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Use Your Calendar

I almost pulled a significant blunder this month by forgetting to pay my MasterCard Bill when it was due. It wasn’t in my Calendar.

Let us review. When you don’t pay your Credit Card Debt off monthly, you then incur exorbitant usury fees that dig you a hole that you will have a tough time getting out of, so paying your Credit Card debt off monthly and on time is of vital importance in any financial plan you put together.

Calendar
Why did it take so long?

I usually end up putting the date of when the payment is due in Outlook or Google Calendar. My Calendar will remind me on my SmartPhone (or Watch), but you need Notifications turned on as well. I should write it on the Calendar at home on the Fridge as well, and you may have other places where you put important dates, but that one is essential.

Pay that darn credit card off ASAP!

Carrying credit card debt will hurt you financially. Make sure you get rid of it and pay it right away.

You Can Get Penalties Reversed

I was able to call and ask that the penalties be reversed since I am a “good” customer (i.e. I spend a lot of money with the card, and I pay it off every month). MasterCard was nice enough to forego it for that month. Since I had paid the entire amount, I didn’t have to pay any more penalties.

Use Your Calendar Don’t Be Proud

Don’t be too proud of your memory. This is creating a reminder for you, and maybe for your spouse. If you share your calendar with your spouse they can be aware of bills as well. The more information you share (financially) the fewer misunderstandings about money. Shared Calendars can be a very good thing.

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If You Hear Hoof Beats

I was discussing with someone about misinterpreting data on the weekend and remembered one of my favourite phrases for this type of activity:

If you hear hoof beats, don’t automatically think Zebras

Badly paraphrasing Occam’s Razor

I believe I first heard this one on CSI, but I do like the sentiment. I view it as a result of Occam’s Razor, but I like the idea of simplicity. Complex ideas and theories always worry me, given I am a superficial thinker.

The simple answers in many areas are the correct answers (especially in personal finance). 

Whose hoof beats are these?

Some of the areas where I have had people hear Zebras when they should have thought horses:

Thundering Hoofs
Thundering Hoofs
  • I am in debt because of the credit crunch. No, you are in debt because you spent more than you made, and you had to borrow to deal with this spending. For some it is borrowing money to buy a house, others borrowed money for a car but the majority, is borrowing money to pay for debts they didn’t need to incur. That ain’t no Zebra!
  • It’s too complicated to stop using Credit Cards. This is a rationalization from folks who really are saying, “I like using credit cards and don’t want to give up my current lifestyle“. You can stop using your credit card tomorrow, put them in the freezer in 2 lbs. of hamburger, and they are gone. That wasn’t a buffalo, just a horse.
  • A budget is too complicated to figure out. No, that is the statement, “I don’t want to use a budget because I will have to give up my current lifestyle” (again), a budget can be very simple and living to it can be simple, don’t make it a complicated thing, or you will fail. That wasn’t a gazelle, just a horse.
  • I can’t save money given my current salary. How many times have all of us said this every time we get a raise? I have made that rationalization myself, you can save it just might be hard to do, that’s all. Wasn’t a wildebeest either, just a horse again.

Don’t make financial planning, personal finance or budgeting more complicated. Please keep it simple and listen for horses, not Zebras.

Written back in 2007 and 2009 on the same hoofy topic.

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Self Insured Company Disability Plans

As part of the Nortel Bankruptcy, one of the biggest victims was employees on disability. The disability plans ended up in a mess, and those on disability lost their benefits. I knew a few folks who were directly impacted by this, and it makes me very upset thinking of them. Could this happen again? You’d hope not, but nothing much has changed.

More Insurance that Doesn’t Quite Insure

Behold the plight of the 400+ Nortel employees (Canadian) who have been living on disability insurance. They will be cut off from their benefits. This has come to light in the media finally. Nortel officially disappeared a while ago.

How can this be, you ask? Nortel and other large companies typically self insure these kinds of plans. This means though it looks like you have your insurance with a large insurance company, you don’t. Your policy is held by your employer and is paid out by your employer (when you make a claim). It is much cheaper to have the insurance company administer the Insurance Policies to the large company. The money comes from the large company directly (rather than merely paying premiums to the insurance company and profit from the programs).

So what is the problem? The apparent issue with Nortel is that the company does not exist anymore. Anyone owed money through this kind of disability policy is now only an unsecured creditor and is likely to get very little (if any) more money. The fact that the firm can dodge this debt by simply declaring bankruptcy is terrible (in my opinion).

So what can be done? For the folks at Nortel, not much more. They have hammered out a deal to get whatever money they can. However, as of the cut-off date, they will be without income, leaving them few options to live on. They may have access to the Canada pension plan disability, but not much else. Those with disability insurance with large firms that are currently self-insuring should be contacting their MP’s right away to have put in place some protection system for this kind of insurance policy.

Former Legislation

There are two pieces of legislation on the books about this topic:

  • Bill S-216 An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement to protect beneficiaries of long term disability plans (authored by Senator Art Eggleton)
  • C-476 An Act to amend the Bankruptcy and Insolvency Act and other Acts (unfunded Pension Plan Liabilities) (author Wayne Marston (Hamilton-East-Stoney Creek))

Talk to your MP and MPP about these two acts and why they died.

Pension reform is needed as well, but these “policies” being held on the companies books as debt liabilities and not like a pension (which is owned by an Arm’s length company that the Insurer funds) puts 1.1 Million people at risk currently (according to the Canadian Life and Health Insurance Association (from the CBC post Disability Insurance at risk for 1.1 Million)).

If you are in this kind of disability insurance program, you may be at risk, and it would be in your best interest to follow up on this issue.

What upsets me is I paid for this insurance when I worked at Nortel, and it was a costly premium that was paid for peace of mind, yet the money effectively went into the companies coffers instead of a safe place. In case I needed it?

The worst part of this whole story is I know people directly affected by this cut-off, and they are the ones who need help. We shall see how this shakes out, but please feel free to comment if anyone knows more about this.

Addendum

I am most likely in the same situation now. I am a Civil Servant, and I guess that the Government self-insures. This couldn’t happen again, could it? Remember, Nortel was too big to fail. The government couldn’t declare bankruptcy, could it?

Other Nortel Disability Stories

From the archives 2010

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What Makes Banks Different ?

I have run across a few interesting things that caused me to wonder what exactly are the banks in Canada doing to make folks want to be their customers? Given they continue to have enormous profit margins, do banks differentiate themselves in Canada?

All of the banks advertise (I don’t have their numbers spent on advertising, but no bank in Canada does NOT advertise). You can see some of the ads on this very web site some times, so they must have very deep advertising pockets, I do like the TD ads with the cranky old men, but that wouldn’t cause me to change banks for that reason alone.

Cheques

The first thing I noticed while collecting dues for a basketball team is that  I received 4 cheques from different parents, but I noticed the cheque design for all 4 cheques were EXACTLY the same, even though they came from 3 different banks. The security patterns on the cheques were exactly the same (I compared them under a strong light), the differences were:

  1. Bank Information about which bank this is, address and logo
  2. Customer information (name and such)
  3. What was included in the MICR lettering at the bottom of the cheque

Other than that, there is no difference in the cheque.  In fact most of the banks use the same printer for cheque designs they simply order them, and thus this service is the same.

On Line Bank Interface

This is very different in terms of who designed the interface and such, but my guess is the “back end” of the software is exactly the same. What you can do is remarkably the same, typically there is a lot of advertising around it to get you to try new services with the bank.

Tomorrow, we continue this interesting case study.

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Spring Financial Cleaning (revisited)

Today is the first day of Spring in the Northern Hemisphere. Spring is a time of renewal and new beginnings, for your finances as well. The first financial quarter of the year is almost over. Time to assess, review and study your plans for this year. Time for some spring financial cleaning.

Spring Financial Cleaning

Saw this in My Backyard, I think I agree

Spring Financial Cleaning

So what kind of financial spring cleaning can you do? Here are some very simple examples:

  • If you are a Couch Potato investor, have a look at your portfolio. Is it time to rebalance? Given the markets, might be a good time to rebalance.
  • Clean out those extra accounts
    • If you have old bank accounts, combine them. Do you have more than 1 “savings” account? Why? Find the one bank that you can stand, and centralize!
    • How many credit cards do you have? Do you really need 6 different Mastercards? Visa? No, you don’t. Close those extra accounts, they are dangerous to keep.
    • You only need 1 checking account, seriously.
  • How is your financial plan for the year going? Time to rethink things? Did you get a raise? Are you falling into lifestyle creep ?
  • Maybe you don’t have a TFSA set up yet? Why not, it is not just a tax free banking account, time to add this account to your arsenal. Use it as your Emergency account?
  • Is your mortgage about to be renewed? Time to go shopping for a better rate.
  • Your insurances coming due? Time to go shopping, and don’t fall for the “insurance saving device” trick either.
  • Planning on some big spring projects? How are you going to pay for it? Plan now how you will pay for them, or start saving for them.

Get out your financial broom, and sweep it clean. Always try to have a clean financial house.

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