Canadian Personal Finance Blog

Last Day of Giveaway

Tonight at Midnight (or somewhere there about) a lucky name will be picked in the First Big Cajun Quicktax Software Giveaway , and we have been deluged with 10’s of entries, so your chances of wining are quite good! Remember you never miss the shot you never take!

Fatwa Against Credit Cards

In Ottawa last week Imam Khaled Abdul-Hamid Syed (local Muslim Community Leader) has declared a fatwa against Credit Cards, and I say to that, Good on you!.

“I conclude that it contains usury … which is forbidden in Islam, so it should not be used…”

I wonder if he reads this blog? The Imam is dead on (in my opinion) in his view that Credit Cards are the modern equivalent of usury and I applaud him speaking out about this topic.

The Imam has said that this Fatwa is not binding, and some folks are concerned about whether this means you should never use a credit card, even if you pay them off monthly (or only use them in emergencies)? I think any statement by any Community Leader that causes folks to talk seriously about this subject is a very good thing. Discussion causes folks to think about how they are doing things, and may cause some to change bad habits.

Will I soon be changing to Islam as my religious following? No, as most of my readers know, I am a devout Anglican, but I wouldn’t mind hearing what the Archbishop of Canterbury or the Anglican Church of Canada has to say about this interesting subject, as well.

Usury = Credit Cards?

As for the Credit Card companies and the banks, I wonder if they are worried about this or not? I doubt they care, but if a ground swell of folks stop using their cards, what might happen? Maybe the “Tea Party” should be looking into this (in the United States)?

After yesterday’s epiphany of the Financial GPS, I think I have streamlined the concept and gone to exactly what might be needed with today’s chronic over spender, the Financial Shock Collar.

This device, will look like a fashionable necklace for the ladies or simply a gold chain around the neck for men, and when it is activated 10,000 volts are instantly activated from a small power source (at milli-amperage levels) causing sudden and excruciating pain for its’ wearers, until they stop the spending which activated the collar (yes I borrowed this idea from a Star Trek episode, but aren’t all the best ideas from Star Trek?).

Is this a severe and dangerous tool to use? You are darn right that this is a ludicrously severe tool, but given some folks ability to completely lose their minds when it comes to:

• Financial Decision
• Overspending
• Use of money they don’t have
• Live now pay later thinking

This may be a useful “last hope” type of device.

Self-Destructing Debit/Credit Card

Don’t like my shock collar idea? A much less severe idea (depending on how you look at it) would be the self-destructing debit/credit card. Given most new cards come with a great deal of “smart card” technologies this one may be simpler to implement (and much more fun to watch).

The concept is quite simple, if the consumer attempts to use the card by either swiping it or “tapping” it, the card receives a simple message destruct and the card emits a high pitched alarm sound and 5 seconds later the card explodes, with a small charge embedded in it, when it was manufactured.

This makes the whole scenario of the credit card company rejecting a purchase and asking the vendor to seize the card a much simpler scenario, and it makes stolen cards that much more lethal for the thieves as well. If a card is stolen, it will automatically self-destruct when it gets near ANY credit card terminal.

Sure, there will be occasional glitches where cards may self-destruct without warning, but those small glitches and maiming of their owners are assumable risks for those who wish to have the privilege of carrying a credit card.

An added side-effect might be less people wanting to carry around credit cards with them, for fear of the occasional random self-destruction as well. Think of someone carrying around 6-8 credit cards, what might happen if one goes off accidentally? The chain-effect might well be complete destruction of the owner.

More interesting new “outside of the box” (unless the box is a coffin) ideas for financial safety may come, as I think of them.

For my regular readers, I am so lazy swamped over the holidays that I am taking some time off and putting up a “Best of” anthology until the New Year (January 4th to be exact). Enjoy two Best of posts a day over the Holidays and have yourself a Merry Christmas and Happy New Year.

Todays posts are diverse in that they talk of Debt and it’s ability to sneak up on you and how Cable over usage can happen when you aren’t looking as well!

I Didn’t Know I was That Far In Debt!

I have found two new guilty pleasure shows on TV, one is 16 and Pregnant on MTV (that one I can’t even talk about right now, I’ll save that for a separate rant) the other is “I Didn’t Know I was Pregnant” where women explain how they can go 9 months carry a child and then claim they never knew they were pregnant. ……

Click here for the complete Post

Rogers Cable and Overruns  (2009/08/25)

One of the problems of having a lot of computers around my house and having a large number of teenagers is that my Internet connection does get heavily used, but I hadn’t had any problems until last month.

Click here for the Complete Post

Gail Vaz-Oxlade pointed out that a lot of folks who are supposed to be teaching kids about money don’t know the basics of their own financial situation. She sighted one important piece of information which is “How much does your credit card charge as an Interest Rate?”, which is a very important thing to know.

I thought about it, and realized, I don’t know this, but I am also not worried.

I pay off my credit cards, so they could easily be charging over 50% annual interest rate and it wouldn’t affect me (unless I forgot to make a payment, which I did once).

I am not having a go at Gail (far from it, I read her site every day), just pointing out that maybe the real statement should have been “What are the interest rates on the credit vehicles that you use?”, (and I do know the interest rates on my lines of credit, so I do pass that part of the test).
I also don’t really know my credit rating (another thing that Gail thinks we should all know), but then again, I don’t plan on making any large Credit Applications either, I think before you do that you need to know your rating, that is for sure.

Here is an excellent question, How Many Credit Cards do you have?. This is important because how would you know if one was being defrauded or stolen if you didn’t know about each and every one of them? You need to have a list of all your cards and maybe the phone numbers of where to call to CANCEL them quickly (or report them stolen).

Christmas Laziness and Cheer

I am planning on doing a Top 10 postings for the Christmas/New Year stretch (given I may or may not be around), so if you have any suggestions for this kind of a list (top 10 for this year), please leave a comment with a title or story you may have particularly liked (written by me, that is).

The CBC pointed me at this report from CIBC about Household Credit Analysis some of the numbers really worry me.

I have been commenting that these historically low interest rates are not an excuse to go out and borrow more money, rather it is a great time to start paying down your debt while you aren’t being choked to death by interest rates (of course I had a mortgage at 12% and thought that was cheap at the time).

Some of the highlights mentioned in the report are:

• On an inflation adjusted basis, credit is rising at the fastest rate seen in any economic recession in the post-war era.
• During the first six months of the year, total debt rose by $44 billion but interest payments on debt fell by $3 billion.
  
• Non-mortgage consumer credit is still rising by 7% on a year-over-year basis—very impressive given the overall health of the economy.
• During the first half of the year, overall household debt rose by 3.4% while personal disposable income in fact fell by 0.2%. This led to an increase in the debt-to-income ratio during this period.
  

I would strongly suggest reading the entire report it’s only 10 pages and it is chocked full of really interesting data (but then again I love this kind of data).

There are actual household balance sheets in the report and in there I found two pieces of data that made me worried as well:

1. A 4% drop in Financial Assets from Q1 2008 to Q2 2009 (look at the Q1 2009 numbers it is even lower). Our savings dropped by that much? Wow.
2. A 6% drop in Net Worth Q1 2008 to Q1 2009, again, not something we didn’t know, but still a worry.

What does this data mean? We are still living outside of our means, and are borrowing to live UP to this lifestyle, but some day very soon, the piper will need to be paid, and he may have a much higher interest rate to dance to. Time to think about paying off debt folks.