Foul Ball

I went into the bank last Thursday to take out my money for the next 2 weeks. I wish there were still bank machines that gave out $5 and $10 bills rather than just $20 and $50 bills, it would save me a trip in to the bank to talk to a teller. Furthermore, it would save me from the frequent credit product pitches that the bank likes to give.

This is a little chunk of my most recent discussion:

"I see you don't have our XXXXXX visa, would you be interested in signing up for one today?"

"No thank you, I already have a credit card"

"But this is an excellent card. If you do any travelling and rent a car with it, if you get in an accident the card covers the insurance for you"

"I understand that, but I'm not interested in another credit card"

"This card has a lot of other perks as well that you might be interested in"

Seriously, I just want $5 and $10 bills, leave me alone.

"What is the interest rate on it?"

"19.9%"

"That's too high"

"But if you pay the card off every month, you don't have to pay anything and the rate doesn't matter"

"It's more a matter of principle"

Okay, so right now it's not strictly a matter of principle, but in general it is. 19.9% is just greedy, especially when you contrast it with what they pay you in a savings account.

"We also have a low rate card you might be interested in. The rate on it is 11.9%, and the annual fee is only $20"

"My existing card is 12.9%, and I don't pay an annual fee on it"

*blank look*

"Which bank is that with?"

"XXXXXXXX"

"Oh. I'll have to leave a comment in the notes about that"

Seriously guys, I know you can see right on the screen that I have a fairly healthy chunk of debt with your bank, why push it?

Okay, chances are your supervisor is making you do it, but still.

It used to be hard to apply for credit. Now it's hard to avoid having it pushed on you. I just wanted small bills.

The more the banks push, the more I want to pay the debt off NOW so that I have less of a reason to deal with them. I know a lot of people who are getting pissed off at the banks right now over it. One guy told his bank that if they don't stop calling him and pestering him to sign up for things he's going to close all of his accounts and go elsewhere. One of the girls I hung out with this past weekend got a message on her answering machine from her bank saying it was very important she call them back. When she did, they tried to sign her up for a credit card. Seriously? Call me saying it's important if someone has tried to drain my accounts, not because I don't have one of your credit products.

Banks, if you're reading this, PISS OFF!

Interesting Rate

I received an anonymous comment a couple days ago on my month end review telling me that my line of credit interest rate was exceptionally high. I hadn't actually given my line of credit interest rate any thought at all, it was just something that was there so I accepted it. The comment however spurred me into gear. I didn't expect to get the 4.5% interest rate he/she mentioned, but if my interest rate was high why not look into getting a decrease?

To google I go!

Apparently the internet isn't a very good place to go to find interest rates on lines of credit in Canada, the banks play that information pretty close to their chest. So, I called my bank Tuesday at lunch, and managed to get an appointment for after work on Wednesday. That was fast!

I almost got my hopes up there!

So, I went in and discussed a rate decrease. No dice. Apparently the major banks tie their line of credit rates to the "customer relationship" they have with you, ie: The more financial credit products you have with them, the better the rate they'll give you. So, if you have your mortgage, credit card, line of credit, RRSP, TFSA, and other investments through them, they'll give you a better rate than if you have just a chequing or a savings account with them.

Lovely.

If you wanted my investment business to build our "customer relationship", why did you try to convince me to lock into a 5.5% fixed rate mortgage when I was being offered 3.99% elsewhere? That doesn't sound like good relationship building to me.

Save 1.5% on a $237,000 mortgage, or save... any number... on a $11,000 line of credit balance.

You tell me what to pick.

There was the option of securing my line of credit to my house equity, but that wasn't guaranteed to be successful. Along with the application process there was an assessment cost of just under $200, and other application/closing fees of close to $500. Those fees alone are essentially the same as tacking another 6% onto my interest rate for the year. Why on earth would I want to do that for a drop of a couple percentage points? I'm trying to pay the thing off, not float it.

The other option offered was to look at increasing the limit on my line of credit. Apparently if I bumped the limit up to $20,000 it would put me into a different "relationship" category, and COULD possibly drop my rate 0.1 - 0.15%

Excuse me if I don't jump for joy on that one.

I contemplated the very financially dangerous maneuver of increasing my credit limit and using the money to pay off my credit card to save myself a few percentage points. I thought better of it.

If I'm going to be shopping around for a better rate, I want as few credit inquiries as possible. The financial advisor did offer me a useful piece of advice though. She said that if I have investments with another bank, I should consider looking to them because they might give me a better rate on a line of credit. Definitely something to remember.

I was just hoping to get a better rate through my existing account. The last thing I wanted to be doing was rate shopping with a balance sitting at 90%+. Not good.

Makes me want to rethink my savings vs. debt repayment plan.

Any Canadian guys/gals know what the banks are offering for line of credit or loan rates right now?

I'm Confused...

IIIIIIIIIIIt's Tax Time!

Err, well, actually it's RRSP time.

I don't know about you, but usually this time of year I feel like I'm being SWARMED with financial institutions trying to shill their wares. It's front and center on most of the websites I frequent.

Put money in your RRSP! It's the smart thing to do! Do it now before it's too late!

It's 24/7 in your face advertising until March 1st.

But this year... it isn't. I don't know if I've just become oblivious to it, but it feels like the banks aren't pushing RRSPs nearly as hard as they've done in recent years. Do they know something I don't?

*suspicion*

Adding to my confusion are the articles I'm seeing relating to RRSPs right now, such as You Can Have Too Much Money In Your RRSP over at Everyday Money, and The Problem With RRSPs over at MSN Money.

Wait, what?

It seems that after years of pushing this type of investment the banks are pulling an about face: don't put money into your RRSPs, pay off your debt instead.

That's fine and dandy that you want us to pay off our debts; at a debt load of 148% for every dollar earned, I can understand you wanting us to pay off our debts as well. But after years of lamenting that the younger generation is taking so long to enter the work force, buy their first house, and generally hit the major milestones... are you sure you want to be telling us to discount or put off our retirement contributions? I agree fully that the overall debt load of Canadians is too high and NEEDS to be reduced, but do you really want to tell us to not focus on saving for retirement in order to do it? Unless we're getting the 1-2 punch of financial education and frugality to go along with it, I'm worried that not only are we going to get out of the habit of saving for retirement, but we're not going to learn the skills we need to avoid going into debt in the first place.

Basically, I worry that the money that would have otherwise gone to savings will become part of our consumption income stream.

The younger you are, the more time is on your side. Putting in at least a little bit when you're young will pay off in spades in the future. Yes, debt interest is a nasty NASTY beast, but when the same concept of interest is used to your advantage it can be a wonderful wealth building tool as well.

Has anyone else noticed the banks taking their foot of the gas this year? Or is it just me?

Wallet Worries

One of my friends has been having an absolutely brutal time over the last couple weeks. Every time something starts looking up, she gets side swiped by something else. The poor girl just can’t catch a break right now. The most recent thing to happen? Her wallet was stolen and the thieves racked up her credit cards before she realized it was missing.

What would you do if your wallet was stolen?

Hint: Your first response should not be to go out and buy a new wallet.

It occurred to me after she mentioned it this morning that I wasn't actually sure what to do if my wallet did get stolen. I knew I had to call the banks and the credit bureaus, but that's about it. So, I did a little digging.

I wish I could dig out of debt as fast as I can dig stuff up on google.

There was a decent stack of things to filter through on there. Everyone seems to have their own order of importance for what you should do first. One site that I did find particularly interesting though was a link from Service Canada, detailing the order of events they recommend you follow. Have you ever gone into a government building to apply for something, and after half an hour of waiting in line find out you don't have the necessary ID to actually do it? Kind of a piss off, and that's what I'd expect I'd be dealing with if my wallet was stolen. Service Canada breaks down the order you should reapply for your ID, so you don't get hung up on the "You need ID to get ID" issue. Kinda handy.

They don't really go into great detail on the financial items though. They mention at the very beginning that you should contact your banking institutions and credit card companies, along with contacting the police, but that's pretty much all they say. Nowhere do they mention that you should also contact the credit bureaus. There are 3 bureaus in the US, but in Canada we only have two: Equifax and Transunion. Why the 3rd company pulled out, I don't know.

The ugly part about having your wallet stolen is that whoever is holding your wallet is basically holding your identity. They not only have (some) access to your money and credit, they also probably have enough information to open new accounts in your name. Think about some of the more common security questions: What is your date of birth? (Drivers License, Health Care Card) What is your postal code? (Driver's License) What are the first/middle/last 3 digits of your social insurance number? (SIN Card). Immediately after calling my banks to have all of the cards frozen and reissued, I'd be calling the credit bureaus. You can have them put a fraud alert flag on your account so that they know to watch for suspect activity, and prevent new accounts from being opened. If the thieves do manage to open up accounts in your name, it will be much easier to argue the charges aren't yours because you've taken a proactive approach and they're aware of the situation.

Personally, I'd work in this order:

1. Call Banks - Have accounts frozen.
2. Call Credit Card Companies - Have cards frozen and reissued with a new numbers.
3. Call Credit Bureaus - Have Fraud Alert placed on account.
4. Contact Police - Go to the station and fill out a report.
5. Go to Bank - Get debit card reissued with a different card number and change your PIN.
6. Go to Government Building - Start the ID replacement process, it'll take a while.
7. Contact Utilities - Or anything else you have automatically billed to your credit card. They'll need to know what's up so that your bills don't bounce. See about getting an extension on paying the bills if you need to and let them know you'll update them with the new number as soon as you get it.
8. Check Credit Report - Wait a while and then contact the Credit Bureaus again to make sure nothing has been opened in your name.

You may do it in a different order, but that's how I'd do it personally. Fingers crossed I never have to deal with this as an adult (my wallet was stolen as a teen).

One things I've seen recommended a lot is keeping copies of your ID at home. I'm not sure whether or not this is actually useful in this case, seeing as last I checked most places won't accept a photocopy of your ID in place of actually having it. Has anyone else had to deal with this before? Do you know if the government will accept photo copies of ID? My gut feeling is no.

Has anyone had to do this before? If you had to do it again, what would you do differently?

Mmmmm Payday

I'm happy that since starting my cash only year I've been much less concerned about when payday actually occurs. While some of my envelopes tend to run out rather quickly (I'm looking at you Food and Entertainment), its soothing to know that I have cash sitting in the other envelopes for when I need something. It also feels like the 2 weeks between paydays go by much faster now. Rather than sitting impatiently waiting for the money to come in again (MUST SPEND MONEY! RAWR!!!), I'm a little more content. Scratch that, a lot more content.

That doesn't mean the internal shopping beast doesn't occasionally try to manifest itself, it's just that I'm getting a little better at beating it into submission.

Along with the lower spending comes higher debt payments :) I love dumping a decent size chunk of change onto the totals. I feel like I'm sticking it to the credit card companies every time I do it (not nice, no, but if it's keeping me going...). I've also gotten better at writing my spending down in my day planner! So far I'm up to date with my February mini goal. I'm not blogging the result of that weekly, though I plan to do it all in a more visual form at the end of the month. I know you like the visuals FB ;)

I'm also a little excited about this payday, because I have a new way to track my money now :) One of my friends read that I have problems writing things down, so we met for coffee and she showed me how she tracks hers. She also gave me one of her little note pads, which was/is SO appreciated (Thanks M!), and I plan to start using it today as soon as I take my cash out for the next 2 weeks :)

On a side note, apparently Tim Horton's is trying to rebrand some of their products again. Their danishes and croissants are now European Style danishes, and European Style croissants. Really? Last I checked they haven't changed at all. Yay marketing?

Anyway, that's it for today. I hope you're all doing great ;)

In Debt We Trust... A Review

I made a point of taking some financial related reading material out of the library to start the year with a little while back. This included a dvd, which I forgot has a shorter rental period than books. Long story short, I'd rather not be paying unnecessary late fees, so I popped it in yesterday evening.

I found Danny Schechter's style to be a lot like Michael Moore's: brief, shocking, and most often lacking in depth. The music was gimmicky and the video was at times hard on the eyes, especially watching it on a laptop. That being said, he touched on some sticky subjects at a time when not enough people were listening for their own good. The copyright on the disk said 2006, and the box says 2007; either way it predicted the credit and housing bubbles before they actually popped.

Danny hopped around touching multiple subjects, ranging from lack of student financial education to predatory lending to capitol hill lobbying to bankruptcy laws. It's more of an eye opener than a financial education. It would have been nice if he had pointed to some places people could educate themselves on the details, rather than just pointing out people didn't have the education. Still, it's good to have your eyes opened from time to time.

One of the scenes that stuck with me throughout the video occurred close to the beginning on a university campus. A new university undergrad asks a credit card pusher what the interest rate on the credit card he's considering applying for is going to be. The credit card pusher says she doesn't know. Seriously? You're convincing kids to make financial decisions and not giving them the proper tools to do it? I know that credit card companies aren't exactly forthcoming with their fees, but that was considerably more blatant than I'm used to. This video is full of slap you in the face scenes and statistics, ranging from the fact that personal debt had more than doubled over the course of the last 10 years (from the time the video was made), to the calculation of interest rates on title loans, to the amount of money lobbyists put into getting capitol hill to change the bankruptcy laws. You'll notice I'm mentioning capitol hill; this video is American based, and does not touch on things happening in the rest of the world (though the credit crisis is applicable to most of us).

In my personal (non-professional) opinion, if you have a financial education, you can skip over this movie. It's a good eye opener for people that a financial education is needed, and that you can't blindly trust that banks and credit card companies care about your interests. They are businesses, and businesses need to make money. They make money off of you and me. Lots of it.