Time and Financial Goals

Yesterday I celebrated my daughter’s 20th birthday, by reminiscing about the day she was born (she is out of town at school, so we won’t celebrate with her, but assume she celebrated with friends).

Twenty Years Ago

The decision to have kids was a hotly discussed topic between my wife and myself, since I was positive we could not afford to have kids at the time (as usual, my wife was correct, that we would simply adjust our lifestyle to fit the new costs in).

Twenty years ago, I had little or no thoughts of retirement, and saving, we hadn’t even bought our first house yet (another hotly discussed topic in the apartment we rented at the time).

My parents luckily thought about the future for us, and started buying our kids savings bonds for their post secondary education (or when they moved out of the house). This is something that I hope I can remember to do for my kids when they have kids, and that money has since moved into RESPs and such. This is something that all parents can pass on to their kids, teaching them the importance of saving for the future, because the future comes a lot faster than you think.

I didn’t really even have any RRSP’s set up in 1990, I did have some savings that we were putting away to buy our first house, but that was hard enough to build up. In hindsight I could have made a lot of shrewd investments, but I have also seen over twenty years that “sure things” in the world of investment are not as sure as they look (i.e. Nortel stock and such).

What Would I Change?

It’s easy to be trite in this situation and list out the obvious things that I should have done back then such as:

• Start an RRSP and invest in high tech early and get out early
• Don’t build up credit card debt
• etc., etc., etc.,

but this would imply some degree of regret or sadness about those twenty years, and I don’t wish to portray those years that way.

I have learned more from being a parent than I would have, had I got a PhD. I have had more happiness and joy in those twenty years than I deserve (or merit), but I am unapologetic too.

Yes there are times where I look back and think, “I should have….”, when it comes to some money decisions and some other decisions in my life, but in some ways I learned more from my mistakes than from my (minor) successes in the financial world.

Am I saying, “Don’t worry, be happy!” (to paraphrase Bobby McFerrin) about your money? No! I am saying you should be careful and take the obvious steps to be safe with your money and to avoid debt every which way you can, however, if you think you have done all you can, and you are comfortable, then you should enjoy your life, is all I am saying.

Tempus fugit, and twenty years will fly by in a heartbeat, so make sure you are enjoying it.

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Yes, it is Roll Up the Rim to Win (TM) time again at Tim Horton’s, a time as hallowed as Spring in Canada, causing normal folks to drink copious amounts of coffee to ensure they have a chance to win. What are these over-caffenated folks chances you ask? Just click here to have a look at the rules (that every Tim Horton’s is supposed to have around as well) and chances of winning.

If you read this document closely, you will learn:

• If you enjoy your Double, Double in Ontario, you have a chance of winning 50% of all the Rav4’s being given away.
• If you quaff your Regular in BC you only have a 6 in 17,364,000 chance of winning $10,000 (they will give away 6 prizes in BC and they figure to sell that many cups in BC).
• If you win a Rav-4 don’t hand your rim around, and when you try to claim your prize send it by Registered Mail (Timmy’s recommends that strongly)

It is always important to read the rules in these types of giveaways. It used to be they broke down the number of winners by cup size, but for some reason that data is no longer in the contest rules (it used to be Xtra Large cups had a better chance of winning).

I always thought that if a Condom maker wanted to make more better sales in Canada, they should license the Roll Up the Rim(TM) from Timmy’s and change it to Roll Down the Rim to Win (but don’t tear). Guess I think too far out of the box for most marketing companies. I suppose a Mohel could also use my idea, but I don’t think they advertise much. Remember, “The rabbi gets the salary, and the mohel gets the tips.”

My other idea, is that Tim Horton’s should sprinkle a few cups in there that say, “Haven’t you had enough Coffee?”, or “Ineligible to Win again this year!” amongst the cups for fun. They’d have to give out a small prize with them, but that would be funny.

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The Budget announced on Thursday did one or two good things, announced some ominous things (for me) and didn’t do much else.

Good: RRSP/RSP to RDSP

The one good thing is that estates of deceased parents and grandparents can transfer money tax-free to a child or grandchild’s RDSP, which helps those with disabled kids, so a very good thing.  The RDSP program will also allow for Carry Forward of the Disability Bonds for up to 10 years, so those who may not have enough to put in one year ,can make it up in the next year (seems a logical step in the program).

OK: Options Victims Saved?

There was a statement about the lucky folks being taxed for money they didn’t make on Stock Options, but the exact logic and methodology is not yet completely understood (as can be seen from this post from Michael James (an admitted victim)). I never had to worry about options ever being worth anything, so I think this doesn’t affect me in any way.

Interesting: Government Cost Controls

This one is directly in my new backyard, with a statement about budget freezes in the public service. What will this mean? Again, not exactly clear, but spending seems to have stopped for now, which might be a good thing for taxpayers (not for us civil servants). Will this mean lay-offs? My guess would be maybe, but a lot of attrition losses due to retirement not being replaced, might be the more logical choice. Will this cut down on bureaucracy and mismanagement? Did it do much in Nortel? Again, the answer is maybe, but I doubt it. Whatever bureaucracy that is there, will stay there, and anybody mis-managing things, are most likely going to stay where they are too, but we shall see.

No mention of the Public Service pension plan, but many ominous statements about it coming from the “side sources” of the government, so another area to watch closely.

Why Not Back to the Past?

So how is it that 4 years ago we were running surpluses and now we are running massive deficits? A couple of reasons come to mind, but they don’t quite add up:

• Massive infrastructure programs to help start up construction and such
• Less Government income, because less folks are working (and those that are, aren’t getting huge raises, and some even took pay cuts).
• More unemployed, so more money going out of the EI “cash cow”, instead of coming in.

But this doesn’t seem to add up to a $50Billion deficit in my mind, but again, maybe it is just not that simple. Anybody think of any other reasons?

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Can advertising add value to a product? I think it can, if our perception of the value of the product is changed by the advertising, then it has added value, and this is the assertion of Rory Sutherland, a self-described “Ad Man”.

Ted.com comes up with yet another interesting video interlude with Rory Sutherland: Life Lessons from an Ad Man.

Advertising adds value to a product by changing our perception, rather than the product itself. Rory Sutherland makes the daring assertion that a change in perceived value can be just as satisfying as what we consider “real” value — and his conclusion has interesting consequences for how we look at life.

I think this is dead right, since many things have pretty much the same technical value, but why is it that iPods are so valued, when most other MP3 players can do most of the same things? Why do folks buy Pepsi instead of Coke (and vice versa)?

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The Tories saying they are reviewing the lyrics of O Canada, while the economy is just recovering and the Government has blown more money than Paris Hilton on a shopping spree in Paris, is possibly either the greatest strategy ever, or the dumbest, I am not sure which. How many Canadians are worried that “… in all thy sons command…” is not inclusive, is more important in comparison to where the Economy stands, and the size of the national debt? I am sure there are some that are losing sleep over our National Anthem, but frankly it really doesn’t grease my wheels much (but then again, I have a son, and he is commanding, so maybe I am biased).

With glowing hearts we read many great postings this week written by the financial bloggers, from the true North strong and free. From far and wide we searched to find those posts that stood on guard for us, and here are a few of them:

• Michael James looks a gift horse in the mouth, and finds a few rotten teeth, in his post Overpaying for “Free” Life Insurance. I guess we should figure out whether “free” is too expensive for us.
• Preet sure talks to a lot of interesting folks, and thanks to his chat with Michael Moore he is giving away copies of Capitalism: A Love Story — Giveaway. Remember true love, is always saying you are sorry.
• The Canadian Capitalist has some Tips for your RRSP Contribution which is useful, even with RRSP season being over effectively.
• Larry MacDonald talks about the 2010 Budget and Personal Finance, and he should know he’ll have been locked away learning about it.
• Canadian Financial DIY points out that Canadian Computer prices might not be as big a gouge as they used to be in The Mighty CAD.
• The Quest for Four Pillars takes on a topic near and dear to my heart with Buying an iPhone From Rogers? – Don’t Believe a Word they Say. I’d like an iPhone, but they are just too darn expensive.
• Gail Vaz-Oxlade gives us something to think about with 8 Reasons Why YOU Don’t Save, how did she know?
• Ellen Roseman returns from a nice vacation and gets Back to Work, helping people get refunds. Vacations are refreshing, wish I knew how to go on one.
• To Succeed Financially you must Know Yourself says Million Dollar Journey, which is true. No financial plan works unless it fits how you want or can live.

Remember folks, there is a new budget and maybe soon we’ll have a new, non-descript, non-threatening and boring National Anthem. I suggest that we hire John Tesh or Air Supply to write it! Have a great weekend.

Don’t You Usually Comment on the Budget?

Yes, I’ll wait until Monday to comment on what the budget means to me. It seems I have walked into another cost cutting world, wonder if the Public Sector’s lay-off scares are worse than in the Private Sector?

For parents one cool thing is that your estate can transfer (after your death) from your RRSP to your disabled child (or Grandchild’s) RDSP, which could be a very good thing for those with disabled kids or grandkids.

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As you can tell, I use QuickTax to do my tax returns and those of my direct family. I find it a useful tool, but my bet is other software solutions might work just as well, but I am comfortable with this tool, so I keep using it (I am a creature of habit).

Typically I do my taxes over about a 1.5 month period, while the various tax receipts and such arrive at my house. Typically the methodology followed would be something like:

• Buy Quicktax (although this year I could have had it for free, darn!)
• Update Quicktax (this is iterative, because there seems to be new updates every week, and then as tax season comes near an end there seems to be an update every day or so)
• Create this year’s tax returns for my family, based on last year’s Quicktax files, this manages to bring forward a lot of useful info like personal info, and also Rrsp limits and such, so I don’t have to reference last year’s returns from the CRA, just run the utility and start from there
• Go into Quicken and glean out whatever information I think I can get, and do a rough estimate of what my taxes might be. Inevitably I overestimate how much tax I have paid and I start getting delusions of large tax refunds, but that is soon remedied. Quicktax does have an import from Quicken tool, however, every time I use it, it really screws up a lot of things, because I don’t have my Quicken set up correctly, so I typically do this by hand.
• With this estimate I will see if there is a need to buy RRSP’s to lower tax owed, which usually is not the case
• As each receipt and/or T-4 or such arrives I then type it into Quicktax and watch my estimate become a closer to reality number
• Over this time I will remember things I have forgotten to input like the cost of my safety deposit box, or my kids bus passes, and I will add them with glee seeing my refund number inflate.
• By the time the first week of March rolls around my return is 95% complete and factual (i.e. not based on estimates), and I can start thinking about E-Filing my return, however, this year I printed out my return first to have a look at it, and found a few “oddities” that I am not sure where they came from, so now I am chasing them down to find out why.
• Finally I have to decide whether I feel confident enough to submit my returns via E-File, it usually happens on a Sunday morning, when I get a sudden burst of enthusiasm and it all gets done. One year there was a problem with my data that I had to follow up with the CRA (it actually stopped me from E-filing), but hopefully this year will not be one of those years.

With that, I await to see whether I forgot something (inevitably a receipt will appear near the end of March, which I have forgotten about), or whether I made an incorrect assumption, when the CRA sends me their response to my submission. Most years it has been spot on, which makes me very happy.

Anybody else do their taxes this way? Did I miss something?

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No Rate Hikes

So the Bank of Canada kept their overnight target rate at 1/4 per cent for March, giving us all cheap money for a little while longer. Rememmber that the C.D. Howe institute last week urged the bank to go Harder, Faster with their rate increases, but the bank is holding off for now.

The telling phrase to read in this report is:

“…Conditional on the current outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target….”

So the end of the second quarter, or say the June/July time frame, money is going to start getting tighter, which could make for an interesting summer.

Time to start planning on how you are dealing with your debt (if you have it) with a higher interest rate, or what to do about your Bonds, given interest rates will go up.

Federal Budget Looms

I suppose Larry MacDonald will again be locked in a large room with a bunch of other “sweaty” financial newspaper types in preparation for the Federal Budget scheduled for March 4th. Larry always has interesting stories about what really goes on in that room, while all these “touts” pour over the budget to boil the essence of it down to a 1 minute blurb on TV or 750 words or less for the papers.

Hopefully we shall move back to a more balanced budget and maybe put together a plan to start paying off the national debt (again), but stay tuned, I am sure there will be something exciting on Thursday.

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Dydd Gwyl Dewi Dedwydd!

Yes, I managed to forget that it was Saint David’s Day on March 1st. so to my Welsh brethren a belated Happy Saint David’s Day, wish.

No You Aren’t Married to Him

An amusing story arose from our application for an RDSP for our son. We applied in November and the account was set up (see New Programs are Never Easy for more details on that saga), and we thought all was fine (with the exception of being unable to access it via my TD Waterhouse on line log in), but things are not as they seem ever, when it comes to some interesting programs.

We got a call last week asking for us to resubmit some of our identification documents because there seemed to be a problem with our application with the RDSP (specifically the grant portion from the Government). We resubmitted them, thinking not much more of it, however, we then received a letter saying we were rejected from the grant portion of the program due to identification irregularities.

Welsh Flag

Now, as background to this story, my wife never officially changed her name when we got married, she simply started using my last name, and for the past 22 years it has not been an issue with the CRA, or any other government agency, but, that has changed. We got told that she must go change her SIN card to match her married name (at least) or she was not going to be eligible to receive CPP benefits and our son would not be eligible for the RDSP grant program either.

I am actually chuckling at this whole thing, but it did force my wife to officially take my last name as hers (at least on her SIN card), but I am curious to find out when they are going to make her change her Birth Certificate to match (at an other inopportune moment in our lives no doubt).

Never assume that just because the Government hasn’t complained about something that they are not displeased with you, seems to be the moral of this story.

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This has been mentioned by a few bloggers, but I think the topic is a good case study in investing in “growth areas” (or as I would call it speculating on stocks).

Olympic Final Hockey Tickets

When the Olympic Hockey Final tickets went on sale about 2 years ago, they were snapped up very quickly, but were all sold (presumably) at their face value by the Vancouver Olympic Committee. VanOC made their money selling those tickets, and this is much like a company issuing stock or like an IPO (for a newer company). The profits have been made by the issuer.

Now we get into the world of presumed value of the tickets, and what they start being re-sold for.

As the Olympics came closer and closer the value of the tickets rose from their face value, to what folks are willing to pay for this Final Game, and I would assume that they started appreciating in value the day they were sold by VanOC. The appreciation may not have been much, but I am sure you could have made some good money simply “flipping” your tickets as soon as you got them.  At this time there is very little “risk” in this investment, because other than the Olympics being cancelled or Team Canada refusing to use NHL players, the tickets are worth at least as much as what they were bought for.

Speculation Time

When Team Canada was announced a month or so ago, that is when the value of the tickets might have started going UP and DOWN (i.e fluctuating), with all the Arm Chair GM’s looking at the roster and deciding whether Team Canada could make it to the game.

The big risk now introduced is, if Team Canada does not make it to the game, the tickets value drop significantly (possibly well below face value).  This is what now will drive the value of the tickets, Canadians would go watch the game if Team Canada was going to win 100-0 or lose 0-100 (maybe not pay as much) but if there is no Team Canada your investment is going to “tank”.

Tournament Starts

Team Canada blows Norway out to start the tournament, and Confidence is high, so your ticket value is going up, and you are sitting pretty. No reason to sell right now, right? What about locking in your profits, because remember what happened in 2006? No, you decide to keep your tickets, and keep going!

Team Canada then plays a worrisome game against Switzerland to begin with and now the ticket value could go up or down with “experts” saying there is a chance this team may not “have the stuff” that is needed to get to the Gold Medal. Do you take your profits now, or do you hold on and hope for  Team Canada to turn it around? You decide to keep your tickets and pray for the best.

Team USA appears with a hot goaltender and puts a beating on Team Canada that causes a collective PLOTZ in Canada, and the experts are now sure this team does not have what it takes and now some of your implied profit disappears, because now Canada must play Germany and then Russia to get to the Semi-Finals. Your ticket value has now dropped a great deal, and you kick yourself for not selling after the Norway game, when your value must have been at the highest, but you decide to ride this donkey to the end.

Canada knocks off Germany handily, and now your ticket value is increasing again, and that voice in your head asks, “Is it time to sell?”, but you are a gambler, and you know that if you hold on and Team Canada beats Russia (the experts are again saying this is going to be a rough game) your ticket value will rebound, so you hold on.

Holy cow, Canada obliterates Russia, and your ticket prices sore, with the possibility of a re-match between the US and Canada in the finals a real possibility (this would give you the Maximum pay back on your ticket, because not only could you sell to Rich folk from Vancouver you could make Yankee Dollars from Americans there too). You are on Cloud 9, thinking, all Team Canada has to do is knock off the Slovaks, and you will make a fortune, on your simple investment!

Here come the Slovaks and Team Canada is cruising, until that Goal and suddenly the market for your tickets gets a lot more nervous. That second goal and you are again panicking that you should have sold after the Russian game and taken your profits!!! OH NO!!! But, Team Canada pulls it off and you are given the added bonus of the Americans pulverizing the Finns, so here you have the ultimate appreciation of your ticket investment, Team Canada vs. Team USA in the finals, your investment has paid off.

Congrats Your Investment Has Come in!

Or has it? Should you sell the day before the game, or what until the day of the game? How are you going to sell it? Will you sell it to a scalper, or will you stand in front of Hockey Place and try to sell the ticket yourself (risking running afoul of the law enforcement agencies that frown on that kind of free enterprise?)? What happens if you don’t find a buyer who is willing to pay what you want?

Maybe you are a Hockey Fan and you don’t care what anyone offers now, you are going to enjoy what you paid for, and don’t care of how much money you can make (you will however feel smug when the two guys who sit down beside you at the game saying they paid $10,000 each for the tickets, or will you? Will you have non-sellers remorse?).

An interesting case study, what would you have done?

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The Ted folks have got a fresh set of very interesting videos, and one jumped out at me, which is a talk by Temple Grandin about how the world needs all kinds of minds to thrive.

Temple Grandin, diagnosed with autism as a child, talks about how her mind works — sharing her ability to “think in pictures,” which helps her solve problems that neurotypical brains might miss. She makes the case that the world needs people on the autism spectrum: visual thinkers, pattern thinkers, verbal thinkers, and all kinds of smart geeky kids.

A very interesting talk, well worth watching (yes it has very little to do with Personal Finance, but remember if your child is diagnosed as having a different mind, you may be able to get a Disability tax exemption for them).

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