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.
“Never was so much owed by so many to so few“, –Winston Churchill
True Heroes
I paraphrase Churchill as a precursor to the latest data from Stats Canada about the National Balance Sheet. Remembrance Day is not far off, but allow me to borrow from Mr. Churchill a bit more.
Unfortunately, the phrase is very much in context. The so few, is the banks, unfortunately.
It starts off saying that we are wealthier (but you need to read carefully what that means), but then we find out about our debt loads.
So Much Owed?
The report states:
Credit market debt as a proportion of household disposable income (adjusted to exclude pension entitlements) increased to 169.1%, as credit market debt outpaced income. In other words, there was $1.69 in credit market debt for every dollar of household disposable income.
Let us not frolic with glee, while the increase is slowing, it is still increasing (i.e. we are borrowing more compared to our disposable income).
For every $1 of disposable income you owed $1.69 ? That seems quite worrisome, because eventually, someone will ask for their money. Loans are callable, especially HELOC’s, Credit Card Debt and Loans.
We are worth more, but so much of that net worth is tied up in Real Estate. If the housing market goes bust, this could lead to disastrous consequences. So much more will be owed by all of us then.
Given the latest Market Volatility and drop in value, is now the time to crack open our skulls and eat the soft gooey stuff inside? No! Remember if you are an Index Investor, now is not the time to panic. Have the picadores finally slowed down the Mad Bull Market of 2009? I have no idea, but it is fun to create click bait for folks based on that.
This coming week it will be Happy Cannabis day (on October 17th). What exciting things will happen that day? I am not sure, but I think I may stay off the roads for a few days. Some employers are being quite strict with their rules (RCMP says you can smoke up to 30 days before your next shift, and DND’s regulations seem quite voluminous). Will folks show up to work stoned? It all remains to be seen, but remember, ” … Dave’s not here man!”.
Seems we will be saying good-bye to Google+? Must admit it never drove much traffic and ever seemed to have anyone on it, so this is no great loss. Will Google create another better Social Media site?
Deep Money Thought
“Believe me it is better to understand the balance-sheet of one’s own life than of the corn trade” –Seneca
A story of tech infiltration broke about how a server manufacturer was compromised by the Chinese security folks (allegedly). The Big Hack: How China Used a Tiny Chip to Infiltrate U.S. Companies, outlines how many US firms use the technology that was compromised. Why am I talking about this here? This is a game changer for technology. Most of your technology is assembled by small companies in the far east, and now that it has been proven that they are compromised, how the manufacturing chain works will have to change.
Who is compromised? Every firm that matters: Apple, Amazon, NASA, Banks, Government Agencies, etc., etc.,. Expect statements soon from all of them, attempting to downplay the scope of this hack (however it is very big).
The current U.S. regime is already xenophobic, there will now be a push to “Buy BUILT in America ONLY”, especially in the tech area (and absolutely on Government contracts).
Dunrobin after the Tornado (courtesy Global News)
This leads to the other big news this week the completion of NAFTAUSMCA. The new agreement has changes that will screw affect farmers, but it seems to be better than nothing. It did not remedy the “buy America” policy the U.S. governments currently have, thus Canadian firms still cannot easily penetrate the lucrative U.S. government contract world.
The tech infiltration will not help with this lack of access to the U.S. Government contracts. If anything rules will get tighter in this area.
Are you feeling paranoid about your own tech security? You should, since Wired just told us, How Russian Spies Infiltrated Hotel WI-FI to hack victims up close. Remember if you are using any kind of public WiFi, don’t use your banking app, better still, just don’t connect to it. Your phone will tell you it is not secure, believe your phone. If you get a VPN (virtual Private Network) you might be safer, but never completely.
Hell of a Wind
We were lucky that all that happened to our house, during the Ottawa Tornadoes, was we lost power for about 49 hours. This meant all food in all of our freezers and refrigerators had to be thrown out (about $1000 worth is my guess). Given my home insurance deductible, it is not worth claiming. We have friends that were much worse off, and my wife and I actually were in Burlington the weekend (visiting my Grandson).
My daughter got to enjoy Barrhaven in the Dark for the weekend, and did an excellent job taking care of the house. Our City Councillor and Provincial MP did a great job helping folks out as well.
I will be putting together a better power outage plan, as the current one wasn’t very good. A generator is an idea, but would entail a great deal of work on our house wiring too. Maybe Solar or a Tesla house battery system?
My Recent Writings
Keeping with my technology theme here, I did write, FinTech’s Foundations COBOL. I loved COBOL at school, it was so easy to comprehend, and maybe I can retire and get some contracts programming in it? Maybe my skills are a bit too rusty though.
Wonder what kind of Tech Infiltration there is on the COBOL side of things?
Deep Money Thought
“Fortune aids the audacious” -Virgil
“What Fortune has made yours is not your own.” -Seneca
A stoic thought about money, what Fortune gives you, you must be wary of, and plan for when it is not there. Virgil’s comment is the more popularly quoted, but Seneca’s view is important to remember as well.
A very interesting article from the Wall Street Journal confirmed to me what I had always suspected, in terms of the technology all banking is still based on, COBOL (at least on the banking side of things).
The world of banking is very risk averse when it comes to technology. There are backups to all systems, multiple power sources every system must live up to “5 9’s” availability. This means the system is up 99.99999 % of the time. As the Canadian Feds found out changing out an old system and replacing it with new code and technology is problematic (aka Phoenix), thus most Banks are reluctant to do whole sale changes just to update technology. Old systems get replaced typically if they are broken, not if they are still working.
At the core of the banking system in terms of technology is a language older than me (and I am old). COBOL (COmmon Business-Oriented Language) was written in 1959 based on the works of Admiral Grace Hopper. I worked in it, at school and on the job as well (at school I used WATBOL), so I have a passing understanding of the language. It does, what it does, well.
FinTech continues to crow about it being new and exciting, and parts of it might be (the user interface is my guess), however the heavy lifting (i.e. account creation, asset moves, etc.,) is all still being done capably by COBOL.
A COBOL Punched Card
Fear and Loathing
Is it time to fear FinTech? You should be skeptical of all the claims, but if the system works (for you), that is the major decision point. If someone tells you how it is the future of banking, ask them about how they interface to the banking COBOL interface (see if they have an answer for you).
I am glad to see that old technology still keeps the world humming.
It is that magical time when kids go back to school, and life goes back to a more normal pace (for parents). If you just took your child to Kindergarten, what are your plans for their University Education? Might be time to start thinking about an RESP, don’t you think?
Back to school is always a fun time, Thanksgiving is around, Pumpkin Lattes are everywhere and Christmas stuff is available in Costco. Halloween candy has been available since the end of July in most stores, and we wonder why people spend so much? If I bought a box of Halloween candy in August, I would be buying more in August, September and October as well. All I can think of when I see this is one of my favorite songs by the Clash, “Lost in the Supermarket” (from the album London Calling).
I’m all lost in the supermarket
I can no longer shop happily
I came in here for a special offer
Guaranteed personality
What would you do if your vacation was ruined by a hurricane? I guess that is something to check with your travel insurance. Sounds like a possible fraud too, as I got an email about making claims on my travel insurance due to the current hurricane (and I am not even on vacation).
There was a disgusting story on Reddit about someone trying to get their 80 year old mother a basic cable & phone package, and Rogers refusing to offer their basic package to the consumer. It is not that surprising, but still shows why the CRTC’s ability to police the Communication Monopolies is nonexistent.
We in Ottawa found out our Light Rail System will not be ready as planned, and isn’t likely to be ready for a good long time. Is this surprising? Not if you actually looked at the work sites daily (like those of us who take the bus). When will it be ready? No one is willing to set a date.
My Recent Writings
Haven’t written one of these in a while, so there is a dearth of things to read written by me (maybe not a dearth, more like a small pile).
On Being Laid Off (a 10 year retrospective) sums up that I was lucky to be laid off when I did, but at the time I wouldn’t have thought that was possible. Another example of right time, wrong reason can still work out. Still doesn’t take the sting out of being laid off though.
Inflation looks like it might be making a comeback, given Inflation is at 2011 levels again. If all this tarif nonsense keeps up, that could be a big contributing factor, luckily in Ontario we have a buck-a-beer.
How we Doin’ now, is more of a statement of, I am not dead yet. I am still at this, but I am kind of busy with life at the same time.
Why would you have more than one savings plan for your disabled child? Why wouldn’t you if you can, is a better question, and that is the contents of Why an RESP for a Disabled Child ?
Social Media Money
If the following Tweet does not make your blood run cold, I don’t know what will. That much income and still having financial issues? Wow.
Monthly income is not necessarily a determinant of insolvency. I've signed people making $20,000/mo after tax income. It's what you spend that can break you.
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