Canadian Personal Finance Blog

Is it Safe?

One of the most terrifying movies I have ever sat through is the Marathon Man which stars Sir Lawrence Oliver as a crazed Nazi dentist hiding jewels and Dustin Hoffman as a pawn in the entire scheme, and in this movie there is a set of scenes where the crazed Nazi dentist torments the Dustin Hoffman character with a hobby drill, drilling his teeth and the only question he keeps asking is “Is it safe?”. Just recollecting this scene puts chills up my spine, but it is actually a good metaphor for the current financial crisis.

Is it Safe?

At the macro level governments have no idea whether “It is safe” and they really don’t know what the answer to the question is, but in fact this movie is an even stronger metaphor at the Personal Finance level.

Is it safe? What does that mean? Is our money safe? Is our job safe? Is our lifestyle safe? Is what safe? Is our economy safe? Is my credit safe? Is my RRSP safe? Is it safe to retire? Is my house safe? (to paraphrase a frantic Dustin Hoffman), the question without context is very hard to answer, and there is the harder part, what is the answer? Is it safe? I have no idea, but I think we are all fighting to find out “Is it safe?”. I hope we are safe, but I guess we really won’t know what the question means and what the answer is, for a while.

Are you safe?

Pension Info Arrives

My final pension settlement has arrived from my former employer, which makes me feel a little more safe. I must now answer the question, “Is it safe(r) to stay in the pension or go to the LIRA?”, I think I know the answer but I will keep my readers posted.

Montreal Grand Prix Dead

One of the major economic events in Montreal every your for a while has been the Grand Prix of Canada held in Montreal, however, this year the F-1 board decided to not return to Montreal for 2009. The Quebec Government has been attempting to change Max Mosely (no comments about Nazis and prostitutes) and crew’s mind, but Jean Charest has said he has no more economic cards to play. I enjoyed the Grand Prix and am an F-1 fan and am saddened to hear of this turn of events. This will have a serious impact on the bars in downtown Montreal that relied on the Grand Prix to draw customers.

There was hopeful statements from analysts that there might be a “honeymoon” for the new president elect and that the death spiral that the Stock Exchanges have been doing might slow down or stop, but that does not seem to be the case, as stocks continued to drop for another day. Looks like the president elect will be handed the rancid entrails that is the U.S. economy and that will be his first job to clean up. I get the feeling that the “good will” from the election is not going to last long if there is an extended downturn in the economy (who said recession?).

More Given by Less

Stats Canada reported an increase in the total amount that tax-filers reported as charitable donations, however, fewer people actually gave that money.

Canadian taxfilers reported making charitable donations surpassing $8.6 billion in 2007, up 1.4% from 2006. At the same time, the number of donors fell 0.9% to just under 5.7 million. Data are based on income tax returns filed for 2007.

I am happy to see that I am above the Median of $250 for givers (i.e. I am in the upper half), remember with the holiday season coming, that means your fiscal end of year is coming for charitable donations and you might want to think about giving a little more?

More Given by More

When we look at the Stats Canada data on RRSP contributions by Tax-filers you see a different picture.

Just under 6.3 million taxfilers contributed to registered retirement savings plans (RRSP) in 2007, up 1.6% from 2006. Their contributions rose by 5.3% to $34.1 billion. These data are based on tax returns filed for 2007.

More money going into Mutual Funds and such, the data for this year will be very interesting, given the stories of Mutual Fund flush outs (i.e. folks selling big time), what this might show in the RRSP world. I actually have given more than any other year this year, but that has more to do with my lay off than any other reason.

The RRSP silly season doesn’t really start until February, but you could put more money in now and it would have longer to start growing? Just a thought.

End of Year Financial Plan

Do you have an end of year plan for your finances? Might be time to figure out what needs to get done before December 31st, since it is usually hard to get anything done after December the 15th. I have pointed out RRSP, but remember the TFSA is coming too, how will that change next year’s plans? The TFSA may well cause a big change in how Canadians save, let’s hope.

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).