Canadian Personal Finance Blog

So one of the major interesting issues financially that I am facing is whether to opt out of my former employers pension plan and take a lump sum payment (which will mostly be transferred to a Locked In Retirement Account (LIRA)) or leave the money in the employers pension plan, and draw from it at either age 55 (at an actuarially lowered rate) or 65.

As I have said previously I will be opting out, as I have very little confidence the money will be available when I get to retiring age, and now I read in the Globe and Mail the following (by Derek DeCloet):

The bad news is that at the start of this year, Nortel’s plans were already short by $1.2-billion (U.S.). The worse news is that 53 per cent of the assets were in stocks, which have been annihilated. So the pension hole has become a cavern – one that will have to be filled with cash that the distressed company would rather use for other things. Like surviving, for instance.

I read this and am not shocked, but I am worried, as I was supposed to receive information within 30 days of my severance about my pension options, however, I have not received anything in the mail as of yet, and I now wonder what new “wrinkles” may arrive in terms of this money.

My view is that this money is mine, and I have earned it over the 20+ years I worked at my former employer, and given they “capped” this pension as of January 1 2007, leaving my money there makes little or no sense to me. If anyone cares to comment or disagree, please feel free I am open to discussion on this issue.

U.S. Elections Tuesday

As the Daily Show’s reporter is fond of saying, “Can we just FINISH THIS NOW!”. I can barely stand Canadian Elections and the campaign is typically only about 6 weeks, how our American Cousins can stand the two years of grind is beyond me. 

Permit me to make the following morbid observation:

• The chance of John McCain dieing each year from his skin cancer is put at around 6%, so cumulatively it is much higher that he will die before the end of his first term as President.
• Senator Obama’s life has already been threatened and as Chris Rock has pointed out, there is gonna be some nut wanting to knock him off, just because of his race.

Errant Wallaby and Personal Finance

I have now been taught how to catch a run away wallaby, evidently you throw a towel over it, hold it by it’s tail (don’t let go) and put it in a bag, and call the Zoo in Kemptville it escaped from. 

What the heck does this have to do with Personal Finance? Be prepared! If I see a wallaby in my backyard I’ll know what to do, just like in Financial Planning, in case of emergencies make sure you have a plan. (Now I sound like Marlin Perkins from Mutual of Omaha’s Wild Kingdom).

Well an eventful week all around with the Western economies all on the brink of collapse and me reaching a milestone of sorts, and it’s all summed up with my catch phrase for the week.

It’s The Economy Stupid!

Around the blogs we read the following:

• Everybody Loves Your Money asks the chilling question, Is this The End of America? Where it is asked is it time for America to get it’s books in order?
• Nancy Zimmerman had a guest post by Franklin Delano Roosevelt stating The Greatest Thing We Have To Fear is Fear Itself. FDR guided the US out of it’s first depression, maybe he can lead the way out of this mess too?
• Michael James writes about Lessons Learned from the Great Depression, where he asks two very pointed questions at the end of the post, that we must all think about. 
• The Canadian Capitalist asks a timely question (especially for me) Thinking About Worst Case Scenarios, where he outlines some points to think about in these hard times, especially if you think you might lose your job.
• Larry MacDonald points out that The Stock Market Hates You!, gee thanks Larry, way to cheer me up with the headline!
• My Money Blog talks about Current Market Conditions: His Opinions, where he outlines maybe we should just all stop watching so closely? It’s kind of like asking someone not to watch a 300 car pile up going on outside of their house, but not bad advice. 
• Gail Vaz-Oxlade talks about how Credit Limits Going Down, not just credit rates, but limits too! Read on, as the sage of savings straightens you out.
• Free Money Finance points out How The Rich Get Poor, interesting in these times that there are still spendthrifts out there.
• On a happier note One Million and Beyond announced the birth of his daughter in It’s a Girl! Good for them, and good luck.
• I even had a momentous moment with Posting Number 1000 this week, which is funny given the futility of things sometimes, but I am still at it, for now. 

The Bank of Canada announced a 1/2 point drop yesterday of one of their key rates to 2 1/2%, and made the statement:

Bank of Canada lowers overnight rate target by 1/2 percentage point to 2 1/2 per cent

The Bank of Canada today announced that it is lowering its target for the overnight rate by 1/2 percentage point to 2 1/2 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 2 3/4 per cent.

Normally I would be dancing in the streets and celebrating (the way I was yesterday for the Canadian Personal Finance 1000th Post), however, sometimes things are not as they seem to be at first blush, at least from one bank.

Toronto Dominion: When is Prime Not Prime?

That is actually an excellent question for Michael James, as he is a Pure Mathematician who revels in all things to do with Prime Numbers, however, in this instance Prime means, Prime Lending Rate.

As of two days ago TD (my current bank of choice) had their Prime lending rate (for only their best clients and least risky loans) pegged at 4.75% and their Variable Rate mortgages (at least some) were available at that very rate. Yesterday an odd announcement and change was made that these loans are actually now at Prime + 1%, or 5.75%, thus bumping up the rate for all of these mortgages almost an entire point (and adding much more to monthly payments).

I on the other hand use a secured line of credit which allegedly is at the TD Prime Lending rate of 4.75% as of two days ago. Today, I have seen no change in that rate either up or down, which worries me.

1. The rate should drop 1/2% in reaction to the Bank of Canada rate drop, but it might not
2. The rate might go up 1% as has happened with the Mortgages to reflect the banks concern about liquidity and credit.
3. The rate might only go up 1/2% as a combination of (1) and (2)
4. None of the Above and the rate simply does not change, thus the bank pockets 1/2% increase.

It’s The Economy Stupid

Thanks for the 1000th Posting

All I can say is I am glad that the Canadian Elections are only about a month long, unlike our American cousins who can revel in them for almost two years.

I was going to write about what other financial bloggers have been saying about the election, but no one seems to care, so maybe I should just shut up too? Nah, but the most interesting weeks in an election is the first and the last, so maybe I’ll shut up ’til the last week before the election for now.

Puffins, Misunderstood Poopers

The biggest controversy of the week was an animated “attack” ad where a puffin flies across the screen and poops on Stephan Dion. The media were appalled at the audacity of this ad, me I thought it was funny, but it does give puffins a bad name.

Puffins are cute birds, and also an English book publisher (at least it was).

I hope there is not a severe Liberal backlash of Puffin bashing, please don’t blame the species for the act of a single deranged member with Tory leanings! Maybe we can get Sir Paul McCartney in to help protect the Puffins? They are cuter than seals, in my humble opinion.

Nothing Else Really

Really, it’s been kind of boring, I was hoping to hear of great tax breaks, or income splitting, or something good like that, but nothing. Ho-hum another boring week on the election trail.

No Candidate Visitors Yet Either

No one has come to my door yet, except one guy trying to sell me windows, so I haven’t been able to ask any of my canned questions for the Candidates either. The windows guy did agree with my stance on income splitting, but was disappointed when I didn’t want to buy his windows. He ran away when I asked if he needed any help, but he’d have to pay me in cash, not sure why.

No calls about putting signs on our lawn either. Now I haven’t cut the lawn lately, so it does look fairly shabby, so that might need to be remedied as well.