Canadian Personal Finance Blog

“The rich ruleth over the poor, and the borrower is servant to the lender.”  -Proverbs 22:7

My that is a very topical quote for a Personal Finance Blog isn’t it?

The bible says that the Rich rule over the poor, that is your thought for Labor Day, since the rich do as they please and the poor work for their lives (OK, trite and over simplification, but still pretty true). I’m sure the bible is not speaking solely on a Financial angle, but this is something to keep in mind.

The borrower is the servant to the lender is very correct. If you are in debt to someone or an institution, they call the shots, and you have no control of the situation (or very little). The only way to get back control if you are a debtor is by paying off the debt, and then you are free.

Tired of me bludgeoning you with Bible quotes on debt? How about this one then?

From Shakespeare’s Hamlet, 1603:

LORD POLONIUS:
Neither a borrower nor a lender be;
For loan oft loses both itself and friend…

In life, in the bible and in literature, debt is a bad thing.

Having worked in High Tech for 20+ years, I have heard many tales about lay offs and how they have “gone down” for some of the High Flying start ups of the late 90’s.

One former colleague told me about how his severance package was his laptop PC, and his Aeron chair (the company had burned all of their cash and the receivers were coming to take everything that was not nailed down). Another told me about getting two weeks notice, and a promise of a package, which never materialized, because creditors got wind of it, and garnished it from the company.

I am luckily nowhere near that situation, if anything, this is a financial opportunity for me, and I am going to have to learn a great deal about the Canadian Tax system in the next few weeks. I was under the naive assumption that it would be relatively straight forward with my severance package, but that is not the case. There are options and scenarios that I must think out and figure out what the optimal financial model will end up being for me (given my age and current financial status).

My vagueness in my description is intentional because I am just not sure about a lot of the financial twists that will be transpiring in the near future.  I will also need to build a certain amount of “crystal ball” gazing about what I think may be happening in the future and what will be important to me as well. Some of the points already in my mind to think about are:

• Do I think I can find a job very soon (i.e. the next month or so)?
• Will I find a comparable paying job in the near future (next 4 months)?
• Which is more important Debt Reduction or Retirement Savings? (right now the answer is both, with an emphasis on Debt Destruction).
• Do I need benefits in the near future? Yes, I think so.
• Should I keep the life insurance from my previous employer? Yes!

Only some of the simple concepts and ideas I must weigh in any decisions in the next month or two.

More likely I will be writing my opinions up, as much for me to think and read my own thoughts, but also looking for any input from my highly gifted readership as well.

Those were the happy thoughts told to me one day at Church. The minister giving the sermon, worked with homeless people and such, so his view might be a little stunted, but that was the point of his statement, “We are all three pay cheques away from living on the streets”.

Is this really the case? Well that all depends on the debt burden that you carry.  If you suddenly had no means of income, but you didn’t have any debt to pay off, you’d simply need money to pay your day to day expenses that may be manageable or controllable. If you are carrying a large credit card debt load, and have minimum payments to make, then your issues are far more complicated and you must find ways to pay spiraling debt as well.

Am I three pay cheques from living on the streets? I don’t think so, I have a fair amount in RRSPs and such, and I also have some savings, but I also have a debt load that does worry me, and given the renewed vigour I have been given from reading good books like: Smoke and Mirrors , I think that is my goal is to kill my debt load while I can.

BCE & Nortel Both Cutting

The news is full of job cuts at BCE as they head towards privatization, and there was the renewed cutting announced by Nortel at the start of the year as well, which may mean some dark times ahead in the High Tech World as well. Hope those folks aren’t three pay cheques away from the streets.

Telus and BCE can both enjoy a new class action suit against them as well for their new texting surcharges. That won’t help BCE, that’s for sure.