Canadian Personal Finance Blog

So one of the major interesting issues financially that I am facing is whether to opt out of my former employers pension plan and take a lump sum payment (which will mostly be transferred to a Locked In Retirement Account (LIRA)) or leave the money in the employers pension plan, and draw from it at either age 55 (at an actuarially lowered rate) or 65.

As I have said previously I will be opting out, as I have very little confidence the money will be available when I get to retiring age, and now I read in the Globe and Mail the following (by Derek DeCloet):

The bad news is that at the start of this year, Nortel’s plans were already short by $1.2-billion (U.S.). The worse news is that 53 per cent of the assets were in stocks, which have been annihilated. So the pension hole has become a cavern – one that will have to be filled with cash that the distressed company would rather use for other things. Like surviving, for instance.

I read this and am not shocked, but I am worried, as I was supposed to receive information within 30 days of my severance about my pension options, however, I have not received anything in the mail as of yet, and I now wonder what new “wrinkles” may arrive in terms of this money.

My view is that this money is mine, and I have earned it over the 20+ years I worked at my former employer, and given they “capped” this pension as of January 1 2007, leaving my money there makes little or no sense to me. If anyone cares to comment or disagree, please feel free I am open to discussion on this issue.

U.S. Elections Tuesday

As the Daily Show’s reporter is fond of saying, “Can we just FINISH THIS NOW!”. I can barely stand Canadian Elections and the campaign is typically only about 6 weeks, how our American Cousins can stand the two years of grind is beyond me. 

Permit me to make the following morbid observation:

• The chance of John McCain dieing each year from his skin cancer is put at around 6%, so cumulatively it is much higher that he will die before the end of his first term as President.
• Senator Obama’s life has already been threatened and as Chris Rock has pointed out, there is gonna be some nut wanting to knock him off, just because of his race.

Errant Wallaby and Personal Finance

I have now been taught how to catch a run away wallaby, evidently you throw a towel over it, hold it by it’s tail (don’t let go) and put it in a bag, and call the Zoo in Kemptville it escaped from. 

What the heck does this have to do with Personal Finance? Be prepared! If I see a wallaby in my backyard I’ll know what to do, just like in Financial Planning, in case of emergencies make sure you have a plan. (Now I sound like Marlin Perkins from Mutual of Omaha’s Wild Kingdom).

My regular readers will remember last week I asked, “What is the Bottom in Stocks” and I pointed out we just will not know what the bottom is until six months afterwards, and I was proven right again yesterday, when I (eternal pessimist) thought there was no way things could drop any lower, yet they did. Canadian financial stocks (banks and financial folks) took a hell of a pounding again, and now I am not even sure why, but TD and BMO both took hits again. 

TD’s drop actually had a minuscule basis in fact as their Ameritrade division announced some fairly neutral numbers, but the whole TSX went “Financial Apocalypse” for the last 45 minutes of trading and a great deal of losses were incurred in that sure time frame (stock value losses I mean).

I keep wondering is this the bottom, but as I have said, we will only know in six months time.

Financial Impact on Me

My RRSP’s continue to drop in value (I haven’t looked really, but am glad it is Dividend time since my DRIPs (Dividend Reinvestment Plan) on most of my stocks will be kicking in and I will be buying some very cheap stock with it). I also continue to collect up old investment vehicles into a single set of investment devices, which are now fairly heavy in cash, which is a good thing, now the only question is when and what to buy, and I continue to “waffle” on what that decision might be.

E.I. Not For You

Got a call yesterday from a lady at the Employment Insurance office asking me a bunch of questions about my severance package and how it had been implemented. She was new on her job, so she and I fumbled around a few questions and I think it has been straightened out for now, but this did bring up an interesting point, which is that you MUST apply for E.I. when you are laid off, not when you think you need it. If you don’t apply right away, you may be disallowed your claim for taking too long to fill in the correct documentation.

At the end of the conversation the nice lady mentioned that I will not be eligible to get E.I. for about a year (the length of my severance package in their calculations). This didn’t surprise me, but I know for sure now that someone at the E.I. office has said it to me out loud.

Weather Bomb

Evidently Ottawa will be the victim of a Weather Bomb in the next day or so. Before you start thinking that the folks at Environment Canada have created a Weapon of Mass Destruction that will cause huge storms, that is not what the term means, it is a real Weather Forecaster term to describe a quick and large drop in the Barometric Pressure which is usually part of a severe storm system.

What does this have to do with Personal Finance? Everything!

• With 15-30 centimeters of snow coming Do You Have Your Snow Tires On? I don’t! If you live in Quebec, remember you need to have them on, it is the law now.
• Do you have enough food at home in case it is hard to get out in the next day or so?
• Is your furnace in good working order?
• What if the power goes off, have any wood in for your fireplace?
• Does your snow-blower work? Does it have any gas?

Good question after the past couple of weeks, asking that question might not be the question to ask, the question might be, “How bad is it going to be this week?”, especially on the financial markets. I have no advice or wisdom for you right now, I simply watch and ask questions and simply react to what happens. Maybe it’s best to follow the Lawyer’s credo, “Never ask any question you don’t know the answer to before hand”.

Cash is Still King

On the personal finance side (micro) we (Mrs. C8j and I) continue to live with the credo “cash is king” and continue to keep our credit cards out of our wallets. How long we can keep this up, I don’t know, but for now, it is important not to allow any credit “build up” to occur thus causing financial haemorrhaging, as we have seen in the past.

More cash is appearing from transferring work related savings vehicles into our own RRSP and savings vehicles, so again, we have decisions to make about WHAT to invest in and WHEN to do that investing. For now, I am in a “wait and see” mode, since I still have little confidence in the current economic apocalypse.

Top 100 Employers in Canada?

Given I am still looking for a job, folks send me interesting information, and one I received from my mother. Evidently there is a company that rates the Top 100 Employers In Canada, with details about every company and why they are such good companies to work for. The information is interesting and is mostly on the “macro” level (i.e. benefits and such), and not much about the work environment itself, but still very useful information to have when searching for a job. Strangely my former employer is not mentioned, curious.

I am not that picky right now, I’ll take work, and not worry as much about whether there is subsidized maternity leave (given it doesn’t really matter to me either).

The Boy Scouts motto is very topical for this week in my life, you should always be prepared (or as prepared as you can be) for the “knuckleballs” that life may throw at you.

Click, Click, buzz….

This was the noise that my wife’s van made on Wednesday when I went out to start it. It kept making those noises even after I had taken the key out of the ignition, which really freaked me out. Luckily I called my mechanic who said it sounded like one of the cells in my battery had gone and my 12 Volt battery was now a 4 Volt battery. The little I know about electrical components in cars (especially a lot of the computer based stuff) this is NOT a good thing, and a bad battery can cause damage to a lot of VERY expensive components, so I was very worried what might come of this.

The nice man from the CAA showed up at my house, asked what year my car was and what the problem was. He was confident it was the battery, because he told me that any time he rolls up and it is an ‘01 or ‘02 year car that won’t start, if it still has it’s original battery, it is the battery! Luckily we were able to jump start the van and it stayed running. 

I was able to drive the Van to my mechanic who did a quick diagnostic on it, to make sure nothing in the control systems had been fried, replaced the battery and $250 later, I had a functioning van and a new battery.

Given I am living on my severance, this was not an expense I needed or wanted, but unfortunately it needed to be repaired. 

This Week in Personal Finances

My wife and I sat down and mapped out what to do with the lump of money we have so far from my severance (another block appears on January 1), the following financial actions were taken:

• All bills for this month were paid (can’t hide from those). Pay things that cause heat to be turned off, lights to be turned off and water to be turned off (i.e. The Rule of No Turn Off Bills)
• All short term debt vehicles were paid off (credit cards, and an unsecured line of credit), thus leaving only the Mortgage as a debt that must be serviced. This was a decision that may or may not be correct, simply servicing the short term debt and holding onto more money now, may be the right decision, but remember Debt Makes Me Sick, which is the reason this decision was made.
• Remaining moneys were dispersed to a Short Term savings vehicle (money market fund), a Higher Interest Savings account (shorter term savings) and an amount was left in the chequing account (you remember the one that has already had money defrauded out of it).

Enjoy the Autumn folks and have a great weekend.