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).


Direct Deposit Enrolment for Government Benefits

Here is a quick Tuesday update to remind you that Government Cheques will be going away very soon (April 2016), and you can easily sign up for direct deposit, if you can remember your on-line banking.

Life of a Government Cheque

Journey of a Government Cheque

How hard is it? Let’s just walk through it for you.

First question to answer is, do you receive Government Cheques for any reason? You sure? Check this web page which has a list of all the different folks that can send you cheques, which include:

You sure you don’t receive any of these?

Next, congratulations! You have figured out you need to set up direct deposit (the first step to solving any problem is admitting you have a problem). How can you fix this? Click on any of those links above and you will be told how, however, let’s try a different way of doing things, let’s go to the CRA and check out how your Tax Refund might be done.

  1. Go to your CRA MyAccount page  (link on that page). What the hell is a MyAccount? Don’t worry, you don’t need to create one, you can simply log in with your On-Line Banking credentials (if you don’t have on-line banking I would strongly suggest going to a Services Canada Office to set things up).
  2. Log into CRA My Account with your on-line banking credentials
  3. If you have done things right you will then be at a home page that will have many different and wonderful things you can do with the CRA. Select the Accounts and Payment tab
  4. Voila here is where you set up your direct deposit, or alter it so that it goes to a different account, or stop it from being deposited (although why you would do that I do not know).

It is just that simple people, so why haven’t you set it up yet? Get off your duff and do it!


Public Service: Government Cheques Going Away

I was contacted by an agency about posting something here about the fact that Government Cheques will be going away very soon (April 1, 2016), and they included a blurb about it. My regular readers know my opinions on Guest Posts, however, given this is somewhat Public Service, I will publish this one. Remember I didn’t write this, nor do I necessarily agree with all the statements in it, but you should really get your government cheques direct deposited (unless you don’t have a bank account, then I am not quite sure what you can do, does it direct deposit to your mattress?).

Life of a Government Cheque

Journey of a Government Cheque

Federal payments by direct deposit are coming your way!

When you consider that it costs approximately 83 cents for the federal government to issue payments by cheque and around 11 cents for direct deposit, you can understand the Government’s decision to eliminate cheques (except in exceptional circumstances) as of April 1, 2016. After that date, all payments made by the federal government including Old Age Security, Canada Pension Plan, GST/HST payments and Tax refunds to name a few will be made by direct deposit.

The majority of Canadians have already enrolled for direct deposit. If you’re one of a dwindling minority who hasn’t done so yet, here’s some information that may help you get on-board.

How direct deposit works

With direct deposit, you designate a bank account and authorize the deposit of specific payments directly into that account. Your privacy is assured and your funds will be electronically transferred directly into your account – its secure and reliable.

How to enroll for direct deposit

You can get the forms online but you don’t need a computer or access to the Internet. You’ll find the forms at your local Service Canada Centre and at your financial institution. The latter will even help you fill it out. If all of your cheques are to be deposited in one bank account, you only need to fill out one form that takes just minutes to complete. Once you’ve enrolled, you can track all deposits made to your account and continue your bill-paying by going to the bank if you like as well as all your other banking routines.

There are lots of reasons to like it – Benefits of direct deposit

Direct deposit is:

  • Fast. The money is guaranteed to be in your bank account on time.  That’s especially important if you have arranged automatic withdrawals to pay rent, property taxes, hydro, etc.
  • Secure. There’s no risk of your payment being delayed, misplaced, lost, stolen, or damaged.
  • Convenient. The money is in your account when needed even if you’re away from home on a holiday or unable – for any reason – to get to the bank right away.
  • A time-saver. There’s no need to adjust your schedule (picking up the kids, attending classes, visiting the doctor, etc.) to accommodate banking hours and there’s no need to wait in line for a teller or ATM either.
  • Easily Managed. If you receive more than two or more payments, for example the Universal Child Care benefit and EI, they can be deposited in one account or in different ones – even at different banks.
  • Designed to save taxpayers money. The government estimates that direct deposit will save taxpayers about $17 million each year.

More information is available

Visit your bank or other financial institution or call toll free 1-800-O-Canada (1-800-622-6232). You can also find more information, including a short informative video, at Public Works and Government Services Canada’s website: www.directdeposit.gc.ca


At The Mercy of Foreigners!!!

This is one of the battle cries I have heard talking about Canada’s National Debt and how we soon won’t be able to have control over our own destiny, as the Federal Government’s Creditors will start dictating to us about fiscal policy, Bunk! I say to that.

As usual the media gets it a little wrong. While the above rant may have some grain of truth with our soon to be turkey stuffed friends down south, in Canada that is not true at all. In fact Canada is really quite good figuring out who(m) is holding the Federal Government’s Debt.

International Comparison of Non-Resident Holdings of Central Government Debt

A very interesting graphic, which explains where some folks seem to get it wrong. Yes, our friends in the U.S. have a high degree of non-residents holding the Federal Debt (more than 2 times as much as Canada). It’s more interesting to see that Australia has such a high level of foreign investment.

Have a read of the document that is linked to the graphic (i.e. click on the graphic), if you are curious about exactly who, what, where and how the Federal debt works. Interesting stuff.


If I Were the Government

So I saw an interesting graphic on Tumblr comparing the U.S. government spending to a median family income and how it might look, so I have tried my best to dredge up this comparison for Canadians.

This model is already flawed as I am only looking at the model where I (the Big Cajun Man) will take on the guise of the Federal Government and not all governments in general (which would change the debt number much as you will see). The average family income is borrowed from 2011’s median family income from Stats Canada as well.

The numbers I am using are gleaned from a report from Stats Canada, and are at best an estimation.

Income for the BCM Family $76,000.00
Spending Costs
   Life expenditures $74,512.00
   Debt charges $9,608.00
Total Spending $84,120.00
Net Income -$8,120.00
Debt charges as a percentage of income 12.64%
Current Family Debt $180,453.00
Debt after this year $188,573.00
Income Compared to Debt 42.12%

What does this mean? Well if I were the Government I’d be spending over 13% of my income on paying off my debt, however, if you look at my debt, it isn’t really that far out of whack, is it? A family with $180K worth of debt is a little high, and they should think about paying it off soon, but then again it is do-able, over a long period.

Oh and here is a nice graph I made too.

If I Spent the Way the Feds Spent

If I Spent the Way the Feds Spent

If you look at the U.S. Model it is a much higher Debt in comparison and a much more dire looking pay back scenario.


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