WK 10 years old and 28 million in debt

Re: WK 10 years old and 28 million in debt

Postby forumdoug » Dec 16th, 2017, 1:48 pm

WalterWhite wrote:Lol - except the government closed Riverview years ago....


Sadly, yes. However, BC Housing is redeveloping it in a multi-year supportive housing project. :)

Cheers,
Doug
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Re: WK 10 years old and 28 million in debt

Postby forumdoug » Dec 16th, 2017, 1:53 pm

TreeGuy wrote:I read the article, technically there is $30 million in reserves.

Is the $30 million in reserves sitting somewhere earning a higher interest rate than the cost of the debt? Or maybe it is under Doug's mattress?

Is that $28 million debt growing due to interest?

In my personal finances I would pay off that debt if the interest was costing more than what my reserves were earning.


There's an important distinction between personal and corporate finances. It makes no sense to focus on paying down or off debt to the relative exclusion of everything else when interest rates are at record lows and, despite what some pundits may say, will continue as far as I can see (at least 10 years) due to declining & aging population and increased part-time, precarious work in an Uber-led "gig economy." Moreover, as debt is retired, that frees up room for new debt to be borrowed to fund necessary capital projects.

A important consideration, or metric, to use is debt-to-GDP and also debt-to-income. In my experience, corporations and governments that maintain such a ratio of 50% are well capitalized in order to withstand economic "shocks".

Cheers,
Doug
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