A Personal Spending Surplus ?

Before the previous Federal Election, the Tories claimed they had a “surplus” I read over the Annual Financial Report of the Government of Canada Fiscal Year 2014–2015 is the statement of the National Debt and saw that one of the ways a surplus was possible in the fiscal year 2014-15 was by ministries delaying spending, which made me wonder if it would be possible to do the same thing with our own personal finances?

Debt Subliminal

This is NOT a Debt Reduction Plan

Suppose we look at a young family, with a Home Line of Credit which holds the debt on their house (as opposed to a regular mortgage, this is an important part of my scenario). This young family goes to a financial planner, who tells them they needed to cut down on their spending and get to a point where what they spend is less than what they earn (similar to the concept of this government’s surplus).

The family is lucky in that their Home Line of Credit’s minimum payment is the Interest Charge for that Month (and luckily their Line of Credit interest rate is nice and low). The young family does have a lot of expenses, with small children, car payments and a large amount of discretionary spending (and the debt that accrued because of that spending). The family decides the best way to reach the zen of spending less than they earn is by not paying down their largest debt (their house), so that they can pay for all of their other spending (cars, vacations, nice clothes, cable, etc.,).

This idea actually works well (assuming the bank doesn’t call the line of credit and ask for all of their money), in that the family is not spending more than they make, but there is a problem. Their debt load isn’t actually dropping, and they will eventually have to pay down the debt on their house, which is a huge problem. An even bigger problem will be when interest rates go up, so in the end, this family is living in a financial fool’s paradise.

At the end of it, the Tories “surplus” didn’t really come to fruition, and thanks to a new Government, we are back to deficit financing programs and such, but there are promises of balancing a budget some time soon. This might well be how our example family ends up as well (i.e. much farther in debt).

Remember as I always say, Hey we got extra money, let’s spend it! (No, I don’t I am being sarcastic).

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Inflation and Silly Gasoline Tricks Continues in August

On Friday our friends from Stats Canada published their monthly report on the Consumer Price Index for August 2015, and their findings are similar to those from earlier months in 2015.

The Consumer Price Index (CPI) rose 1.3% in the 12 months to August, matching the increase in July…. Lower energy prices continued to moderate the year-over-year rise in the CPI, led by the gasoline index, which was down 12.6% year over year in August.

So the story continues with many areas rising by a fair amount, while gasoline dampens the overall index.

Consumer Price Index

CPI with and without energy for past 5 years

As you see we are closer to 2.0% inflation, than we are the “actual” 1.3%. Food is up 3.6% (year over year), which impacts most Canadians, but due to Energy and Transport being down 7.2% and 2.3% no one seems to notice that feeding ourselves continues to be an ever-increasing commodity. Doesn’t even seem to be an election issue, haven’t heard anybody talk about it.

This graphic is useful to see how the numbers are skewed:

CPI by category

What was Cheaper and what was more expensive

Bank of Canada’s core index

Just remember that the bank of Canada uses their own data to calculate inflation, and there numbers are more telling:

The Bank of Canada’s core index was up 2.1% in the 12 months to August, following a 2.4% rise in July

CPI from Bank of Canada Graphic

It is interesting that this is really not a topic on the election trail.

Reports from Previous Months in 2015

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New UCCB and Taxes

So the Harper Government introduced the much vaunted New and Improved UCCB  (universal child care benefit) this month so parents (with eligible children)  have been receiving payments, and from what I can tell of the parents I know it has been viewed as a positive thing. Mrs. C8j received the new payment and the back payments as well (conveniently paid just at the start of an election campaign (sorry that just slipped out)) for Young C8j, which was nice to see in the bank account.

Before you go blow all your new money on “penny whistles and moon pies”, remember this is a taxable benefit. The UCCB is taxable income, but, in the hands of the lower-income earner in the family. For the C8j family (which I think is the Tories target audience, surprisingly) it is not a bad thing, because Mrs. C8j’s income is less than mine, so the UCCB cheque will be a less taxed benefit, but those dual income families where both spouses have high paying jobs, are going to be paying the tax-man (more (depending on their income levels)) for their UCCB cheques.

UCCB and Taxes

Not Quite As Portrayed

I claim to be part of the Tory target audience since I also was able to take advantage of the Family Tax Cut as well (this one only works if your spouse makes much less than you do). It is kind of weird to think that I am one of their target audience, but bring on the tax breaks!!

Welcome back the Family Allowance Cheque, we have missed you so (yes this is how baby bonus cheques were handed out and clawed back).

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After living through the past 18 months, of bickering, and vitriol, that is the U.S. election (from ALL sides of the argument), all I can say is, Get the hell back to work, will ya?.

The U.S. is still an incredibly divided country, should be a painful 4 years, but hopefully the U.S. can pull out of this tailspin.

As an outside observer, I am astounded by the amount of time and effort in these elections. The Government effectively shuts down in March and the Political Silly Season begins. I have to admit that the entire spectacle is enthralling, and is sometimes more entertaining (and has more twists) than a Wagnerian Opera, however, I keep wondering, is this a good use of time and money?

Excellent advice Monsieur Levesque (for our friends down south too)

What does this mean financially? Political grid lock has its merits (as we have seen for the past 6 years in Canada, before the Tory majority), however, in the U.S. it is going to create yet another dangerous game of Chicken between the Congress, Senate and the President, is my guess. Given the tom-foolery and shenanigans in Europe this really does seem to suggest that our Monetary sh*te vortex is going to continue for a while longer.

And to quote Aislin after the 1976 election of the PQ in Quebec, “O.K. Everybody take a Valium!“. For those who said, “If Obama wins I am moving to Canada”, please rethink that, and realize that in Canada our Conservative Party makes your Democrats (the alleged liberal party in the U.S.) look very right-wing. Moving to Canada to escape socialism? Um, you might want to rethink that one.

At the end of it all, it’s really none of my business, but that has never stopped me (or anyone in the real media) from shooting my mouth off.

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Election Day Comes to Ontario 2011


In Ontario the Good election day has finally arrived and now we can choose between, What’s his name, That Guy, and that Nice Lady (I kid you not I barely remember any of their names it has been that dull a campaign).

You would have thought someone who had introduced so many taxes, and such would have a Democrats chance of getting elected in Texas, but Dalton McGuinty seems to be holding his own and at worse he will have a minority government this time around. It is hard to believe that the Big Blue Machine used to rule Ontario with an iron fist for so darn long, but I guess those days are long past. The Tory leader (Tim Hudak), seems to find new ways to trip himself up, or aggravate some new part of the province, and both Liberal and Tories have been running the standard attack ads that have marked the last decade of politics in general (i.e. point out all of your opponents mistakes and faults, while never talking about what you might do, policy wise).

Vote Ontario 2011

Vote Ontario 2011

Then you have the NDP leader (Andrea Horwath) whose name always escapes me. She has run a relatively positive campaign, is attempting to continue the Jack Layton Orange Tide that started federally, but I suspect all you need mention to any Ontarian is Bob Rae and they just won’t be able to mark a ballot for the NDP (but I may be wrong).

The major points of this election were:

  • If you vote Liberal again you’ll get your asses taxed off, and they are going to break all their promises
  • If you vote Tory you’ll go back to the days of Mike Harris when your Grandmother couldn’t get her hip replaced, and the schools were infested with rats
  • Oh my God, you aren’t thinking NDP are you? Oh dear, don’t you remember Bob Rae?

OK, I am being a little facetious here, but most of the campaign has been just that banal. I think the big loser no matter how it all falls out are the Conservatives, since they had this election in their back pockets until Mr. Hudak started opening his mouth (and his handlers couldn’t figure out how to make him more palatable to “the center”).

If you live in Ontario, remember to vote. If you want to have fun, come out of the voting booth holding your nose and hand your ballot to the elections folk, and see how they react.

If you don’t vote, you don’t get to complain!

 

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