Fees and Penalties

Remember that great expression from your local video store

“Be Kind, Rewind”

Back then, some places even charged a penalty if you didn’t rewind your VHS tape. Interesting that this fee went away, but that is because the entire “VHS Rental” business disappeared. That sounds like a fairly sarcastic commentary, but how many fees disappear?

VHS Tape

I will bet there are readers who have never used one of these

  • My home telephone bill (yes I still have a land line) had a “Touch Tone” charge on it (up until July 2015), but if I tried to use a rotary phone I get nasty remarks from Bell, pointing out the technology really isn’t supported any more. The fee finally went away after Bell was shamed into removing it by the CBC.
  • How about that fun “paper charge” if you still got your bill mailed to you? Wasn’t that Green and cool? That went away (mostly) after the Government said they were not allowed. I actually can see why that charge was there.
  • Account fees for day-to-day banking continues at most major banks, even though many smaller banks offer free banking (PC Financial, Tangerine and others), yet we continue to pay for the services at major banks? Michael James has pointed out that eventually the Major Banks will take a dive and may finally stop charging these fees? Nah, never gonna happen.
  • On line trading fees started at $29.95 and it has dropped steadily since (and is around $9.95 or lower). Since I am pretty sure the trading houses are still making money on this, it does make me wonder how low could these fees go?
  • The airline industry seems to have completely built their profit structure around service fees, gas fees, take off fees, sitting in nice seat fees, not getting broken cookie fees, etc.,etc.,. and not many of those fees are going away. Aren’t they charging for carry on luggage now?

Are there any fees that may go away some time soon? I can’t think of many (maybe gas taxes once gas cars go away). Pretty sure overdraft fees will never go away.

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You know that your taxes are due this weekend, so to quote one of my new favourite shows LetterKenny, Pitter-Patter, time to get at ‘er! (in terms of your taxes at least). The most interesting part of the show is that my daughter claims that she talks to people like that every day, so just remember when it comes to your money, “Keep yer eyes on the prize, Sky Chief” (to paraphrase), so get down to yer taxes. Hope this is advice you can appreciates.

RESP Piggy Bank

RESP’s Are Savings For Your and Your Child’s Future

There is a new report from the Government about the RESP program and who has benefited from this useful savings vehicle (for parents). The Report entitled, Canada Education Savings Program: Summative Evaluation Report, and the telling statement in the report (about whom uses RESPs) is:

Furthermore, it was estimated that over $400 million in grants (or 49% of all CESP expenditures) were distributed to families with a household income of $90,000 or more in 2013, of which $280 million (or 32% of CESP expenditures) went to families earning $125,000 or more.

I think this is kind of a self-fulfilling prophecy (i.e. Rich folk are the ones using the program the most), in that more affluent families are more likely to open accounts, and thus more likely to build up grants from it. Very few lower-income families are even aware, that even if they put no money in, they can still build up savings for their kids future post-secondary education. While there are groups like SmartSaver.org that are trying to help get the word out, the Government does a poor job educating parents about the benefits of the program for lower-income Canadians.

There was a planned NCFBA semi-periodic meeting planned this week, but thanks to most un-excellent planning on my part things did not transpire as I had hoped. It is always fun to meet with my fellow Financial Blogging folk, because most of them are very interesting folks (you would be surprised what most of them do for their real jobs). It may have been better that I didn’t go, given my son has a terrible cold (I might have infected some of the finest financial minds).

My Writings for Week Ending April 29th

Another week and more odd news from Stats Canada in terms of prices of things, where we continue to be told that drinking gas might be the cheapest way to live? Good Food Still Is Not Cheap in Canada (Inflation for March), outlines how good food is getting more expensive but thanks to cheap gas and oil, we don’t really notice.

Self-Driving Cars Will Change Things, but not just in terms of technology and such, financially. The insurance world is still analyzing what this new technology is going to do to their bottom line. A well controlled piece of technology, instead of road raged humans? That equation should mean lower (if not missing) insurance premiums, shouldn’t it?

A Money Thought

Have more than you show, speak less than you know.

👇 For more great financial articles from this week click here 👇

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Self-Driving Cars Will Change Things

I realize that self-driving cars will change how we drive, but it will also change many other auto related things as well (even some financial aspects of our lives).

What happens to Car Insurance? If most of the cars on the road are being driven by computer and such, will insurance rates drop? They should, but will they? Will we even need car insurance? The concept of lower rates for better drivers goes away, since none of us will drive, thus we should all get the same rate (shouldn’t we?). Other things that can affect your rates now come into question too:

  • Distance you commute to work, does that even matter any more?
  • Age of the driver, an 18 and 85 year old are the same when they aren’t the driver.
  • Type of car being driven shouldn’t really matter, in terms of whether it is a sports car, RV, sedan or pick up truck, only the relative cost of replacement (or maybe not?).
  • The theft portion of your auto insurance might be lower, as the new cars should be harder to steal (if new ignition systems are used), and certainly be easier to retrieve?

If cars are this much safer, do they still need to be that safe in terms of an ability to survive a crash? My guess is yes, since mechanical failure is possible (i.e. flat tires, failed systems, etc.,) so that kind of safety won’t be going away any time soon. The GPS industry will change, as our cars will have them built-in, will that mean the end of Garamond and other GPS companies, or will they evolve to some other useful idea?

Will we need to have parking lots? If a car can drop you off at work, and then either go home or drive somewhere else so that someone else can use it (e.g. your wife), then will the concept of a parking lot become obsolete ? Why do we need to tie down so much real estate so that cars can wait for us (hopefully somewhere close)? Wouldn’t I just send my car home after it dropped me off?

Google Self Driving Car

A Google Rendition of their Self Driving Car

Uber and Taxis might both just disappear, or maybe Uber would take over, if I could have my car drop me off at work, and then act as a “Ride Service” which I would be paid a premium when used? This might lead to a great deal less cars on the road too, that should lower insurance rate as well, shouldn’t it? Do you really need that many flights on shorter haul trips? Overnight car trips suddenly become more attractive and cheaper.

How will governments intervene into the technology? Will local governments be able to divert cars off heavily used roads to alternate routes? Schedule snow clearance and divert cars away from areas having snow cleared? Same would be true for road repair as well, you can easily divert cars elsewhere and be able to repair roads during reasonable hours (less work done over night). Will there be need for more roads? I think both sides of that argument are possible.

At first blush you’d think the following driving violations would simply disappear:

  • Distracted driving, since we don’t need to notice, we can be oblivious and not kill anyone.
  • Impaired or under the influence should go away, although if you are too drunk to tell your car to take you home, what do you do then?
  • Speeding? Again, I suspect there are going to be “cheat codes” to make that possible
  • Driving with an expired drivers license? Do we need those any more? Driving with expired registration might go away, if they hook into the government’s DB, and not allow cars that aren’t license to start.
  • Running a red light, or a stop sign, assuming everything is hooked together well.
  • Driving too slowly, will this mean that Quebec highways will no longer need posted minimum speeds?
  • Demerit points would go away, since it is a mechanical system doing the driving (you can’t penalize the human riding in the car, or can you)?

I am sure there are a few I have not thought about, but how will that change how Police work?

Will we have car offices, where we can work while commuting to our office? You aren’t driving, maybe you get some work done, or maybe you watch a movie? Will folks be tricking out their cars so that they are nicer leisure environments? Hacking the control systems will become a huge black-market for those wishing to get an advantage on things.

An interesting financial question is will families need to have two cars? If you can schedule things with pick up and drop off, maybe 1 car can deal with all the family transportation needs. Lower insurance and less cars means more money in family pockets.

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Friday, Stats Canada published their monthly Consumer Price Index Report, and showed that while on the surface Prices are not going up much, if you look a little closer, eating Good Food (i.e. Fresh Veggies and Fruit) continues to sky rocket (in comparison to the over all index).

There actual statement in their generic report states:

Excluding gasoline, the CPI rose 1.9% year over year in March, matching the increase in February.

Six of the 8 major categories had increases, which suggests that if you claim that CPI is running at 1.3%, there must be some components dropping significantly to reflect this low number, and (as usual) Gasoline, Natural Gas, and Fuel Oil are the big ones.

CPI For Past 5 Years

Five Year CPI Graph with and Without Gasoline

Main contributors to the 12-month change in the CPI:

Main upward contributors:

  1. Purchase of passenger vehicles (+3.2%)
  2. Electricity (+7.5%)
  3. Fresh vegetables (+14.9%)
  4. Food purchased from restaurants (+2.6%)
  5. Fresh fruit (+11.3%)

Main downward contributors:

  1. Gasoline (-13.6%)
  2. Natural gas (-17.4%)
  3. Fuel oil (-25.8%)
  4. Mortgage interest cost (-1.5%)
  5. Women’s clothing (-1.8%)

As you can see nothing you can eat is getting cheaper, and note also that most power and resource types are dropping in price, however, electricity (allegedly the power of the future) is still going up in price. In Ontario the price increase is even more marked.

Bank of Canada’s core index

The Bank of Canada’s core index increased 2.1% in the 12 months to March, after rising 1.9% in February.

This suggests the Bank of Canada will not be able to blame Inflation as a reason to raise Interest Rates (for now).

Reports from the Past While.

If you want to have a walk down memory lane about how prices have been going up, here you go.

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Disabilities, Tax Time, The Queen and #MoneyStories

The CBC had an interesting story about a disabled person who had both legs removed, who had to re-file to keep their disability claim (effectively to prove their legs had not grown back). While this sounds horrible, it was most likely an admin error at the CRA, as normally they are pretty good on the disability claim side of things. The CBC however also trumpeted, Delay at CRA hurting disabled Canadians, advocates say, which is sensationalized, but has some ring of truth. The entire disability claim system is complicated and quite daunting for a lot of folks, if you want proof check out my article CRA Child Disability Benefit (How To) and the 160 comments on it from various folks asking for help. The article also talks about the private firms that folks engage to help the process that end up gouging their customers (in my opinion), which I outline in Disability Tax Credit: Please Do It Yourself. No one should be profiting on someone’s disability claim. I also agree with the assertion that the system needs to be made simpler for the average person to make a claim, or there needs to be more help for those folks. The CRA does have a Nurse on call that can help out with disability claims, if you tweet their account (so keep that in mind as well).

Sad to hear we have lost another great musician with the death of Prince this week. Remember folks, your hero age the same way you do. I never saw Prince live, but evidently it was something else.

The Queen at 90

The Queen and 3 generations of her children

Remember that your tax deadline is April 30th, and there is no extension planned by the CRA. You had your chance to have free Turbotax, although I have 5 licenses to give away, and only 3 comments on my giveaway post, who knows?

The Queen turns 90, and continues to work a withering (to me) schedule of events. I have problems getting to work in the morning, and this nonagenarian still works harder? I gotta step up my game, God Save the Queen!

My Writings for Week Ending April 22nd

Another week where I wasn’t overly motivated to write. I assume this is a short lull, so I continue to find older writings from my archive of over 220 unfinished posts, with A Personal Spending Surplus ? If you have a spending surplus, you should pay off debt, and then once that is done, you should save it, stop lifestyle creep!

A Money Thought

Time is the only limited resource in your financial plan, keep that in mind!

👇 For more great financial articles from this week click here 👇

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