Canadian Personal Finance Blog

Looking at your mid-year personal finance review, you can ask the all important question, “Now what?”, and as usual my mealy mouthed answer is, “That depends!”.

If you have met all of your financial goals for the year and it is mid-year, you set your goals too low (or you sand bagged to make yourself feel good), or you got really lucky. No matter what reason, you can celebrate a little bit for achieving your goals, but now is the time to make some “stretch” goals for the end of the year, and prove that your success at the start of the year was not just a fluke and that you can work hard the whole year. Simply sitting on your financial laurels is just not the thing to do, build from your success and show that you can finish strong for the year.

If none of your goals are met, and you think you will be unable to hit any of your goals this year, maybe it is time to re-vamp, or re-think your plan (or scrap it completely). Not to worry, look at where you had problems with your plan and figure out whether you were:

1. Too aggressive in your planning, and set unattainable goals
2. Very unlucky and the world conspired against your plan
3. You never really planned to follow this plan

If the answer is (3) don’t kid yourself, you need to plan, this is going to hurt you some time soon. If the answer is you were too aggressive then maybe go back to your original goals or plan, and maybe scale them back so that they might be attainable by the end of the year (but still make them challenging).

If things are going OK, and you think you can succeed with your plan, good for you, you have made a good plan, and you are following it. You can celebrate a little in your success, but get back to your plan, enjoy your success and keep up the good work.

Don’t get me wrong, given the amount of complaining from the banking industry, Jim Flaherty’s new credit card rules seem to be a very good start, but I would dearly love to see them go a little farther.  The Globe and Mail does a good outline of what the new rules does address, but my concern is the major problem is still not being addressed, which is the exorbitant interest rates allowed.

Loan Sharks Blush

The rates that Credit Cards charge as regular business while cheaper than seen from the Pay Day Loan world are still completely out of sync with bank rates, yet, they are allowed to inflict this kind of usury on consumers. There are no rules capping the rates that can be charged, and I think that is what is missing from this legislation. I am not sure what the cap should be, but allowing unfettered rate increases is asking for trouble.

Better rules for credit limits would be good as well, stopping folks from being able to bump up their limit via a simple phone call seems a dangerous practice as well. If you want to lower your credit limit you have to send in a signed document and such, but to increase your rate is a simple phone call, wonder why that is?

While I know the other issue with credit card debt is that people are using Credit Cards as short term credit mechanisms (and then turning them into long term credit vehicles, since they can’t extricate themselves from the debt), and that a lot of the financial pits dug by consumers are self-inflicted, I think the Credit Card companies make this trap a little too easy to fall into.

There was one credit card lobbyist complaining about how teenagers and young folks won’t be able to get credit cards if new rules are put in place. I believe I shouted at the TV, “… and that is a BAD thing?”, so my view is less credit cards to less folks might just be a good thing. 

Nobody needs as many credit cards, as we all have!

Other Useful Documents

A useful link for those who are learning about Credit Cards is a document posted by the FCAC called Getting The Most From Your Credit Card. They also have a very good beginners document called Your Rights and Responsibilities , well worth a read as well.

Given the incredibly low CPI this week it made me wonder if this will all last and in reflection on yesterday’s numbers, the answer is an emphatic NO! Gasoline prices in Ottawa are now steadily heading back to at least $1 per liter which means the drops we have seen in the past few months are gone for now and we will be living through another summer of price gouging. With food prices sky rocketing, I suspect we may have a huge CPI jump by June, which will then cause an interest rate spike to slow it down, just my opinion, but might be a good time to lock into your mortgage rate.

Financial Folk Speak

The bloggers this week had a varied topical view on things and here are some of the best of the week.

• Canadian Financial DIY points out that Inflation is Higher For Retirees, and given it looks like Inflation might be coming back real soon now, those about to retire should read this closely.
• Michael James comments on Conrad Black’s Free Roll at the Supreme Court, good luck Mr. C.
• Preet at Where Does All My Money Go writes about Real and Fake Billionaires, my favorite on the list is the last entry, Excellent…
• No Debt Plan outlines the new Canadian Credit Card Act and I will be writing more about this act next week.
• One Caveman is writing about an excellent topic Cycling to Work (how to) I always dream of doing this and when I get my job I will look into this seriously (makes you frugal and fit).
• Canadian Capitalist does a review of Steadyhand Mutual Funds, sounds ok if that is how you want to invest. 
• Larry MacDonald asks What About The Little Banks are they going to be allowed to fail?
• Nancy Zimmerman is Looking Forward to Turning 50 , me I just hope to have a job by then.

Looks like the summer may actually be here so enjoy the warm temperatures and go outside!

You Gonna Use those Air Miles?

The LCBO evidently has fired 10 employees for allegedly de-frauding the Air Miles system (according to the CBC). This one while upsetting, is not surprising. 

More than once I have thought (while standing in line behind someone at a store that takes Air Miles or some other rewards program where your number is put in at the end end of sale) about asking whether their sale could go onto my account. The problem with this idea is it is fraudulent in the eyes of the rewards program, since I didn’t purchase the goods, and evidently this is sort of what these employees were doing (taking points on sales where the consumer didn’t have their card, or didn’t care). 

This is another example of the problem of “insider trading” (i.e. employees or insiders taking advantage of the system, which we have seen in the lottery sales area, and now with this reward system).  The LCBO policy quoted is:

“Staff are … prohibited from using the purchase by any customer to issue reward miles to their own personal account or the account of other staff, family, friends, other customers or any other person,”

How can this be remedied? Not sure, but it is something to be prudent about, to make sure you don’t lose any rewards you should get.  In this instance no one lost their points, it was a situation where fraudulent points were created where none should have been given out, not to rationalize or worse condone this bad behavior, but the victims were the folks at the Air Miles reward program.

Federal Language Test Leaked?

On Thursday I took two Federal Government language tests (for French), and they were quite challenging (I was close to being able to work in a French environment in my younger days, my French now is very rusty). I found out Friday morning that evidently these tests may have been leaked (according to the Ottawa Citizen), which is intriguing, and may prove very costly to the Federal Government (which will have to retest a large group of folks who have been tested (hopefully not me)).

The tests leaked were the two which I took, and they were done on line, on a private network, so how the questions were “copied” seems to suggest another “insider job”, but we shall see.