This week Robin Williams decided he couldn’t deal with the inner demons (or Parkinson’s Disease, evidently) he had, and ended his life. Everyone has choices in life, but if you are having these thoughts, please go get help before you make any final decisions.

BAD!!!

More likely the photo used if I am ever mentioned in the Media (Cranky Old Guy)

The ALS (Amyotrophic lateral sclerosis ) “folks” in the states seem to have found a viral shtick that is catching on and that is the Ice Bucket Challenge. It seems many celebrated folks are dowsing themselves with Ice Water to show their support for folks suffering from ALS (if you click on the Ice Bucket Challenge link, you’ll get to where you can donate to the ALS Canada organization). ALS (to me) is the most frightening disease out there, and when they find a cure, I will celebrate.

The #IfTheyGunnedMeDown movement in the states is an interesting commentary on the media’s portrayal of minorities. I am confident if I am mentioned in the news in some fashion it will most likely be a very unflattering photo, but I am curious to see if the media changes their use of Social Media to find unflattering photos for folks in News stories?

Give Blood This Year

My Writings for Week Ending August 15th

Lots of rain in Ottawa, and a chill in the air that is reminding us there are only 19 more Fridays ’til Christmas!

  • Stats Canada’s news last week about Moribund Job Growth in Canada, underlines the problem that this economy seems to be creating a large number of part-time jobs, but not enough full-time jobs. Will Part-Time become the new norm in this economy?
  • Even though we have had the TFSA for a while folks are still having problems getting the hang of the TFSA Two Step, the important factor to remember is that it is not like a regular savings account, so read the rules carefully.
  • I got to meet with a Financial Planner when I was laid off from Nortel, and I did write about it 6 years ago, so I figured it was time to do a Financial Planner Retrospective, given I now have 20/20 hindsight to rely on.

Scotia Bank Value Visa
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Financial Planners a Retrospective

Back in the dark days after I had been laid off from Nortel, I was given access to a Financial Planner (as part of my severance package), and at the time I had a Fairly Positive Opinion of that Financial Planner. As a retrospective, I will look back on what I was told and the advice given and see if my opinion is still positive.

Go faster it is catching up!

In Retrospective Neither of Us Knew the Dangers that lurked not too far behind us!

I think I agree with my overall verdict of Financial Planners who charge by the hour have a potential to be less driven by selling specific products, and more inclined to create a plan that fits the client (instead of making the client fit “The Plan”).

To refresh your memories, just after getting laid off I met with a Financial Planner, who was going to help me plan my Financial Future (which luckily went OK in spite of my own ideas).

Specifically he looked at:

He started by filling in some of the numbers he gave me about my yearly income, the size of the severance package, and the size of my pension pay out.

The variables to be dealt with are:

  1. Do I take my severance package completely when it is made available?
  2. Do I use the RRSP room I have now or later?
  3. What are the implications of me withdrawing from the pension plan?

The advice “Bill” gave me was fine, and in hindsight there was a large amount of blind luck in some of these decisions (i.e. circumstances changed drastically during the time I was laid off until all my financial decisions were complete), I will elaborate here.

I take my severance package completely when it is made available?

“Bill” gave some very sound advice, that almost ended up being catastrophic (through no fault of his own). I was laid off at the start of August, so my “package” would only be paid out as of mid-October, however, I could defer payment into two parts if I wished. “Bill” advised to split the moneys so that I didn’t have a massive tax bill in the year I was laid off, and then take the rest on January 3rd of the next year.

This was good sound advice, however, Nortel declared bankruptcy on January 15th, and luckily they paid the second part of my severance, or I might have been left like many folks with nothing to show for it.

Grade on AdviceB  but if he had said January 30th the grade would have been an F

Do I use the RRSP room I have now or later?

The advice given was use up all the RRSP room that I had to hide as much money as possible, which ended up being a good thing as well. I used most of the RRSP room in the year I was laid off to soften the tax blow on things, and I still have some of that money left, again good avice.

Grade on Advice : A

What are the implications of me withdrawing from the pension plan?

Initially “Bill” had very bad advice (in hindsight) because he said that I should leave my Pension with Nortel. He was quite insistent that Nortel’s pension plan was safe from Nortel’s imminent demise, but at the end of it he relented (a little) and said that I could take the money out and put it in a LIRA (and RRSP) if I wanted to, but he did say it would be smarter to stay in the Nortel Pension Plan.

Again, “Bill” couldn’t have known that the Nortel Pension Plan was going to unravel the way it did, but luckily Mrs. C8j and Michael James both advised strongly against keeping the money in anything with the word Nortel associated with it, and we did remove the money from the Nortel Pension Plan before it unraveled (as well).

Grade on Advice:  D- I can’t give him an F, but he was way to insistent on staying in the plan for my liking, I could be in a bad financial place right now if I had followed that advice.

Overall

I think it was good to talk with someone about our Financial Situation, and I think “Bill” did an OK job, didn’t try to “sell” anything to me, and gave me some good ideas on how to live on my severance package.  Yes, he almost cost me a great deal of money, but then again, can I blame him for not knowing about Nortel’s pension woes? Don’t know.

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TFSA Two Step

TFSA and Deposit Penalties

Seems the TFSA idea is getting misunderstood by a few investors and savers, so let’s wander through a few simple examples.

First go read TFSA.gc.ca and make sure you at least understand that site, and then come back here for our Arithmetic games.

Let’s also remember that as of now (2014) I can put in as much as $5500 into my TFSA this year (2014) (the total of all deposits, cannot exceed this value).

NB: Each of these scenarios makes the naive assumption that you start 2014 with no excess TFSA room transferred from earlier years and no carried over withdrawals from previous year .

TFSA How To

TFSA Two Step?

Scenario 1:

  • I put $2500 into my TFSA on January 12th 2014 and buy a money market fund (to make this simple)
  • On June 23rd, 2014 my car needed new brakes, so I cashed out $1800 to pay for this job (money taken from my TFSA)
  • September 17th, 2014 I find some money and deposit back the $1800 I took out and add another $600 for a total deposit of $2400

Scenario 2:

  • January 19th 2014 I deposit  $4766.00 in my TFSA (which is a savings account set up)
  • August 19th, 2014 I need some money to pay for my kids’ tuition, so I withdraw $3500 to help pay for fall tuition
  • December 1st, 2014 I find some extra money and decide to pay back the tuition money taken out of $3500

Scenario 3:

  • February 11th, 2014, I open a new TFSA and deposit $5500 into it (assuming it is a savings account configuration)
  • September 3rd, 2014, I need some extra cash for an impromptu vacation and I withdraw $2000 from the TFSA
  • January 15th, 2015, I deposit back the $2000 that I took out in September, 2014

Which of these scenarios may leave you with a Penalty for over depositing?

Scenario 1 is OK, because the total amount deposited in 2014 was only $4900 under the maximum for that year.

Scenario 2 is a big NO-NO! Your total contributions for that year would add up to $8266.00 which is WAY over the yearly contribution rate (even though you took out $3500). You may then have to pay the 1% over payment penalty on $2766.00

Scenario 3 is OK, you deposit your maximum in 2014, and if you want to “pay back” any withdrawals, you wait until the next year to do so (and you check with the CRA to see what THEY think your TFSA limit is).

The formula to remember is:

Maximum deposit into your TFSA for year = ( Previous Year Limit Carry over (if more than zero) )
+ ( $ 5500 )
+ ( Identified withdrawals from previous year )

 If you are not sure what your TFSA limit is, check with the CRA first before devising any plans.

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Moribund Job Growth in July in Canada

Nothing good, in Friday’s message from Stats Canada about jobs in Canada, but then again nothing horrendous, mostly stagnant in the world of job creation in Canada. The real news from Stats Canada is almost discouraging:

Overall employment was unchanged in July, as gains in part-time work were offset by losses in full-time. A decline in the number of people searching for work pushed the unemployment rate down 0.1 percentage points to 7.0%.

So we are back to the world where we lose Full Time jobs, and they are replaced by Part Time jobs? This is not a good thing long-term for the employees. Part-time employees cost less for most employers with less (or no) benefits and an ability to limit their hours as well. I am surprised the large Unions aren’t saying much about this topic. Hopefully it will be part of the next Federal Election discussions, as we have a younger generation of folks with multiple part-time jobs, is that model sustainable?

The fact that less folks are looking is even more discouraging. Why aren’t these folks looking any more?

Employment Canada

Employment graph for the past little while

The one positive thing mentioned is that there are more 15 to 24 year olds employed, and less over 55 year olds, but then again, the younger set is much more likely to be working part-time jobs.

As I have mentioned before much of this data depends highly on how it is interpreted (as I have mentioned in Damn Lies and Data) and Stats Canada admits that if they calculated unemployment the way the U.S. interprets it, our unemployment rate would be 6.0% (instead of 7.0% as they mentioned on Friday).

Unemployment Canada Stats Canada

Unemployment for the Past Little While

The Big Table

This month let’s explore employment by Industry, which is telling as well.

Employment by class of worker and industry (based on NAICS1) - Seasonally adjusted

June 2014 July 2014 Std error2 June
to July 2014
July 2013
to July 2014
June to
July 2014
July 2013
to July 2014
thousands change in thousands % change
Class of worker
Employees 15,115.9 15,145.3 35.6 29.4 161.0 0.2 1.1
Self-employed 2,704.8 2,675.6 25.9 -29.2 -45.7 -1.1 -1.7
Public/private sector employees
Public 3,637.8 3,641.0 25.0 3.2 47.9 0.1 1.3
Private 11,478.0 11,504.3 38.2 26.3 113.1 0.2 1.0
All industries 17,820.7 17,820.9 28.5 0.2 115.3 0.0 0.7
Goods-producing sector 3,852.1 3,818.1 26.0 -34.0 -91.8 -0.9 -2.3
Agriculture 299.2 296.7 7.8 -2.5 -20.7 -0.8 -6.5
Natural resources3 351.3 355.9 7.9 4.6 -11.0 1.3 -3.0
Utilities 153.7 148.2 5.3 -5.5 3.9 -3.6 2.7
Construction 1,337.1 1,294.9 17.6 -42.2 -49.7 -3.2 -3.7
Manufacturing 1,710.9 1,722.4 18.9 11.5 -14.2 0.7 -0.8
Services-producing sector 13,968.6 14,002.9 34.4 34.3 207.2 0.2 1.5
Trade 2,726.1 2,726.5 24.3 0.4 15.2 0.0 0.6
Transportation and warehousing 897.4 909.4 14.6 12.0 53.6 1.3 6.3
Finance, insurance, real estate and leasing 1,096.8 1,099.7 16.7 2.9 -22.4 0.3 -2.0
Professional, scientific and technical services 1,364.1 1,362.0 18.7 -2.1 6.0 -0.2 0.4
Business, building and other support services 703.5 692.9 14.2 -10.6 -52.6 -1.5 -7.1
Educational services 1,292.1 1,324.2 16.2 32.1 33.7 2.5 2.6
Health care and social assistance 2,238.5 2,210.0 19.4 -28.5 87.1 -1.3 4.1
Information, culture and recreation 790.1 805.2 14.8 15.1 53.0 1.9 7.0
Accommodation and food services 1,125.5 1,139.6 17.1 14.1 21.5 1.3 1.9
Other services 787.7 775.5 13.5 -12.2 -7.8 -1.5 -1.0
Public administration 946.6 958.0 12.4 11.4 20.2 1.2 2.2
1. North American Industry Classification System.
2. Average standard error for change in two consecutive months. See “Sampling variability of estimates” in the section “About the Labour Force Survey” at the end of the publication Labour Force Information (Catalogue number71-001-X) for further explanations.
3. Also referred to as forestry, fishing, mining, quarrying, oil and gas.
Note(s): 
Related CANSIM tables 282-0088 and 282-0089. The sum of individual categories may not always add up to the total as a result of rounding.

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It is 100 years since the “War to end all Wars” started, and I continue to learn more about this period in history. I had not realized the number of men (and women) that died in the war, and didn’t really comprehend the horrendous conditions that the soldiers (on all sides) fought under. I seem to know a great deal more about the 2nd World War, however, I am embarrassed about how little I know about a war that devastated an entire generation (over 16 million soldiers and civilians died). The fact that 21 years after it, another “War to End All Wars” erupted only strengthens my view that humans are a dumb species (myself included).

Evidently the Russian Mob (or Russian hackers) most likely now have one of your e-mail passwords, might be time to think up a new one, and maybe a heuristic to change your password more than once every time someone hacks the entire web?

Ebola continues to be in the news, I am not sure if I am in a full panic about it yet, but I do wonder if this is worse than we are being told, and things are starting to get a little out of control? The fact that a major US City (Toledo) had a toxic water supply, is another interesting environmental episode this week as well. Wonder if this is Mother Nature finally saying, “You know Homo Sapiens, you have been around long enough”?

My Writings for Week Ending August 8th

It was a shorter week this week, in Ontario we celebrated the Anonymous Long Weekend, next long weekend has a name at least (i.e. Labour Day).

  • How do you celebrate a holiday with no name? Who knows, but I did poke fun at it with Happy Civic Holiday.
  • Mike Tyson seems like an odd foil for Financial Advice, but his statement is prophetic especially for finances, “Everybody got a plan … until they get hit
  • Living beyond your means seems to be the raison d’etre of an entire generation, so Lifestyle Creep really is aimed at the new lost (money) generation.
Birds Series $100 - front / Billet de 100 $ de la série Les oiseaux - recto

My Kind of Specimen
(Courtesy of the Bank of Canada)

 

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