Interest rates are the lowest they've even been in years. This keeps borrowing costs low, but creates another problem: if rates rise even a small amount (as they inevitably will), borrowing costs increase tremendously.
Canada's debt is currently about $566 billion. Even a tiny .1% rise in interest rates (that's one-tenth of one percent) would increase borrowing costs a staggering $566 million a year, or over a one and half million dollars per day.
Interest rates are also important on a personal level. For example, if you have a $375,000 mortgage, a 1% rise in rates adds about another $3,750 a year in interest, or over $300 per month. If you're already treading water and living paycheque to paycheque, this could be enough to push you into bankruptcy, and out of your house - exactly what's been happening in the United States.
We see then, that the following formula is life-altering:
debt X interest rate = interest payment
Even a small change in rates can greatly increase the interest payment, if the debt is large.
All this got me wondering: What is the interest payment of a document?
To find this out, we need to determine:
- the debt of a document
- the interest rate of a document
The interest rate of a document includes:
- the volatility of the document - the degree to which the document needs to be updated because of changes in the product or thing being document; in other words, how much and how frequently the document must be maintained
- the importance of the document - a document that is not used or is considered irrelevant or unimportant has little value; the users or the organization that owns the document literally has little interest in it
Larger documents generally have higher interest payments than smaller ones, because greater effort is required to maintain them. However, a large document may have a lower interest payment if its interest rate is sufficiently low, for example:
Large document: 5,000 x 1% = 50
Small document: 3,000 x 2% = 60
The first figure in each equation (the debt or size of the document) is arbitrary and is simply there to indicate relative sizes.
Now, what happens if you fail to make the interest payments? The debt of the document increases as it becomes more outdated and chaotic. It may even reach a point where the owner must declare bankruptcy and create an entirely new document.
Who knew documentation could be so...interesting?
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