Canadian Personal Finance Blog

Jim Flaherty is poised to announce his new budget and instead of the tradition of the finance minister buying a new set of shoes, instead he had his existing shoes re-soled, which I think is a message to say, “Tighten your belts folks, leaner times are ahead” (at least that would be my spin on it). Interesting that he can make that statement given the government is about to announce a $13Billion surplus, which will mostly be used to pay down the national debt (which I agree with as a tactic for using surplus spending, however, I am not happy with the enormity of the surplus itself).

Some new measures may be brought in but it is unlikely to effect (affect?) my wallet too much. The fact that this is the 3rd budget for Mr. Flaherty for a Minority government is quite the achievement.

Stock Options

I have worked in High Tech all of my career, but I think I am one of the few folks who never, ever had a chance to cash in a large amount of stock options for their company. I just never got options until very late in the game and then they became worthless quickly. I state this as a preface (and as a whine as well).

Yesterday I sat down with a couple of co-workers and this topic came up and I was shocked to have them both admit to me the amount of money they “left on the table” with their options. I am assuming they did make some money on options, but the amounts they both quoted me as potential profits they didn’t act on caused my head to spin (well over a million dollars combined).

Why would you leave that kind of money on the table? Here are some of the reasons I know of:

1. The options had not fully vested. In this instance I don’t view that as lost money, since you were unable to do anything about this, and you shouldn’t beat yourself up about this “lost potential money”.
2. I thought the stock would recover. I guess we can see that one, was not a good strategy, in hind sight we can see you should have taken the money and run.
3. I was waiting for the Stock Options Tax changes. That one had me scratching my head, but I guess it’s a valid reason.
4. I bought the stock with my options and then held it to live on dividends and capital gains. That one is the most lethal mistake that I have heard. These people really did lose money on this, because they spent the money on the options and then got nothing for that money. The previous three “mistakes” didn’t lose you real money, it just lost you potential money, this one lost real money.
5. My options were never worth more than a $1000 ever . That is my excuse, I feel like the Eunuch at the orgy sometimes, never got anything out of this whole thing, oh well.

At the end of it all, lost potential money is much like Love Lost, not much you can do about it, so you might as well forget about it.

Any other High Tech Stock Option stories out there?

To quote Chance the Gardner from Being There, and I really do enjoy watching stocks on a ticker (I use the Yahoo Instant Messenger version) but I really am not sure why. I preach that you should stay the course and not make rash decisions, so the worst thing I can do is to sit in my office and every 10 minutes glance over to see how my stocks are doing. For a while I turned it off (and I must admit I did turn it off from 2001 to 2003, because that was just too much to watch). I also remember the heady days of the late 90’s watching stocks jump $2 and $3 a day and having no idea why (and in hindsight, neither did anyone else).

I think it is the part of me that enjoys watching sporting events like Baseball. It is so long and so boring, but occasionally something amazing happens and you don’t want to miss it. Maybe I am hoping to turn and see that suddenly I can retire because all my stocks have doubled (ok, quadrupled at least), but it’s an interesting behavior that I really don’t understand.

Do you stock watch? Why?

Count Floyd Says No Surprises

“AAaaaa-ooooohhhh kids that is some scarey stuff to hear…”, Count Floyd aka Joe Jim Flaherty the Federal finance minister said. Evidently he has reformed and will not be giving us any nice tax breaks or cut spending in the upcoming budget, reports the CBC. An $11.6 Billion surplus is expected for the past year, which he could put on the National Debt (and drive it below $500 Billion) or maybe he’ll put it in the Government’s secret vault and save it for a rainy day?

I found a few years back that the time I spend commuting and running errands as time lost. I wasn’t doing anything, so I decided to start to listen to books on cassette. Over the years I have listened to many novels (many abridged), and enjoyed this time that much more.

When I started writing here, I noticed that many financial advice books were starting to get published on cassette and on CD and so now I tend to listen to them in my car as well. Is this the best way to absorb research and ideas? I have no real idea, but I find that it does pass the time nicely, and if an idea is a good idea, it does tend to stick in my head.

Naturally I cannot afford to buy all of this material, I borrow it from the Ottawa Public Library which has an amazing on line system for putting items on reserve and an easy method to pick them up. They also have an ability to download materials onto your PC and listen to them there (for a fixed period of time). Typically if a book is quite useful I may go out an purchase it (that rarely happens), but the library allows me access to a wealth of information that I would not normally have access to.

I have a friend who also does this, but he tends to store the books on his iPOD for later listening pleasure, which is a great idea as well.

National Debt Update

Stats Can put out yesterday a statement about the Canadian Federal National Debt:

At March 31, 2007, the federal government’s net financial debt (defined as the excess of liabilities over financial assets) decreased to $508.1 billion, a 1.2% or $6.0 billion decline from March 31, 2006. An increase of $5.1 billion in financial assets and a decrease of $0.9 billion in liabilities explain this drop. The federal government net financial debt has decreased for the 10th consecutive year, a decline of $80.3 billion from 1997 to 2007.

So the debt has dropped $80 Billion over 10 years, that is not bad, about a 14% drop, and if they can keep this pay back velocity it will only be another 65 years until the debt is finally paid off. I guess it’s better than going farther into debt?

U.S. Interest Rates Down Again?

Another 0.5% drop by the U.S. Federal Reserve yesterday to help prop up a faltering U.S. economy, which caused the Canadian dollar so sore above it’s American cousin for the first time in a while. My guess is the Bank of Canada may follow suit some time in the future, but don’t hold your breath either. Evidently Canadian banks are actually raising their long term Mortgage rates (announced in the past week or so). This suggests that this drop in interest rates may be a very short term thing. TD Canada Trust updated their interest rates (available through an RSS feed) on Tuesday.