http://www.financialpost.com/money/family-finance/story.html?id=1137321

The New Debt- free you

Summary:

Credit cards gives off the feeling of being wealthy, and who doesn’t like that feeling? Jamie Snider who was in school for 6 years and for 1 of the years he completely relied on his credit card rather than student loan to pay for school. After he was done with school, he realized his debt has double the amount of what it uses to be. He knew he was in deep trouble so he went to non-profit agency and got help. Now he has to work both day and night with two different jobs. Moral of the story is to don’t depend too much on your credit card; you still have to pay off the debt later on. Also abundant of people do not realize how much they end up spending on their credit card and how much interest they have to end up paying afterwards. According to the Credit Counseling Service of Toronto since credit card first came out the debt has been slowly increasing. So think twice about your using credit card, you don’t want to be stuck in deep water!

Connections:

In this chapter we’re learning about tax and how taxes are being used. In this particular story, it would be the best for him to have vertical equity, so he will be able to pay off his debt and save money up much quicker. There are two approaches to vertical equity benefits-received approach and ability to pay approach. In this case it is better for Snider to use ability to pay approach because while he is out working hard, he won’t be spending as much as money therefore he won’t have to pay as much. Snider should also be glad that double taxation isn’t permitted; if it was permitted he would probably be in debt for the rest of his life unless he won the lottery & even if he won the lottery he wouldn’t be super wealthy.

Personal Reflection

Although the approaches I mentioned above are not being used, but if it was being used, then Snider would be paying off his debt so much quicker as well as other. Eventually this would lead to spending more money because they are not able to pay off their debt much quicker. I am glad that double taxation is not permitted, if it was permitted it would take us years to save up enough money to buy something we really like; also it would be like robbing us. With all the debt rising, perhaps the government should change the tax system and try a different approach that would help people pay off their taxes more efficiently and quicker.