Canadian Personal Finance Blog

Started reading Fark again and tripped across some business stories from the main stream media that made my stomach turn (haven’t had a good rant lately). Why isn’t the entire financial world imploding into a black hole is my only question?

British Import I Hope Not to See

So there is a “Money Card” that is branded as a Visa card in the U.K. that ends up charging up to 365% interest on balances. Doorstep lending, gives you this card with a positive balance of 300 pounds sterling, which you then can use to purchase things, however, the balance is actually a loan, and you must pay it off before you can use the card after you have used up it’s balance. If you pay back sooner, you pay more in interest, which is astounding to me.

Naturally this isn’t a card a person with a good credit rating could use, instead, this is marketed and aimed at those who cannot get a credit card, and thus are less likely to complain about this new usury rates (also less likely to pay it back would be my guess as well).

If this kind of stuff is going on in Canada, I really hope the government steps in to stop it. Loan Sharking used to be a crime, guess now it is just “Good Business Practice”?

Less Foreclosures in the U.S. ?

Well not really, what is actually happening is that the banks are so overwhelmed with folks not paying their mortgages on time, that they have started to look the other way. Evidently folks are simply staying in their house and seeing if anyone is going to kick them out, which evidently isn’t happening as fast as you would think?

I get the feeling this whole “low interest scam” thing is just not going to go away, and may be a much deeper pit than I thought it was.

When In Doubt Change the Rules

One of my favorite lines from a movie was, “Just when you thought you understood the game, we CHANGED THE RULES!!!“, and that statement seems to be true in the world of Financial Institutions as well. This article from the Seattle Times, implies that the Washington Mutual bonus system which previously relied on things like profitability and such, are now being re-vectored, due to the company’s problems in the area of foreclosusures and such.

Let me quote directly:

However, its 2008 bonus plan for about 3,000 top employees specifically excludes the effects of bad-loan set-asides, foreclosures and restructuring costs from the financial criteria used to judge the executives.

Instead, in addition to measures such as operating income, bank fees and “customer loyalty,” the compensation committee will subjectively evaluate “how well our executive management team addressed the challenges in the housing, mortgage and credit markets and the impact of those challenges on our financial results.”

That seems fair, if this information is factual.

Yesterday most of the financial blogs took time out and had an April Fool’s post of some kind, a few caught me off guard, but then I realized what day it was, and laughed along with the authors. I don’t typically post April Fools stuff too much, because I am so gullible and might read my own posts and then believe them. John Chow had the most evil April Fool’s day gag, but I won’t link to it, because it causes nasty things to happen to your browser windows.

Pay Day Loan Fees Capped

In Ontario the provincial government did something of value, by capping the “fees” the payday loans companies have been subjecting their clients to. Along with the cap the legislation will also:

If the legislation passes all payday lenders must also:

• Be licensed by the province
• Provide customers with a total that includes all charges the consumer is required to pay when borrowing
• Contribute annually to a fund to pay for public education about payday lending.

I applaud the Provincial government for this action against these modern day loan sharks. As my regular readers know, I loath these institutions, and their trickery to steal as much money as possible from the people who can least afford it.

Be Nice to the Police Person (off topic kind of)

Sunday night I got yet another example of speaking to someone in a contrite and apologetic way when you know you were in the wrong, can sometimes help you out. I was returning from a basketball tournament very late and was in a big rush to get home.

Between Highway 407 and 401 in Toronto is a bit of a goat path (called Brock Road), which has a very low speed limit.  I came over a rise and barreling down a hill at what must have been 100 km/hr and the posted speed limit was 60 KM, and the policeman had me dead to rights. He ignited his lights and I pulled over kicking myself for being in such a rush to get home, but was very polite, contrite and apologetic to the officer. He seemed very reasonable and polite as well, but when he went back to his patrol car and was there for what felt like 15 minutes, I thought I might be getting nailed with the new Ontario “Street Racing” law (because 40 KM over is a HUGE fine, street racing is 50 KM over the speed limit).

He returned he said that the penalty for 32 KM over the speed limit was 4 demerit points and an over $200 fine (I think my jaw dropped open as he said that, because that most likely would mean a large insurance premium bump as well), BUT, that since this was a first offense (effectively), he was going to let me off with a fine for going 15 KM over the speed limit ($60 and no demerit points).

I was very thankful to the policeman for his leniency. I found out later another friend had the exact same thing happen the previous day on Highway 7, so being polite is always a good thing!

Advice for the day: Always talk nicely to the policeman or woman.

I like that title, in fact that could be the entire post, I like that title that much, but I will elaborate on this provocative statement.

Today’s consumers (myself included) love of things and what money can purchase has turned into a full blown obsession with money and it’s trappings.

Are you seduced by spending? Ask yourself these question:

1. Does anyone really need to spend $8.00 on a cup of coffee? In my mind if the beans were picked my Marilyn Munro in the nude (and she delivered it to me in that same state), then I might think that coffee is worth the money I spent. Starbucks has seduced you to spend that money with it’s cache and marketing.
2. Can you hear the difference of $10,000.00 speakers for your stereo over a cheaper set of speakers? I can’t, but I am also fairly deaf from younger days in printing plants and rock concerts. If you feel it is really important and you can tell the difference, you have been seduced into hearing something that may well not be there (except for your dog).
3. Why would you pay $16,000.00 for a Toyota Corolla when you could pay $80,000 for a BMW or Mercedes Benz? Do you live in your car? For that price, in some places you could get part of a house for the Benz. If you think people will be impressed by the Mercedes name you have been seduced into thinking people care what car you drive (I might care if you drove me to work).

These are pretty crass examples of the seduction of spending that we all fall for (I am not portraying myself as being lily white in this, I have bought things that afterward I have asked, “Why did I do that?”), but this is one of the hardest things to control, the urge to spend money.

We can stop ourselves from walking up to an attractive member of the opposite sex and introducing ourselves, simply by rationalizing the embarassment we might feel and the fear of rejection in that situation, yet we can’t stop ourselves from spending money when we know we shouldn’t (and worse we know we can’t afford the thing we want to buy).

Should we all be taking Prozak or some other psychotropic drug to curb our spending urges? I don’t know, I don’t think they would stop us (they might make us so stoned that we might not do much of anything), so how can we stop ourselves?

No Credit Therefore No Buy

The idea I have is so simple but also very hard to do, for most of us, since we feel naked without a wallet full of credit.

If you go out with no credit cards and no money, you are going to be hard pressed to buy something, aren’t you? Yes, I know with instant credit it’s not impossible, but it will slow you down a fair amount. If you are going out to look at a high priced item or even just going “shopping” with friends, don’t take your credit cards, and maybe bring enough cash to buy a coffee (not a $6.00 one either).

If you are someone who can control your impulses to spend, I applaud you, and strongly suggest you should write a book about it, I’d buy it on the spot (anyone see the dichotomy of me impulse buying a book that is to stop me from impulse buying).