Canadian Personal Finance Blog

Archive for June, 2008

The Supreme Court ruled (without formal explanation) that the BCE sale can march ahead, but it is by no means a done deal, as there are still a few obstacles before the sale is finalized. It’s very interesting that there is no formal statement from the court yet about why they are allowing it to go ahead, so it will be interesting to read the reasons, once they are finally available for commentary.

Am I happy about this, for now, yes I am, however, as I said, I think the sale price of $42 may not be achieved due to market pressures, but again, we shall see.

Best Buy Warranties

Thanks to an accident and a pressing need for a new digital camera (the previous one was damaged) we went off to buy a camera at Best Buy. Why Best Buy? Don’t have to pay for 3 months, and I thought their advertising implied don’t pay for 12 months, but we’ll talk about that one in a little while.

For a while no one really bothered us and we decided to pick up another Canon camera (not advertising, just stating a preference). A sales agent finally came over and did some intelligent gabbing about how she owned this camera and it was fabulous (oh really? not sure I bought that part, but what the heck). I asked all the questions that were important to me:

• Does it use “AA” batteries or Lithium Ion (I use “AA” rechargeables), the answer was yes “AA” was normal.
• Does it do video? Yes, it does Full Motion JPEG (a little wonky format, but there are enough translators out there, that it was fine).
• How much for a big memory card, $40 for 4 GB, so that was fine (high speed SD card? I seem to remember this means it may not be easily readable in older systems, but what the heck).

Then we came to the payment. Best Buy standard is don’t pay for anything over $100 for three months for free (but if you don’t pay it off they scalp you with a 28.8% interest rate that is retroactive to the day you are born the day you purchased the item). The advertising in the weekly circular implied that 12 months pay back was “complimentary”, but no, they were simply saying, that if you want to pay $90 you could not pay for 12 months (which added up to about 20% interest paid anyhow).

Then we came to the Warranty, which the young lady pushed on me with great ferocity. Did you want to pay $70 for a 2 year warranty above and beyond Canon’s warranty? No. Long diatribe about all the serious things that can go wrong with my camera (no mention of daughters dropping it and breaking it), I listen politely, no again. There is also a 3 year warranty at $90? No thank you, still more talk of the perils of the lenses and how long it will take to get the camera back from Canon, who most likely won’t fix it, still, “No Thank you”. The young lady finally relented and I left.

I remember reading that while Best Buy employees do not get paid commission on sales (not sure I completely believe that), they do get a BIG percentage on all “extended warranties” that they do sell, and I saw that when I got this camera. I was in a rush, but managed to stay polite but firm in the situation, but I could tell the young lady trying to make the sale had a large stake to be made if I did buy the “warranty”.

Any folks out there with similar stories to tell?

Related Articles

• Extended Warranties a Sucker’s Bet by the Canadian Capitalist
• Class Action Suit Against Canada Post by Michael James on Money
• Pride and the Extended Warranty by me

BCE Decision Today at 4:30 PM

Care to wager a few shillings on the results? I am sure that is what a few traders will be doing, in either direction, with the Supreme Court ready to bring down a decision on an appeal of the Quebec Supreme Court’s ruling stopping the BCE sale. This ruling will either kill the sale or put it back on track for now. As a share holder, I would hope the sale would continue, but who knows what the highest court in the land might decide.

The Nortel Three and their Day in Court

Frank Dunn, Douglas Beatty and Michael Gollogly had their arraignment in court yesterday under Fraud charges brought by the RCMP. This is interesting to me, since I lived through those days, and am curious now to hear about what exactly may have transpired during that time at Nortel.

What happened to cause all employees to get their “Return to profitability” bonus? I will be reading the coverage of this case very closely.

Important to note that Nortel the company is not part of these proceedings as a defendant, and they have stated they are co-operating fully with the RCMP investigation.

The Globe and Mail Report:

The RCMP alleged Mr. Dunn, Mr. Beatty and Mr. Gollogly fraudulently misstated Nortel’s results. Among the accusations are that the three “made false entries and omitted materials particular in the books and documents in regards to the financial results of Nortel.”

It will be very interesting to see how this is proven in court, or refuted, because I suspect this is going to get into some very technical aspects of Corporate Accounting Practices in Canada. I have had some of this explained to me, and I can say as a non-accountant, it is very confusing.

Rates Staying the Same

So what did the new Governor of the Bank of Canada know that we didn’t last week when he refused to lower rates, when the majority of experts were sure the rates were going to drop? Maybe he figured out that Inflation might be coming back, like we found out yesterday?  Does Mark Carney have a good crystal ball, or good information collecting skills? Either way, looks like he hit the nail on the head with that call last week.

Given Scotiabank, TD and BMO are raising their long term Mortgage Rates, makes me wonder what they might know as well?

Consumer Price Index at 2.2% for May

Yes, inflation is on the rise folks, up from 1.7% in April, hope you aren’t surprised, because I sure as shooting am not!

For those who wish to note the obvious, from this month’s report we have the following statement:

The acceleration in consumer prices in May was mainly a reflection of the 12-month increase in gasoline prices. This acceleration in gasoline prices occurred as crude oil prices almost doubled between May 2007 and May 2008. Gasoline prices increased substantially across the country, rising the most in Quebec and Ontario.

I’ll take “State the Obvious” for $1600 Alex. This is only the beginning folks and this is going to trigger a reaction in interest rates, I think this might be time to start partying like it’s 1974, because we may be hitting that “tipping point” (to use an overused and trite term) and may be heading for some heady inflation rates real soon.

Property Tax Day in Ottawa

Given that the Hockey Night In Canada theme’s rights are already owned, I am curious what tune I might play as the theme for Property Tax Day in Ottawa (feel free to add ideas in the comments section), I’ll settle for the Beatles “Tax Man”, for now.

I had a look at my second payment for my property taxes this year, and I am struck by a few major points that I hadn’t noticed when I first bought it.

The City of Ottawa thinks my house has appreciated in value over the past 8 years by over 50% (if you calculate this by ( (New Price – Old Price) / Old Price ). I have done some work on the house, mostly upkeep things, but what would cause such an astronomical increase I have no idea. Yes I am living in one of the fastest growing suburbs in Canada (Nepean/Ottawa South), but new houses are going up around me faster than mushrooms in my back lawn!

There are a plethora of other interesting charges on my tax bill:

• Solid Waste Curbside pick up fee of $82.00, interesting, and I guess I don’t mind that, given I don’t want to go to the dump every week to drop my trash off.
• I am paying the Conservation Authority about $20.00, my only wish would be that they keep the Canada Geese and vermin in the parks and not in my backyard.
• A Capital Tax Levy, which I think is translated to “Give us more money dammit” of over $40
• Standard fees for Fire, Police, Transit and the actual money that goes to the City of Ottawa so they can afford all the interesting services they offer.

Am I getting good bang for my buck here? I guess, I do like the libraries a great deal, and we do use the recreational facilities a great deal. I just drove into work on the roads that the City supports, so I guess I should be paying for those as well, so I guess I am getting a bargain? At the end of it, I am paying %3.5 of my gross income on this.

I get hundreds of spam and phishing e-mails at work, and for the e-mail account I use for this blog I get thousands of offers, spam, and phishing e-mails, and I have seen pretty much every one that has been sent (although I still wonder why only my girlfriend worries about the size of my penis, but that is for another post), so someone ignoring an e-mail normally wouldn’t cause me to write a post about it, but, sometimes there is an e-mail you should do something about.

My oldest, who is going to University in the fall got an e-mail last week, that she didn’t act on, and it may end up costing me (potentially) a large sum of money.

What Teenager Doesn’t Check Their E-mail?

That’s a darn good question, and the cost of it, is about 1/2 the cost of lodgings at University next year (and more) from what I can estimate, thanks to one of my children not checking her e-mail in the past 2 weeks or so (or at least not checking this e-mail in specific).

Evidently the University she is planning to attend this fall (if she passes all of her courses in high school) has a large 1st year class arriving in this coming academic year, so the residence board is worried they will not have enough rooms for all of the students who might want to live in Residence, thus they have devised a brilliant plan (IMHO) to deal with this.

One of their existing residence building has fairly large single rooms, so what the school will be doing is putting Bunk Beds into these larger rooms so two students can sleep and live where one would have been previously, which should help alleviate some of the over crowding problem.

The University’s housing folks are smart enough that they could simply force this on to their incoming first year students but that might cause some hard feelings, so instead they turned this problem into an opportunity so they devised a deal to make this an attractive choice, instead of a stop gap fix to their over crowding problem. The solution is ingenious, they sent out an e-mail to students going into first year that made the following offer:

1. Any first year student who volunteers for one of these bunk bed rooms, would only have to pay 1/2 of the normal residence lodging fees (excluding food). That in itself makes it a very attractive deal, but they weren’t finished.
2. In addition any student who is in one of these rooms, gets a free laptop computer and the residence will be set up with wireless Internet, due to the rooms being crowded and maybe not having enough space to study or work. There will be study areas set up to allow for these students to have  a work place somewhere near their rooms.

Great deal, don’t you think? I thought so when my oldest told my wife and I about it on Monday night, after my daughter finally checked her e-mail, however, the deal had been sent out on the previous Thursday and evidently by Friday morning all the spots and volunteers needed had been filled, so we missed out on this deal.

Did we really lose all that money? Not really, but it does go to show that sometimes you should check your e-mail a little more often than once every 2 weeks or so. Lessons we learn in life are never easy, and they always seem to have a large monetary value of some kind, unfortunately.

One of the interesting trends I have noticed in my household is that during the summer months spending tends to drop, due to:

• No school fees needed for trips and such
• School lunches are now part of the regular groceries
• Organized sports are mostly complete so very little spending there
• Less running around, so a little less gas money spent.

This gives us a chance to try to catch up before the September onslaught of spending. September to December is the worst spending time for my family, due to start of school, sports and Christmas all piling in together and causing a glut of spending.

Did I mention it’s 6 months and 8 days until Christmas? Have you started planning yet?

Lazy Good For Nothing Canadian Workers

I mean that in a facetious fashion of course, but productivity dropped for another quarter again, according to Stats Canada.

In the first quarter of 2008, the labour productivity of Canadian businesses declined for a second consecutive quarter, in a context of inclement weather, reduced working hours, and a widespread drop in manufacturing output, especially in the motor vehicle industry.

Productivity of Canadian businesses edged down 0.3% in the first quarter of 2008, slowing from the upward revised 0.7% decline in the fourth quarter of 2007. The back-to-back declines followed four quarters of growth.

I think higher gas prices is going to be hitting us and a much stronger Canadian Dollar is going to really hurt manufacturing for a good long while.

BCE Takeover to the Supreme Court

BCE takeover bid takes another step towards wherever it may end up with a Supreme Court hearing being set. This expedited hearing means that BCE’s battle with it’s bondholders might be over soon and the final fate of BCE may be known before my kids go back to school? Maybe a little premature on that, but who knows?

More importantly the BCE board has defferred on whether to declare a second quarter dividend until the end of June, and speculation has it that that money might be used as part of a deal with the bondholders.

The Canadian Press reported Friday that one scenario would see the $294 million that otherwise would be paid as the second-quarter dividend instead used to compensate bondholders.

Hey, that’s my money! I am a shareholder and I hold BCE as a dividend paying asset, and you guys are keeping my money? Hey!