it doesn’t exist.”
Should you rent or buy a house? It depends, according to Graveson. If you want to own property, then buy a house. Either way, you’re paying off a mortgage, either your own or someone else’s. If you want to buy a house, it is better to do it sooner rather than later. He admitted paying your own mortgage can function like an investment or savings account, and said the condo he bought and then sold two years later was one of his best investments.
