As we start a new year, all folks who receive paycheques (I believe the Japanese term is Salaryman) get to start paying CPP and EI premiums again.
For many folks, they are just deductions that appear on every pay stub. For folks who make more, this deduction disappears sometime in the year, and after that, they get a “virtual raise” given they do not have to pay these deductions for the rest of the year.
It’s a pretty simple game to play and well worth a couple of minutes to create a miniature model to figure this thing out.
Meet Jill for 2019
Jill gets paid bi-weekly, lives in Ontario and works as a private firm NUJAC. She gets paid a regular salary (assuming no bonuses ). If we list the month in which Jill tells us, “I stopped paying EI premiums in August,” we can then approximate how much Jill makes in salary.
We learn from the EI website that the 2019 premium is 1.62% of insurable earnings (and the maximum insurable earnings were $53,100 in 2019).
One of the joys of the new year is the restart of having to pay CPP and EI premiums. It always makes that first pay cheque a bit smaller, and thus that much more annoying. You have just got used to not having to pay them (if you make enough money), and now you are back paying them again, how annoying!
If you live in Quebec your Max EI premium is $767.88
If you don’t live in Quebec your Max EI premium is $937.98
Some folks will pay CPP & EI premiums the whole year, but those who make a bit more, you will eventually hit the max and will stop paying premiums later in the year.
Remember you can have some Fun With Numbers and figure out when you may stop paying these premiums by doing this simple calculation (you’ll need your first pay cheque showing how much you pay each pay cheque):
# Pays = Maximum Premium / Premium per Pay
I do that every year and then mark my calendar to remind myself when I stop paying. On that pay you could take that “extra” money and then pay off debts with it, couldn’t you?
For those who have not been following me on twitter you have been missing out on some helpful (if not sarcastic) job hunting tips that I learned throughout my job hunt a few years back.
I have been on both sides of the interview table, so I have interjected a lot of my own pet peeves to this list for candidates that I have met and wondered what they were thinking when they showed up to my job interview.
They are worth a read, and many of them are applicable to all jobs (and some are me being a smart ass). Some of the best Job Hunting Tips:
Always wear clean underwear to a job interview but never show them to your interviewer either
Tell someone you are using as a reference before you use them, “… who? That Idiot? I would never hire them!”, could be your reference. Ensure all your naked photos are well hidden on your social media as well.
Be Precise, e.g. “When I invented the Internet, I was working at…”, no one likes vagueness in job interviews
Be complimentary with your interviewer: “That outfit doesn’t make you look nearly as fat…”
Hygiene is important, always shower before your interview, ensure there is no green leafy things in your teeth either.
If anyone asks you about your religious views, claim to be a Druid or a follower of Zeus
Humor has a place but don’t do the Uncle Buck mole bit if interviewer has one (don’t be a twiddler)
One answer that always gets interviewer’s attention “Why the f*ck would you ask me that?”
Scents make you memorable at an interview, but don’t eat bean burritos 2 hours beforehand, you are too memorable then
Arguing with your interview about technical issues is OK, but will you being right (in your opinion) get you the job?
The more the interviewer talks, the better you are doing, except if they are yelling about your lack of skills
The only person you can “throw under the bus” in an interview is yourself, don’t blame others, explain why
It’s good to seem to know a lot, but very bad to appear to be a Know-it-all , keep that in mind
For anyone who earns anything more than $47,200 annually they have been enjoying a vacation from their Canada Pension Plan (CPP) and Employment Insurance (EI) premiums for the past little while, however, given it is a new year (2011), the government is now back collecting these from you.
It is a yearly right of passage to have these premiums raked out of your income, until a prescribed date, when you are on vacation from the fees for the rest of the year.
Wait, you looked at your Quicken and saw how much you made last year? Sorry, the amount you will be paying for each is going up, so you will be making a little less this year:
CPP maximum contribution for an employee was $2163.15 ($4326.30 if you are self-employed), however, in 2011 are $2,217.60 and $4,435.20 (self employed). Not a big jump but still a 2.5% increase on the total amount paid.
EI maximum payment for folks outside of Quebec was $747.36 for 2010 however in 2011 you will be paying and estimated $780.36 (max) outside of Quebec, a 4% increase in total amount paid.
Nice to think that the government will be pulling a little more out of your wallet this year, or have their big hands in your pockets.
Tax Rate Updates Might Help (a little)
Another better thing with the new year comes a change in Personal Income Tax brackets as outlined in this fact sheet from the CRA. Each bracket is due to slide up 1.4%, so your tax bill may be a little lower in the new year, but check to make sure.
22% Bracket now tops out at $41,544 up from $40,790
26% Bracket is set at $83,088 up from $81,941
29% Bracket now starts at $128,800 up from $127,021
Deductions increase as well with:
Your basic personal amount now goes up to $10,527 from $10,382, so again a little less tax there.
Your Spouse is worth a $10,527 deduction up from $10,382 last year
There are many other number changes that you should go and check out. If your income hasn’t changed in the past year, you may pay a little less tax (but a little more on CPP and EI), so it may end up a wash, you’ll have to check your first pay cheque to figure that one out yourself.
Given the Pandemic of 2020, I think we can safely say, Disasters are not planned, so disaster planning is that much more important.
Any financial planning you may be doing , needs to include a Disaster Recovery plan. I have had a few folks tell me that this is morbid, but as a Project Manager I have learned that you are being naive if you do not have some kind of disaster recovery plan in place, to deal with unexpected events in your life, in general, and in your financial life, in specific.
What kind of catastrophic financial events? Some simple examples might be:
Bread winner loses job, if your household’s main income earner loses their job, what might happen? If you don’t have a plan in place for that, and an emergency fund to deal with this, you are asking for trouble. I used to think I couldn’t lose my job, but it eventually happened, and luckily I was taken care of, but I was not prepared, and it could have been much worse. Different experts suggest 3-6 months pay in reserve, I’d say a year’s pay is your ultimate goal, having lived through it. If you think you don’t need an emergency fund because your company pays severance, that is what I thought, but then I saw what happened to my Co-Workers when Nortel went very south.
Bread Winner passes away, again, if you have a family and don’t have Life Insurance, or a big packet of money hidden somewhere, you are living on the edge. Does your loved ones know whether you have life insurance and what to do should you die? They need to know (as well). As soon as you get married, get life insurance (Term in my opinion), yes it’s an expense, but you need it. Is there an up to date will? Hope there is, or there could be a big mess financially to follow.
Bread Winner disabled, disability insurance is a tricky topic with me. I have it through work, and bought it at my former employer, and my opinion is that you should get it, if you don’t have it, but I have seen compeling arguments that simply building up savings enough is just as good a way to deal with this contingency (I don’t agree, but it is another option). What about a power of attorney? Once someone is disabled mentally getting a power of attorney is a lot harder to put in place.
Stuff Gets Broke, a generic topic covering stuff like Home Insurance, Car Insurance and the like. Again, you need this insurance if you care about your stuff, and in most instances in a lot of places you must have these insurances (Car Insurance at least). If your house is paid off do you need Home Insurance? I think so, if just for the liability side of things, but for unforeseen things like fire and such as well.
Why Have These Stop Gaps?
Having these financial stop gaps in place you are protecting yourself and your family’s interests, but it is worthwhile doing a plan about each of these scenarios, to see how things might work. You don’t need to go into gross detail, but if you walk through the scenario you might learn the importance of:
Keeping your loved ones informed on where things are. If your spouse doesn’t know about your banking, or where your insurance is with, how will he or she find out? Where is your will or power of attorney? Again, are they up to date?
Are you sure you have enough insurance coverage? If you run through a scenario you might realize that you need both spouses incomes, and thus you might need to have the same coverage on each spouse.
If you go through the scenarios and feel confident you are prepared, you then have given yourself the great present of peace of mind, and that is important.
Saying that you did this 10 years ago and it was fine is asking for trouble as well, many things change over 10 years, review it and make sure your plans are still up to date and current.