Travel and Your Canadian Dollar
Canadians have been so long with a dollar worth only pennies in exchange for US currency or the Euro, it almost goes against the grain to think about how to use the high dollar to our advantage. In early 2002, the Canadian dollar sank to less than $.62 against the American dollar. But our economic recovery has surprised pretty much everyone (even us!) and even our finance minister has said that the high value of the Canadian dollar is likely here for a while. So what are the advantages and disadvantages to the all-time high our currency is enjoying?
First, traveling in the US may or may not be cheaper. But with a Canadian dollar more or less at par, it becomes possible for many more Canadians. Instead of adding 30% or more to the cost due to exchange losses, visiting the US can at least be considered as a vacation destination. There are a few things to remember, though, if you plan a trip south.
Retailers more than a few hours across the border generally won’t accept Canadian dollars. Even if they do, they’ll not likely give you the current exchange rate. If you revert to your credit cards, you’ll still lose on the exchange (although not as badly as when the Canadian dollar was worth much less) and get dinged big time service fees as well. The best way to save with a high Canadian dollar is to make sure you exchange your money in to US funds at your bank before you head south. Then pay as much as you can with cash. For example, reserve your rooms with your credit card, but pay in cash.
Once in the US, of course, many products can cost much less. So take advantage of the buys and look for great deals, especially on clothes, books, some electronics, and if you’re buying really big, even vehicles. Even if the prices are no cheaper, sometimes the biggest bonus of shopping south of the border is selection and quality-both are nearly impossible to match in the much smaller Canadian market.
Traveling to Western Europe and the EU nations, however, is a different story. Europeans are well accustomed to dealing with all kinds of currencies, and give much better exchanges. The dwindling Euro means Canadian dollars can go a long way this year if you’re traveling abroad-right now one Euro will cost you about $1.29 Canadian, about 40 cents less than this time last year.
Not all EU countries will take your Euros-England and Switzerland, for example, don’t take Euros at all, even though they’re member nations. So before you change all your currency into Euros, check the countries where you plan to travel. In many cases, it’s better to use local money. But don’t change your currency at the airport where costs are through the roof. Many banks now will simply spew out the local currency at the ATM machine, only charge the exchange rate and no extra fees. Before you go, check if your bank offers this service.
The best thing about a high Canadian dollar is that it can allow you to think about traveling to countries that were out of reach only a few years ago, without breaking the bank to get there.
Baby Expenses That you Can Live Without & Ones your Baby Shouldn’t
You can go through a wad of cash as a first-time parent trying to sort out the must-haves, want-to-haves, and what-to-avoids when buying for your newborn. Some purchases don’t need to be made at all-like brand name toys or clothes. Some purchases are optional-like a mobile over the crib. Other purchases are absolute must-haves, and some are strictly regulated to ensure your baby is well protected. A car seat and your baby’s crib are perhaps two of the most important purchases you’ll make for your little one, so be sure to do your homework before you buy.
Car crashes are the number one cause of death for children, so a baby car seat is a purchase not to be lightly made. They are considered so important that you can attend a car seat clinic to be sure yours is installed properly. When you do buy, here are some key considerations:
- Car seats are specifically designed to carry children of a certain size and weight.
- Do not put your child in a seat that is either too big or too small. Newborns do not use the same seat as, say, a 2-year old.
- As your child outgrows a car seat, a new seat must be purchased for their continued safety.
- Always follow the manufacturer’s height and weight guidelines when buying your car seat, and read installation instructions carefully.
- For newborns, car seats are installed facing the seat.
- Consider attending a car seat clinic to be sure your baby’s seat is properly installed.
Transport Canada has terrific advice and information on baby and child seats. You can contact Transport Canada at 1-800-333-0371, or by email at roadsafetywebmail@tc.gc.ca.
Your baby’s crib is another critical consideration, and new parents may want to do some serious research before buying their child’s first. Here are some pointers:
- Health Canada warns that cribs made before 1986 do not meet current safety standards and cannot be bought or sold or even advertised for sale. Be sure that, if you buy a used crib, the original labels and dates are intact, and that the crib is dated later than 1986.
- Second, Health Canada also recommends that bumper pads should not be placed in your baby’s crib, nor should toys or other soft items be put in the crib.
- Third, the mattress should fit snugly on all sides to keep your child from slipping between the mattress and the crib bars. Worn out mattresses should be immediately replaced.
- Fourth, be sure that the crib is securely put together. Lock the sides of your child’s crib in place when you put your baby in it.
- Finally, keep your baby’s crib well away from windows, electric sockets, cords, or any other source of potential danger.
For more information, contact Health Canada at 613-952-1014, or by email at cps-spc@hc-sc.gc.ca.
So You Think a Foreclosure Doesn’t Impact Your Credit Score?
There are many misconceptions about how credit scores work and what happens to yours if you miss a bill payment, foreclose on your mortgage or short sale on your home. Some borrowers may think that because they never missed a payment, they can just walk away from their homes with relatively little or sometime even no impact on their personal credit scores. This is simply not so. Coming from experts, when a deed-in-lieu or short sale is reported as a partial payment, it’s treated as a serious delinquency, just like a foreclosure.
Here are a few ways a mortgage borrower can lose their home: a foreclosure; a short sale, where the home is sold for less than is left owing on the home and the banks generally forgive the difference, or a deed-in-lieu, in which the borrower gives back the property and the bank again forgives any unpaid balance. Regardless of which method you have used to eliminate your mortgage, generally credit bureaus will reflect the same penalty towards your credit score. The bottom line to the bank is that they report you paid less than the agreed amount on that settled account.
So even if, as a borrower, you made payments faithfully for years before short selling or doing a deed-in-lieu, your credit score will still have an enormous negative impact on it. Mortgage debt, combined with other financial problems, can send borrowers into bankruptcy, which is the worst thing that can happen to your credit score. So, since it’s now common knowledge that any kind of delinquent behaviour towards your mortgage will cause your credit score to suffer, the question remains, how much?
Until recently, credit bureaus were reluctant to let consumers know how much of an impact these late and non-payments would have on their scores. Being as there are so many variables, it was, for the most part, very difficult to even begin to answer that question with any sort of accuracy. Now, however, it is possible to get an idea on how many points you will lose by the amount of days your payment is late, as well as by the means you use to get out of your mortgage early.
Fair Isaac, who developed FICO scores, released these numbers as an average go-by. If you are: 30 days late: 40 – 110 points; 90 days late: 70 – 135 points; a foreclosure, short sale or deed-in-lieu: 85 – 160 and a bankruptcy: 130 – 240.
If you are in danger of a mortgage foreclosure, or missing payments, speak to your lender before it’s too late. Every situation is different, so find out the best option for your circumstances.
Spend Less, Save More: Your Own Debt Loss Program
Think of it as a kind of debt loss program. When you handle your debt, you’ll find a huge weight falls away from you. Some experts actually think there’s a correlation between the growing debt of Canadians and our growing waist lines. Whether that’s true or not you can debate over a donut, but there can be little doubt that debt reduction is one loss most of us can probably use at least a little of.
Tally up your debt weight. Until you know how much you’re carrying, it’s pretty much impossible to know how much you have to lose. Don’t cheat-add up every penny you owe.
Have a partner on board. It’s a lot easier to tighten your belt when someone else is tightening right along with you. Whether it’s a life partner, spouse, friend, or your mom, having someone you’re accountable to, or someone who’s just cheering you on can only help, right?
Don’t hide anything from yourself or the people helping you out. It just won’t do any good to pretend your debt load is smaller than it really is. Is it six credit cards, three personal lines of credit, and two in-store accounts (not to mention your sister and best friend)? Get it all out there.
Plan a debt loss strategy. Whether you pay one debt off at a time, based on a high-interest first approach, or several debts a bit at a time, the key is to have a plan, and stick to it. Having regular money meetings with your partner in debt loss can help you to stick to the plan and meet your debt reduction goal.
Always save something. If you feel like your entire pay cheque is going to pay down debt (and it might be) start setting aside at least a small amount every cheque that goes to savings. Always save something, no matter how small or trivial it might seem.
Live by a budget. Set out the things that you have to pay each month, like your mortgage, car payments, and utility bills. Then pay them, every month, without exception. Never skip a payment. Pay less, if you must, and then contact the company and talk to them about it. Often, they’ll understand and even waive the interest charge or late fee.
Stop using your credit cards, lines of credit, or other false income-extenders. One of the problems with credit is that it makes you think you have more money than you do. And, as valuable as credit can be, until you understand how much you really make-without the help of plastic-it’s probably good to stay away from it.
Try these guidelines to your debt loss and see how much better you feel with debt weight off your shoulders.
Just say “No” to More Debt
Saying “no” is really tough, whether it’s to ourselves for something we really have our hearts set on, to our kids, or someone else we love. Nobody wants to be the bad guy who has to deny something that someone has asked to have. When it comes to the ease of using credit, saying no to all the wonderful things there are to purchase in the world can get even harder. And it seems to get worse if it’s something you think you must have to “keep up with the Joneses”, or something for your kids that every other kid on the street seems to sporting.
But learning to say “no” can be the most important lesson to learn about using a credit card. Only by saying “no” will your balance ever get to zero. When was the last time you paid off your credit card? When was the last time you paid off your credit card, and then didn’t immediately charge it right up again? If you find that you just cannot say “no” long enough to get that credit card paid paid off, here are a few ‘no boosters’ that may help you give that 2-letter word a work out more often.
Keep your debt total where you can see it. Post it in big, bright red numbers in plain sight-on the fridge or as you go out the door (don’t forget to take it down when people visit). There’s nothing like a little red to help you say “no” to a new purchase. When you see what you owe, and how long it might take you to dig your way back out of debt, “no” can seem like a pretty easy alternative.
Remind yourself what a good lesson it is for your family. If you can say no to yourself, your children will see the self-discipline you practice, and discover that even adults have limits to what they can have in their lives. This can help teach your kids that someday they, too, will have to make choices-and some of them may be plain “no” decisions.
Take satisfaction in resisting impulse buys on credit, like lunch out, magazines, or an afternoon at the movies. Too often the buys that really add up are not the big ticket purchases. It’s the “$5 here, $10 there” small expenses that really go “ca-ching.” And that can be a real shocker when the credit bill comes in and you’re expecting to owe little or nothing, and instead you owe three or four figures.
Learning to say “no” is a good lesson for all of us. Try it for 30 days. Can you keep a zero balance on your credit card that long?
Climbing Back from Bankruptcy
So, you did it. You declared yourself bankrupt. You may well have mixed feelings about the whole affair. You may feel relieved that you don’t have to worry about answering the phone any more. But you may also feel pretty low about throwing in the towel on your monetary situation, and losing some things back to creditors that may have held value for you.
Right now, rebuilding may be the furthest thing from your mind. But, even though bankruptcy might not be anyone’s first choice of things to happen to them, it offers a second chance for you to begin again-making better choices and smarter use of your dollars.
Start again without credit cards. For many people, it’s mishandling credit that got them into trouble in the first place. So, be slow to return to plastic. Instead, buy with cash until you have a good feel for how much money you really have every month, and just how much you can buy with that amount of income. Basically, learn to live within your means.
Consider making a budget. When you can see it right in front of you in black-and-white where your money has to go each month, to the groceries, gas for the car, or other bills, it’s a lot harder to blow the wad. Budgets are great reality checks on unconscious spending binges.
Watch what you buy, and when you buy it. Without credit, you might not be able to act on your urges the way you used to, but eventually you’ll likely have credit back in your life. Now might be the time to observe when temptation hits you, and what you can do to resist those terrific buys that got you into trouble last time round. Do you go mad not being able to buy something if you spend a few hours in the mall? Maybe you’d be better off choosing the ballpark on Saturday afternoon. Learn to change the habits that lead to uncontrolled spending.
Make a pact. Agree with someone-your spouse or partner or best friend-that each of you has veto power over the other’s purchases. So if you do spin momentarily out of control, that person can send you straight back to the store with your buying spree. Or take it back for you, if necessary.
Are you a sneak-it-in buyer? Buying purchases and then hiding them until they can be safely slipped into the household? That habit can be quickly nipped in the bud by tracking your spending with the whole family each week. If you’re keeping a budget, and only using cash, it’s much harder to hide that DVD habit you’ve got going.
Recovering from a bankruptcy is hard work, but not impossible. With a few budget guidelines, you can come back to a bright-and solvent-financial future.
The Bank of Montreal is Claiming Mortgage Fraud
The Bank of Montreal estimates it may lose as much as $30 million on a mortgage scheme that involved some of its own employees. The bank is suing a few hundred people including four of its own employees, along with mortgage brokers and, so far, seventeen lawyers in what they allege is one of the largest cases of mortgage fraud in Canadian history.
The Bank of Montreal says its securities department first noticed irregularities in several of their Western Canada mortgages back in 2006. This prompted the bank to hire a forensic accounting firm who spent the next year digging through the details to uncover what was really going on.
The forensic accounting firm realized a rather sophisticated scheme where scammers would chose the worst house in a preferred, established neighbourhood. They would then convince the bank the house was worth much more than it really was due to it’s location, and being as banks rely on software programs to determine house values, the banks would concur. The scammers would then purchase the house and pocket the difference.
To qualify for the mortgages, these scammers were paying unsuspecting people, generally new immigrants $2,000 to $8,000 for the use of their name on the mortgage. Lawyers would then step in and draw up fake documents of earnings, often showing inflated wages and high net incomes to ensure the immigrants would qualify for the mortgages. The legal documents filed by the bank shows the fraud scheme was operated by 14 inter-connected groups that generated approximately $140 million of which $70 million was in fake mortgages.
The Bank of Montreal’s documents also showed that millions of the fraudulent money was sent to countries such as India, United Arab Emirates, Lebanon Pakistan and Saudi Arabia. They also noted that in one instance alone, a home in Calgary that was bought for $900,000 was sold three years later for $2.3 million, netting the scammers a whopping $1.4 million.
A Calgary based management company had documents unravelled by the Bank of Montreal investigators showing 150 suspected counts of mortgage fraud within 16 different financial institutions. The investigators felt this was a clear sign of how inefficient the controls are in the banking system. If you have been the victim of fraud and have had your finances affected because of it, you might want to consider a private consolidation or car title loan to help get your mortgage back on track.
The New West Partnership Agreement
Many long-time residents of Western Canada question why the 3 western-most provinces, who rely so much on one another and who interact to the degree that they do, never thought of this before. Between the three provinces, B.C., Alberta and Saskatchewan, there has finally been an agreement to function, more or less, as a single economic zone. Between oil and gas, mining, farming and lumber, these three provinces also share a major part of their population. Many people leave their native province to zip into one of the others for work. Closer to the Alberta / BC border, some even live in one and while working in the other.
So now that the premiers of B.C., Alberta and Saskatchewan have finally signed a deal that has helped remove those barriers and encourages these provinces to function more as a single economic zone, what exactly does this mean? Well, under the new West Partnership Agreement, these changes mean that professional qualifications and business licenses that were earned in one province will be transferable and recognized by each of the three partnering provinces. This is great news for the trades industry or for anyone who holds a skills ticket. This means if you are a teacher who earned a teaching certificate in Alberta, you will be able to gain certification and teach in either B.C. or Saskatchewan.
Saskatchewan’s Brad Wall was quoted as saying “We signed an agreement today that creates an amazing economic force: the new west, an economic region of 9 million people strong and $555 billion in GDP is an economic region that is home to a number of industries the world is very interested in right now.” There are also plans of promoting the three provinces together. The first of these joint promotions will take place next month when the three premiers share a trip to Japan and China. They hope such joint promotions will help attract investment and talent into the provinces.
Among some of the other benefits they see are using the provinces’ joint purchasing power to get better deals from suppliers for necessities such as prescription drugs, school equipment and textbooks. This should be a substantial savings for the provinces, which, in turn, should be a substantial savings for its residents. The Canadian Federation of Independent Business supported the new agreement, saying it hopes this will solve some of the labour shortage problems. This agreement should also make finding work easier for certified trades people.
According to the White House, 683,000 US Jobs Created in the First Quarter
There’s always speculation when it comes to actual public tallies, but according to the White House, the $787 billion stimulus package has created just under 683,000 jobs in the first quarter of 2010. Based on 179,000 reports filed by individual states, these 682,799 jobs were added primarily in the areas of road construction, police officers and teachers as the stimulus money was put directly towards these occupations. These numbers do not reflect jobs that were created indirectly through companies.
However, the White House’s Council of Economic Advisers tells a different story, claiming figures from the stimulus package were closer to 2.2 million and 2.8 million jobs through the same first quarter of 2010 and claims the massive American Recovery & Reinvestment Act project is still on track to fund a total of 3.5 million jobs by the end of the year. Even though both sets of figures have been praised by several governors for producing jobs in their states, the numbers simply do not coincide. A large difference between the two founding reports is that the White House’s Council of Economic Advisers findings are based on a mathematical formula that uses figures on how many stimulus dollars have been used for job projects and includes both direct and indirect hires.
According to a National Association for Business Economists survey, 73 per cent of them note that employment at their workplace is the same, not being any higher or lower due to the stimulus project. As well, a recent Pew Research survey for the Press said that 62 per cent of respondents admit that stimulus package has not helped the job situation at all.
Stimulus dollars are distributed and tracked on a cumulative basis, whereas stimulus jobs, reported quarterly, are not cumulative. Since the American Recovery and Reinvestment Act was passed in February 2009, a total of $205 billion has been awarded and an additional $62 billion has been distributed to recipients. In the fourth quarter of 2009, the stimulus plans says it funded approximately 600,000 jobs. However, 14 months after it was enacted, the Republicans point out that the high unemployment rate of 9.7 per cent is evidence it is not having the desired effect.
Despite reports of 15,200 full-time jobs being either created or retained in Pennsylvania, many economists still question the reports from the Obama administration and how much impact the Recovery Act has actually had. Money and job security has been an ongoing issue for many people.
Move Over TSX, There’s a New Option in Town
For 157 years the TSX has enjoyed the near monopoly status as the place to buy and sell stocks in Canada as it currently sits as the sixth largest in the world. Lately, there have been options moving in, eroding the TSX’s monopoly. These alternative trading systems such as MATCH Now, Chi-X, Omega, Pure Trading, Instinet and Alpha Group have arrived on the scene with varying degrees of success. In some markets, these new players make up more than 40 percent of all trading activity in Canada.
Currently, Alpha Group seems to be the biggest threat to the existing TSX. In February, the TSX’s market share of all trading in Canada decline to 71.9 per cent compared to 93.1 per cent at this time last year. Alpha, on the other hand, has seen its share increase to 21 percent from 3.3 per cent during this same period. Major Canadian banks and other large financial institutions formed alpha in 2007. They’ve been successful in obtaining a large part of the market due mostly to decreased fees.
The TSX is parented by TMX Group Inc. who essentially has three businesses. The listings business where companies who want to have access to investors pay TMX fees to have their companies listed. They also provide trading data and historical marketing activity data to clients who, in turn, pay subscriptions fees for this information. As well, they are in the trading business, where brokerages pay fees to buy and sell securities.
For now, Alpha does not have much interaction with individual consumers. However, on April 22, Alpha filed papers with the Ontario Securities Commission to become a listings exchange. If approved, this would make them a full competitor to the TMX Group who has always competed with new entrants across each of its business units. Major companies trade on the main market that is reflected in the S&P/TSX composite index, while smaller start-ups are typically listed on the TSX Venture Exchange, which TMX also owns.
Alpha is owned in part by Canaccord Capital as well as the investment branches of Canada’s six largest banks. Having multiple stock exchanges would move Canada closer to the U.S. system where as many as seven separate stock markets are available for listings. The two giant New York based traders the Nasdaq and New York Stock Exchange still dominate the market. Having money to invest in the stock markets is a great way to secure a future nest egg. It often does not take a lot to make a lot.