Canadian Personal Finance Blog

Archive for the ‘Case Study’ Category

Time and Financial Goals

Yesterday I celebrated my daughter’s 20th birthday, by reminiscing about the day she was born (she is out of town at school, so we won’t celebrate with her, but assume she celebrated with friends).

Twenty Years Ago

The decision to have kids was a hotly discussed topic between my wife and myself, since I was positive we could not afford to have kids at the time (as usual, my wife was correct, that we would simply adjust our lifestyle to fit the new costs in).

Twenty years ago, I had little or no thoughts of retirement, and saving, we hadn’t even bought our first house yet (another hotly discussed topic in the apartment we rented at the time).

My parents luckily thought about the future for us, and started buying our kids savings bonds for their post secondary education (or when they moved out of the house). This is something that I hope I can remember to do for my kids when they have kids, and that money has since moved into RESPs and such. This is something that all parents can pass on to their kids, teaching them the importance of saving for the future, because the future comes a lot faster than you think.

I didn’t really even have any RRSP’s set up in 1990, I did have some savings that we were putting away to buy our first house, but that was hard enough to build up. In hindsight I could have made a lot of shrewd investments, but I have also seen over twenty years that “sure things” in the world of investment are not as sure as they look (i.e. Nortel stock and such).

What Would I Change?

It’s easy to be trite in this situation and list out the obvious things that I should have done back then such as:

• Start an RRSP and invest in high tech early and get out early
• Don’t build up credit card debt
• etc., etc., etc.,

but this would imply some degree of regret or sadness about those twenty years, and I don’t wish to portray those years that way.

I have learned more from being a parent than I would have, had I got a PhD. I have had more happiness and joy in those twenty years than I deserve (or merit), but I am unapologetic too.

Yes there are times where I look back and think, “I should have….”, when it comes to some money decisions and some other decisions in my life, but in some ways I learned more from my mistakes than from my (minor) successes in the financial world.

Am I saying, “Don’t worry, be happy!” (to paraphrase Bobby McFerrin) about your money? No! I am saying you should be careful and take the obvious steps to be safe with your money and to avoid debt every which way you can, however, if you think you have done all you can, and you are comfortable, then you should enjoy your life, is all I am saying.

Tempus fugit, and twenty years will fly by in a heartbeat, so make sure you are enjoying it.

This has been mentioned by a few bloggers, but I think the topic is a good case study in investing in “growth areas” (or as I would call it speculating on stocks).

Olympic Final Hockey Tickets

When the Olympic Hockey Final tickets went on sale about 2 years ago, they were snapped up very quickly, but were all sold (presumably) at their face value by the Vancouver Olympic Committee. VanOC made their money selling those tickets, and this is much like a company issuing stock or like an IPO (for a newer company). The profits have been made by the issuer.

Now we get into the world of presumed value of the tickets, and what they start being re-sold for.

As the Olympics came closer and closer the value of the tickets rose from their face value, to what folks are willing to pay for this Final Game, and I would assume that they started appreciating in value the day they were sold by VanOC. The appreciation may not have been much, but I am sure you could have made some good money simply “flipping” your tickets as soon as you got them.  At this time there is very little “risk” in this investment, because other than the Olympics being cancelled or Team Canada refusing to use NHL players, the tickets are worth at least as much as what they were bought for.

Speculation Time

When Team Canada was announced a month or so ago, that is when the value of the tickets might have started going UP and DOWN (i.e fluctuating), with all the Arm Chair GM’s looking at the roster and deciding whether Team Canada could make it to the game.

The big risk now introduced is, if Team Canada does not make it to the game, the tickets value drop significantly (possibly well below face value).  This is what now will drive the value of the tickets, Canadians would go watch the game if Team Canada was going to win 100-0 or lose 0-100 (maybe not pay as much) but if there is no Team Canada your investment is going to “tank”.

Tournament Starts

Team Canada blows Norway out to start the tournament, and Confidence is high, so your ticket value is going up, and you are sitting pretty. No reason to sell right now, right? What about locking in your profits, because remember what happened in 2006? No, you decide to keep your tickets, and keep going!

Team Canada then plays a worrisome game against Switzerland to begin with and now the ticket value could go up or down with “experts” saying there is a chance this team may not “have the stuff” that is needed to get to the Gold Medal. Do you take your profits now, or do you hold on and hope for  Team Canada to turn it around? You decide to keep your tickets and pray for the best.

Team USA appears with a hot goaltender and puts a beating on Team Canada that causes a collective PLOTZ in Canada, and the experts are now sure this team does not have what it takes and now some of your implied profit disappears, because now Canada must play Germany and then Russia to get to the Semi-Finals. Your ticket value has now dropped a great deal, and you kick yourself for not selling after the Norway game, when your value must have been at the highest, but you decide to ride this donkey to the end.

Canada knocks off Germany handily, and now your ticket value is increasing again, and that voice in your head asks, “Is it time to sell?”, but you are a gambler, and you know that if you hold on and Team Canada beats Russia (the experts are again saying this is going to be a rough game) your ticket value will rebound, so you hold on.

Holy cow, Canada obliterates Russia, and your ticket prices sore, with the possibility of a re-match between the US and Canada in the finals a real possibility (this would give you the Maximum pay back on your ticket, because not only could you sell to Rich folk from Vancouver you could make Yankee Dollars from Americans there too). You are on Cloud 9, thinking, all Team Canada has to do is knock off the Slovaks, and you will make a fortune, on your simple investment!

Here come the Slovaks and Team Canada is cruising, until that Goal and suddenly the market for your tickets gets a lot more nervous. That second goal and you are again panicking that you should have sold after the Russian game and taken your profits!!! OH NO!!! But, Team Canada pulls it off and you are given the added bonus of the Americans pulverizing the Finns, so here you have the ultimate appreciation of your ticket investment, Team Canada vs. Team USA in the finals, your investment has paid off.

Congrats Your Investment Has Come in!

Or has it? Should you sell the day before the game, or what until the day of the game? How are you going to sell it? Will you sell it to a scalper, or will you stand in front of Hockey Place and try to sell the ticket yourself (risking running afoul of the law enforcement agencies that frown on that kind of free enterprise?)? What happens if you don’t find a buyer who is willing to pay what you want?

Maybe you are a Hockey Fan and you don’t care what anyone offers now, you are going to enjoy what you paid for, and don’t care of how much money you can make (you will however feel smug when the two guys who sit down beside you at the game saying they paid $10,000 each for the tickets, or will you? Will you have non-sellers remorse?).

An interesting case study, what would you have done?

After yesterday’s tale of Chutzpah I figured I’d show that I can show just as much temerity if I am pushed.

Over Christmas we purchased a new washer and dryer (a purchase we had been putting off but decided it needed to be done, as our washer treats our clothing the same as if you beat the clothes on a rock by the river). We saw that Home Depot was having a “Boxing Day” sale, and we actually walked down to Home Depot to purchase a washer and dryer. My wife had done her normal extensive investigation of the topic, so she knew what she wanted, so I let her have at it with the sales lady.

I wandered off and found that Home Depot did sell “liners” for my new green bin, and I looked at various other building supplies. I returned to find that my wife had settled on a model and price, which seemed reasonable and we then needed to decide when to have the new washer and dryer delivered.

Our previous configuration had a Natural Gas based clothes dryer, so to remove it and replace it with an electric dryer would mean a gas fitter would need to come and “cap” the supply line, so we pushed the delivery into mid-January which we were told was not a problem. We also “qualified” for the “don’t pay until next year (and then we gouge you with ASTRONOMICAL interest rates)” payment plan, so we signed up for all of this and left the store treading carefully (Ottawa had an Ice Storm on Boxing Day).

Fast forward to 3 days before the new washer/dryer was due to be delivered. By this time Home Depot had already put the purchase on my credit card (interesting, I never like paying for something I haven’t received yet), and the gas fitter had just come and capped our Natural gas line, leaving us with no clothes dryer, but for only 3 days (or so we thought).

That very afternoon my wife got a phone call from the manufacturer of the Washer/Dryer (LG) that our delivery was going to be delayed by over a month because there were no more Washer/Dryer models in North America of the type we purchased. Now that in itself is a type of chutzpah but at least they called, leaving my wife at a level of aggravation which if it was on a scale of 1 to 10 would be around HOLY CRAP! level.

I got on the phone to the manager of Home Depot to voice our displeasure about the fact that:

• We no longer had any ability to dry our clothes for more than a month (at least).
• When we “purchased” the washer/dryer it was not actually purchased, it was in fact simply us saying we’d like them and if they were in stock, we might get one when we wanted. No one went into the “warehouse” and marked a set “Property of Mr. & Mrs. C8j, deliver in January”, we simply put in an order which might be filled.
• The purchase had appeared on my credit card yet I was not going to have it for more than 2 months after I allegedly “purchased” the product.
• The manufacturer was the one who told us about this, and not Home Depot
• He had upset my wife and I got to enjoy her wrath, when in fact she was mad at him and his store

After assurances that the situation would be remedied, the Manager never called me back, but did call Mrs. C8j and offered her a “loaner” clothes dryer until our actual washer/dryer pair arrived, for free, so that we could continue to have clean clothes and such. Mrs. C8j was happier with that solution (although still secretly seething with hatred for Home Depot) and we now have this dryer in place and we are able to have clean clothes until our new washer and dryer appears.

Was this Chutzpah on my part to get a loaner dryer? Not really, but I do think it is truly chutzpah on the stores part not to ensure that they had stock enough to make their deliveries for the next month.

My guess would be someone looked in the inventory for the warehouse, saw there was a set left and sold them before they could be delivered to us, so someone else got a “great deal” and “fantastic service”, while I ended up with a loaner dryer and a wife with the disposition of a Wet Wolverine.

For a while, Mrs. C8j and I have been hunting for a new family vehicle. We have had many arguments discussions about what type of vehicle we wished to purchase. I think we will not need a van for much longer and she sort of agrees but thinks we still need one for the short term so we should get one, and after a great deal of consternation consultation I we agreed that a van would be the best way to go. I must admit that we did try a few SUKs SUVs and while they felt OK, they did feel a bit “truck-ish” for my liking.

We have been dealing with a smaller dealership who had in stock the van we were hoping to get (used) a Sienna from Toyota (please don’t treat this as me endorsing this model, or that I have received any compensation for this story). The salesman at the dealership seemed a nice personable chap, although maybe a bit slick for my liking, but we thought that might be where we wanted to make our deal.

We had decided before we got too far into this process, that we would purchase a used vehicle this time (we purchased new last time, but I decided a used vehicle was the way to go). We borrowed from the Ottawa Library the Lemon-Aid books and saw that in fact the Sienna from ‘07 on seemed to be a good choice. If we were going to buy a used car, I was going to have my mechanic who I trust in these situations, to have a look at whatever we might choose to buy (I simply do not trust dealerships that much).

I mentioned to the salesperson we were dealing with that we wanted to take whatever vehicle we were thinking of buying to my mechanic to have a look at it, and the sales guy kind of got twitchy (i.e. tried to dissuade us), but eventually relented, figuring that he might lose a sale if he didn’t agree (smart guy).

I then called my mechanic and said I would like him to have a look at a vehicle and he said he would, and he asked who I was thinking of buying from, and when I mentioned the name of the dealership my mechanic hesitated. After a short pause he said he had had some dealings with the dealership and gave me some advice about possible issues getting the van off the lot and to his garage. When my mechanic makes that kind of statement the hair on the back of my neck starts to raise up. I thanked my mechanic and said I’d call back when I had decided on a specific van.

Time passed and eventually we decided (after consulting CarFax on line) on a specific Sienna that our original salesman had on his lot. My wife called up to talk to our salesman, but he wasn’t around, so she spoke to the “Owner” of the dealership.

Now this is Chutzpah

My wife asked the question, “What do we need to do to take a van to our mechanic to have him inspect it before we buy the van?”.

After a short pause the Owner’s answer was classic chutzpah, “First you buy the van, and then take it to your mechanic and whatever he may find that needs fixing, we’ll fix.”. This is most definitely not what had been discussed previously (we had been told no worries, it should be fine, you can have the car inspected BEFORE you buy it).

Let’s analyze this amazing piece of chutzpah, you want me to give you a large amount of money, have the car licensed into my name, and then once I am owner of the vehicle and my mechanic finds something, I should trust you that you will fix these problems? I do realize that in Ontario a bunch of new rules are in place dealing with used vehicles, but I am also not naive enough to believe that they will somehow protect me in this situation.

I guess it all comes down to who(m) do I trust, a car dealership that I have never dealt with (that I have heard some odd stories about), or do I trust my mechanic, who has fixed my cars for 20 years? As you can guess, we did not call back this dealership.

We have since found a similar vehicle with a larger dealership, which may cost a bit more, but they are fine with us taking the van to my mechanic (if I leave a deposit, and my current vehicle) and will abide by whatever my mechanic says (and will find another van if my mechanic finds an issue with the van). The CarFax report on the van suggests there should not be a problem.

Financial Moral of the Story?

None really, just that I am a very untrusting person and that if you try to sell me things, it doesn’t take much to get me to go elsewhere, or completely walk away from the purchase.

My wife a couple of days ago took on the daunting task of creating a space for a gas fitter to come in and work on a new project in our house. Our back room in our basement was very cluttered and there was no way anyone could get anywhere safely, so she took on the task of attempt to clear a space in the chaos.

I came home and was very impressed with the work done and the amount that was being thrown out (although there still is a great deal to dispose of) in some industrial strength garbage bags. The area was swept and cleared so that the work could be done without fear of anyone breaking a leg attempt to scale “mount crap”.

My wife was not impressed when the workman finally showed up and was able to do all the work needed on the main floor of our house and went nowhere near the basement.

Was this a waste of time? NO! That kind of de-cluttering is a good thing for many reasons:

• Safety:that mess was going to injure someone, and could easily have been a fire hazard, so it needed to be lessened in magnitude.
• De-Clutter:the amount of crap that we were never going to use again (and things that should have been disposed of long ago) is now reduced by 9.75% now, which means we only have 90% of it still to clean up (but still a good start)
• Security issues:although it might be possible for an Al-Qaeda cell to hide out in that mess, I did not mean that exactly. We found a whole set of banking records for an organization my wife no longer works for, and those records have now been destroyed. That kind of security is very important.

Do you have a lot of old financial records hidden in the clutter of your “secret stash” (be it in your basement or in that closet you just never open)? Maybe it’s time to at least find all the old credit cards, banking cards, pass books, cheque books and bank agreements that you no longer need and destroy them. Leaving that kind of stuff around is just asking for problems later in life.

If you destroy it now, you know it no longer exists, if you simply “leave it”, do you know if there are records hanging around that can easily be used for identity theft? Maybe it’s time to go clean up a bit? Before you destroy those credit cards, make sure the accounts aren’t still active, as well.