Canadian Personal Finance Blog

About 8 years ago, my wife and I bought something at Colonial Furniture, and paid it off on lay away using a “no interest” plan of some kind. At the end of the period, when we finally paid off this bill, we had made a mis-calculation and over paid the bill by about $4.56, but nothing has ever happened with this positive balance (I have not bought anything there since).

The stupid part of this is that every month since I paid off this bill I receive a balance statement telling me about my positive balance. If my caculations are right I have received about 90 of these notices, and this must have cost somewhere near $40.00 in postage for Colonial, to tell me about my positive balance.

Every month I get this invoice and every month I scratch my head wondering why they do it. In other instances where I have had a positive balance, I have simply received a cheque to return the balance to zero, but not here. 

Rocky Financial Roads

Given the complete implosion that seems to be happening in the United States, I continue to get from friends articles about the impending end of civilisation as we know it. My opinion is that this whole thing are ripples from the ill-conceived “Sub-Prime Mortgage” fiasco in the states, and my guess is there are more ripples to be felt, which hopefully will not cause too many more days like Wednesday.

My portfolio is not doing too badly, but I do see some stocks that may never recover and one of them being Nortel . It is now down to $2.76 but if you take out the reverse stock split the stock is actually worth $0.276 (Canadian), and they continue to sell things off to get money.  I hold a little Nortel in one trading account, mostly because I never got around to selling it, and now it isn’t even worth selling (I’d spend more on the trading fees, than I would get from the sale).

Is this “correction” a buying opportunity? I think some time soon it will be, if not right now, but remember to do your homework and don’t just “buy because I think it is on sale”, because if you had done that with Nortel in 2002, you’d have been mistaken. Do the homework, investigate the company, make sure their financials are sound and the company is sound as well.

Lock It Up

Debit Fraud Follow Up

Some excellent comments yesterday about my article about Debit Card Fraud . I think I will be going more towards a cash based purchase system to remove some of this risk, but a few commenters mentioned using a credit card instead, since your liability is limited. 

While this method may work for a lot of people, I don’t think it is for me, since a few years back we tried this with a PC Financial Mastercard, to get money back on our groceries. Due to some bad tracking by me, I ended up with a ballooning credit card balance that scared me, so we ended up paying off the card quickly and then going back to using the debit card.

Monday I spent a good 2 hours with a Personal Finance Planner, that was made available to me by my soon to be former employer, and their right management team. I won’t divulge the name of the planner, just because I don’t feel right doing a “review” of their services, since I got them for a large discount.

Scope of Discussions

The scope of my discussions with this gentleman was mostly around what are my options to do with my severance package and what the tax implications would be if I withdrew from my company’s pension plan.

Bill (not the financial planners real first name) collected a fair amount of background information from us, which made my wife a little nervous (since she had not met him before, but I had at a group financial planning session). We were fairly strict in what we did and did not tell him, since we wanted the scope of the discussions to stay mostly around the task at hand (i.e. tax implications of my severance package).

Planning Session

After collecting the information, the financial planner had an already set up Excel spreadsheet with the tax scenarios possible for me and my family. Bill has done this with many (more than 100) former employees of my soon to be former employer. He also had a massive plasma display that he ran this on to show my wife and I what he was calculating. My wife pointed out I will never be getting a display like that for my computer.

He started by filling in some of the numbers he gave me about my yearly income, the size of the severance package, and the size of my pension pay out.

The variables to be dealt with are:

1. Do I take my severance package completely when it is made available?
2. Do I use the RRSP room I have now or later?
3. My employer was gracious enough to allow me to split my severance and take some now, and then some on January 1, 2009, do I do that?
4. What are the implications of me withdrawing from the pension plan?

The financial planner went through all of these scenarios, gave his opinions and dealt with my and my wife’s questions in a professional way.

Outcomes

I think my wife and I had already decided what to do, but we didn’t really have a clear plan of why or how much, I think now we do (at least I hope we do). Simply sitting down with someone with enough Tax savvy and background to “bounce ideas” off was just great and I think I got my moneys worth out of it (remember I got this at a large discount).

Bill did point out that his company does offer many services, and that if I did need them, I should call him (and I wouldn’t expect anything less from a small business owner), but he was not pushy and understood the audience he was dealing with.

Bill also told me his hourly rate, and I think I might think a bit before going back to him, and make sure I was much better prepared than I was this time, because his services do not come cheap (but then again, you pay for expertise, I have always found).

All in all a positive experience, and I would recommend dealing with a financial planner, with NO ties to any insurance company or mutual fund company. Make sure the planner charges you by the hour, for the service he is offering, so you know where he or she is making their money (mostly).

What I am learning is that Free Advice, and advice in general should always be viewed from the context it is being given to you.

Odd Advice

An example of this is I was told when I was laid off, “Don’t tell anyone about this…”, as soon as I heard that I went “WTF“? Why wouldn’t I tell people? Me telling people has got me more “job leads”, helpful hints, positive reinforcement and general niceties, than I could ever have dreamed of, so that was very bad “free” advice.

Financial Advice

If I get “great” advice from a Mutual Fund salesman about what funds I should buy, should I take that advice at face value? Of course not, it may well be the best advice, but you must take into context of where the advice is coming from.  If an insurance sales person tells me I should buy Whole Life insurance to protect my family, is that good advice? Not really, at least not in my opinion.

I always preface any advice I might give for any reason with, “Your mileage may vary”, or something to that effect, because what has worked for me, is not guaranteed to work for anyone else in the same situation.

Good Advice

Then you have other great advice, like from Drippy Chick, who pointed me at www.petersnewjobs.com to get on the mailing list for jobs in Ottawa in Toronto, fantastic advice (I’d already subscribed to it, but good advice, no doubt).

Lots of great investing and financial advice from N.C.F.B.A. and other good financial blogging sites, but again, remember you are getting that advice for free, so remember that point as well.

Last night the National Capital Financial Bloggers Association met, and we did what we normally do, swap stories and ideas about finances and the like (see the N.C.F.B.A. blog roll in the side bar for the sites authored by this group).

During these discussions the topic of time share condominiums came up and that led me to tell this story (which I previously published here).

The Worst Financial Advice I Ever Gave

Most of you know that I am very unlikely to give you direct advice in any financial area, and this story is one of the reasons why.

My wife, myself and some friends went on a vacation to Florida (this was about 17 years ago). My Father In Law had told me about how if you go to a Timeshare Condominium sales pitch, you can get free tickets to some of the sites around Orlando, which sounded good to me (Free is always a good price).  We found that at the Motel we were staying there was an entire courtesy desk filled with Timeshares offering this deal, so we signed up for a “sales demonstration”.

Off we went to this sales pitch, and it was hilarious,and surreal. I must mention one of my friends on this trip was Michael James On Money himself and his wife, so we were sure we weren’t going to buy. The salesman (who we nicknamed “Ray Don Bob Ron Don”, don’t ask why, but it was funny), tried all the sales pitches:

• Slow playing us to see if the condo would sell itself  (it didn’t)
• Pandering to our wives about how there was little or no housework  (they laughed)
• Telling the men they could rent whenever they wanted (I asked if we could get to stay during Daytona 500 week, he said yes, I laughed)
• How much money we’d save (we in turn figured out how much money they were making per building on the initial sale, and then how much they were going to make per year on their service fees).
• Finally asking, “Would you buy this place for nothing?”, and then saying, “OK your price is between FREE and our selling price”, which always makes me chuckle.

I must admit that we played along and acted very much out of character (worrying my wife a great deal), but at the end, there was no sale, we got our free tickets and we left (our salesmen grumbling about how we were, “… too analytical…”. I was struck by how the people at the sales pitch “closing” room looked like deer in headlights while paying for their time share with their Credit Cards, a very disturbing site.

Fast forward a few months and a dear friend was off to Orlando with his new wife, so I told him the story about getting free tickets for a theme park and all you had to do was sit through a timeshare sales pitch. He said he’d think about doing that, and nothing much more was said.

My friend returned from Orlando a week later, picked me up to go to work and he told me all about his trip.  I asked had he gone to the timeshare sales pitch, and he confirmed that he had. I then railed about how pathetic the sales pitch was, and what kind of an imbecile would buy one of those things, etc., etc., etc., for about 5 minutes.

Once I finished, my friend said in a very small voice, “We bought one…”

The car ride to work was very quiet that morning.

From that day, I always shy away from giving anyone any financial advice directly, I will tell them what has worked for me, and let them decide for themselves