Canadian Personal Finance Blog

After watching athletes work hard to reach their goals, I feel invigorated to attempt new financial goals of my own (OK, that’s pretty lame, but I couldn’t figure out any other way to spin the Olympics into a post over the past two weeks).

Glad to see the Canadian Athletes compete and do the Canadian thing and not win too much and be boastful, we are a very polite nation.

Coming Financial Decisions

The coming week is an important one for me financially because I must make key decisions on how much, and when my severance package is to be executed, and what to do about my pension (whether to leave it in my company’s badly underfunded pension (last time I heard it was funded up to about 87%)) or take the money and run, with some severe tax implications)).

I am meeting with a Financial Planner today (who is also a Chartered Accountant), to hear his ideas on how to make my severance package run as long as it can, and to maximize it’s financial impact for me. Ideally, when I find a job soon, I can simply use it as a debt destruction vehicle, but I must plan in case I have issues finding a job, as well (remember Hope for the Best, Plan for the Worst).

Mostly I am meeting with this gentleman, because it is free, as his services are being paid for (evidently he charges $175 an hour normally) by the Right Management team that I am dealing with. I’ll listen to anyone for free, doesn’t mean I will necessarily follow their advice, but I can listen easily for free.

Interesting questions that may come up:

• Is it better to pay down debt quickly thus having less to deal with, or plan to simply service debt so that my liquidity stays sound?
• Is it worth working at Home Depot in my spare time right now? The easy answer there is NO, not this year, because whatever I earn, I lose about 1/2 of, and we should be able to budget well enough to last that long.
• Should I cash out of my company’s pension plan? Do I think they will exist in twenty years, and will the pension fund ever get back to 100% funding is the real question.

What other questions maybe need to be asked? I am open to suggestions here folks, any good questions, please pass on in the comments section.

Should be an interesting visit.

As I am cleaning up my blog (and making sure all of my links work) I find some interesting gems that I had forgotten that I had written. The following is a classic Rant from me Pay Day Loans: No, No, No!!!!. I have added a fun charicature of the Pay Day Loans business as well (the Great White Shark).

Pay Day Loans: No, No, No!!!!

As most of my regular readers know, I tend to get a twitch and rant loudly when talking about payday loans and the places that give out this “alternate credit vehicle” (a term used by the industry). I have pontificated about this point many times, but now Stats Canada has put out a study about the growth of this financial alternative, and also who uses it. Perspectives on Labour and Income examines this whole industry in detail, but Stats Canada has put up a good summary on their web site about it.

Pay Day Loans Just Like the Great White, A Perfect Eating Machine

Three percent (3%) of families in Canada have admitted to using these kind of services in the past 3 years. The family’s main bread winner is typically between 35 and 44, which is also interesting (non baby boomers, more like Generation X’ers).

This quote makes me feel very sad:

Almost half of families who used payday loans reported that they had no one to turn to if they faced financial difficulty, significantly higher than for non-users (32%). More than one-quarter reported that they could not handle an unforeseen expenditure of $500, almost four times the rate for non-users. Nearly half could not handle one of $5,000 (17% for non-users).

Yikes, that really does mean we are living a little too close to the ragged edge these days and really need to think about how we spend our money.

I am not condemning you for using this service, but I do want you to think about how you can stop using these services. There are many different ideas out there on many different blogs and books you can get from your library, so please start a plan. Don’t feel like this is your only way to deal with this, because these Loan Sharks are not the answer to your financial survival, if anything they are the end of your survival, there is little chance of escape from these sharks. If you are paying 470% interest, your chances of getting out from under this is not likely.

Having worked in High Tech for 20+ years, I have heard many tales about lay offs and how they have “gone down” for some of the High Flying start ups of the late 90’s.

One former colleague told me about how his severance package was his laptop PC, and his Aeron chair (the company had burned all of their cash and the receivers were coming to take everything that was not nailed down). Another told me about getting two weeks notice, and a promise of a package, which never materialized, because creditors got wind of it, and garnished it from the company.

I am luckily nowhere near that situation, if anything, this is a financial opportunity for me, and I am going to have to learn a great deal about the Canadian Tax system in the next few weeks. I was under the naive assumption that it would be relatively straight forward with my severance package, but that is not the case. There are options and scenarios that I must think out and figure out what the optimal financial model will end up being for me (given my age and current financial status).

My vagueness in my description is intentional because I am just not sure about a lot of the financial twists that will be transpiring in the near future.  I will also need to build a certain amount of “crystal ball” gazing about what I think may be happening in the future and what will be important to me as well. Some of the points already in my mind to think about are:

• Do I think I can find a job very soon (i.e. the next month or so)?
• Will I find a comparable paying job in the near future (next 4 months)?
• Which is more important Debt Reduction or Retirement Savings? (right now the answer is both, with an emphasis on Debt Destruction).
• Do I need benefits in the near future? Yes, I think so.
• Should I keep the life insurance from my previous employer? Yes!

Only some of the simple concepts and ideas I must weigh in any decisions in the next month or two.

More likely I will be writing my opinions up, as much for me to think and read my own thoughts, but also looking for any input from my highly gifted readership as well.