Wings Clipped For Awhile?

[Kip Powick]

I have written this countless times, and rewritten it many times because it is a sensitive subject and  I find it difficult make a suggestion concerning  financial well being  because, understandably, I don’t know, and nor should I, how individuals or couples handle their money but…….

I find it very distressing when I see videos from all over the USA and Canada where people lined up, in many cases in their cars at 4:00am, to get food from a food  bank because they don’t have the funds to purchase groceries. In the last instance I viewed over 2000 cars lined up and the food bank ran out of food when just over 800 vehicles passed through.

Naturally there are those with no cars, no job, no skills and  who may border on homelessness that are in really bad shape and I would think they are a special case  but……the people in the videos I have seen, when interviewed, all have the same reason for being at a food bank. “I lost my job last month”, or “I lost my job 2 weeks ago” , I have never done this before”, and all echo the same reason, ”because of Covid 19”.

Yes, we all agree the virus has wreaked havoc throughout the world and adversely affected employment in so many ways, no argument there, however, I would like to offer a small suggestion that was passed to me by the Reverend that married Scuba02 and me.

A little background on my source . At one time the Reverend  was a WW2 Spitfire pilot and flew in the Battle of Britain. During one mission a ME109 put a cannon shell through his cockpit and blew off 3 fingers of his right hand. He managed to get the Spitfire home but felt “God” was his co-pilot that day and stopped flying and took up the Ministry. A nicer, and more humble man I have never met.

Prior to our marriage and at the wish of my future bride’s parents we were to have a small meeting and counsel from this veteran.. It was a short meeting and he brought up many points some of which we applied to our lives…and I still do.

Here is my point…..a salient part of  his brief counsel  concerned  personal finances… The only thing he said was…….”In the event of something untoward happening to one, or both of you, you should endeavour to always have three months of salary, untouched, in a joint Savings Account and if your salary increases you should top up that three month “Emergency Fund”.

To be brief and end here……..we took that advice and day I retired, we still had that three month “Emergency Fund” in the bank….and I still do. Old habits are hard to shed….

Further…We passed that advice to our three married children and during their time under our roof if they learned nothing from Scuba02 and myself…they did take that idea  to heart and have done the same thing.

Perhaps it is something to think about if you don’t have that plan perhaps you can start one and  perhaps you might pass on the same idea to your children because…….through life…you never know.

Be Safe.......DKP

[deicer]

While I agree with what you say Kip, why do we have to have people lining up for food banks when there is such a surplus of food they are destroying it?

https://www.ctvnews.ca/canada/nearly-200m-pounds-of-canadian-french-fry-potatoes-stuck-in-storage-1.4915551

https://www.thestar.com/news/canada/2020/04/07/ontario-dairy-farmers-dumping-milk-in-coronavirus-fallout.html

https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html

When corporations keep wages low, then destroy food stocks to keep prices high, the problem is deeper than we think.

[st27]

Ahem...don’t know how how farmers dumping milk in Ontario can be the fault of greedy corporations when production here is governed by the Milk Marketing board...

Quote

Some Canadian dairy farmers started dumping milk last week to rid the system of surplus production as demand from restaurants plummeted amid the COVID-19 pandemic that forced eateries across the country to close their doors.

"We first started seeing milk being discarded last week," said David Wiens, vice-president of the Dairy Farmers of Canada, a national organization for dairy producers. Though, it's a bit early to know exactly how much milk farmers dumped at this point.

Dairy production in the country is controlled under a system known as supply management. It's a controversial system that has seen its share of opposition. U.S. President Donald Trump called on Canada to end the practice for dairy.

The Canadian Dairy Commission administers supply management for dairy producers, with the Canadian Milk Supply Management Committee assessing national demand for milk products and setting targets for production annually. Dairy farmers own what's known as quotas, which allow them to produce a set amount of milk that depends on the anticipated demand. The production amount for their quota can be moved up or down as needed.

 

https://www.cbc.ca/news/business/dairy-covid-19-1.5528331
 

The article is from the CBC so you know it has to be true....

I do agree it is a terrible waste that could be put to better use.

[mo32a]

My parents taught me and we taught our kids to always have at least 3 months worth of funds available to pay your bills. 

However some people were not taught that or were unable to make it happen.

53% of Canadians live paycheck to paycheck, 78% of Americans do the same.

 

 

[Specs]

56 minutes ago, Kip Powick said:

I find it very distressing when I see videos from all over the USA and Canada where people lined up, in many cases in their cars at 4:00am, to get food from a food  bank because they don’t have the funds to purchase groceries. In the last instance I viewed over 2000 cars lined up and the food bank ran out of food when just over 800 vehicles passed through.

Naturally there are those with no cars, no job, no skills and  who may border on homelessness that are in really bad shape and I would think they are a special case  but……the people in the videos I have seen, when interviewed, all have the same reason for being at a food bank. “I lost my job last month”, or “I lost my job 2 weeks ago” , I have never done this before”, and all echo the same reason, ”because of Covid 19”.

I saw those videos myself and have to admit I was shocked.  Most of the cars in the lineups were late model and most of the people looked to be upper middle class yuppie types.  I had to question the meaning of "Food Bank" here because none of these people looked needy or like they were living paycheck to paycheck.    If they are then I think I understand why being poor in America is a lot better than being poor anywhere else.

[Seeker]

Even more interesting to me are people that literally have no food in their house.  These are the people who are in a crisis situation when they get stuck in the house for two days because of a snow storm.  I don't have 3 months cash sitting in a bank account - not because I don't see the merit in it but because I've done the math and decided that extra cash should be used to pay down debt.  If I have extra cash left over at the end of the month it get allocated to an extra mortgage payment or lump sum to the line-of-credit.  Of course I realize that being able to do this starts from planning to have extra leftover and not spending beyond my means.

[Guest]

Seeker, I share your thoughts.

Started out with CP at the princely wage of $200.00 per month in 1965 (to cover rent, food, etc) learned then how to  budget. Got married 50 years ago and my desire to have buy a home, have children etc. took over, so continued to live on a budget. Did not use credit cards.   As the health of CP went up and down, always was faced with a possible lay off, so saved so as to have a couple months of money in the bank to cover our costs if that did happen.  Part of which was buying food on sale, using a freezer and stocking our pantry to last at least a couple of months just in case. Zip forward to today, retired quite a while ago on a non indexed pension, so still on a budget and yes we still have a couple of months of money in reserve just in case along with a stocked pantry.  I use credit cards only if there is money in the bank to pay any balance off before there are any interest charges. 

 

 

 

 

[Kip Powick]

42 minutes ago, seeker said:

  If I have extra cash left over at the end of the month it get allocated to an extra mortgage payment or lump sum to the line-of-credit.  Of course I realize that being able to do this starts from planning to have extra leftover and not spending beyond my means.

I think I follow your train of thought but......lets say you go into work on the 15th of any month and the boss says , "I'm afraid I have to lay you off..Not sure if I can ever take you back, times are tough"....good luck ".

I'm not sure how you are working the line of credit...I have a $50,000.00 line of credit because of the small business I have had but I have never used it so.........I ask you...if you are unemployed do you have access to the line of credit the bank has given you ?....or .........if you are paying INTO a line of credit, aren't you basically putting funds into an unused savings account...or......... are you presently paying DOWN a line of credit that you have used??. Not sure how that all works........thanks.

[Seeker]

50 minutes ago, Kip Powick said:

I'm not sure how you are working the line of credit...I have a $50,000.00 line of credit because of the small business I have had but I have never used it so.........I ask you...if you are unemployed do you have access to the line of credit the bank has given you ?....or .........if you are paying INTO a line of credit, aren't you basically putting funds into an unused savings account...or......... are you presently paying DOWN a line of credit that you have used??. Not sure how that all works........thanks.

Well, with out diving too deep into my personal situation - having cash sitting in a savings account does nothing for you.  I have virtually no cash at the end of the month - any extra goes on debt, mortgage, car loan, line-of-credit.  When faced with the big car repair or vacation (rarely), landscaping bill, whatever, I use the credit card.  In fact, everything goes on the card; phone bill, internet, insurance - everything I can.  At the end of the month the credit card gets paid in full from the line-of-credit.  The credit card pays back about 5-600/year in cashback.  So the line-of-credit swings from having a balance to being paid off to having a balance again.  Now I could just keep a slush fund to be able to handle the fluctuating financial need but that balance provides virtually 0% interest.  By my calculation the money I pay by having a balance from time-to-time is offset by never having to worry about paying the credit card and by being able to make the extra go towards the lump-sum car loan payment or extra mortgage payment.

I find running everything as if I'm broke each month serves a psychological purpose in that I never feel like I have extra cash to blow.  As for whether I can draw on the line of credit when I suddenly become unemployed - I guess this is a question lots of people are asking.  Personally, doesn't bother me too much since the money that I would have saved in a savings account I used for mortgage payments - not like I spent it at the casino.  So, yeah, no money in savings but smaller mortgage than I would have had otherwise.

The problem comes for people who don't save and also don't use extra for paying debt - basically those who live beyond their means.

[Kip Powick]

Aha...OK..I see what you are doing.

.The thing I forget is MORTGAGE..Haven't had one for 20 years or so. You are correct about savings accounts....very little interest generated but more than a personal chequing account. At one time I was thinking of throwing it all into a TFSA  but TFSAs don't generate a lot of interest either unless you have the TFSA "invested".

We are pretty close on the use of the CC except  if I am at any store today and I, like you, use my CC exclusively, and I come home........I am onto my computer money program and pay the CC immediately. A few folks have stated that it would be to my advantage to wait until the CC was due but with my memory I would probably forget and end up paying interest. My CC gives me enough cash back in that I have not paid a cellphone bill for over two years..

I think one of the problems with the youngsters of today is that when they leave home, get married etc, they want to move horizontally in that they want everything they had at home and more....There seems to be some inward, self induced, pressure to have it all "now" and thus living on the edge of plastic and when the bubble bursts......big shock.....not prepared.

Each has to find what they consider as the  best way to manage the $$$ they bring home and I think it is very unfortunate that there are not mandatory courses in schools that pass on some important information on how to manage your financial situation as you pass through life.

 

[Super 80]

I can't bring myself to wave my finger at most young people, housing costs in most of Canada and most economically vibrant parts of the US are squeezing every drop of potential economic security out of them.

One of my minions was quarantined due to illness in her family and she asked me to bring a bunch of work stuff to her apartment that consumes half her income.

Was it nice? No. It looked like something built in the Soviet Union in 1966.

Was it close to transit? No. It's quite the hike.

Did it have secure underground parking? No. It smells like an outhouse and there is broken glass all over the place because the local junkies can easily get in.

Does she have a car? Yes, a 2003 Hyundai Accent her grandmother gave her when she left for college.

Does she have a room mate? No, I don't think an intimate couple could live comfortably in there together.

Could she live with her parents? No, they live on a farm 100km out of the city.

 

[UpperDeck]

One point about "food banks" and south Florida. I was there for Hurricane Wilma.

There was a "giveaway" of water and ice due to the loss of power etc. My wife and I watched the progression of cars for awhile. As noted above, we were amazed by the number of late model luxury cars. We extracted from that observation the conclusion that in certain areas, people will line up for hours for a free handout regardless of their circumstances.

The primary hurdle in practising philanthropy is identifying those who are truly in need and then meeting that need most efficiently.

[Seeker]

1 hour ago, Kip Powick said:

 

We are pretty close on the use of the CC except  if I am at any store today and I, like you, use my CC exclusively, and I come home........I am onto my computer money program and pay the CC immediately. A few folks have stated that it would be to my advantage to wait until the CC was due but with my memory I would probably forget and end up paying interest. My CC gives me enough cash back in that I have not paid a cellphone bill for over two years..

 

 

Well, I can help you out with one thing; go to your bank (the one for your credit card) (some time in the future when you're allowed such a luxury again!) and tell them to set up your card for automatic payment.  This is not something that can be done online.  I can't remember the name for it but it's a backroom process and you have to set it up at your home branch.  Once you have this set up your full balance will be paid from whichever account you want (even from a different bank) each month.  I have not paid my payment myself for years and have not paid a penny in interest.

[Kip Powick]

Unfortunately, ROGERS is a bank in the ozone but I will see if that can be done. (MasterCard)

I use a different bank for Direct Deposit etc and all my accounts are in it and they have the ATM

]I have told many that if I could get cash out of the USB port on my computer I would never have to set foot in a bank.Thank goodness for 24 hr ATMs.

[Rich Pulman]

10 hours ago, seeker said:

Well, I can help you out with one thing; go to your bank (the one for your credit card) (some time in the future when you're allowed such a luxury again!) and tell them to set up your card for automatic payment.  This is not something that can be done online.  I can't remember the name for it but it's a backroom process and you have to set it up at your home branch.  Once you have this set up your full balance will be paid from whichever account you want (even from a different bank) each month.  I have not paid my payment myself for years and have not paid a penny in interest.

I’m not sure where you bank, but I’ve set up PADs (Pre-Authorized Debits) on all my credit cards online. Many CC issuers these days don’t even have any physical branches. Every CC PAD I’ve set up gave two options for payment; either full amount owing or the minimum payment only.

[Seeker]

5 hours ago, Rich Pulman said:

I’m not sure where you bank, but I’ve set up PADs (Pre-Authorized Debits) on all my credit cards online. Many CC issuers these days don’t even have any physical branches. Every CC PAD I’ve set up gave two options for payment; either full amount owing or the minimum payment only.

Perhaps it's changed, been a few years since I did it.  Back then you could set a PAD for a set amount but in order to have the "full balance" paid each month required setting up a backroom process at the branch.  I stand corrected.

[mo32a]

Yeah, pretty easy to set up online. Autopay full amount every month. I have four CC's and they are all set to autopay full amount. The only one that is a bit goofy is AMEX, you get an e-statement saying your payment is $10,000 and due in 20 days. In the intervening 20 days you get a rebate for $5000, they still take the $10k out and you wind up with a $5k credit on your account. All the others adjust up until the bill is paid.

[Specs]

As somebody who has built and sold a number of small to medium sized businesses before getting involved in aviation I have one golden rule - put it on the wife's card.  (She's an accountant.)