Where the Money Goes · Chapter 4
Debt, in Order
Maya writes every balance she owes on one page and braces for the lecture. Simon doesn't ask how she got there. He asks which one charges the most.
Maya had asked her uncle one question at the end of last Sunday's dinner, and it had sat in her chest all week. Should she even be saving while she still owed money? He'd said that was next Sunday's conversation. Now it was.
She came prepared, which was new for her.
She'd written it all down on the bus, on the back of a flyer she'd grabbed at the door. Everything she owed, top to bottom. The student loan — the big one, the number that made her stomach drop every time she saw it. The phone she was paying off in pieces. And the credit card. That balance she'd carried longer than she wanted to admit, that never seemed to shrink no matter what she paid at it.
She'd written them in order of how much they scared her, which meant the loan was first and biggest. And she'd spent the bus ride bracing for the question she was sure was coming. How did you let it get like this. Or some kinder, worse version of it.
By the time the chicken was on the table she'd half-decided not to bring it out at all.
But her mom went to put the kettle on after dinner, and in the quiet that followed Maya heard herself say, "I made a list."
She pushed the flyer across the table before she could stop herself. "It's everything I owe. I figured you'd want to see it."
Her uncle Simon put on his reading glasses and picked it up. He didn't ask how. He just read it the way he'd read a grocery list, top to bottom, calm.
"Good," he said. "Getting every last one of them onto the page and seeing the totals, that's the move nobody wants to make. Now we put them in the right order."
Maya waited for the but. It didn't come.
Her uncle set the list down and uncapped his pen. "Now," he said. "One more column. Next to each one, I want the interest rate. What it costs you to carry it."
"The rate?" Maya said. "But shouldn't the big one come—"
"The rate. Not the balance. The rate." His pen hovered over the empty column. "You wrote these down by size. By how scary they are. That's the wrong order. Let's find the right one."
Maya pulled out her phone and started digging. The card was easy — the rate was right there on the first screen, and it was high. "19.99%," she read out, and her uncle wrote it into the new column without a flicker.
The phone next. She found the financing agreement buried in an email. "It's, um." She scrolled. "0%. No interest on the phone. I'm just paying it back in chunks."
"So that one's nearly free," her uncle said, and wrote a small zero beside it. "It's just a bill with an end date. Keep paying it, don't think about it."
Then the student loan. The one she'd put first because it was the scariest number on the page. She had to look this one up properly, and when she found the line she checked it twice.
"That can't be right," she said.
Her uncle waited.
"It says zero. There's no interest on it. They got rid of it, there's a date and everything, a few years back." She turned the phone around as if he'd want to check her work. "The one I've been most scared of. It isn't costing me anything to carry."
"Canada student loans. They took the interest off those for good." He hadn't written anything down yet. "How many student loan payments come out every month?"
Maya opened her mouth to say one, and didn't.
"Two," she said slowly. "There's two. There's always been two." She was scrolling through her transactions to make sure. "I thought the second one was a fee. It's a whole different website. I don't even have the password."
"Reset it," Simon said, and drank his tea and read the paper while she did.
"It's Alberta," she said. "The province lent me part of it. That's the second one."
"That's the usual way," he said. "Most people who borrow for school finish with two loans, not one. The federal government lends you some, the province lends the rest. Two lenders, two websites, two payments." He tapped the single line she'd written. "So this line is really two. What's the province charging you?"
"Prime," Maya said. "That's all it says. Prime."
"And what's prime today?" her uncle asked.
She looked it up. "4.45%."
"Then that one isn't a zero." He wrote it into the column — a real number at last, sitting between the two zeros and the card. "Prime is the rate the banks work from. Alberta pinned your loan to it. Today that's 4.45%, so today that's what you're paying."
"And tomorrow?" Maya said.
"Whatever prime is tomorrow. The card stays at 19.99% until somebody writes and tells you different. This one moves on its own, and nobody writes to tell you. It's low right now, next to that card. Low isn't nothing, though."
Maya looked at the list now. Two zeros, 4.45% in the middle, and 19.99% at the bottom — the smallest balance on the page carrying the biggest rate.
"So I had it backwards," she said slowly. "I was scared of the wrong one."
"You were scared of the biggest one. Everybody is." Her uncle drew a line under the card, separating it from the rest. "But you sorted this page by size, and size isn't what costs you. The federal loan is the biggest thing here and it charges you nothing. The card is the smallest, and at 19.99% it's quietly taking the better part of twenty cents off every dollar you leave on it, every year. Which one's actually hurting you?"
"The card."
"So that's the one you go after. Hard." He wrote a 1 beside the card. A 2 beside the Alberta loan. A 3 beside the phone. And a 4 beside the federal one, the giant one, last of all. "You rank by the rate. Not by the size, not by how guilty it makes you feel. The dollar that costs you the most to keep, that's the dollar you clear first."
four lines, not three. go at number one.
"There's another way people do it," Simon said. "Smallest balance first, so you knock one off quick and feel good about it."
"Honestly, that one sounds more like me," Maya said.
"It usually costs more, because the expensive one sits there racking up interest while you chase the small one. Either way beats doing nothing. If you can stomach it, highest rate first saves you real money."
"What about the minimums," Maya said. "On the other three."
"You pay every minimum, on every one, every month. Always. Miss one and the whole thing falls apart — fees, your record, all of it." He held her eye. "So it's not a choice between them. You cover every minimum, then every spare dollar you've got goes on top of the card."
"And the other three just sit there?"
"They tick along until that card's gone. Then you move to the next one in the list, by rate, same rule. Alberta next, then the phone, then the big federal one, last."
Maya nodded. Then she caught something. "Wait. What about the calm account? Do I stop the savings and put that on the card too? It's the same question I asked last week."
"No," Simon said. "Keep putting money into the calm account, just a little, enough to keep your one-month buffer alive. That's what stops the next bad Tuesday from going straight back onto your credit card." He set the pen down. "You don't empty your shield to fight the thing your shield protects you from. Small buffer first. Then everything spare at the card."
She looked at the flyer one more time, the giant loan at the top wearing its 4, the little card at the bottom with a line under it like a target.
It was, she realized, the first time the word debt hadn't made her stomach drop.
She folded the flyer to put on her own fridge at home. Her uncle was watching her do it.
The reading glasses went away into the shirt pocket. "You know," he said, "the way you handle these. Paying every minimum, on time, chipping away at the balance on your card. You're not just paying it down. You're building something else while you do it."
Maya looked up. "Building what?"
"A record," her uncle said. "One that other people can see, when the time comes you need them to."
"What record? Who sees it?"
Her uncle reached for his tea again. "Ah," he said. "Now that's the good part. And I'm not spoiling it. Come back with that question and I'll introduce you to them."