Canadian Personal Finance Blog

The Boy Scouts motto is very topical for this week in my life, you should always be prepared (or as prepared as you can be) for the “knuckleballs” that life may throw at you.

Click, Click, buzz….

This was the noise that my wife’s van made on Wednesday when I went out to start it. It kept making those noises even after I had taken the key out of the ignition, which really freaked me out. Luckily I called my mechanic who said it sounded like one of the cells in my battery had gone and my 12 Volt battery was now a 4 Volt battery. The little I know about electrical components in cars (especially a lot of the computer based stuff) this is NOT a good thing, and a bad battery can cause damage to a lot of VERY expensive components, so I was very worried what might come of this.

The nice man from the CAA showed up at my house, asked what year my car was and what the problem was. He was confident it was the battery, because he told me that any time he rolls up and it is an ‘01 or ‘02 year car that won’t start, if it still has it’s original battery, it is the battery! Luckily we were able to jump start the van and it stayed running. 

I was able to drive the Van to my mechanic who did a quick diagnostic on it, to make sure nothing in the control systems had been fried, replaced the battery and $250 later, I had a functioning van and a new battery.

Given I am living on my severance, this was not an expense I needed or wanted, but unfortunately it needed to be repaired. 

This Week in Personal Finances

My wife and I sat down and mapped out what to do with the lump of money we have so far from my severance (another block appears on January 1), the following financial actions were taken:

• All bills for this month were paid (can’t hide from those). Pay things that cause heat to be turned off, lights to be turned off and water to be turned off (i.e. The Rule of No Turn Off Bills)
• All short term debt vehicles were paid off (credit cards, and an unsecured line of credit), thus leaving only the Mortgage as a debt that must be serviced. This was a decision that may or may not be correct, simply servicing the short term debt and holding onto more money now, may be the right decision, but remember Debt Makes Me Sick, which is the reason this decision was made.
• Remaining moneys were dispersed to a Short Term savings vehicle (money market fund), a Higher Interest Savings account (shorter term savings) and an amount was left in the chequing account (you remember the one that has already had money defrauded out of it).

Enjoy the Autumn folks and have a great weekend.

One of my favorite topics to discuss with anyone political is: why is it that the Canadian Tax system seems to be skewed against the single income family?

Most of the time the response I get back is a lot of “baffle gab” about supporting families through social programs, etc., however that is not what I am saying.

If you gave a couple (be they married or not) an ability to pool their income and income split (as they currently can with pension income after age 55), you might be surprised at what comes of this. If I was able to income split with my spouse (when I was employed at least) the amount of tax I would have paid would have been staggeringly less than I did as a single income earner, even with the paltry tax credit for the “Married tax credit”.

I have done numerous articles on this one (and have caused some interesting discussions in the comments as well), so I won’t rehash the numbers, but I think if the government gave families or couples the capability to income split or income balance (if that made sense) and had the concept of the Household Income, I tihnk they might see:

• More single income families, since it would make more sense for a spouse to stay home instead of taking a lower paying job.
• Higher employment numbers, since there would be many people who would stop looking for work, as they are more of a family asset as a tax shelter.

Haven’t had any politicos appear on my doorstep yet, but given I am home all day long, I feel sorry for the first one to show up on my doorstep.

Severance and Redundancy

Those of you who are regular readers know that I work in the High Tech industry at a large telecommunications company, that was until Wednesday July 30th, when my position there was declared redundant and I was given a severance package.

This is not a parable or a story on my part, this has actually transpired, I am now gainfully looking for employment after 20 years of work at the same company. As I mentioned yesterday, this is most likely going to temper and change the tone of this blog, to be less “savings” oriented and more “survival” oriented. As most can tell, I write about things in the financial area that matter to me and to my family, and this kind of upheaval and change is bound to cause a thematic change in my writings (at least for now).

I have spoken to many people about this already (including most of my loved ones, hopefully no more are learning from odd places, as my Brother learned from a comment I left on an industry web site), and I have already “activated” my network of contacts for job searching.

I am open to requests for articles or requests from my readers about this event in my life, however I must say that legally I am not allowed to say how much my severance package is, and there are some other points I am not supposed to discuss, that I can’t remember. I will say that it is very generous (but it should be given I have been there for 20 years, and am now 47 years old), and I have been given access to a firm that will help me get ready to find a new job.

I am also eager to hear of stories of redemption and success in this area, as well as helpful tips on how to survive and better still overcome this tumultuous event in any worker’s career.

Excellent Layoff and Severance Articles So Far

• Gail Vaz-Oxlade has written this excellent article: 9 Things to Do If You Lose Your Job . Good reading.
• Canadian Capitalist made a post a while ago (and he and I have spoken in E-mail about this situation already): Surviving a Layoff .
• Uncommon Sense also lays out some important points in: 14 Tips For Living Through a Layoff

Michael James talked about found money yesterday and the joy of paying off bills with found money, and how we should not squander this found wealth, and really use it to create happiness in the future by paying off debt now. I think this is a sensible approach to found money, but it made me think about another post I did a while ago, which was how couples deal with money.

Many times found money can cause a great deal of consternation between spouses because each have their own idea of what the best thing is to do with found money.

I think this is natural, as with most every subject possible spouses are going to have their own ideas, but the problem arises when the two ideas are contradictory or even orthogonal to each other.

Say Mary and Bob get $10,000.00 in found money from an inheritance. Mary thinks she’d like to go on a nice vacation with the family because the family has never really been on a vacation, however, Bob thinks that putting that money on their Mortgage (thus shortening it’s term by 5 years), is the right answer.

Reading this, it sounds like an easy enough “problem” to deal with, both folks want to do what they think is best with the money, but the problem now is you have is a simple difference of opinion. The problem I have seen in my life and from other folks I know is that this is not a simple problem, because:

• There is no wrong answer (or right answer)
• Both spouses have voiced their opinion, and thus feel they have the right answer.
• Money and money management is a divisive factor in many relationships

Is there a Solution?

Only if both parties are willing to compromise, or one is willing to lose (i.e. typical Prisoner’s Dilemma issue). Wikipedia’s explanation of the Prisoner’s Dilemma is:

Two prisoners (the players) during the interrogation each have a choice: whether to betray the other one, and thus to decrease his own jail time by, for example, 1 month (as a compensation for the cooperation), while increasing the jail time for the other by, for example, 10 years, or to stay silent. Each of the prisoners is only interested in receiving the least possible sentence. It shall be assumed that the prisoners make their choices (to betray or to stay silent) simultaneously, and they know for sure that their choice cannot affect the choice of the other one.

All right I am stretching this (feel free to leave a comment), but the need to compromise and find the best solution for the couple is not always obvious to either spouse, and sometimes they feel it is not in their best interest (they got their way the last time, so I want my way this time). Sound familiar to any of my readers? Never happened to you?

Resolution?

I have no canned simple answer for this one, because as I keep saying, Money is a strange and divisive thing in a relationship, especially if the spouses do not agree in terms of money and how to use it.

What needs to be done is have clear lines of communication and rational discussions between the spouses about what they want to do, and a decision made that doesn’t cause either to feel that they have “lost” in this decision. Sounds easy doesn’t it ?

Think this is a simple thing to resolve? You and your spouse never have these issues? Then you are either very lucky (or very naive).