Canadian Personal Finance Blog

$30 Billion is Quite a Debt

Stephen Harper told the CBC that the coming fiscal year the Canadian Government could run up to a $30 Billion debt thanks to the Financial Apocalypse? Wow, that is quite the turn around from running surpluses for years, and if it is a one time thing that does stimulate the economy and gets people (like me) back to work, I guess it isn’t too bad, however my concern is that this isn’t going to be a one time thing. When deficit financing started in the 70’s it was not planned to be the “Standard Business Practice”, but it did end up being that way and we are still paying for it now.

The statement by Harper is also a contradiction of his own finance ministers statements of a week or two ago where it was claimed Canada would only run a $5 Billion deficit, makes me wonder what is the real number (and we won’t know that until December 31 2009 or later) and how much “stimulation” the Tories plan on putting into the economy (and what happens to this whole mess if the Three Headed Coalition Monster rears it’s head as well). Should be a very interesting fiscal year coming ahead, that is for sure.

The specter of Deflation or Hyper-Inflation is what has me concerned as well, because we are now in uncharted waters that is a certainty.

Advent Financial Calendar Box Day 20

Advent is slowly coming to a close and the Christmas Festival begins on Sunday and our Financial Calendar has very few boxes left for us to open.  In today’s box we find House Plan, complete with blue prints, cost estimates, the works. This plan has a few ways you can look at it as part of your financial journey:

1. If you succeed in your financial journey, you may one day be able to afford building your Dream House where you and your family can live and prosper.
2. For me this signifies the importance of a complete Plan for your Financial Journey. If you do not have a Financial Plan which is honest, and complete you cannot succeed and worse still, you cannot tell if you have succeeded as well (which is more important). 

Every week I write at least one article on the importance of Financial Planning, but many times I don’t mention why it is so very important.

There is a line from a Tom Clancy novel that rings in my ears, “… if you don’t write it down, how do you know it happened…”, but better still if you don’t write down what your goals and plans are, how do you know if you are succeeding? That is the positive view you should take of any financial plan, it gives you the positive feedback that you are succeeding, or the Shepherdly tap on the shoulder to get back on track, if you are not.

Make that Financial Plan for next year today, before Advent is over.

Snowmagaedon?

After visiting Toronto (to pick up my daughter from school), I had to chuckle at Environment Canada’s interpretation of the coming snowstorms for Southern Ontario.  The weather forecasts on Wednesday night quoted Environment Canada saying the storms would be Snowmagaedon (my spelling), which is a little over the top, given I don’t think the Rapture will be occurring during this event (if it is, my apologies), but it is even funnier to think that Environment Canada feels it is important to get people’s attention so they use these kind of sensationalized colloquialisms.

The storm does look quite serious, and I would suggest not traveling during it, but I am hoping that the Rapture does not come during it (because then we’d miss Christmas). Hunker down my fellow Ontarians, here comes another snowstorm!

Deficit? Booo!

Yes, Jim Flaherty announced the likelihood of a budget deficit in 2009 for the first time (a planned one at least) in a while.

“There tend to be delays in infrastructure projects and, given the seriousness of the economic situation, it’s important that shovels get in the ground, that repairs on buildings start as quickly as possible,” Flaherty told CBC News.

He also warned of much higher unemployment as well. The year 2009 is shaping up to be a very “interesting” year economically.

The Day the TSX Died

Unbelievable but, the TSX did not open yesterday due to a network glitch? Amazing. An allegedly world class stock exchange is crippled by a network problem, in the middle of the Financial Apocalypse?

“Because the data feeds provide information to investors to guide their trading decisions, trading was halted to ensure market integrity,” the TSX said in a statement.

Integrity may have been saved, reputation on the other hand, who knows?

Are Banks a Bargain?

For those who remember, I still hold banks in my portfolio, mostly because I view them as a good Dividend providing investment.

BMO

Bank of Montreal had a new stock offering and thus added more shares and lowered their stock value thanks to this, which doesn’t make me very happy, but on the converse side of things, thanks to this my DRiP(Dividend ReInvestment Plan) will be buying more this quarter for this stock.

TD

Toronto Dominion continues to get hammered as part of the Bank Backlash with all the shenanigans that have gone on in the U.S. (and around the world).

Again, this means my dividend reinvestment program will be buying more shares, so that is good.

I am holding these stocks as a long term investment vehicle, which creates dividend income as well, and they continue to be good for that.

Advent Financial Calendar Box Day 19

Opening this box, you find a card, a Library Card. The Library is our friend, because we can do our Personal Finance research without having to buy books to do it. In Ottawa you can get books on CD, DVDs and a lot of on line information as well. Research is a cornerstone of your Personal Finance Journey, the more you read, the more you learn and the more you can apply to your financial planning.

If you are planning for next year (as you should in Advent), visit your Library and use your Library card.

Doesn’t Zero Interest Mean Money is Free?

When the Fed in the states cuts their key rate to between 0 (Zero) and 0.25% I think we are no longer looking for a long term fix, we are attempting to simply “enable credit junkies”. An interest rate this low has not been seen for decades and we are now in completely uncharted waters, and I for one am wondering if Deflation and/or Depression is not the next step?

Simply making it easier to borrow money does not fix the systemic issue of too much credit, it exacerbates the situation. It is like handing an Alcoholic a bottle of Vodka and tell them not to worry about it, it will all pass.

On the bright side it did cause the Stock Markets to recover, so that is kind of cool for we investors.

 Will stock prices stay down for RRSP season? Could be a real bargain buyers market by then (if the market still exists by then).

Advent Financial Calendar Box Day 18

You open the box and it is a Wii Fit! What the heck does that have to do with Personal Finance or Advent? Not much, but if anyone has one and wants to get it to me, that would be nice.

The Wii Fit actually is a very good Metaphor for not following the crowd both in investing and in personal finance.  For those who are unaware, the Wii Fit is the new “it” Christmas present and does not stay on store shelves for more than 10 minutes when they are in stock.

In the past 10 years it was in vogue to build up large debt load and figure it wasn’t going to be a problem, which has turned out to be wrong. In investing buying when everyone else buys and selling when everyone sells, you are sure to end up like everyone else.

Do not join the herd, think about why you are doing what you are doing and do what you think is the right thing, not just what everyone else is doing.

Meltdown and Mutual Funds

According to IFIC (Investment Funds Institute of Canada) Canadians cashed in a lot of Mutual Funds in November. The selling seems to be slowing, but there are less assets in Mutual Funds this year compared to last year at this time (but then again that could be due to the fact that the assets aren’t worth nearly as much as they were last  year either). 

“We remain cautiously optimistic” said Pat Dunwoody, Vice President of Member Services and Communications with IFIC. “Asset declines slowed last month as did net redemptions. Hopefully, the actions taken this month by governments worldwide, coupled with the transition to a new government and new economic team in the United States will continue to calm markets and instill confidence by all market participants.” She said.

Isn’t that what the Captain of the Titanic said just before he asked the band to play? Maybe not, or maybe investors have become tired of the large MER fees most mutual funds charge? Not likely either.

Advent Financial Calendar Box Day 17

You open this box and it is another scroll, but on this is a list:

• Fix baseboards in basement
• Fix hole in ceiling
• Put gate in back fence
• Repaint bedroom
• Replace windows
• …..

It’s a list of projects around the house that need to be done, well that is another part of Financial Planning for next year, that is for sure. If the project is a large cash outlay (say like Windows), then you had better budget the money correctly, or you won’t get that project even started, let alone finished.

For those interested, yes that is a partial list of the things I need to get done around the “Big Cajun Crab Shack”.

I Cannot Write

I learned yesterday after writing a Public Service exam that I cannot write. For my regular readers I can hear you already commenting, “We knew THAT all along!“, but no I am not commenting on content, but I am commenting on the physical act of write with paper or pen. I wrote about 15 pages of answers using pencils and paper and now my wrist is sore and I have no feeling in my index finger. I never did physically write well, and was “over the moon” when the world moved away from the written word (i.e. on paper), and went to typing as it’s method of  transliteration, but given what a physical wreck I am after one 3 hour exam, maybe I should rethink ever going back to University!

The exam was challenging but fun in a weird way as well. We shall see whether the content of my scrawlings was correct or not.