Canadian Personal Finance Blog

BCE Decision Today at 4:30 PM

Care to wager a few shillings on the results? I am sure that is what a few traders will be doing, in either direction, with the Supreme Court ready to bring down a decision on an appeal of the Quebec Supreme Court’s ruling stopping the BCE sale. This ruling will either kill the sale or put it back on track for now. As a share holder, I would hope the sale would continue, but who knows what the highest court in the land might decide.

The Nortel Three and their Day in Court

Frank Dunn, Douglas Beatty and Michael Gollogly had their arraignment in court yesterday under Fraud charges brought by the RCMP. This is interesting to me, since I lived through those days, and am curious now to hear about what exactly may have transpired during that time at Nortel.

What happened to cause all employees to get their “Return to profitability” bonus? I will be reading the coverage of this case very closely.

Important to note that Nortel the company is not part of these proceedings as a defendant, and they have stated they are co-operating fully with the RCMP investigation.

The Globe and Mail Report:

The RCMP alleged Mr. Dunn, Mr. Beatty and Mr. Gollogly fraudulently misstated Nortel’s results. Among the accusations are that the three “made false entries and omitted materials particular in the books and documents in regards to the financial results of Nortel.”

It will be very interesting to see how this is proven in court, or refuted, because I suspect this is going to get into some very technical aspects of Corporate Accounting Practices in Canada. I have had some of this explained to me, and I can say as a non-accountant, it is very confusing.

Rates Staying the Same

So what did the new Governor of the Bank of Canada know that we didn’t last week when he refused to lower rates, when the majority of experts were sure the rates were going to drop? Maybe he figured out that Inflation might be coming back, like we found out yesterday?  Does Mark Carney have a good crystal ball, or good information collecting skills? Either way, looks like he hit the nail on the head with that call last week.

Given Scotiabank, TD and BMO are raising their long term Mortgage Rates, makes me wonder what they might know as well?

This is one way to do this spreadsheet, I used Excel but I am sure other methods are out there that may be more accurate. I use this spreadsheet as an estimate to figure out how much money I still owe on my mortgage and it gives me a warm fuzzy counting the number of days left in my mortgage. Today, I will explain the main function used to estimate your periodical mortgage payments and tomorrow I will show the Mortgage Pay Out Schedule (I’ll include an example template tomorrow as well).

Mortgage Payment Estimation

As with most calculations you will need the following information

1. Total cost of your mortgage
2. Interest rate you will be paying for the mortgage
3. How many years your mortgage is amortized over (25 years?)
4. How may payments you are going to make in a year (25.5 for bi-weekly, 12 for monthly, etc.,)
5. How often the rate is compounded
6. Starting date of the Mortgage

Put each of these values in a cell on a blank spreadsheet. The most important function to use in this worksheet is the PMT() function. In Excel the PMT() function figures out how much your payments are going to be (now the function does this for American Mortgages and really should only be used as a guide, since I have never had a Bank and this function match given the same data.

To use the PMT function is simple it is:

PMT(  X ,  Y , -Z )

Where

X = Interest Rate (yearly) divided by number of pay periods in the year (e.g.  4.75%/25.5 periods)

Y = Total Number of payments which is number of years of the mortgage multiplied by number of payments per year

Z = Total Mortgage to be repaid

Use this and you will get a good estimate of how much your mortgage payments will be (either bi-weekly or monthly).

That alone is very useful if you are trying to figure out how much how you can afford, in either bi-weekly or monthly payments.

Example

Say me and Mrs. C8j decide to really downsize and because our kids ate us out of our savings, we still end up with a $100,000 Mortgage at 5.5% and we want to pay monthly payments on the mortgage but only want a 15 year term.

The cell on the spreadsheet would look like:

=PMT( 5.5%/12, 15*12, -100000)

which would give us a monthly payment of $817.08

This is close to how much we will make in Mortgage payments per month (remember this is an estimate your BANK will tell you what they will charge). This one function can also be used for car loans and many other things, which makes it a very powerful tool.

Tomorrow, we do the mortgage schedule.

Last year, we bought a shredder because I kept taking stuff to shred to work, and felt I had enough stuff that appears in my house that I do not want to leave my house in the garbage where anyone might look at it, and I also enjoying destroying things.

What kind of things do I enjoy running through my shredder?

• Most of the credit cards I have keep sending me “cheques” that I can use to make cash withdrawals and get charge 20% interest from the moment the cheque is cashed. These things have on them my credit card number on it, and thus if someone got a hold of it in tact, I would be in very deep trouble. They shred very nicely.
• Credit Cards that I do not use, I have a bunch of credit cards that I do not use, that I am going to cancel, but I have already shredded them. They shred very nicely indeed.
• I also shred many old financial documents that I don’t need to keep, don’t want to burn and don’t want to leave out in my garbage either.
• Canceled cheques and the like as well.
• Old pay stubs.

I put my shredder in the same class as my safety deposit box as being something important in my Financial Planning, an important aspect of safety and security in finances.

New Housing Prices Still Rising

Just not as fast, and it’s acceleration is dropping. This means if you are buying a new house and you waited from last year it is going to cost more, it’s just not getting as expensive, as quickly.

Year-over-year growth in new housing prices slowed for a second consecutive month in March. This deceleration continues a downward trend that started in September 2006, due mainly to the softening market in Alberta.

Contractors’ selling prices rose 6.1% between March 2007 and March 2008, a slightly slower pace than the 6.2% year-over-year increase posted in February 2008.
(…)
Elsewhere in Ontario, contractors’ selling prices were 4.5% higher in Toronto and 3.1% higher in Ottawa–Gatineau compared with March 2007.

Personal Finance Update

So my attempts at stopping my spending at work begins anew. No spending over the last few days and that is a good beginning. De-Crapification continues as well, with more crap to go very soon.