Ralph and Betty and their next door neighbour Fred

The day after their meeting with their new Personal Money Manager (PMM), Ralph and Betty are sitting on the front step of their new home when along comes their older neighbour Fred.





"Why so glum"? asks, Fred.





We are selling our new home, replies Ralph.





Just when I was starting to like you folks - how come?





Our PMM says it is in our best interest. We even have to sell our car.





Hey - I'll buy it.





Fred, why would you want our Honda - You already have a good family car?





Not the Honda - it's the Van I want.





Ralph and Betty look at each other and then Ralph responds: "the Van is not for sale - we are going to continue to have need of it".





Whatever for, asks Fred.





A tear creeps down Betty's cheek - but neither reply.





Fred breaks the silence. I thought you guys were happy here and the ding.., I mean your children seemed to have settled in quite nicely.





That's just the problem, replied Betty; Ralph and I and the kids just love our new home and we just hate to leave here, but our PMM says it is imperative that we do.





The discussion went on to include RRSPs, RESPs and TFSA's and the like.





You have no idea how hard it is for families like ours these days Fred.





What do you mean by that? Margaret and I had 3 kids too you know and it was only me working outside the home. Things turned out pretty good for us.





Our oldest is a Pharmacist, our middle girl - a Manager and our youngest, is a Registered Nurse. We have our home paid for and no debts to our name. Plus we have never had so much money to live on.





"How so? The money part I mean", asked Betty?





Margaret and I both receive the OAS, the CPP, and the monthly Gains Cheque. We have never been so well off.





Wow, said Betty. That's incredible.





"So how did you pay off your home", piped in Ralph?





We rented until we saved up a big enough down payment to keep the payments manageable. And we amortized it over the course of the rest of my working life. The final year of my employment saw the mortgage paid off in its entirety.





Okay, what about the post secondary education for your 3 children? That must have nearly bankrupted you?





Hell no, we told our kids they were on their own. Get a job, and get student loans. Margaret and I realized that kids only value things if they have to pay for it themselves.





You mean you didn't help them at all?





Unfortunately, no. We provided them with free room and board while they attended school.



Any Regrets, asked Ralph?



Just one; we should have charged them rent!!



Still interested in buying our van Fred?

------------------------------------------------

Note - the above is my effort at a 'tongue in cheek' look at this industry. In reality though, and as a Libertarian, I see the value - on a number of levels - of having individuals plan for their retirements and not depend on Big Government. There is great value in seeking out the advice of a credited Financial Planner employed at any of Canada's five major Banks.

As I see it..

"Galagher"

Personal Money Managers

A short while ago, I wrote a Blog on 'Stock Market Prognosticators' and how very adept they all are at determing how the Market will perform - albeit, a day or two after the fact.




Today lets take a look at your Personal Money Managers.



You know, the ones you see mentioned in the financial section of your local newspaper.



These are the folks who review your financial status and provide you with advice on how best to prepare for your retirement.



So like the newspaper, we'll take a look at a Case Study (entirely fictitious of course):



Let's look at Ralph and Betty and their 3 ding a lings - I mean children.



Ralph and Betty are in their late 30s and the ages of their children range from 4 to 12 years.



Mr. works for privately owned company and Mrs. is employed by a non-profit organization. Their combined annual income totals approximately $100K.



Within the past year, they moved from a townhouse into a single detached home where they are all very happy.



She drives a fairly modern Honda Civic, while his mode of transport consists of a rather ancient Van.



The other day, Betty casually mentioned to her husband that it will not be too much longer before they will have to give serious consideration to how they will fund a post secondary education for their eldest. Ralph agreed, and added that they should also start to give serious consideration to planning financially for their retirement.



The problem they both recognized, was that after paying their monthly expenses, there was little or nothing left over for such savings.



Not to worry, they agreed that they would contact a Personal Money Manager (PMM) for his or her sage advice.



It did not take the PMM long to hone in on the problem:

Gross Income - $100k

Expenses:

• Taxes of all kinds - except realty taxes - $40k


• Mortgage - Principal, Interest and Realty Taxes - $21.5k


• Food, Clothing etc - $15k


• Car Payment (Honda) / Car Repairs - $4.5k


• Heat & Hydro - $3.5k


• Repairs to Home - $3k
• Insurance of all kinds (house / car / life/ disability) - $3.5k
  
• Entertainment (including cable vision, internet) - $4K


• Miscel - $5 k

"Your annual income is entirely cancelled out by your annual expenses" proclaimed the PMM.




What to do?




'Ralph and Betty, you have to immediately start to save for your retirements and for the cost of post secondary education for your 3 children and I suggest you the following course of action:"

• Each of you need to open an RRSP Account - for Mr. that would mean an annual contribution of $10,800 (18% of his annual income) and for Mrs. a further $7,200.



• You also need to open an Education Account for each of your 3 children and be sure to contribute at least enough to realize the government's maximum co-contribution. (formula) For the 3 children this would mean an annual contribution from their parents $7,500 ($2,500 per child to receive the government per capital grant of $500).



• And, of course you each must open your own new Tax Free Saving Account which will add an additional $10,000 to your annual bill.



• Oh, one more thing. It is prudent to have at least 6 months worth of income in a saving's account in case of the unexpected (e.g. the loss of one or both of your jobs) - $50,000.

Mr. and Mrs. sit dumbstruck. PMM sits with a great big smile on his face basking in the sageness of his advice.

Finally, Ralph clears his throat and manages to get the following out - but that totals nearly $90,000. "We don't have anything left over now - where are we going to get that much additional money?"

"That's why you came to me".

First you need to sell your home. That will save you mortgage payments, realty taxes, heat & hydro, and of course there will be no need for repairs.

Second, you need to sell one of your cars.

"My van"?

"No, you are going to need the van - I am talking about the Honda. With its sale you will get out from under $3,500 in annual car payments".

"Whaaat else"?

Glad you asked...

Now with respect to Food & Clothing. Have you thought of the Food Bank? Plus there are more second hand clothing stores than you can shake a stick at.

"Where'd we live?" asked Mr.

"Ah, that's why you are keeping your Van"!!

As I see it...

"Galagher"

p.s. My next Blog will deal with financial advice from their elderly neighbour.

The Monarchy ...encore..- Pt. 2

Andrew Coyne's two suggestions to improve our current system to better involve the Monarchy are as follows:

1. Have the Monarch once again appoint the GG and do so via members of her immediate family - e.g. the Prince of Wales; his brother Andrew etc etc. Or,

2. Discard the GG's office altogether and have the Queen or King directly liaise with the Government.

I see some merit in the first suggestion but do not see it being a viable solution for a number of reasons, including:

• Family of the Monarch is not the Monarch itself. And, to have the existing Canadian appointment process replaced by Brits - other than the Monarch him or herself - would not be supported by Quebecers nor by our so called left-wing elite. Even, I, on the right, would ultimately have trouble with it.

With respect to Andrew's second suggestion - I like it. Doesn't mean though it will ever happen.

• The current system is dysfunctional. Currently you have Canadians playing 'Queen for the Day' when all they are in fact doing is usurping the power of both our Prime Minister and the ruling Monarch. In the recent Prorogation Crisis did Madame Jean even consult with Queen Elizabeth? As her Representative she most certainly should have. And if she did, was the decision arrived at - her decision or the Queen's decision - the latter being the appropriate one.
• With current communications, the GG position as a intermediary is no longer needed. The PM can pick-up the telephone and speak with Her Majesty irrespective of where either of them may be in the world. They can even use Video Conferencing if they wish.
• Simply stated, the King or Queen of Canada no longer needs a representative in their ever less 'far flung empires'.

I think this second suggestion has the potential of breathing more life into a splendid and very worthwhile tradition. The Monarch would though have to become more visible here in Canada and his or her role as the Head of the Anglican Church would have to come to an end for obvious reasons.

Okay, that said, I am not confident that this important Institution will last given the opposition of so many Canadians and given the apathy of so many others.

I have stated my reasons why I think we desperately need to keep the Monarchy but there is one final one that I have yet to touch on.

In recent decades Canada has opened its borders to millions from around the world - with different cultures, different languages, different religions etc. This has been a welcomed development because Canada desperately needs immigration given our aging population. But one negative side effect is that it has resulted in less and less commonality with fewer and fewer symbols to help keep us together as a Nation.

The Monarchy is one of those Institutions that has been tested by the sands of time and accordingly gives us all something to be proud of and to respect.

As I see it...

"Galagher"