Raggedly Rich

Canadian Finances, Musings, and Art

Why You Need to Tackle Debt: Financial Lessons from Hamilton

“If we assume the debts, the union gets a new line of credit –
a financial diuretic. How do you not get it?
If we’re aggressive and competitive, the union gets a boost.
You’d rather give it a sedative?”

Cabinet Battle #1, Hamilton OBC

if you don’t have it yet, get it! – this is an affiliate link to Amazon

What’s Alexander Hamilton talking about here? Consolidating debt, and how that would benefit the union (aka you, if this was a metaphor).

If you haven’t heard about Hamilton, or Lin-Manuel Miranda and his creative-bro Alex Lacamoire, take a look at the video below (the song starts at 1:03-ish, Miranda plays Aaron Burr):

I saw this seven years ago and became instantly obsessed. It’s a staple on my 8+ hour road trips, and one of the two musicals I currently have on rotation in my car. Hamilton rocked the musical world with innovation, talent-casting, a shitload of heart, and a bunch of Tony’s (16 nominations, 11 wins).

And you know how I know that America’s finances were at the forefront of Alexander Hamilton’s mind? Because they’re mentioned in the third song of the musical, which takes place at least two decades before he was appointed Treasury Secretary: “We need to handle our financial situation – are we a nation of states? What’s the state of our nation?” (My Shot)

Alexander Hamilton was chosen to be the treasury secretary for a reason. I’m not an American history buff, nor am I any sort of history buff. My knowledge of United States history (and even Canadian history) is tenuous at best. But I can see the link between Hamilton’s interest in America’s financial future, and how anyone can use that mentality in their present-day finances. So I present:

A Readers Digest Version of America’s Finances,
by me, a scholar-not

The Revolutionary War left the union in a lot of debt.

That debt was spread out unevenly among all the states. Some states didn’t have any debt: “our debts are paid, I’m afraid” / “your debts are paid ’cause you don’t pay for labour” (Cabinet Battle #1).

Other states had a lot of debt.

Hamilton’s plan was for the union to take on the debt of all states. He wanted to create a National Bank, that would then pay off this combined debt – instead of individual states having to pay off their individual debts. That’s what this section of the musical was referring to:

“If we assume the debts, the union gets a new line of credit –
a financial diuretic. How do you not get it?
If we’re aggressive and competitive, the union gets a boost.
You’d rather give it a sedative?”

Cabinet Battle #1

This works in your personal finances for two reasons:

  1. Showing that you’re able to consistently pay off a monthly / bi-monthly payment will help your credit score.
  2. Consolidating all your debts will (hopefully) score you a lower overall interest payment, and make the debt more manageable. 

Your credit score (in Canada) is based off five things:

  • Payment History (35%)
  • How Much is Owed (30%)
  • Length of Credit History (15%)
  • New Credit Application (10%)
  • Types of Credit Used (10%)

Though it’s good to note that the two companies in Canada might calculate them slightly differently (source: My Money Coach).

Credit score is clearly important. Consolidating your debt into manageable chunks will, over time, affect your payment history (by making it more manageable and consistent), and how much is owed (paying down your debt with payments). A consolidation loan isn’t the best kind of credit, and it will reflect badly on your score in that regard, but it might just be better than struggling under multiple sources of debt.

There are a lot of different things your credit score is important for, like:

  • Student loans
  • Line of Credits
  • Mortgages
  • Credit Card Eligibility
  • Qualifying for Better Credit Cards
  • Goods & Services / Contracts (cell phones, housing, cable, insurance, etc.)
  • Employers (sometimes)

Alexander Hamilton knew that getting country’s finances in order would benefit the country and give it a powerful tool. His “plan to assume states debt” (from the Revolution) (Cabinet Battle #1) might’ve been insanity to some (I’m looking at you, Jefferson), but in my understanding, Hamilton’s plan worked (though I’m sure was much more complicated than just assuming states debt, and involved things like avoiding crazy spending and other regulatory fine print).

Alexander Hamilton made tackling America’s finances a priority. And that was the most important step.

Deciding to tackle your debt is the most important step you need to take.

The first step is making that choice, and figuring out your options. Hamilton figured the best way out of America’s financial situation was to consolidate state debt. The best idea for your debt might be consolidation – or it might be to keep your debt where it is and aggressively pay off the highest interest debt first.

Or maybe it’s paying a bit off each debt, until the smallest is paid off, and then transferring that extra money to the next smallest one.

I’m hoping this post acts as a motivation to get you looking into debt repayment plans, and/or how to most efficiently pay off your debt – it’s not a how-to on what’s best for your unique situation. Check around your locale to see what different banks and credit unions offer, shop around, do your research.

But without a doubt, meeting it head-on is the best start. Hamilton had to fight, and sacrifice, to get his plan into place, and you’ll have to do the same. But somehow things came together, and a national bank was established – and if you attack your challenges with the same tenacity and ferocity, things will come together for you too.

We might not all be as smart as Alexander Hamilton was, but we can learn from his actions, and adapt them to our own circumstances.

I can’t be the only one who was/is obsessed with Hamilton, right?! 

Disclaimer: If you use the affiliate link to buy the Hamilton OBC recording, I’ll receive a small commission. None of the lyrics nor images are mine, and I’m just using them to assist in my commentary on personal finance, and debt. I would never sell you anything I wouldn’t buy myself, and I 100% have had Hamilton in my car, on repeat, for 2+ years.

4 Comments

  1. Damn good musical…. even for those (like me) who usually hates musicals!

    I turned it on the other month for my brother (also a musical hater) and he was like, “HAMILTON IS RAP SONGS??? I HAD NO IDEA!!!” Haha… Now he’s obsessed with it too 🙂

    (that’s another good lesson – turn anything into rap songs and it will be more popular!)

    • Ms. Raggedly Rich

      July 20, 2017 at 11:05 pm

      Thank you!! It’s it just amazing!! I’m so glad that it’s changing the rep of musicals for so many people – they can be fun and innovative and dynamic! They’re not all random people singing random songs all the random time!

      My Dad heard it on the news and jokingly went: wouldn’t it be funny if they just did a whole musical like that? Me: They did, and it’s amazing, you’ve heard it many times in my car.

      Isn’t that what English was sneakily trying to teach us all along? I wonder if Shakespeare counts as rap, he had that whole rhythm thing going…

  2. Lol I love you. You’re absolutely darling and this shows both a historical lesson and your passion for Hamilton. I didn’t know credit score would impact services like cell phones and cable!

    • Ms. Raggedly Rich

      July 21, 2017 at 10:58 pm

      : ) // pushes glasses up nose

      I was really surprised when I switched over my cell phone carrier for the first time and they wanted to check my credit. Maybe it’s different in America? I think they’re interested in making sure you’ll be good for the monthly payments.

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