Canadian Personal Finance Blog

Yes, another busy day, didn’t quite get an idea together so here is one of my more favorite “off the wall” posts about Is It Safe in the financial markets?

Is it Safe?

One of the most terrifying movies I have ever sat through is the Marathon Man which stars Sir Lawrence Oliver as a crazed Nazi dentist hiding jewels and Dustin Hoffman as a pawn in the entire scheme, and in this movie there is a set of scenes where the crazed Nazi dentist torments the Dustin Hoffman character with a hobby drill, drilling his teeth and the only question he keeps asking is “Is it safe?”. Just recollecting this scene puts chills up my spine, but it is actually a good metaphor for the current financial crisis.

This is going to hurt

At the macro level governments have no idea whether “It is safe” and they really don’t know what the answer to the question is, but in fact this movie is an even stronger metaphor at the Personal Finance level.

Is it safe? What does that mean? Is our money safe? Is our job safe? Is our lifestyle safe? Is what safe? Is our economy safe? Is my credit safe? Is my RRSP safe? Is it safe to retire? Is my house safe? (to paraphrase a frantic Dustin Hoffman), the question without context is very hard to answer, and there is the harder part, what is the answer? Is it safe? I have no idea, but I think we are all fighting to find out “Is it safe?”. I hope we are safe, but I guess we really won’t know what the question means and what the answer is, for a while.

Are you safe?

An interesting week with conflicting data coming out about whether the Recession/Financial Apocalypse is “over”, “nearly over” or we are being fooled and it will come back soon. The stock market certainly seems to have recovered and one good quote I read this week said (and I paraphrase), “Fear has given way to Greed again”, which may mean it’s time to get out of the Market again, because when Greedy people get into the market, things get very unstable. We shall see what this all really means, and whether it is real, or simply created by all the money Government has rammed into the economy (which will have it’s own ramifications later).

Financial Quips for the Week

• Michael James showed how heartless he is in his article “Nothing is More Important Than Your Family“, where he refuses to protect them from his untimely demise (OK he points out how crappy some insurance policies are, but I had you going there for a little while).
• Canadian Financial DIY wonders about the Economic Recovery After the Crisis: How Long and Lasting effects, isn’t it great for financial bloggers we can write when the economy goes in the crapper, and we can write about it when it recovers, it’s like we are bookies or something.
• The Canadian Capitalist wonders about Rogers new Local Television “Fee”, but we all know it is just another grab for cash, Rogers really isn’t making me a happy customer these days. Maybe it’s time to pull out my Rabbit Ears and chuck out cable!
• Larry MacDonald writes about the new Boy Band New Financial Bloggers on the Block, and their new smash hit… ok, he is just writing about new financial bloggers, but they can still dance!
• Another one of my favorite boy bands Preet at WhereDoesAllMyMoneyGo showed off his new Video Blog capabilities. He’s no Katy Perry, but it had a good beat and it was easy to dance to (nobody remember rate-a-record from American Bandstand? Guess I am showing my age).
• Money Smart Life asks, How Money Are You Hiding in Your Swiss Bank Account? I refuse to answer that question on the grounds that it might incriminate me (besides all my money is in Guernsey)
• Nancy Zimmerman laments the death of a bank with Alas, poor Citizens Bank of Canada! What do you send to a Bank’s funeral?

I’ll be here all week, try the veal, good night!

With Canada Day (July 1st) falling on a Wednesday and the 4th of July falling on a Saturday it makes for odd holiday patterns for both Canada and the U.S.A., my guess would be a lot of folks in Canada are taking Thursday and Friday off and making for a Mega-Long weekend.

To my American brother(s) and sisters I wish you a Happy 4th!

In the Financial Blogosphere

In the blogs this week some very interesting views of important issues in Personal Finance and Investing:

• Michael James and I both spoke about Whether I can Blow $5M but Michael James offers concrete Advice For Wealthy Athletes.
• Preet at Wheredoesallmymoneygo points out the TSX had a Rockin Year so far, and remember to watch him on the W Channel’s Ultimate Expert Challenge as well!
• The Four Pillars are taking a run at the always popular topic in Canada Tax Deductible Mortgage/Debt, always informative he runs down the hows and ifs on this topic.
• The Canadian Capitalist brings forth another irritating subject for me The 5 cent Levy on Grocery Bags Rip Off (in Ontario at least). Remember to wash your reusable bags!
• Loonies and Sense had Good Timing For Once, but even then ran into issues with the strike in the GTA (how high can you pile garbage?).
• In the Tech area, Techcrunch mentions two words that may revolutionize your phones: Google Voice, read this and start thinking about how you might use it, I already have signed up on the waiting list.
• Ellen Roseman continues her discussions about saving energy in Tanks and No Tanks.
• Larry MacDonald gave us an Update: One Minute Portfolio another lazy man’s investing tool (I appreciate folks who make my life simpler).

Remember the Globe and Mail Best of the Money Blogs voting continues until Monday as well! Enjoy the Mega-Long weekend.

Interesting turn of phrase I have seen used to mean a few different ideas in the software development world and in a few other places as well.

The Interpretation I got for this phrase from the person who sent me was:

Eating your own dog food

1. Coined by a Microsoft manager, to use the products you develop in your office as your customers would (with the same software quality), to ensure you understand your product and understand your customers needs as well.

It seems to be an extension on the concept of “Practicing what your preech” or “Walk to the walk, don’t just talk the talk…”, but finding a company that actually uses their own product can be a good thing, I have found in my travels in the world of high tech.

Financially Eating Your Own Dog Food

Investing and Financial Institutions are a little harder to figure out if they “Eat their own dog food“, I think it would be amusing to find out that the CEO of my bank didn’t use the bank for his finances (if not very disconcerting).

I would be very interested to see if the following might be happening:

• The President of the insurance company that espouses “Freedom 55″ actually uses that program him or herself? I kind of doubt that one, but I’ll gladly retract that statement if it is not true.
• Does the CEO of BMO  use their “Mortgage Insurance” facility, or does he or she simply buy term insurance as others do? My guess is No, they don’t use that either (they may not have a Mortgage mind you either).
• All those insurance sales folk who want to sell me “Whole Life” insurance, do they buy the product? My guess is some do, but maybe at a much cheaper rate than we do.
• Does the President of TD use their Stepper GIC product? I think no is the answer on that one too.
• Do the CEO’s of the Mutual Fund companies that have MER’s of 4 and 5%, buy their own mutual funds? My guess would be not likely.
• Did Mr. Madoff buy into his own Ponzi scheme? Don’t answer that, it’s rhetorical, by the by, he got 150 years, given he is 72, he’ll be spending the rest of his life in prison (is that enough).

Any other examples of “Eating their dog food” in the financial world I have missed, please chime in the Comments section.

As I will be traveling on the weekend, I have written this Best of post for my readers. It is one of my favorite stories about how my Father taught me about money.

You can find this story and other Favorites of mine on the Favorites tab at the top of this page.

Best Financial Advice Ever

My parents have been very helpful in my life, both financially, but also with very wise advice, and with that in mind, I’d like to share you a story my father told me (kind of a parable):

There once was a court jester who enjoyed a good joke, usually at the expense of the King, which got the Jester into deep trouble. One day the Jester was having a particularly “devilish” day and insulted the Queen in a large public forum. The King was OUTRAGED by this and ordered the Jester executed for his insolence and the guards dragged the Jester off to the dungeons.

Hours passed and the Jester (who was a quick thinking man) thought how can I get myself out of this mess? Finally the door to his dungeon opened and the guards dragged him back to the King. The King said, “I have enjoyed your buffooneries over the years, so I will give you one wish before I put you to death for your crimes.”.

The Jester thought what could he wish? Then he came up with a plan, he knew that the King adored his horses so he came up with the following, “Sire, all I ask is that you give me a year’s reprieve, and during that time, I will teach your horses to Sing! This will make you the envy of all other monarchs. If at the end of this year I am unable to get your horses to Sing you can execute me in any gruesome fashion you wish.”. The King looked perplexed and then confused, but finally he thought that he had nothing to lose, he would either be the envy of Europe or the Jester would be executed, either way was fine by him.

The guards then took the Jester towards the Royal stable, when one of the Guards asked the Jester, “Why would you make such an obviously impossible deal, surely you know no one can get a horse to sing?”

The Jester smiled and whispered to the guard, “Many things can transpire in a year my friend, I could die and thus I have cheated the executioner… the King could die and I might get a reprieve… or the horses could sing!”

My Dad told me this story after we discussed payments schemes for money he was loaning me to buy my first house. What was he telling me? I’ll leave that to you gentle reader, as usual with a story from my Dad, you get from it, what you think, not necessarily what he thinks you should.

Snow Tires -> Brakes

Remember when you take your car to get it’s snow tires off, be prepared to have your brakes checked out too. I forgot and had an unexpected bill on Friday. My brakes did need fixing (I am not commenting about my mechanic) but I wasn’t expecting the extra expense! Be prepared for unexpected bills as well. Better still have a car emergency fund for just this kind of expense!