The Salt Shaker: Canadian Citizenship and Japanese Lunchbreaks

I had two national holidays last week, and yet somehow, I was busier than most weeks. As such, I think I was only at my computer for a total of maybe two hours. I didn’t get much reading done, but here is a list of what I did come across.

Canadians born abroad should take special note of the first two links.

Articles

• Back in June I wrote about a little known change to Canadian citizenship rules which affect the descendants of Canadians born abroad.
• As this article shows, those citizenship changes are starting to cause problems for some families. This article profiles a Canadian man born to Canadian parents who were studying in Scotland 40 years ago. He was brought to Canada when he was 5 months old and lived there until his early thirties. He then decided to teach abroad and has two children. His first was born before the new citizenship rules, and is therefore Canadian. His second child was born after the amendment, and is not Canadian.
• On the lighter side of things, I found this short article about lunch breaks at the Tokyo Stock Exchange very amusing. I just can’t shake the image of frantic traders taking an hour and a half to quietly eat the bentos their wives made.
• I came across an article on Morningstar about weeding out some of the ETF mess that’s out there. Nothing groundbreaking, but good for someone who may be intimidated by the number of ETFs out there.

Blogs

• Money Smarts asks if reinvesting dividends in the same security is really the best use for them, and offers some other options. (If you’re reading this, Mike, sorry for not responding to your reply yet.)
• Larry MacDonald writes about China being the next Enron. Let’s see… Its valuation keeps defying gravity? Check. A fall from grace would wipe out a lot of investors? Check. It is most likely cooking its own books? No comment.
• In an older post I stumbled upon, Invest it Wisely looks at the infinite portfolio. I agree our life expectancies will extend outward to a point, and we may well need more money than we think we do. The idea of perpetual portfolio is also something interesting to those wanting to leave a legacy.

And that’s about all I had the time to read the in the past week, if memory serves correctly. In other news, I have fixed the link in the sidebar to the S&P data on actively managed funds vs. indexes, and my interview notes from the Canadian Trade Commissioner to Japan will be uploaded this week.

Barter Groups and Home Repairs

Back in university I had a friend named Steve. Steve’s dad was an electrician, and had a very interesting way of keeping his home costs in check.

I’m not sure how it all started, but he had several friends that were skilled in a variety of trades. One of his friends was a plumber, another a carpenter, one was a mechanic, yet another did landscaping. There were a few others, too, and I think there was some doubling up of professions as well.

They essentially created a barter group for home and car maintenance. Whenever one of them had a problem with one of the above mentioned trades, they would contact that tradesman and the work would be done for free or at cost. If Steve’s dad had a problem with his toilet, he would call up his plumber friend and have it fixed. His mechanic friend would take care of any automotive needs without charging labour. Of course, sometimes a call would come in to install a new lighting fixture at one of his friend’s houses, and the bill would only be the cost of the materials.

It would be very interesting to see how much one could save by being in a circle of friends like this. The closest thing to a barter group I have seen was growing up on a wheat farm. Our neighbour had a pig farm, so every summer we would give him a wagon load of straw, and in return he would slaughter us a couple of pigs. I don’t think my parents ever paid for bacon or pork chops while that system was in place.

Have any readers been involved in a barter group (products or services)?  What kind, and what was/is your experience with such a system?

I imagine being in a group like the one my friend’s dad was in not only keeps expenses low, but keeps your home in tip-top shape as well.

The Salt Shaker: ETFs, Carnivals, and Trade Commissioners

The Salt Shaker is an ongoing post theme that will highlight some of the interesting articles related to personal finance, business, or economics that I come across. Until now I have published the Salt Shaker (formerly called Weekend Reading) on a bi-weekly basis, but from today onward I will be publishing it weekly. It will be the first post of each week. So without further delay, here are some goodies in no particular order:

Blogs

• Andrew Hallam reports from Shanghai that the best way to invest in the Chinese market is to buy quality name brands like BMW, Rolex, Starbucks and McDonald’s, because that’s what the wealthy there buy.
• In this older post from a year ago, Canadian Finance Blog goes over the basics of the Smith Manoeuver. This tax saving/wealth building strategy is something that interests me, but it is not recommended for everyone. You need to have a good understanding of the risks involved.
• Balance Junkie asks if you have adapted to life in the “post consumerism era,” and gives some pointers on how to do so if you haven’t already. As a side note, I don’t see it here in Japan… the malls and department stores are as packed as ever, and everyone is carrying several bags of purchases.
• Canadian Capitalist outlines what he would like to see happen in the world of Canadian ETFs. My favourite of his suggestions? Being able to access a World Ex-Canada ETF.
• Canadian Personal Finance Blog points out that making use of a select group of point cards can be a good thing. Agreed. Getting a point card for every store you shop at can be a hassle, but being dedicated to a couple of places can add up quickly.
• Canadian Couch Potato has a two-part series on dollar cost averaging with ETFs. As I only put a few hundred to work each month in Canada, I’ll be sticking with mutual funds for now, but it’s something to consider for the future.
• Invest It Wisely is turning 6 months this month, and Kevin is giving away a lot of prizes to celebrate. Things to be won include several books and some gift cards.
• Frugal Zeitgeist asks how long Social Security will last. Great question. All the more reason to make sure our RRSPs, and TFSAs are ready to help us in retirement.
• I find it interesting that some people can isolate for one appliance to figure out how much it is costing them. Michael James on Money does this with his hot-tub.
• Larry MacDonald highlights one investor’s early retirement, and how she lives off her dividend income. This is where many of us would like to be in 25 or 30 years.
• Money Smarts Blog looks at how to determine the value a renovation gives to your home. There are some interesting percentages to think about, but as he points out, it’s all within reason.
• Investing Thesis says you should be mindful of inflation, and includes an interview with a North American Strategist.

Blog Carnivals

• The Canadian Personal Finance & Investing Carnival, hosted by Investing Thesis, featured my article on the carry trade.
• The Canadian Finance Carnival, hosted by Canadian Finance Blog, featured my article asking if 60% of Canadians are really living paycheck to paycheck.

As for In Search of Salt, I just got back from a fascinating interview with a Canadian Trade Commissioner to Japan. I expect to have an article based on that interview on the site within the next week to ten days. Check back or subscribe to the blog to read that.

Hope everyone has a great week.

Scholarships, Bursaries, and Used Books

I studied at university for a total of seven years, earning two degrees in three fields, and a few letters to put behind my name.  I have perhaps only two regrets from my university days: I didn’t make full advantage of the scholarships and bursaries that were available to me, and I didn’t buy used books for the first two years.

From e-mails I have received, I know some of my readers have children that are either at or near university age.  I understand that tuition fees have been on a relentless charge upward (even during my time, tuitions fees were up 90% from my first year to my seventh) but there are ways for students to either gain or save a few bucks.

Buy Used Books

My first mistake was buying all my textbooks new from the university bookstore. I think my first year I paid about $400 for general textbooks ranging from theatrical theory to psychology to astronomy. By my second year I had switched to a double major in English literature and psychology, and my university bookstore bill had ballooned to about $800 –  buying $80 to $100 textbooks on abnormal or applied psychology (plus all the supplemental reading), as well as a few shelves worth of American, Canadian, and modern literature.  I think the Norton Anthology of English Literature alone  set me back about $150.

By my third year I had clued in to the fact that buying used was the way to go (which was ironic, actually, because the majority of my personal/leisure library was bought from used book shops). Buying used cut my book bill by at least half, depending on the courses that semester. As long as there wasn’t a new edition of a psychology text, I could buy it for about half price. For my English lit. books, I bought a used copy from the university store, or went to a used bookshop in town. There is no reason to buy a fresh copy of Shakespeare or Swift, as they haven’t made any revisions recently.

(Edit: I have been reminded by a close friend that I bought the above mentioned astronomy text used… from him. So I guess I was slightly on the ball in my first year.  I have also received an email from another close friend who happens to be an English professor. She makes a valid point that there is much to be had from revisions to the introduction or commentary on literature; there is always new research and theory. So quite often it is a good idea to have the same edition as the course requires, especially if it is a translated work… but you still might be able to find it used.)

Apply for Scholarships and Bursaries

My second mistake was not applying for a wealth of scholarships and bursaries that I could have possibly received. Usually when one says “scholarship”, we think of exceptionally high grades as being required. That is not always the case. I received several scholarships through my program for having an average over 80%, but I never had to apply for these awards. That meant the only work on my part was to earn the grades. But there was much more that I should have been on the ball about.

Quite often you can find small bursaries from alumni of, or local residents around, the university. Many of these bursaries may have a certain grade requirement, but others merely stipulate the student must be in need of financial aid. Take a look at this not-so-randomly selected list of Donor Awards from Brock University. Some are related to grades and program, some are related to grades and varsity sport, others are awarded based on parental employers or the student’s high school.

It is these awards that can really help offset the cost of a university education. (One donor scholarship, for example, is worth $17,600 over four years. The requirements? An average of over 75%, financial need, and meet some residential requirements.) The competition for these ‘application required’ awards and bursaries was often quite low, as students either didn’t know about them, or didn’t get applications in on time.

Because of this, it could be a good idea as a parent to take a look at your child’s university website. Take a look at what your child could be eligible for, and get them to fill out the application. It will only take a few minutes, and it will be in both of your financial best interest.

Are 60% of Canadians Really Living Paycheck to Paycheck?

Much media attention has been given to a recent poll by the Canadian Payroll Association, which (among other things)claims that 59% of respondents would find it financially difficult if their paycheck was delayed by a week. This story has been picked up by several newspapers, but my question is: can we trust the interpretations of the data?

Taking a look at the actual poll from the Canadian Payroll Association, I’m left with a lot of questions about the data-set used to come up with the numbers, especially in connection with Canada’s workforce. For example, though women make up roughly half of the Canadian workforce, they account for 73% of those surveyed. Not that this deters from the findings in relation to an individual who is concerned about his or her financial wellbeing, but it does raise the question of whether this is an accurate representation of Canadian workers or not.

A second issue I have with the survey is that there is no breakdown of industry. Knowing what workers were polled would give greater insight into the demographic validity of the survey.  A disproportionate number of steel workers, for example, could very easily skew the findings. The closest question is about respondants’ position within their organization, in which case we can see that 66% are in non-management rolls. 

My problems with the demographics continues in regard to the geographic location of those polled. Though Alberta, for example, makes up only 11% of the Canadian workforce, workers from Alberta make up 32% of the survey data. On the flip-side of this is the fact that workers in Ontario and Quebec make up 38% and 23% of the workforce, yet only make up 27% and 8% of the survey respectively.

I’m also a bit unsure of how to interpret to what degree a financially troubling situation is. Michael James on Money raised this point in a recent article, and looking at the survey gives us no help. We are left wondering what each respondent’s thought was when she or he answered.

The actual question is “If your pay cheque was delayed for a week how difficult would it be to meet your current financial obligations?” The 59% number is actually the sum of 3 possible answers: very difficult, difficult and somewhat difficult. “Somewhat difficult” sounds more like the annoyance that is talked about in the linked article above.  

Beyond the question of ‘what is difficulty’ I am also wondering what a ‘financial obligation’ is. I could give myself the financial obligation to put a certain amount of my paycheck to a retirement plan, but it wouldn’t be the end of the world if I skipped a week, or pulled from savings to make that RRSP contribution.

So can we trust the numbers? I  say yes and no.

Though I don’t think we can take the survey and say with accuracy that 60% of Canadian workers are living paycheck to paycheck, I do think we can probably take the numbers as an indication that there is a high proportion of Canadian workers that could find themselves in financial difficulty. Whether the real number is 60% or 40% is not important; the survey is a pointer to a problem.

I do think there are some interesting points in the survey though. While there is a general feeling of worry on one hand, 68% received a wage increase in the last year (though it may or may not have matched inflation), 62% of those surveyed expect a wage increase within the next year, 92% feel confident that their taxes and benefit deductions are accurate, and 67% feel the economy in their town or city will improve over the next year.

Another great thing about reading the actual survey is the inclusion of a select number of actual responses. Reading those comments from people makes you realize that there is a large number of people who are worried about debt, housing and their children’s education. And that is far more important that any numbers game.