Canadian Personal Finance Blog

As I am cleaning up my blog (and making sure all of my links work) I find some interesting gems that I had forgotten that I had written. The following is a classic Rant from me Pay Day Loans: No, No, No!!!!. I have added a fun charicature of the Pay Day Loans business as well (the Great White Shark).

Pay Day Loans: No, No, No!!!!

As most of my regular readers know, I tend to get a twitch and rant loudly when talking about payday loans and the places that give out this “alternate credit vehicle” (a term used by the industry). I have pontificated about this point many times, but now Stats Canada has put out a study about the growth of this financial alternative, and also who uses it. Perspectives on Labour and Income examines this whole industry in detail, but Stats Canada has put up a good summary on their web site about it.

Pay Day Loans Just Like the Great White, A Perfect Eating Machine

Three percent (3%) of families in Canada have admitted to using these kind of services in the past 3 years. The family’s main bread winner is typically between 35 and 44, which is also interesting (non baby boomers, more like Generation X’ers).

This quote makes me feel very sad:

Almost half of families who used payday loans reported that they had no one to turn to if they faced financial difficulty, significantly higher than for non-users (32%). More than one-quarter reported that they could not handle an unforeseen expenditure of $500, almost four times the rate for non-users. Nearly half could not handle one of $5,000 (17% for non-users).

Yikes, that really does mean we are living a little too close to the ragged edge these days and really need to think about how we spend our money.

I am not condemning you for using this service, but I do want you to think about how you can stop using these services. There are many different ideas out there on many different blogs and books you can get from your library, so please start a plan. Don’t feel like this is your only way to deal with this, because these Loan Sharks are not the answer to your financial survival, if anything they are the end of your survival, there is little chance of escape from these sharks. If you are paying 470% interest, your chances of getting out from under this is not likely.

Started reading Fark again and tripped across some business stories from the main stream media that made my stomach turn (haven’t had a good rant lately). Why isn’t the entire financial world imploding into a black hole is my only question?

British Import I Hope Not to See

So there is a “Money Card” that is branded as a Visa card in the U.K. that ends up charging up to 365% interest on balances. Doorstep lending, gives you this card with a positive balance of 300 pounds sterling, which you then can use to purchase things, however, the balance is actually a loan, and you must pay it off before you can use the card after you have used up it’s balance. If you pay back sooner, you pay more in interest, which is astounding to me.

Naturally this isn’t a card a person with a good credit rating could use, instead, this is marketed and aimed at those who cannot get a credit card, and thus are less likely to complain about this new usury rates (also less likely to pay it back would be my guess as well).

If this kind of stuff is going on in Canada, I really hope the government steps in to stop it. Loan Sharking used to be a crime, guess now it is just “Good Business Practice”?

Less Foreclosures in the U.S. ?

Well not really, what is actually happening is that the banks are so overwhelmed with folks not paying their mortgages on time, that they have started to look the other way. Evidently folks are simply staying in their house and seeing if anyone is going to kick them out, which evidently isn’t happening as fast as you would think?

I get the feeling this whole “low interest scam” thing is just not going to go away, and may be a much deeper pit than I thought it was.

When In Doubt Change the Rules

One of my favorite lines from a movie was, “Just when you thought you understood the game, we CHANGED THE RULES!!!“, and that statement seems to be true in the world of Financial Institutions as well. This article from the Seattle Times, implies that the Washington Mutual bonus system which previously relied on things like profitability and such, are now being re-vectored, due to the company’s problems in the area of foreclosusures and such.

Let me quote directly:

However, its 2008 bonus plan for about 3,000 top employees specifically excludes the effects of bad-loan set-asides, foreclosures and restructuring costs from the financial criteria used to judge the executives.

Instead, in addition to measures such as operating income, bank fees and “customer loyalty,” the compensation committee will subjectively evaluate “how well our executive management team addressed the challenges in the housing, mortgage and credit markets and the impact of those challenges on our financial results.”

That seems fair, if this information is factual.

Friday has come again, and it has been an interesting week:

• BCE stock price continues to lower slightly and is around $35 right now, even though the sale to the teacher’s union (et al) has effectively been ok’ed. The rumors now are that the union may not be solvent enough to pull off this kind of a deal, and it may all go down the porcelain deal disposal.
• Banks and financial stock seem to be recovering for now, TD Canada Trust recovering from a near $60 price per share last Friday and now is up to around $64 per share. Does this mean banks are safe to invest in? I always thought so, but that is just my opinion too.
• Many hilarious April Fools jokes this week from various sites, and I fell for a few of them I must admit.
• I complained about the Hidden Prices of Education again. Am I expecting changes? Not really, but it feels better to complain.
• Our friends in the Pay Day Loans business are under even closer scrutiny from the Ontario government, with new regulations being proposed capping their fee structures and forcing them to show their customers where the fees are being charged. Way to go Dalton, guess even an ugly dog has the sun shine on his butt every day or two.
• Unemployment in Canada jumped 0.2% last month to move back to 6.0% year in Canada. Employment is up as well, which means there are more of us working too, which always confuses the heck out of me.
  

Enjoy your weekend, hopefully the snow is melting where you are (but not too fast).

Construction This Weekend

I will be doing a little work on the site this weekend, so if I disappear for a short period of time, don’t give up hope, I shall return with my odd view on Finances.