Canadian Personal Finance Blog

The Tories saying they are reviewing the lyrics of O Canada, while the economy is just recovering and the Government has blown more money than Paris Hilton on a shopping spree in Paris, is possibly either the greatest strategy ever, or the dumbest, I am not sure which. How many Canadians are worried that “… in all thy sons command…” is not inclusive, is more important in comparison to where the Economy stands, and the size of the national debt? I am sure there are some that are losing sleep over our National Anthem, but frankly it really doesn’t grease my wheels much (but then again, I have a son, and he is commanding, so maybe I am biased).

With glowing hearts we read many great postings this week written by the financial bloggers, from the true North strong and free. From far and wide we searched to find those posts that stood on guard for us, and here are a few of them:

• Michael James looks a gift horse in the mouth, and finds a few rotten teeth, in his post Overpaying for “Free” Life Insurance. I guess we should figure out whether “free” is too expensive for us.
• Preet sure talks to a lot of interesting folks, and thanks to his chat with Michael Moore he is giving away copies of Capitalism: A Love Story — Giveaway. Remember true love, is always saying you are sorry.
• The Canadian Capitalist has some Tips for your RRSP Contribution which is useful, even with RRSP season being over effectively.
• Larry MacDonald talks about the 2010 Budget and Personal Finance, and he should know he’ll have been locked away learning about it.
• Canadian Financial DIY points out that Canadian Computer prices might not be as big a gouge as they used to be in The Mighty CAD.
• The Quest for Four Pillars takes on a topic near and dear to my heart with Buying an iPhone From Rogers? – Don’t Believe a Word they Say. I’d like an iPhone, but they are just too darn expensive.
• Gail Vaz-Oxlade gives us something to think about with 8 Reasons Why YOU Don’t Save, how did she know?
• Ellen Roseman returns from a nice vacation and gets Back to Work, helping people get refunds. Vacations are refreshing, wish I knew how to go on one.
• To Succeed Financially you must Know Yourself says Million Dollar Journey, which is true. No financial plan works unless it fits how you want or can live.

Remember folks, there is a new budget and maybe soon we’ll have a new, non-descript, non-threatening and boring National Anthem. I suggest that we hire John Tesh or Air Supply to write it! Have a great weekend.

Don’t You Usually Comment on the Budget?

Yes, I’ll wait until Monday to comment on what the budget means to me. It seems I have walked into another cost cutting world, wonder if the Public Sector’s lay-off scares are worse than in the Private Sector?

For parents one cool thing is that your estate can transfer (after your death) from your RRSP to your disabled child (or Grandchild’s) RDSP, which could be a very good thing for those with disabled kids or grandkids.

Given we start a new year, all we folks who receive pay cheques (I believe the Japanese term is Salary-man), we get to start paying CPP and EI premiums again. For a lot of folks, they are just deductions that appear on every pay stub, but for folks who make over a certain amount, this deduction appears some time in the year, and after that, they get a “virtual raise” given they do not have to pay these deductions for the rest of the year.

Michael James is a lover of numbers (but not a numerologist luckily) and pointed out one day how easy it is to approximate how much someone makes, by when they stop paying EI premiums (and you’d be surprised how many people talk openly about the fact that they have stopped paying the premium (in fact I had just told Michael James that very fact)).

It’s actually a pretty simple game to play and well worth a couple of minutes time to create a little model to figure this thing out.

Meet Jack

Jack gets paid bi-weekly, and works as an employee of XYYZZ. He gets paid a regular salary (assume no bonuses and such), so if we list the month in which Jack tells us “I stopped paying EI premiums this month” we can then approximate how much Jack actually makes in salary. We know from the EI web site that your premium is 1.73% of your insurable earnings (and the maximum insurable earnings is $42,300 in 2010).

Just remember what you tell folks can sometimes have more meaning than you might think.

For the Remembrance Day week, there was much to reflect on. We live in a great Country (Canada) and are lucky for those who have fought for us and those in our Armed Forces today. Thank You.

I was also excited to see that the Ottawa Public Library has updated their “Stone Knives and Bearskins” interface and are now testing a brand new interface which I like a great deal (and you can find me on their as bigcajunman as well). Try it out and tell the folks what you think of it.

From the Financial Blogosphere

Given the N.C.F.B.A. met this week, I always feel a level of rejuvenation in my blog, and also a level of confusion, given some of the topics that are discussed by some of the members are well over my head financially. I listen and attempt to learn as much as I can, and then go and read about the topics more (so for me it’s like going to a seminar on high level finance ideas).

• Michael James wrote about Veterans’ Pensions and just how little we pay permanently disabled soldiers and members of the military (shockingly low, but might be tax free).
• Speaking of disabilities the Canadian Capitalist wrote about The Sad Story of Nortel LTD Beneficiaries which is another scandalous issue. These folks are going to lose their benefits (or already have lost them), because of how Nortel ran their program. Read the posting, and then ask yourself how your company does Long Term Disability benefits.
• Soon to be Television Personality Preet at WhereDoesAllMyMoneyGo put up a useful video on What is a Mutual Fund for those wanting to learn more about how that investment vehicle works. Preet will hopefully soon be seen on the W Network on a weekly basis, stay tuned.
• Larry MacDonald (who promises to write a follow up one day of his successful book Nortel: Telecomm Empire) writes a useful posting on the Quotable Guide to Passive Investing where he gives you some quips from some very good books about passive investing.
• The Four Pillars asked Should the Government Bail Out Pension Plans? I think my answer is maybe, but they should definitely REGULATE them much more closely! What has been allowed to transpire at GM and Nortel is at least an abomination if not actually criminal.
• Gail Vaz-Oxlade tells you 8 Reasons Why You Don’t Save right on target as usual (wish she wasn’t sometimes).
• Promod at Riscario Insider write about Three Reasons Why Financial Literacy Eludes Us again, wish he wasn’t right.

Have a great weekend all, remember it’s time to put your Snow Tires on!

Given the recovery in the markets over the past little while it is not surprising to hear Pension funds claiming they are on the road to recovery, and now CPP claims their assets are up $11B in the first quarter of this year (which is good news). This kind of growth is needed given the losses most pensions took during the great Apocalypse of ‘08, however is the Canada Pension Plan going to be able to withstand the onslaught of retirees which will live much longer over the next 30 years?

“We are pleased with the $11.1 billion increase in the fund and the positive 7.1 per cent return for the first quarter,” CPP president David Denison said. “At the same time, the negative returns of our past fiscal year and the positive results of this first quarter both need to be viewed within the context of our long-term strategy. We continue to focus on delivering solid returns over the span of multiple years and indeed decades.”

Since the CPP folks have started investing they have managed about a 4.9% return on their assets (over 10 years) so that is a better thing, but the nagging questions are:

• Can the fund sustain and continue to pay out to the tidal wave of retirees coming in the next 10 years, or will the government be forced to change the system?
• What is the percentage of Canadians who will only be using the CPP for their retirement?

As I grow older this worries me more and more.

This is the one year anniversary of my lay off notice from Nortel. A lot has happened in the past year (unfortunately not a job offer for me, but I am still optimistic), that have me thinking that for something bad, it may end up being a good thing.

Relaxed

The atmosphere at Nortel had been such that since about 2000, there was a constant feeling of the Sword of Damocles hanging over you. I lived through about 16  lay off rounds in the various groups I had worked in, so the actual lay off was almost a relief in a very odd way.  My minister made that exact comment that since he had first met me every time he spoke to me I mentioned something about impending lay offs, so my eventual lay off was anti-climatic in a perverse way.

Severance Paid

From my calculations I was in the last group (or nearly the last group) that received full severance from Nortel. The people after me are on a long list of creditors who will be paid little or none of what they are owed (or were promised by the company). There are many very sad stories that I have heard from people I used to work with, and I count myself as very fortunate.

The latest stories are sickening to hear that they will be withdrawing payments to people on long term disability, as well as pulling their medical coverage. Hopefully there will be government assistance to these folks, but I am not optimistic.

Pension Losses

I suspect that Nortel’s pension debacle may only be the tip of the ice berg in corporate Canada, with Air Canada already having done this (and doing it again).  I took my pension money out of Nortel when I could, which in hindsight was a great decision but at the time it was more my lack of trust in the company that made me do it, not any great insight.

All pensions these days seem to be under pressure (even the Public Service pension lost $9Billion dollars this past year), which makes me wonder how the retirement of the Baby Boomers is going to go, and whether all pensions can deal with this huge out flux of cash from their reserves?

Reflections So Far

My real view of my lay off last year is that I have been very lucky, and I was lucky to have worked at Nortel/BNR for the time I did. The experience I picked up continues to get me job interviews, and I worked with many wonderful and amazing people, so even at times when I seem to be a “bitter former employee”, I am not, I am grateful for the experience and hope to soon find a new place to ply my trade.