Tales from Behind the Untaxed Money Wall

For the past year and a half I have been attempting to buy into the Federal Government Employee pension plan, and it all finally went through a while ago (I am planning on doing a string of posts outlining the exact events, and how much fun it is to deal with the Government from the inside, at a later date), and after the dust had settled, it turned out the government owed me money (good they are giving it back, bad they had it for so long).

All the moneys I was using was on the other side of the Untaxed Moneys Wall (i.e. the money was in RRSPs, and LIRAs), and I have learned the importance of ensuring that moneys from the other side don’t accidentally end up migrating over to the taxed side of things, because this can cause no end of headaches and troubles for you (as well as an inflated tax bill). I learned this when previously the bank had put money into my RRSP, that should have gone into my wife’s Spousal RRSP (that was a big mess), so you must be diligent that moneys go where they should and take the correct route to that end point.

All of this is a preface to the fact that I received an RRSP contribution receipt from my bank for a real sum of money. I saw the envelope and trepidation was already running up and down my back like fire ants, but when I opened the envelope I spewed a fountain of expletives, questioning the parenting and intelligence of the bank folk. As soon as I saw that receipt I knew my life was going to have many hours lost attempting to remedy this situation.

My first call was to the CRA help line (which isn’t too busy, yet), and got a nice young man who agreed, that I should start with my Bank to find out how they received the funds from the Government Pension folks, and see if they are the ones that screwed up (i.e. thought the money was a donation and not a transfer like it actually was), and get them to fix the problem, because this mistake can cause:

  • Obliteration of any remaining RRSP room I might have had, since the CRA gets a copy of this receipt as well and a nasty letter or possibly an audit from the CRA asking me “What’s your game?” when they realize this isn’t really a donation but a transfer
  • Endless hours on the phone trying to fix this (unfortunately this one is a guaranteed occurrence)

If the bank then claims they received this as a contribution from the Government Pension folks, then I am in a right pickle, because then I have to get the Government Pension folks to send a letter to the bank saying, “No that wasn’t from the Taxed Side of the Wall, it is from the UNtaxed Side of the Wall”, and given how long my Service Buyback has taken so far (and the number of hours I have wasted on the phone), will be a Headache of the Himalayan variety.

I’ll keep you all posted on this one, but I am not very optimistic it is going to resolve quickly (maybe it’s time for another visit to the bank and some more free banking for my troubles).



Can I retire?

I was reading a very interesting article on-line by Mr. Mustache Money about the shockingly simple math behind early retirement and the predictor function used is surprisingly simple, but it also made me wonder when I can retire.

Being a Civil Servant I have a nice pension plan (with a medical plan (for now, we shall see what comes in the future)), but for now I am effectively saving for my retirement by paying my pension premiums, and I can (if I manage to keep a position until 65) retire with a full pension (i.e. the maximum I can earn in the pension system which is 70% of the average of my 5 best years of salary). Mr. Mustache’s calculations don’t take into account pensions, it is more a how much must I invest and save to then live on type of calculation (but it cleverly takes into account your ability to live with less income because you are saving too).

For me the even easier question is when will I be able to make the following function true:

limit X -> 35  (X > 20 already)

X * B  * 2%  == Living Expenses for Year

Where B is my average salary over 5 years.

Pretty simple, really, I will view any RRSP moneys I still have as slush funds for fun things, but my day-to-day expenses and living stuff had better be down to 70% of what they are now! The other fun variable in this is that my pension income can be split, so the equation is assuming Net Income not Gross, since what matters is the folding green that ends up in my bank account, not some imaginary number that means nothing.

My real suspicion that unless I get a windfall of money somehow, I will continue to work for another 14 years (job & health willing), and I will then have to retire and I may then force myself to live on less? An interesting quandary, or maybe I will then end up as a greeter at Wal-Mart or work at McDonald’s.

If anyone knows how to make the above equation look like a real Limit equation, feel free to comment as well.


Inflation Slows a Little to End 2012

Year over year 2012’s Consumer Price Index ended at 2.3% according to our friends at Stats Canada. The drop from last month’s 2.9% is being attributed to gas prices moderating (i.e. not increasing as fast, and in some instances almost dropping a smidge), and car prices dropping a little.

This is not to say that Gas prices are really dropping, but that the increase compared to last year at this time doesn’t seem quite as bad. The actual rise of gas prices year over year was about 7.6% as compared to last month where the year over year where gas was effectively up 13.5%, so it looks like the gas price increase is declining (but not the price really).

Other words from Stat Canada:

Consumers paid 4.4% more for food in the 12 months to December, following a 4.8% increase the month before. The year-over-year change for food purchased from stores eased in December to a 5.0% gain from 5.7% in November.

Bouncy, bouncy graph

Even though the CPI is moderating the bad news is that prices are up in every major category on the Index. Everything ends up costing more year over year, is never a good thing to read.

Since 2002, you can see how inflation has chewed away the actual value of a Canadian Dollar, and this period has been low, what happens if inflation suddenly heats up?

Bank of Canada’ Core Index

What the Bank of Canada thinks the inflation rate runs at is even more important, because they are the only one who has a brake for the economy (i.e. Money supply rules and Interest Rates), and luckily they think it is actually a little lower than their target which is around 2.0%, using their index. This means interest rates won’t jump due to inflation for this month.

The Bank of Canada’s core index rose 1.9% in the 12 months to December, after increasing 2.1% in November. Increases were recorded for food purchased from restaurants and passenger vehicle insurance premiums, while prices for the purchase of passenger vehicles declined.

The seasonally adjusted monthly core index posted no change in December.

The BIG Table

Where were the biggest jumps in the CPI? Always check out the Stats Canada web pages for more details, but I always love publishing one of their BIG tables too.

Table 1 Consumer Price Index and major components, Canada – Not seasonally adjusted

Relative importance¹ Dec 2010 Nov 2011 Dec 2011 Nov to Dec 2011 Dec 2010 to Dec 2011
% (2002=100) % change
All-items Consumer Price Index (CPI) 100.00² 117.5 120.9 120.2 -0.6 2.3
Food 15.99 123.9 129.2 129.3 0.1 4.4
Shelter 27.49 124.6 126.3 126.8 0.4 1.8
Household operations, furnishings and equipment 11.55 109.3 112.1 111.8 -0.3 2.3
Clothing and footwear 5.31 88.8 93.1 89.1 -4.3 0.3
Transportation 20.60 121.2 127.6 125.2 -1.9 3.3
Health and personal care 4.95 115.8 117.9 118.1 0.2 2.0
Recreation, education and reading 11.20 103.9 104.8 104.1 -0.7 0.2
Alcoholic beverages and tobacco products 2.91 134.6 135.8 135.8 0.0 0.9
Special aggregates
Core CPI³ 82.15 116.0 118.8 118.2 -0.5 1.9
All-items CPI excluding energy 89.92 115.4 118.2 117.5 -0.6 1.8
Energy4 10.08 144.0 154.1 152.7 -0.9 6.0
Gasoline 5.80 158.0 175.2 170.0 -3.0 7.6
All-items CPI excluding food and energy 73.93 113.5 115.7 115.0 -0.6 1.3
Goods 47.80 110.0 113.8 112.6 -1.1 2.4
Services 52.20 124.9 127.8 127.7 -0.1 2.2
1. 2009 CPI basket weights at April 2011 prices, Canada, effective May 2011. Detailed weights are available under the Documentation section of survey 2301 (www.statcan.gc.ca/imdb-bmdi/index-eng.htm).
2. Figures may not add to 100% as a result of rounding.
3. The Bank of Canada’s core index excludes eight of the Consumer Price Index‘s most volatile components (fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers’ supplies) as well as the effects of changes in indirect taxes on the remaining components. For additional information on the core CPI, please consult the Bank of Canada website (www.bankofcanada.ca/rates/price-indexes/cpi).
4. The special aggregate “Energy” includes electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.


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Fun and Sunday Thoughts

The week has brought us more revelations about who is allowed to be “Captain” of the cruise ships that are out there, along with very interesting stories like the alleged, “… I fell into the life boat…”? Wow, now that is a novel excuse, that’s even better than “… the dog ate my homework…”.

The weather in Ottawa continues to be interesting, and hopefully it will hold for the All Star game weekend, as there are folks skating on the canal, yes the world’s longest skating rink is open once again.

With the release of the remake of Tinker, Tailor, Soldier, Spy Canada had its own spy fiasco, complete with Russian folk being expelled and such. Sounds like something, right out of the story, no wait, IT WAS!

We also lost a gift athlete with the tragic death of Aerial Skier Sarah Burke, but what was even scarier was that her family might have been stuck with a medical bill of over $500K, luckily donations seem to be covering that.  It points out the importance of having good medical coverage no matter who you are!

This week on my twitter feed my combing of my archives found a few interesting long-lost gems to help accentuate my posts for the week as well:

  • Snowbound personal finances was actually written when I was stuck at home a while ago, thanks to a snow storm.
  • While men’s health does have basis in facts I still have skeptics who don’t believe that Viagra has saved many men’s lives.
  • The number of requests for Guest Posts on my site is astounding, and I wrote on one of my other blogs an open reply to all those folks who send me requests: guest posts: please stop the madness!
  • After receiving yet another complimentary copy of Quicken, I did repost my post of my Quicken 2011 review (which has an astounding number of comments associated with it
  • I love poking at Garth Turner, given he has been very blustery of his predictions for the market and with And He’s An Expert I take dead aim at the former federal MP
  • With Suze Orman’s debit card idea fresh in my head, I let fly with my old article about Free Banking, and how it isn’t as hard to get this as you might think

Enjoy your Sunday!

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Random Thoughts: Loose Money Continues on in Canada

Given the Bank of Canada keeps repeating itself, I decided doing an actual post on the fact that the Bank of Canada kept it’s overnight rate at 1% was getting a bit redundant. Given the current state of the Canadian (and world) economy the Bank of Canada decided to keep with the loose money policy that they have had in place for the past long while. The reasons given for this were actually a little more interesting than normal, however:

The recession in Europe is now expected to be deeper and longer than the Bank had anticipated in October.

Well that is not really news, but the Bank of Canada admitting they made a mistake is a bit of news. Will Europe suck the whole globe into the great Economic Abyss? I don’t think so, but it may cause a much longer period of lower interest rates, which might be a good thing for some individual consumers, it all remains to be seen.

The Canadian Taxpayers Federation are now attempting to put the clamps on the Platinum Plated MP Pension Plan which seems to be a pretty sweet deal (makes me want to run for Federal Politics). Their report alleges that for every dollar put in by the MP, Taxpayers must cough up $23.30 and they also point out that this isn’t really a pension as much as a major portion of the National Debt. I love political rhubarb and finger-pointing, I wish them luck, however, they are also looking to go after the Public Service’s pension plan, which worries me a little.

Weekly Recap

With loose money continuing on, I didn’t really touch on the subject but did have an odd cornucopia of topics this week:

  • On the Frigid North and Sunday’s Best I included a great video by Vinnie Jones that points out that in the UK anyone can do CPR, if they want to help.
  • Pointing out why I am an insomniac with losing sleep and money still didn’t help me sleep any better.
  • I did my bit for Bloggers for Charity with the guest post 16 Going on 30, and hopefully next time someone will bid to post on my site.
  • My Quicken 2012 review was as much me saying thanks for giving me a copy to review, because I’d use this software no matter what.
  • I am not well pleased with Suze Orman’s decision to put out a debit card and I state that in Let’s all Sell Out

And thanks to those who added me on Twitter I am now over 980 folks who follow me, wow!. Check out my facebook page as well.

Links for the Week

With ship wrecks, and the European economy still faltering there is a lot to be discussed in the Financial Blogosphere:


Carnivals this Week

I did make it into a few carnivals this week too:

Other Bookkeeping

Remember my RSS feed is available too, for those who enjoy reading without looking at my crappy page lay out, and I have added an RSS Comment Feed as well.

Have a look at my micro-blog on Twitter, where you can see a whole plethora of good articles and pithy comments by me as well. Twitter feed where I re-tweet many great articles by some of my featured writers (and make the occasional odd or off colour commentary on life (in 140 characters or less)). I am also on reddit, Tumblr and other Social Media sites (look for the BigCajunMan userid) as well.

If you have social media accounts, don’t forget to vote for my posts (see the nifty dashboard on the bottom of each article, where you can cast your votes). As they say in Quebec, vote early and vote often!

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“I’m spending a year dead for tax reasons.”

Author: Douglas Adams



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