Canadian Personal Finance Blog

The Bank of Canada on Wednesday held the line, in terms of their key overnight interest rate, and neither raised nor lowered it. Lowering the interest rate would have triggered a significant drop in the value of the Canadian dollar, but it would have provided a much-needed boost to the economy. On the other hand, raising the overnight rate would have protected the value of the Canadian dollar, but it would have created chaos in the real estate market. By choosing to remain inactive, the Bank of Canada may imply that it does not see the need for further stimulation or protection of the Canadian dollar.

In their own words:

All things considered, therefore, the risks to the profile for inflation are roughly balanced. Meanwhile, financial vulnerabilities continue to edge higher, as expected. The Bank’s Governing Council judges that the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent.

For now, we are OK? Maybe.

Another distressing statement from the Parliamentary Budget Office (PBO) about Household Indebtedness and Financial Vulnerability, and we are more in debt than most G7 nations, which upsets the PBO (and the financial media in general).

In their words:

Based on PBO’s November 2015 Economic and Fiscal Outlook, we project that household debt will continue to rise, reaching 174 per cent of disposable income in late 2016, before returning close to current levels by the end of 2020….Household debt-servicing capacity will become stretched further as interest rates rise to “normal” levels over the next five years. By the end of 2020, the total household DSR, that is principal plus interest, is projected to increase from 14.1 per cent of disposable income in the third quarter of 2015 to 15.9 per cent.

So the world of family debt is going to get worse before it gets better, and it better get better soon because interest rates are going to rise one day.

Finally, the Loonie is below 70 cents US and showing no strength either. Could this mean spirally prices for imported stuff? We already have the great Cauliflower Calamity of 2016 (where it costs anywhere from $5 to $8 ahead). Inflation will most likely be low for a little while in reaction to very low gas prices, but the weak loonie may spark higher inflation, thus higher interest rates might be sooner than we think.

If I was a musician over the age of 60 I’d be worried, 2016 looks like a bad year for the Stock Market, and Musicians.

My Writings for Week Ending January 22nd

Winter may be here, but there is no canal skating going on yet in Ottawa, maybe soon:

I was a dirty skunk with my post Optimize Your Budget for Any Debt Level, where I tricked unsuspecting readers into reading my sure-fire way to optimize their budgets (yes I am going to hell for that one):

I hear that 55 is the new 40? I am not buying into that, because I could still run at 40, but I do write about my advancing age in Now I’m Fifty Five, nothing too exciting yet, but very close to retirement.

Remember Tax Season is Here

Thanks for reminding us Mr. Mercer

Read More »Loose Money, High Household Debt, Weak Loons and #MoneyStories

Several experts are boldly claiming that the price of oil will plummet below $20 a barrel this year, which could potentially lead to significant economic consequences. One of the most notable impacts already being observed is the devaluation of the Canadian dollar, which has fallen below 70 cents US in value. It is worth noting that just two years ago, the Canadian dollar was stronger than the US dollar.

Alan Rickman and David Bowie passed away this week, so not a very good week for celebrities. David Bowie’s music was the anthem of my teenage years, whereas Mr. Rickman’s acting made me wonder whether it would be worse to be tortured with a spoon? Rest in Peace, should be an interesting band wherever they are with Lemme Kilmister too.

In other news I have reached another magical milestone, in that I have turned 55, so I can get a 20% discount at Shoppers Drug Mart (on Thursdays). I will be exploring what other great advantages becoming a somewhat senior citizen might buy me. For those that follow me on Facebook, sorry for the flim-flammery, but Facebook’s dates are purposely wrong. You should really never publish your exact birth date for many reasons, but security is a really good reason too (I am also 66 years old on Facebook too, remember you can’t believe everything you read on-line).

A good bit of humor from my carpool mate,
“What do you call folks moving east from Alberta to find jobs ?” — Newfoundlanders

My Writings for Week Ending January 15th

Winter is here, and it is time to pay for Christmas:

The job picture is no better but no worse to end the year, but it is actually better for old farts like me, and not so good for my children.

Mrs. C8j is trying out the new on line order and then go pick up yourself systems being offered by a few of the grocery stores, she seems quite happy with it so far, but is it also a good budgetary tool ?

Read More »Cheap Oil, Cheap Dollar, Dead Folk, and #MoneyStories