Observational 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.
I keep reading commentaries from “influencers” talking about debt-shaming. At best, “shaming” is becoming “old hat,” but I digress.
The Acadia Axe Man, not the RedBlacks Big Jos
Debt continues to be a bad thing. It limits your choices in life and is a dangerous tool (much like a chainsaw). Surprisingly a chainsaw comes with warnings and instructions, whereas most debt vehicles do not. The debt vehicle also cannot be used to make incredible wood carvings, but I digress.
Many times you need to use debt, and this is not an immoral thing. Examples of this are mortgages and possibly student loans (in both cases, there are exceptions). Buying a highly leveraged house or getting a student loan to study Hegelian Philosophy are examples of those exceptions.
The indiscriminate use of debt for impulse purchases is a reason for debt dishonour. Using high leverage and high-interest rate debt vehicles is another reason the fickle finger of debt derision is wagged.
“Influencers” who portray a lifestyle where debt is a good thing are an issue to me. The credit vehicle providers’ advertising is truly reprehensible. The higher the interest rate of the vehicle, the more vile the product. Yes, I mean Pay Day loans, but reverse mortgages are odious.
Debt-Shaming Finger Wag
I will plead guilty as a debt-shamer. However, I stand by all of my previous statements.
Three Solid Ideas For Your HeLOC is a misdirection title. With interest rates going up, home equity lines of credit are becoming heavier anchors on your financial life.
Surreal Paragraphs Found in Credit Card Bills, if you carry balances on your credit cards, you are in trouble. Look at their estimate for how long it will take to pay off the debt on minimum payments.
If you keep building up clutter and you think all you need do is call a Junk Hauler, the price for one load could easily be $1000. How do I know? I hired the Junk Ninjas in Ottawa and they took away a lot of old furniture, and a piano for over $1000. Could I have taken these things to Value Village or the dump myself? Maybe, but I needed this stuff gone fast. It was gone fast.
Clutter and Junk Sure Piles Up Photo by Andrea Piacquadio on Pexels.com
The piano I couldn’t give away, and it needed to go. I found out that Value Village does not take bed frames, thus we had to call someone to take away the 4 bedframes (extra) in my house. As I have mentioned, don’t store 3 apartments’ worth of stuff in your house.
This answers the question, does clutter cost money? Yes, it does.
Oh, and if your response is, “We can just put it in a Storage Facility”, you have a big problem. Storage just means you will continue to pay for junk ad infinitum. Clutter and junk are expensive, the longer you keep it the more it is going to cost.
Inflation is back for those who have been somehow living a quiet life entirely off the grid. Inflation is the rising of the: Cost of Living, Consumer Price Index or daily life essentials.
A Flock of Hairdressers
The last time it was this high I was in my 2nd year of University, and a Flock of Seagulls was a big thing. Those heady days of 1983. In those days you could buy a Canada Savings Bond with 19% yearly interest! Who would invest in the Stock Market, if you had less than a 4 year doubling period using CSBs?
Lovely graphics from Stats Canada help us understand where the price explosions are coming from.
All the parts of the CPI graphically shown and how they have increased
When did this all start? Have a look at this graphic, which is very helpful.
12-month change in the Consumer Price Index (CPI) and CPI excluding gasoline
We had a good run with low inflation, but looks like we are going to have to live with it now, but for how long?
Bank Rates for Past While… looks dramatic, but just wait!
What Shall We Do?
There are plenty of things that can be done if you have the financial ability to do so:
Lower your debt now, while interest rates are low. If you are unable to do that, maybe it is time to talk to a bankruptcy trustee or registered financial planner about what you can do about this. Things are not going to get better very soon.
Time to think about a budget again. Yes, budgets are very old-fashioned, but so was Inflation until a few months ago. If you have no budget, how do you know how Inflation is affecting you. If you have the ability to reign in your spending habits, now is the time.
Nortel still paying out like a slot machine! Rarely, and in minimal amounts.
After my layoff back in 2008, a tiny portion of my severance was still not paid. Due to Nortel’s bankruptcy, they did not pay off severance and many other debts. Nortel is slowly getting around to paying a small amount of its remaining debts, including my remaining severance.
The unpaid part was only about 1% of the total pot of money, that was my severance package. I was lucky I got most of my money before the bankruptcy.
I Love Nortel
Nortel continues through the courts, and yesterday I got a cheque for $10.41. I have received a little more than 1/2 of the outstanding funds with this amount. The payout has been over about 11 years.
Many folks were owed much more money, and I am unsure whether they received 50% of what was owed to them. The impact of Nortel’s bankruptcy on these folks was much worse.
Thanks, Nortel, or should I say Ernst & Young, who are the Monitor for Nortel Networks Limited.
Previously this was not automatic. A submission had to be sent to the CRA to prove that the disability was life interrupting, the same as for Autism and other conditions. I had heard instances of folks with Type 1 Diabetes who had an insulin pump being denied a Disability Tax Credit by the CRA. I have no direct knowledge of this, but it didn’t surprise me.
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