Canadian Personal Finance Blog

Archive for the ‘Dollar’ Category

It’s a Mad House, A MAD HOUSE!!!

NB: You have to read that title like Charlton Heston is screaming it in a movie, to get full effect.

A weekend of Basketball Nirvana here in Ottawa begins, with NCAA March Madness games, and then slides into the CIS Men’s Basketball championships going on at Scotiabank Place. If you want to see basketball, Ottawa is the place in Canada to see it this weekend.

If you live in Ottawa and own a house you also better have paid your property taxes as well. Income tax season continues to roar ahead as well for we Canadians, but is that all we have to worry about? The Canadian dollar is almost at parity with it’s American Cousin, and our Gasoline prices are back to $1 per litre again, while our temperatures are more akin to May in Ottawa, not March. All in all a very interesting week here in the Nation’s Capital.

What do the Financial Bloggers have to say this week?

• Michael James shares his views on Hot Water Heater: Rent vs. Buy, which I witnessed first hand (OK I saw the end where the new water heater was in place). If this had happened to me, I am confident my basement would have looked like a scene out of Waterworld.
• Million Dollar journey got the geek in me all a quiver with their post Free iPhone Apps that Save You Money (Canadians), because even though I don’t have an iPhone, I do have an iPod Touch, and they work mostly on there as well. Quicken has a client for the iPhone as well, if you are part of the Quicken Cult.
• Preet at WhereDoesAllMyMoneyGo answers a Reader Question on Multiple RRSP Accounts, which points out that (A+B) * C is the same as (A * C) + (B * C), for those who like Math (but if C is Zero, then who cares?)
• The Canadian Capitalist points out that even in Index Funds you can have some “issues” say with Tracking error in TD e-series Funds, Part 1. This is of interest to me as I do own these funds, well worth a read.
• Larry MacDonald suggests that Economic lift-off may be delayed, due to the tight money policies in the states. True, but now that Canadian’s can buy American so cheaply, maybe Canada will kick start the American economy?
• The Canadian Couch Potato asks How Much Risk Do You Need to Take? which discusses the always interesting discussion about the balance you should have between fixed income and equities. You mean I shouldn’t have all my money in International Buggy Whip?
• Gail V-O points out that if you can’t live within your means, maybe you should Quit Your Unsustainable Life, but you already knew that didn’t you?
• Canadian Financial DIY asks, is Inflation at 4% to be the New Normal?, that would be nice, except then you can kiss big pay raises good bye too

Have a hoopy weekend.

CPI Numbers on Monday

Stats Canada will publish their Consumer Price Index today, but I will have my regular post about that on Monday.

That is a Credit Card Debt!

Here in Canada we are flagelating our government because they are going to be running a budget deficit (they are going to spend more than they make this year) of over $50B, and rightfully so, given we have been runnnig surpluses for several years (i.e. making more than we spend), however we are humble overspenders compared to our brothers to the south (the USA). The estimate now is that this year the US Federal Government will run a deficit (remember that is overspending this year’s budget) of over $1 Trillion, wow.

That is effectively the same as giving every single human being on the earth (assuming the Trillion they are talking about is 10 to the power of 12) $140.00, this year.  Canada’s deficit would only give every human a paultry $7 , as you can see we Canadians are small time in this overspending world.

How will this be remedied in either country. Some are arguing in both cases there are 1 time bail outs that do not reflect actual spending habits (Bank Bail outs, Car Company Bail outs, etc.,), and that may well be the case, but what is going to be the fall out trying to pay back this deficit? Canada had been paying back the National Debt (i.e. the money we owe, from accumulated deficits over the years) however this latest set back is not a good thing.

As with personal finance every time a deficit is run for a year, it will eventually need to be paid back, Live Now but you will Pay A Lot More Later.

Local Ponzi News

If you think Bernie Madoff is a uniquely American issue, think again, evidently a new collapsed Ponzi scheme has been uncovered in Montreal. Earl Jones, the advisor in question is missing, as is all of his “clients” money as well.

This begs the question, do you trust your financial advisor? Are you sure you know where all your money is, and why it’s there?

Yup, it’s half way through 2009 and how goes your financial plan for this year?

For me my plan of having a job by now, has not come to fruition, but I am still working hard at making this happen.

This week’s posts will discuss what areas and ideas you maybe should be thinking about for your personal finance plan and what you might need to tweak, change, add or forget about in your Yearly Personal Finance plan.

Do You Have a Plan?

You are now saying, “Wait a minute, I don’t even have a financial plan for this year?”, that’s a problem, but not insurmountable that is for sure.

So many people a yearly financial plan has to be complicated, over-thought or grandiose, but that is really not the case (if you don’t want it to be).  A personal finance plan can be as simple as you want it to be, and is simply based on the goals you want to hit this year (financially), no more, no less.

Simple Plan

A simple plan for a year might be:

• Cut your credit card debt by 30% (if you have credit card debt, if you don’t then you have achieved this goal, give yourself a pat on the back). If 30% is way too much for you, then either:
  • You have one hell of a credit card debt and you need to see someone about this.
  • You need to adjust your lifestyle, because this is do-able if your credit card debt is less than $10,000
• Pay off 15% of your University loans (adjust as you see fit).
• Open an RRSP account and put in at least $1000 for the half year. Make sure it is with an investment firm and not with an Insurance Company or a Mutual Fund firm.
• Create an emergency account that you will deposit $100 a month into (open a TFSA if possible for this as well).
• See how much you pay in bank fees monthly and lowering them or cut them to Zero, if possible (see PC Financial or talk to your bank about lowering the fees). My regular readers know how I hate bank service fees.
• Buy 1 less coffee or latte a day and put that money in your top desk drawer (and then put it monthly in your emergency or RRSP account ).

Simple as that, no fuss, no muss, and less worry, if you hit those goals.

Tomorrow

What to look for in your Personal Finance Plan and how to deal with success and with failures.

Another interesting month in March for the CPI with the CPI running at 1.2% down from 1.4% in February. Lower inflation is a good thing for consumers for now, except the numbers are very deceiving, when Food is the major upward pressure (a day to day cost we all incur) and with Energy prices stabilizing, what will come in the next few months. With the amount of money “vomited” into the monetary system by governments, is Inflation that far off?

Food Glorious Food

The main culprits in the upward pressure is the cost of shelter and the cost of food. Specifically Stats Canada points out:

Food prices, the largest factor, rose 7.9% during the 12-month period to March, on the heels of a 7.4% rise in February. March’s increase was the largest since November 1986.

Yikes, that is expensive, seems our Food dollar is really not going that far these days.

Energy and Transport DOWN

The Energy and Transport sectors did their best to lower the CPI, if not put us into a deflationary spiral, by dropping significantly over the year as well. 

Mitigating the overall increase in the CPI was a 6.2% decline in transportation costs. Year-over-year price drops for gasoline and for purchasing and leasing passenger vehicles were the primary downward contributors. Increasing prices for passenger vehicle insurance mitigated the overall 12-month drop in transportation costs.

Excluding gasoline, the CPI rose 2.4% in the 12 months to March. Overall, energy prices fell 11.2% during the same period, a larger drop than February’s decline of 8.8%.

Now that is a price drop! No wonder they are laying folks off in the oil patches. 

CPI for March

The Big Picture

Random Thoughts will return next week, have a great weekend all.

Mardi Gras is on Tuesday, so that means that Lent begins Wednesday this week and this is a perfect opportunity for folks to start something new with their Personal Finances (and their spiritual life, if they wish as well). Easter is the time for new beginnings or restarting something you need to start doing again, and most people view Lent as a time to “find something to give up”.

That is one way of viewing your Lenten journey, but another way is to look for something to Enrich your life for the 40 days of Lent (leading up to Good Friday and Easter). 

Financial Lenten Journey

What areas of your personal finances could use either Enrichment or Better still a sacrifice that might help your financial well being? There are some very simple ones that I think about every year (and have done a few of them):

• The Latte withdrawal penance. Cut out buying coffee for the 40 days of Lent and put that money aside, to either save, give to charity or pay down your debt. Keep track of this and see how much money you might be saving here, it’s worthwhile finding out where this discretionary money is going.
• Read 4 Personal Finance books over the 40 days to enrich your understanding of your personal finances or your investing adventures. Building up your expertise over Lent is a good thing.
• Brown bag it for 40 days, give up buying lunch at work, and bring your lunch instead. Another way to find out where your discretionary spending is going.
• Take the bus to work for Lent. Leave the car at home, buy a bus pass and take the Bus to work. Yes gas is cheaper right now, but not driving might have other benefits for you (less stress, more exercise, etc.,). 
• Live on cash for 40 days and get rid of your credit cards. Freeze them in your freezer, lock them in your safety deposit box, or cut them up, but live on CASH only (no debit either) and see if you can do it, does it change your spending habits?

Think about these or suggest others, I am open to suggestions myself. Shrove Tuesday is tomorrow and then Ash Wednesday means Lent begins and your journey begins that day.