Canadian Personal Finance Blog

With Lent beginning, tax season roaring into view and the RRSP season coming soon to an end some very interesting posts were done this week, for the end of February.

• Larry MacDonald wrote an excellent article for the print Globe and Mail where my comments were included A Relief Valve for RRSP Holders. I was very happy to see they included a picture of my son’s bum as well.
• The Canadian Capitalist advises us to Keep Faith in Buy and Hold, which I think is important to remember, even with recent fluctuations.
• Michael James points out that It’s Different This Time, or is it? I’ll tell you in a few years, since we never know until it happens.
• Preet asks the interesting question How are the Pros Investing Their Money  (ok he quotes the Wall Street Journal). Preet was also mentioned in Larry’s G&M article as well, and is always and interesting read.
• Gail Vaz Oxlade talks about an important topic for me Starting an Allowance for kids, something kids need to learn about.
• Ellen Roseman asks a pointed question Can You Trust Your Financial Adviser ?  
• Nancy Zimmerman shares Here is What I am doing with my RRSP. What Are you Doing with Yours? She thinks it is a buyers market, but my question is, are we at the bottom?

Have a great weekend all, and watch for the Ultimate Canadian Get Rich Quick scheme video.

I am hoping to have a first hack at my taxes done very soon, however, as usual my former employer will only send me T4 (and now T4A and others) at the END of February (if not later, given it’s current fiscal state, I would not be surprised if it arrived very “en retard”). This means I am unable to try to purchase RRSP’s to compensate or lower my taxes (if I had any room, as I mention in the Globe and Mail). I guess if I don’t get the forms in time, I can just guess and submit the numbers, but I assume they will arrive some time soon.

I know that QuickTax offers an RRSP scenario tool, but I have never used it, has anyone else? It supposed to show the advantages of buying RRSPs in February and their impact on your income tax owing. I may use that tool one day, but not this time around.

More Money in Government

Stats Canada published an interesting report on 2009 Public and Private Spending estimates.

While public sector capital spending is expected to increase 9.5%, private sector investment is anticipated to fall by 13.1%, mainly due to the mining and oil and gas extraction industry.

This says loudly the one growth industry in the next year, is the Government. Those of us looking for jobs, might want to look at the Public Sector, since it looks like they may be hiring.

And I thought I had Investment Issues

CTV is reporting that:

The Caisse de dépôt et placement du Québec will face intensified scrutiny in special government hearings into the investing strategies and risk management practices that led to its stunning $39.8-billion loss.

Holy cow! This is the biggest pension fund management group in Canada and they managed to blow that kind of money investing? Wow! Evidently the Quebec government is investigating bringing in a new management team, might not be a bad idea.

RRSP deadline is March 2nd. Complete your taxes with QuickTax before the deadline.

Normally by this time of year (Mid-February) the airwaves should be inundated with reminders to get your RRSPs bought for this  year’s taxes, but this year, I have seen very little “pomp and fanfare” about the whole situation and assume the banks have figured out:

• People worried about their jobs are less likely to be worried about their retirement
• People without jobs aren’t going to buy RRSPs
• Banks have cut back on advertising due to their own financial shortcomings.

I may be wrong, but I certainly have not heard the normal crescendo of advertising campaigns about getting RRSPs bought before the end of February.

I am Worried About My Job

If you have money to put in your RRSP but are holding off, at least put your money into a TFSA to have it grow without taxes, but maybe think about putting it into an RRSP anyhow. The TFSA is a safe bet and is a good “holding place” for now.

If you have money you want to put into your RRSP now, just make sure it is in an investment that can be liquidated quickly (or does not have HUGE penalties for taking money out early) and the following scenario might occur:

• Put money into RRSP and get back tax money from last year (where you might have been in the highest tax bracket).
• Get laid off this year, and if at the end of the year you need to withdraw the money you might be in a lower tax bracket? Crunch the numbers but think about that possible scenario if it fits your life.

Weird Inquiries

Got a weird inquiry from someone from MTV (claiming to be) about a show they are doing about laid off people and how they have to adapt their lifestyle now they aren’t making a big salary. They were looking for folks much younger than me, so I didn’t answer, but I could think of some possible titles:

• Dude where is my career?
• The E.I.  (a parody on The O.C.)
• Dump’ed  (as in job)

I had to smile reading the e-mail. Now if the CBC wants to talk to me, I am all over that!

That is what Minister Flaherty has created, a budget for every single person in Canada (or at least everyone in Canada will be touched in some fashion or another). This is an all encompassing and wide sweeping budget to kick start the economy (hopefully) and drive the government back into the glory days of the 70’s for racking up massive deficits ($33.7 B this year alone) (my opinion).

Budget Things that are Good For Me

Since I personalize things usually here is a list of things in the budget that are a good thing for me:

• EI payments will be extended by 5 weeks, which is great, except I haven’t started collecting E.I. yet, but it is good to know that if I need it, I will be getting it for a longer period of time.
• $8.3 billion for the Canada Skills and Transition Strategy, this is a good thing, since it helps unemployed folks like me get retrained and learn new certifications and skills (I am currently working on I.T.I.L. base certification and will move on to more technical training soon, as part of a provincial training program).
• Basic personal tax exemption for this tax year goes from $9,600 to $10,320, not a bad thing making $720 more not taxed!
• Tax brackets move up with (quoted from CBC) “…The upper limit for the 15 per cent bracket would go to $40,726, while the upper income limit for the 22 per cent bracket would rise to $81,452….”.
• Some very vague statements about “Mortgage Insurance” that we couldn’t really decypher (whether it pertained to CMHC insurance or the insurance banks offer on their mortgages).
• Tax relief for home improvement projects up to $1350 (if you spend $10000 or more) but only for this year and only for work done starting today.
• Adding CDIC support for TFSA accounts. This one surprised me, since I thought that was already in place, but I am very happy to know my TFSA is insured like a bank account is.
• “…Extending the Wage Earner Protection Program to cover severance and termination pay owed to eligible workers impacted by employers’ bankruptcy….”  which should help Nortel employees in specific, but not by much.
• EI Rates are now frozen for a while, which is cool.

And a lot of other rhetoric and vagaries that confuses me.

I actually got to read the Budget document when Larry MacDonald showed it to me, which was kind of cool, but he kept it. 

Is this budget going to help? I don’t know. Are the Liberals going to vote it down? I don’t know, but don’t worry all that will give me much more to write about in the next few days, so stay tuned.