Canadian Personal Finance Blog

A week after the tumultuous news of the Bank of Canada raising their nightly rate by ¼% Canadians are still recovering from rate reactions shock. As I have said, if that rate increase caused you consternation, “… you ain’t seen nuthin’ yet…”. While rates will not sky-rocket they will slowly increase back to normal levels (whatever normal means these days).

With the rates moving upward I wonder if it will become “cool” again to make overpayments on mortgages (again)? I found it interesting with rates so low, making “double up” payments or such would get the loan principal down, but it became very passe to do that. You could make so much more investing the money, was the argument. Funny, that argument is always around (no matter what the rates are at).

The new “thing” to talk about is the impending Stock Market correction. Many financial talking-heads are espousing that the markets are far too high, and there will be a correction soon. This is possible, but as I have said, “Economists have predicted 7 out of the last 3 market corrections“, so take it with however much salt you wish.

Game of Thrones starts the first½ of their final season? Winter is here, both in Westeros and financially in the real world.

Rates are Rising, Winter is Here

Interesting that not too many of the talking heads are saying much about the fact that bonds should drop in value with interest rates rising? Doesn’t sound right does it, but my Bond Funds have dropped in value over the past few weeks.

Most disgusting thing I have heard about at work? Someone boiling the silicon buds from their headphones (to clean them) in the communal group electric kettle. I know longer drink tea at work.

Cyclists Take Heed

I know many of my readers and friends are avid cyclists, so please take heed of this video of the importance of stopping for red lights and stop signs!

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The Bank of Canada upped their key overnight rate by 50% this week! How will consumers possibly withstand this huge jump? Yes, that is how I interpret a lot of the talking heads reactions. If the ¼% increase of this week is impacting your life, you are in some serious trouble financially. Most of the experts are more concerned about the return to less opportunistic rates. It is time to pay off your debt, or figure out where you go from here.

I did like one talking head that pointed out that the passed two rate drops were both ¼%, however the banks both time only lowered rates by 0.15%, yet most banks have already jumped their “prime” rate by at least ¼% in reaction. Some banks had already raised their rates, and this is why I own shares in banks (horrible to customers, but good investment). Someone else pointed out that the interest rate on Savings Accounts doesn’t appear to be rising, at some banks.

Remember that other lenders may jump on board as well, and raise their rates. Can your car loan or lease go up? Might want to check the fine print, but your HELOC and unsecured lines of credit are going up.

Is this the cold shower the economy needs to cool things down? No, not yet, if rates return to around 4% then we will see housing markets going into the crapper, but that could be where we are headed. The economy has been stimulated for a long time, time to calm down.

Keep calm and pay off your debts, as I have said so many times before.

Is Money too Tight to Mention ?

What if this is actually similar to the 70’s, wonder what today’s 20 year olds would do if their mortgages were 15% annually, and inflation was running at 10% or higher? Yes, I am just stirring the pot, but still an interesting question.

Is Money too Tight to Mention ? Not yet, but it might head there soon. Still one of my favourite tunes from Simply Red.

Allow me to give an alternate perspective on raising interest rates. Increased interest rates will finally teach a generation about the importance of paying down debt. How does anyone know about the power of compound interest, when rates stay at 2% (a doubling period of 36 years)?

The other interesting topic that I haven’t heard discussed is what does this mean to the biggest debtors, the governments? How will all level of Governments “balance” their budgets with higher interest rates? Higher taxes, is my guess, but I am not an economist.

Writings Past Little While

Haven’t been really writing much, but I have been rewriting and updating a great deal of my back catalogue (well worth checking out). Check out my Twitter feed if you wish to see some of the best of, but I did write about Unlocking Your Phone, What Comes Next? Waiting until December 1^st is the first thing, unless you go to the Apple store and buy your phone Unlocked.

I am still astounded that Bell (another terrible to customers, but good investment) hasn’t simple foregone their profits on unlocking, but that is why I am not in marketing.

Some of My Favourite Talking Heads

I know two of them!

[click to continue…]

A little while back the CRTC changed the rules for unlocking cellular phone (s). Note that this is only happening on December 1^st 2017, until then what is happening.

I have commented on this before, but I decided to have a close look at my Bell contract (you should look at yours as well). Here is what my current Bell Contract says on the subject (reproduced without Bell’s permission):

“Can I unlock my Device and is there a Fee?  When you purchase a Device from Bell it will be locked and can only be used on the Bell network.  If your Device was provided at a discount as part of this Agreement and your account is in good standing and your Device is eligible, you can unlock your Device after a minimum of 90 calendar days, if you pay an unlocking Fee (plus applicable taxes) of $50, or $150 if your account carries a security deposit or is subject to a credit limit.  If your Device was purchased from Bell at full retail price or you brought your own Device (originally purchased from Bell), your Device can be unlocked upon request and payment of an unlocking Fee of $50, plus applicable taxes.  If your account is past due, your Device will not be unlocked until your account balance is paid in full using a credit card.  Visit bell.ca/onetimefees for details.”

It costs how much ?

Let’s unwrap some of the zingers in this unlocking cellular phone clause.

• This will cost me $50 until December 1^st 2017. I am not sure if I called and talked to their customer retention team, I might get it for free, but maybe not.
• If I don’t have good credit or have a credit limit, this will cost me $150.
• There is an HST charge for the service.
• I better have my account payments up to date, or they will not do this unless I pay all outstanding costs with a credit card.
• If I got a new iPhone N (where N is the next great iPhone that just came out), I have to wait at least 90 days to have it unlocked.

My Opinion on Current Unlocking Phone Policy

I am disappointed that Bell hasn’t just declared an amnesty on unlocking, and doing it (for existing customers) for free. Given all phones will be unlock-able (and sold unlocked) in a few months, it seems, vindictive to keep charging for this service (especially to existing customers).

I will be waiting until December 1^st to get my phone unlocked (I assume that it will take a while). The battery on my iPhone 5, was replaced for $50 so I will be keeping it for a while. Most likely I will be getting a new iPhone some time soon, however, I will try to find the cheapest price possible.

Canada turns 150 tomorrow, and the City of Ottawa has put out its best for folks to celebrate. Should be interesting, I vaguely remember 1967, and I hope I am around for 2067 guess I should really push out the boat on this one.

My family, immigrated to Canada, and I am so thankful that they did. While I respect and love the land of my parents (Wales & Britain), Canada is my home, and it will always be with me.

The Bank of Canada Governor is saying he thinks low-interest rates have “done their job”, however:

“… certainly we need to be at least considering that whole situation now that the capacity excess capacity is being used up steadily.”

Sounds a lot like someone contemplating a rate increase soon. Might be time to get out of debt ? Debt is a four letter word , after all.

The White Walkers Want Your Money

Yes, the first 1/2 of the final season of Game of Thrones starts soon too. Rising rates will bring financial winter for some folks.

Writings This Week

I have been working on RESPs and High Fee Mutual Funds for a while. It has languished, but I was able to figure out what I was trying to say (I think). Just because it is easier to use a Bank Mutual Fund account for your kids’ RESP accounts, doesn’t mean you should use it. If you ever hear someone from a Mutual Fund firm brag about how high their fees are, please drop me a line.

Expo 67 Greatest Show Ever

Do you remember Expo 67? Bobby Gimby ? If you lived in Montreal this song makes you cringe, because it played on a permanent loop for a year. Was it the Greatest Show Ever ?

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