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.
When you finally get a mortgage your behaviour and your attitude will change. Why? I won’t ruin Mr. Rock’s eloquent perspective (quite NSFW), but let me sum up:
When you have a large debt, you have fewer options. Your options are limited due to your need to pay off this large debt.
The people I know that have the most options, have little or no debt.
You can delude yourself into thinking you have options, but you don’t. If you carry a large debt, and think you can afford other high debt options, you will inevitably end up in a place with even fewer options.
Just because you may have a pension, doesn’t mean you shouldn’t have an RRSP. You also should have a TFSA and your only financial goal should be to be out of debt by the time you retire.
If you have an emergency fund, do you have a plan on when you might use it? Simply having money sitting somewhere with no plan on when it should be used, is really just a savings account.
An RRSP is simply a tax deferral savings program. It works best if you use it for your retirement, but that is the main goal of it. You can’t use it like a TFSA, but it is not solely for your retirement either.
The TFSA is a badly named program. It is Tax Free, and you can save in it, but it is not only a savings account. Many banks are fooling you into thinking the program is a 1 savings account. It is not. Open a TFSA with a trading firm like Questrade, Directline or others.
Debt is simply borrowing money from your future self. I know it is not in vogue to say debt is a bad thing, but it is. Your first goal, should be to deaden your debt load, the rest of the financial plan is gravy.
In previous years I have written over 200 articles in a year. In 2020, I wrote a great deal less than 200 articles. I continue to have a huge backlog of unfinished titles, but 2020 was an interesting year. Here is the entire list, missing my #MoneyTalk compilation posts.
Estimated reading time: 5 minutes
Most Popular
CPP and EI Maximums for 2020, was my most read and searched article all year. I have done these every year for a while, so not sure why it was so popular, but here it is. I have in fact already published CPP and EI for 2021 to see if it is as popular.
My CRA Account another highly searched article, outlining how to set up your on-line CRA account. You really should set that up.
When to Put Money in RRSP I created a step by step reasoning, and naturally someone complained it wasn’t a waterfall. Seems there is no pleasing some folks.
Miscellaneous
The Hidden Cost of Land Transfer Taxes is a rework of a much older article. Funny I never hear about this being part of the purchase of a home. This is not an insignificant lump of money.
Moving Expenses for Students are things to remember if you have just graduated. These costs can help lower your initial tax bill.
The Financial Echo Chamber is a dangerous place. Many of us live in bubbles, that really don’t help. You need to see opposing opinions, to understand the whole picture.
Free Credit Bureau Access sounds lovely doesn’t it? Unfortunately the reasons for it, are not so lovely.
The Dangers of Automatic Reloading I have written about this before. Keep this in mind, when you automate things. The Perils of Automatic Payments is also an area you should audit regularly. If you pay bills from PayPal or a Credit Card, make sure you restrict access to only those bills you want paid.
Credit Card: One Time Services can help if you are late paying your bill. This only comes into play, if you are a customer who normally pays things off on time.
RESP – Registered Education Savings Plans
RESP withdrawals and Taxes was a guest post by a chap from UFILE, a little thin in spots, but still interesting.
RESP Only For the Rich ? There is an argument that this is how it ends up. The poor, don’t open accounts, even though they can earn money without deposit. Banks don’t market them to those with low incomes, thus, RESP’s are for the rich.
COVID-19 Are we F*cked ? really was prophetic. The pandemic has made a mess of so many financial things. Interesting to see the comments as well.
Doomsday Finances was an old article I recycled. Whenever you can talk about Star Trek and money together, you know you have a winner.
Post COVID-19 Budget ? but when will you be able to use it? Soon, is the hope, but remember, right now, your life is different. Maybe you can bring some good habits forward, but maybe not.
As I have said, don’t count on 2021 being a complete turn around year. I can be better, but it could even be worse. If anything 2020 has taught us is, you can never guess what might be coming next. If you want try some New Years Resolutions, but don’t look too far ahead, you might trip on something in front of you.
Happy New Year, and with this new year we can finally say, “Hindsight is 2020”. Sorry for the Dad Humour, but that is only way I can laugh at 2020. Truly a year that will be one we talk about for a long time.
Planning any great New Year Resolutions? I think they are for suckers, you can change any time of the year. I’ll bet the Gyms take a big beating as most are closed and all those folks who want to get in shape for the New Year can’t sign up for a year long subscription. I am not dissuading you from making a Financial Change, just be realistic. Start with small changes, they add up slowly.
Many folks think that the New Year will be a panacea for how bad 2020 was, but I am skeptical. This year has potential to be better later on in the year, but the Winter has potential to be as bad as 2020. Hope is a good thing, as I have mentioned before, but don’t get your hopes too high.
Will we all be working at home more, after things settle down? Maybe, but don’t be so sure it will continue as it did during the Pandemic. I can work remotely, but many teams cannot for many reasons. I am hoping for a hybrid solution for me. Less days in the office, would be nice, but I am not sure it will happen that way.
I turn 60 this year, so that makes me a Senior, I suppose. Given I am part of the privileged class (old white guys), I don’t feel that privileged. Must be subscribing to the wrong magazines?
As the year closes, I realize I have not driven too much this year. I will write more this coming year, but not sure on which topic. More on RDSPs, but maybe a few other topics. Maybe I’ll try to become an #Influencer? 💩
The Perils of Automatic Payments outlines why you need to audit your automatic payment situation. If you use PayPal or allow companies to take money from your bank account, you need to know who is doing it. I was astounded to see how many were set up on my PayPal.
Merry Christmas 2020 are my Christmas wishes for this year. I also linked to all my previous Holiday Wishes. I have been doing this a long time.
Weirdest Boxing Day Ever? Certainly from the retail store perspective it was. In Ottawa most stores only did curb side sales. The Costco near me was not busy at all. On-line things may have been different.
Good Bye 2020, and Good Riddance?
This belief that 2021 has to be better than 2020, is naive. For some folks 2020 was a great year (ask Jeff Bezos). It is all a question of perspectives.
2020 year-end financial clean-up, might be a little late now, but maybe something to remember for the end of 2021? The Blunt Bean Counter is a person who would know about these things.
CPP Timing: A Case Study is Michael James doing what he does best, which is crunching those numbers for you. You don’t want to do it, but he has done it for you!
Password Security
PC Magazine published a list of the most common passwords. I have written previously about insecure pins, but these are wild. Take advantage of the year end to update your passwords!
Canadians continue to get gouged for their Internet
Dancing Robots?
Great now even Robots dance better than me?
It's pretty awesome how dancing makes robots less intimidating. Looking forward to seeing more nontrivial Machine Learning on these robots. Credit: Boston Dynamics. pic.twitter.com/wnB2i9qhdQ
Yes, for about 15 years I have wished you a Happy New Year
I must have had an inkling about 2020, as I didn’t wish you a Happy New Year to start things. Hopefully with this post I have helped make the year better?
Belated Happy and Prosperous New Year was how 2008 started, the economy was booming, employment was high, but there were hints of the systemic failure that was coming soon.
CPP and EI rates for 2021 (as usual) are a little higher.
One of my most popular posts in 2020 was CPP (Canada Pension Plan) and EI (Employment Insurance) rates for 2020, so I figure I’ll keep going with a winner. Interestingly interest in this topic is year round. CPP and EI rates for 2021 (as usual) are a little higher.
We can hope that 2021 will be a better year. Hopefully a year where you don’t need to receive EI as CERB is now gone.
As we start 2021 (a new year), all of us who receive pay cheques (the Japanese term is Salaryman), get to start paying CPP and EI premiums again. Depending on how much you make this might be a short-term issue or a year long pain.
If you pay CPP and EI premiums all year long, don’t worry, this is not for you. For those who have an end date for your CPP premiums, read on.
EI this year is again a bit lower:
The maximum insurable earnings for 2021 is $56,300, up from $54,200 in 2020. This is the EI maximum insured income for the year. If you earn more than this, and claim EI, this is what your benefits will be based on.
The rates have remained the same as last year:
Workers rate (self-employed folks should research further, or if you live in Quebec) $1.58 per $100 earned.
Maximum premium paid $ 889.54, once you reach this point no more EI will be deducted from your pay
Max difference from 2020 $ 33.18 more, over the year.
CPP rates continue to rise. The system is under more pressure from more Boomers retiring.
Maximum Pensionable Earnings: $61,600 (up from $58,700 in 2020)
Employee Contribution Rate : 5.45 % (rate is up 0.20 % over 2020)
Maximum contribution for year: $ 3,166.45 ($6,332.90 if self-employed)
Guess How Much Bill Makes
Somewhere around July, Bill (a friend) says he has paid off his CPP & EI, can we construe from this how much Bill makes (given he lives in Ontario and is not self-employed)?
Month
Bi-Weekly Pays
Approx Gross Income
Per Pay EI
Per Pay CPP
January
2
$761,110.00
$444.77
$1,583.23
February
4
$380,555.00
$222.39
$791.61
March
7
$217,460.00
$127.08
$452.35
April
9
$169,135.56
$98.84
$351.83
May
11
$138,383.64
$80.87
$287.86
June
13
$117,093.85
$68.43
$243.57
July
15
$101,481.33
$59.30
$211.10
August
17
$89,542.35
$52.33
$186.26
September
20
$76,111.00
$44.48
$158.32
October
22
$69,191.82
$40.43
$143.93
November
24
$63,425.83
$37.06
$131.94
December
26
$58,546.92
$34.21
$121.79
If your co-worker tells you they have “paid off CPP for this year” helpful table
So from this helpful table, we can guess Bill makes less than $100,000.00. Isn’t this a fun game to play? Also if Bill told you what the approximate EI deduction is on his pay cheque, you can also guess his gross income, using this cool table.
Past CPP & EI
Yes, it is a topic I write about, as it is important to me. Here are a few from the past years, to compare and contrast (hint see how much CPP has gone up).
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