A Money Coach in Canada

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218317068_0e367bfc72_m.jpgSheila is a single mom with three kids. She lives in a the GT area. Her income is solid enough to keep her in reasonably solid financial shape. She does watch every penny though.

Sheila’s bf of 14 months is in a different tax bracket – he earns about $40K more than she does. And he doesn’t have kids. During the first months of love, this didn’t seem to be an issue. She was willing to be more extravagant than usual, and he also picked up the tab a lot.

Now, the difference is starting to bubble up to the surface. His lifestyle simply does include lots of weekends across the border, upper-scale dinners out at least a couple times a week, and a generally more easygoing way of spending his money.

Sheila is quietly starting to resent feeling obliged to rearrange her budget to afford this lifestyle – even though he does help defray the costs quite a lot. Lately her bf has also made an offhand comment or two about being willing to help pay for dates with her, but not if the kids are involved (eg. going out for pizza and a movie together – something she would do as a treat, not a regular event).

After affirming Sheila’s right to set financial boundaries, we came up with a few approaches on broaching this thorny topic. At this point, the starting place is simply opening the conversation, more than coming up with specific financial strategies. A couple “rules of engagement” included:

  1. Remove any judgment. Her bf is allowed to have the lifestyle he wants; she’s also allowed to put boundaries on her spending. He’s not being extravagant and she’s not being cheap.
  2. Give themselves permission for the conversation to be awkward and possibly go badly. It may take a few tries before talking about money, much less coming up with an M.O. that works, starts to come naturally.
  3. Assume the best possible outcome: that they can come up with ways that feel good to both of them that take into account both his lifestyle and her budget.

Readers: how have you started conversations about money with people close to you? Did it feel awkward? Did it get better? Did it create a wedge between you, or open the channel of communication?

photo credit: Rick

Water and money… some questions, some answers! From Raul, Vancouver’s academic-environmentalist-blogger. (thanks, Raul! you got me thinking, that’s for sure)

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First of all, thanks to Nancy for inviting me to guest-blog on issues of money and sustainability. You’d be surprised to find that there are many more linkages than people think about. For this first post, and given that we recently celebrated World Water Day 2008 (some countries celebrate on March 20th, some on March 22nd and others on March 23rd), I wanted to highlight the linkages between money and water, given that water is one of the world’s most scarce resources (and at risk of becoming a commodity). As the Dublin Principle 4 indicates, water has an economic value:

Dublin Statement on Water and Sustainable Development (1992):
‘Principle No. 4: Water has an economic value in all its competing uses and should be recognized as an economic good. Within this principle, it is vital to recognize first the basic right of all human beings to have access to clean water and sanitation at an affordable price. Past failure to recognize the economic value of water has led to wasteful and environmentally damaging uses of the resource. Managing water as an economic good is an important way of achieving efficient and equitable use, and of encouraging conservation and protection of water resources.’ [United Nations’ World Water Development Report]

Water pricing in Canada is amongst the lowest amongst the developed world (at $ 0.40 per cubic metre, compared to $ 1.91 in Germany). While people often tend to believe that Canada doesn’t have problems with water scarcity (some statistics indicate that Canada has about 7% of the world’s supply of freshwater, you would be surprised at how much of a fallacy this statement is. Furthermore, this widespread belief (combined with the fact that much of Canada’s municipal water supply is not metered and thus consumption is not deterred by way of price differentials) has led some people to be wasteful with the precious liquid.

However, the pricing schemes looming in the future of Canadian residents will include both metering (and paying per cubic metre) and the concept of full cost recovery, which implies that you’ll be paying more if you consume more (also, the more you pollute water, the more you pay). So, the next time you want to find ways in which to reduce your spending, you may want to start thinking about ways to reduce water consumption. Your ecosystems will thank you, and so will your wallet.

Readers – I don’t know about you, but when I see the image below, I get pretty complacent about how much water I use. Do you make an effort to conserve water or like me ( busted!) do you not really even think twice about it?

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Rob Cottingham (thanks, Rob!) just passed along this info from the Tyee:

Two subscriptions, one price — FREE!

Be one of the first 200 Tyee readers to sign up for a FREE subscription* to our e-newsletter (your choice of daily or weekly delivery) and you’ll receive a FREE subscription to Geist, Canada’s most widely read literary magazine.

The Tyee’s e-newsletter is the best way to stay on top of our award-winning independent journalism.

Don’t miss out on this time-limited offer. Sign up now for your two FREE subscriptions.

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The Tyee is a must read if you want something other than the usual media.  I’m signing up right now, so that leaves only 199.  Act fast!

What the cbc is failing to deliver , RIP, thankfully Pacific Baroque Orchestra will provide — and free, this Friday.

C’mon down to my ‘hood (aka dtes) and enjoy some Mozart:

In the early eighteenth century, baroque was on its way out as Le Style Galant became all the rage. As music moved out of the church and into the courtly salon, elegant tunefulness and genteel accompaniment took over. Then, along came Mozart, who turned this style into some of the greatest classics of all time. Revel in the music of the thoroughly modern composer of his time. You’ll hear a violin sonata, a piano quartet, and Mozart’s take on some music by J.C. Bach, all played as he would have heard it. (editor’s note: this was directly pinched off PBO’s website)

Venue: St. James Anglican Church

This Friday (Mar 28), at 7:30pm (I’m quite sure)

(photo cred: elaine)

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2085541144_b925053054.jpgI’m feeling a bit doom and gloomy about the economy. One possible bright side is that the people who live and work here in Vancouver, who make it a city and not a ghost town, may yet afford a place here. So take heart, Krystal.

It all has to do with this Asset Backed Commercial Paper problem. Don’t run away from me. It won’t be boring, I promise. And remember, I’m a money coach, I’m not an economist, so what follows may be way off base. But here’s the future as I see it:

Joe wants to buy Sally’s $300K condo. He doesn’t have $300K available just then (he’s not John Chow).

So Joe goes to Friendly Credit Union or Big Bank to borrow the money.

Now here’s the thing. Do you think Friendly Credit Union has the $300K sitting around? No! They don’t either! (seriously. they don’t.) So how do they get the money to pay Sally out? Two ways:

1. For every $1 dollar banks do have sitting around (in term deposits, gic’s, savings etc) they can essentially use their own credit to give Sally approximately $20 or a little less. (Think of it a bit like writing yourself a cheque on your line of credit.) So let’s say they have $10K in savings. They can pay out Sally $210 and owe themselves $200 which of course they’ll get from Joe over the years. But where’s the remaining $90K they still need to pay Sally?

2. Friendly Credit Union or Big Bank would go to outside sources, and “sell” that part of the mortgage to a third party. With the proceeds of the sale, Friendly Credit Union would then pay out Sally. Often, these third parties were american companies. And often these companies also provided mortgages for less than stellar people … who increasingly defaulted their payments in 2007. So now these companies are extremely jittery about lending out their money anymore – if they even have any to lend.

What that means is this. In the coming months, Friendly Credit Unions and Big Banks will have to be a lot more cautious about who they lend to. Why? Because they can only go to those third parties if Joe is a super-secure kinda guy. If he’s not, the third party companies won’t touch him, and the FCU or BB won’t be able to pull together the cash to pay out Sally.

It also means the FCUs and BBs are going to do all they can to get some cash coming in (see point #1 above if you don’t understand why) so expect pretty good rates on term deposits and high interest savings.

Here’s the doom and gloom part. Say Joe wasn’t a good risk. He’s more likely to get turned down than ever before. So Sally doesn’t get to sell her place. But there’s worse news. Sally isn’t the greatest risk in the world herself, and her mortgage has is up for renewal. She actually rents her place out (she doesn’t live in it) and doesn’t get as much in rent as her monthly mortgage payments. So Friendly Credit Union or Big Bank may end up not renewing her mortgage. So Sally goes from Bank to Bank and finally finds one who will lend to her – but at an interest rate so high that her cash flow would mean no lattes or ski trips for the year.

What would you do if you were Sally? You may start to feel pretty anxious. You may decide it’s not worth it, and dump the property. You may drop the price of your place to get someone – anyone – to take it off your hands.

And that’s where Krystal and all the other average joe/ette Vancouverites may find a gleam of hope.

I don’t know if I should laugh or cry. Or if I should take my own future-telling seriously.

Readers: what do you think? Will the other factors undergirding the Vancouver economy keep housing prices up? Or will the ‘credit crunch’ lead to falling prices and a fair bit of panic? Is the cold and rain of Vancouver just getting to me and skewing my perspective?

Photo credit: Azrainman (who apparently shares my sense of gloom)