Personal Finance essays, stories, case studies and how to articles with a distinctly Canadian Point of View, from the Chief Kibitzer of Personal Finance. Paying it forward as best I can.
Before RDSPs there were not a lot of options for Parents of disabled children to protect income they were saving for their child’s future, without having to pay a great deal of tax on it, as it grew.
The RDSP helps a great deal with this, however before the RDSP another way to dissipate the impact of a disabled person receiving a large inheritance which could cause large tax implications and worse a loss of services and programs (due to the change in their financial status) was a Henson Trust (a specialized version of the Absolute Discretionary Trust).
I was going to attempt to explain this one, but thanks to Mark over at the Blunt Bean Counter, he has a much better explanation with this one:
The RDSP is a much “simpler” (for lack of a better term) program to work with in terms of set up, but in some instances, the Henson Trust may be the only option available.
Note: Yes, this is a bit of a cheat on my part relying on other writers, but this has been sitting in my “To Do” list for a while. Please feel free to comment and ask questions, I will make sure I get some answers for you.
Also remember your loved one needs to have a Disability Tax Credit (DTC) for this as well. Evidently, I was mistaken, however, the ODSP is actually involved for Ontarians as well.
I found this one in my archives, and I started writing it two years ago, having no idea what 2020 was going to bring. Read it with that in mind, it is about Personal Financial Doomsday.
One of my favourite Star Trek episodes is The Doomsday Machine , where a robot is let loose to destroy both sides in a long past war. There was much overacting and emoting by both William Shatner and William Windom but I liked it.
We are not in a Doomsday scenario right now (COVID19 Pandemic), but we might be in a big mess in the financial world (on the Macro Economic side of things).
I think 2008 showed that things can go off the rails badly, but now we live in completely uncharted waters. I worry, this is going to be a very long mess, so we shall see.
I think the financial apocalypse I was thinking of is was at a personal level. As we have learned from a few financial books, personal finance apocalypse can happen much more easily than we think.
Your health failing suddenly is more likely than you hope, as I learned in my Movember story. There are other more catastrophic health issues that can arise, and that can easily trigger a personal finance failure.
Simply losing control of your debt load, or maybe a sudden increase in interest rates, is the most likely financial doomsday. The interest rate sudden jump is not out of the question, but I suspect governments are fighting against this, knowing the impact it might cause, financially.
The ultimate doomsday of course is our own demise, but then again, your financial concerns are over then as well.
Losing your job can be another financial apocalypse, that many folks have a hard time recovering from.
The best way to avoid a Financial Doomsday, is be ready with a financial plan that takes into consideration the Risks possible. Is there a financial apocalypse likely globally? We shall see is all I can say.
I do know that a personal financial doomsday is more likely than most of us wish to admit.
The Big Financial Snit ?
“… and I thought YOU, wanted to play, SCRABBLE!”
One of my favorite apocalyptic shorts from the NFB, the Big Snit.
One of the most important things you can have is have a My CRA on-line account with the Tax Folks. How do you do that?
Straight forward
Go to this web site to start the process: CRA Log In Registration Site . Note you will need a copy of last years Tax return to verify you are who you are. Once you register, you wait, because the CRA will then send via Canada Post your log in credentials.
Yes, this is cumbersome, but also very important. This variation on 2 stage verification is important to ensure no scurrilous nasty folk get at your CRA data. Even in troubled times, security is very important.
Once this letter shows up follow the instructions and log in. After logging in once, you can then put that information somewhere very secure, and forget about it. Why? Your Bank access for online banking can be used (for most of us) as our log in after that.
Why Get it?
Why is My CRA so good to have? Here are a few things you can get there:
Your TFSA limit for this year. This is calculated at the start of the year, so if you have already deposited money into it, you’ll have to take that into consideration.
Your RRSP limit for the year. See the TFSA for the same cautions about the data.
The Status of your Tax Return or Appeal. I have found this invaluable with my many reviews and such. Typically the CRA will tell you if you have email to deal with from them as well.
Emails from the CRA about your return, or appeal. This is the only way the CRA will contact you, and it will tell you to check My CRA, without any link. They won’t ask for iTunes cards either.
Usually can download your Tax data into Turbotax and other Tax Prep software, which makes life infinitely easier. I used that this year, very useful.
Lots of other stuff too.
If you are an on-line person, get this access now, it will make your life much simpler.
Haven’t done this for a while, but I do have a little more free time as well. So let’s start with the best joke about this year so far.
I’d like to return this year (2020), I don’t like it and it isn’t doing what I want. It is within 90 days and I expect a full refund, or at least store credit.
The 2020 Dad Joke
How are you all doing? I hope you are doing well, and if you are still working, I say Thank You, for that.
If you are not essential, STAY HOME! This is what you can do for your loved ones and yourself, STAY HOME! I cannot visit my Mother or my Brother because I could kill them, I don’t know if I have been exposed or am a carrier, so I STAY AWAY. I want to go see them, but I know I could kill them, so I stay away.
Toilet Paper?
So the one thing I will remember about this vividly will be the folks who have hoarded Toilet Paper. I hope that they have to use all that toilet paper in a very short time. Remember COVID-19 attacks your lungs, it is not a stomach flu. On this date (March 27th) I continue to look for another pack of TP, but Costco was out.
I also have heard from every place that ever asked for my email address (it is a HOTMAIL address which I usually ignore). Everyone is telling me how they are trying to help me be safe during these times. Thanks?
Past Writings
So it has been a long while since I have written one of these, so we have a long list to wander through.
COVID-19 Are we F*cked ? OK, so the title was a little click-baity but I had to write this down. Sometimes these thoughts need to be put in print to see where we stand. Apologies for the rant and salty tones.
RDSP Statement of Grant Entitlement 2020 yes another year has passed and the government has told me how little they will match in terms of my son’s RDSP. It’s free money, but it will increase over time.
Reflections on 15 Years means I have actually been doing this for more than 15 years. I am attempting to rewrite, edit and delete many of my older posts.
Impact of COVID-19 on Small Business and Self-Employed my daughter is a Chiropractor, and she offered to write a piece on the impact of this thing, on her financial and professional life. I think I may have a few more posts from her in the future.
Financial Disaster Plan would have been good to have one of these before all of this, but maybe it is time to write one anyhow?
There are more, but you can go check them out on the site. As you can see my writing rhythm may be returning (for good or bad). Hopefully more from me in the coming weeks.
Financial Reads for Troubled Times
I give you an excellent reading list of articles to help you get through these troubled and worrying times.
Many “Experts” are Wrong about Risk written by Michael James, points out that oh so many experts have been wrong about money things. He is not arguing with Scientists, he is arguing with Financial Folk.
Robb Engen brings us High Interest Savings Account vs. GIC maybe it is time to start thinking about those again? You should have some in. your portfolio, but the mix is the question.
For those that have not noticed, Squawkfox has not been around much, and that is because she has been battling with Cancer. She is a friend, and I hope you all send her good thoughts and love. She is one of the reasons you should stay home!
I’m hangin’ at the hospital with my best friend — The Hand Sanitizer.
I’m immune compromised and waiting for a post-chemo heart scan. 😷
This is being written during March 2020 the COVID-19 Pandemic. At the time of publishing things were quite confused and unsure, but this is my simple opinion of where we in Canada may stand financially.
We are f*cked.
Is this me being overly alarmist? I hope so, but there are countless areas that are not likely to ever recover from the Pandemic.
Travel and Vacation Industry
Dead.
The Air BnB industry and that side dodge is done. People will not be travelling much, for the next year or two. What happens to all those condos in Toronto that were bought with that in mind?
Cruises and Cruiselines? Good night, they are now synonymous with the Pandemic, if they recover it will be not in the near future.
Travel bloggers? Freebies are not going to be given out much, I think this gig is going to curtail or die off too. At this moment, Las Vegas is closed. This is not the W.C. Fields joke about visiting Philadelphia, this is Vegas, which never closes.
Airlines? These may recover if business travel returns, but they are going to take a beating, and will ask for a bail out.
Real Estate
F*cked
Construction sites are shutting down, thus screwing up the whole system.
People who are buying the new properties need to sell, but will have nowhere to go.
No one is buying a house right now, and when will they start?
Mortgages are being called and payments are being missed, renters are not being given reprieves either. What happens next? People being kicked out on the street? I doubt it, but you really don’t know right now.
Big wave of homelessness? I hope not, but the economic models aren’t there for this.
Over priced real estate may soon be worth less than their financing (i.e. mortgage), will we seeing folks walking away from their expensive high-rise downtown condo?
Advisors are telling their customers to sell now, thus locking in their losses. They are following the buy high, sell low credo, that is not synonymous with getting rich.
The markets may rebound completely as it did in 2008, but surprisingly not as many folks got rich on that rebound as you might think.
Employment
F*cked, we had a weird job dynamic already, (the side gig world) but now it is F*cked.
My kids’ generation has had to have 3 part-time jobs to add up to a full time job, but none of those jobs exist right now. Restaurant jobs, are gone mostly due to the restaurants being closed. Retail jobs are gone, stores are closed.
The growth industries are:
Delivery, that is about it. Everything is being delivered now, but does anyone make any money doing this?
Government, because there is going to need to be a big government to deal with a broken country. Is this a good thing? I don’t think so, but I am a small L libertarian.
Debt, the world of debt is going to explode in terms of big money. Payday Loans, alternate loans and Bankruptcy Trustees are going to make big money in the short and mid term.
Will industries other than Travel go in the crapper? Lots of potential there
Retail, when folks don’t have a job, they aren’t going to be buying a lot of stuff.
Cars? If interest rates stay low, they may be OK, but if interest rates go up, this could make folks keep their old cars.
Oil and Gas already is in the crapper, with gas at 70 cents a litre, which makes it not worth working on the Oil Sands in Alberta.
Inflation
Coming, much like the four horsemen.
Governments are injecting Infinite money into the economy to try to prop it back up. I am not an economist, but even I know this is the recipe for Inflation (ever hyper-inflation). If money loses value, prices go up. Most folks don’t remember the 1970’s but this could be where we are heading (if not worse).
If we end up in an Inflationary spiral Interest Rates will have to be used to control things, and that is a world many folks have not lived in. I have seen 19% CSB’s in my lifetime, will I see them again?
Bankruptcy trustees may not be able to keep up with the tsunami coming at them.
Alarmist Clap Trap?
I really hope so. I hate to think we are financially f*cked as badly as I am guessing we are, but these are uncharted financial waters. I am not an economist, but I have lived for 60 years, and seen a lot of financial changes, and this one has me scared.
I hope we all come out of this with our health, and if we have that, all this other stuff can be dealt with, in some fashion or another.
Remember when we said, Get Out of Debt, it gives you options? This is what we meant.
What to Do?
First thing, take this article as simply a warning of what could happen. Next, make a plan for your financial world for:
The next week, what are you going to spend on? Why? Can you afford it?
The next month, assuming this stays the way it will.
Six Months, where hopefully around Autumn things start to turn around in terms of normalcy.
An overall recovery plan.
How are you going to recover your savings?
What is your retirement plan, given what has happened?
How do you plan around something like this happening again?
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