Category: Personal Finance

This post ventures into legal and philosophical territory that is far beyond my areas of expertise.  If I get something grossly wrong, please correct me in the comments (and any readers, please be careful if you use any of this information, it’s even more questionable than my posts usually are).

I’ve often found the notion of “rights” quite interesting.  From basic human rights, to legal rights, to political rights, to employment rights.  There’s even a gamers’ bill of rights (“you have the right to be eaten by a ghost while playing Pacman…”).

Implicit in the idea of rights, to my mind at least, is that they are absolute.  Clearly this rarely occurs in practice. For example, freedom of speech doesn’t protect people who falsely yell “fire!” in a crowded movie theater and I doubt many U.S. prisoners feel entitled to “life, liberty and the pursuit of happiness“.  Clearly my expectations that these are absolutes is incorrect, as the first section in the Canadian Charter of Rights and Freedoms begins:

The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.

For those who missed it, the weasel phrase here is “reasonable limits”.  Society reserves the right to revoke our rights and beat us on the head with a stick if that becomes necessary.

In employment situations I’ve known people who find out some employment “right”, then spend large amounts of time insisting that it be absolutely and completely honoured.  Often they generate so much ill will that they are worse off than before the entire exercise began, even if they convince the organization to follow that rule.

A woman I’m friends with at the grad school is constantly asking what the rules are for this or that.  Recently she wanted to go on vacation and was asking around to find out what grad students are entitled to.  Her plan, I guess, is to go in to her supervisor’s office, say what the prescribed number of days of vacation is, then demand her supervisor give her that much time off.  When she asked me, I told her I’ve just asked for time off whenever I need it and my supervisor has said ok.  She blinked a few times, then asked me again if I knew what the official policy was. The end result is that she may force her supervisor into giving her time off (which she might have been given if she’d just asked:  I know her supervisor is VERY reasonable), but the next time she needs the rules bent for her I can imagine what the supervisor’s response will be.

Laws, rules and rights are all very important when two parties are unable to reach an agreement, but trying to reach agreement is an important first step before someone gets smacked in the face with a rule book.

Another friend of mine works closely with management at a union workplace.  She has, on a number of occasions, done things prohibited by their collective agreement (such as working unpaid overtime).  One year she got three raises / raises during the period where other workers got a single cost-of-living increase (the management she was working with juggled things around so that she’d qualify for a higher salary band).

I rented a basement apartment once from a couple who wanted to raise my rent.  They only gave me one month’s verbal notice (the residential tenancy act requires 3 months written notice of rent increases).  I knew this, but I told them I’d be ok with the increase if they’d let me only give them 1 months notice when I was going to move (more flexibility was better for me than delaying the increase).  The act requires 60 days notice by a tenant who wants to leave.  By mutually agreeing not to obey parts of the tenancy act, we were able to reach an agreement that was better for both of us.

Have you had situations where you and another party ageed to ignore a rule, policy or law?  Did it work out well for you or lead to problems?

A common financial strategy for someone who is trying to pay off their debts is to allocate some of their savings into a different account which might be used for some sort of fun.  The idea is that while you want to focus on paying off debts – ie have some gazelle intensity, you should also be realistic about your focus and give yourself some rewards along the way to stay motivated.

I think this is a perfectly reasonable thing to do although I would argue that someone who has excessive debt has already had their fun and then some.  One problem however is that sometimes people will make a purchase saying that they “saved for it” or “paid cash for it” which makes it a financially responsible action.

The fact is that if you have money in cash instead of using it to pay off debts, then you are essentially borrowing that money at the rate of your highest interest rate loan minus the net amount of interest earned on the cash (which these days is jack squat).  This is the logic behind not having a cash emergency fund (or not having a large one) since you are paying a high premium to keep the money in cash.

I’m not suggesting that everyone who has any debts shouldn’t buy anything non-essential until the debts are gone, nor am I suggesting that you can’t have some fun along the way.  What I would suggest is that you shouldn’t base any purchase decisions on how much cash you might have on hand but rather on your overall financial situation which includes your goals.  At the very least, don’t pretend that some of your money is “special” and doesn’t apply to the rest of your finances – it’s all one big bucket of money and debts.

If you are committed to paying off some or all your debts before taking any rewards then you should stick to that goal.  Having some cash in a different account or receiving some sort of bonus shouldn’t affect your strategy at all.  This is not to say you can’t change your goals (I change mine all the time) but don’t cheat on your financial plan

I recently picked up a new digital (what else?) point and shoot camera. I’ve been the happy owner of a Canon Digital Elph from 2002 (2.1 megapixels) but in the last few years it started to fade. The battery doesn’t work as well and the speed of the shots, particularly inside photos was very slow – up to several seconds. This is tolerable for landscape scenery shots but for toddlers it just doesn’t cut it. Often we would try to take a photo of one of the kids and by the time the camera got its act together, the toddler would be in the next room.
Our solution was to buy a Sony DSLR A350 camera (which will be the topic of another post) because they are very quick. The drawback of the DSLR is the size – it’s like lugging around a separate piece of luggage if you go somewhere. It occurred to me that some of the great features of our DSLR like the anti-shake function should be available on a point’n shoot as well. I thought if I could get a camera that would take better pictures than my old Canon and the size didn’t increase then it might make a great “traveler” camera – one that I could take the kid’s park or on a bike ride.

Researching cameras

I knew that I wanted a modern day version of my old Canon – some quick Googling reassured me that the digital elph line was still around.  I then checked out a great post on how to buy a beginner digital camera over at “The Fox“.  I then exchanged a few emails with the royal Squawkers herself and got a whole bunch of more info on the topic.  Talking to other people can be quite helpful – especially if that person is “The Fox”.

The criteria

My criteria was very flexible but the basic criteria was as follows:

• Price under $500.
• Small and portable – ie similar to my old camera.
• Anti-shake function.   In my opinion this is a key feature that helps improve photos.

The choice

I narrowed the choice down to 2 great cameras:  The Canon PowerShot SX200 ($400 at FutureShop) which is basically the modern day equivalent to my old camera or the Canon Powershot G10 ($529 at FutureShop).  The G10 had more mega-pixels which I didn’t really care about but it seemed to be a pretty good camera that was rated quite favorably in Consumers Reports.  The drawback of the G10 compared to the 200sx was size – although not a big camera the 200sx was significantly smaller than the G10.  I decided to go with the Canon 200sx since it fit the bill exactly for what I wanted.

The purchase

I bought the camera at Future Shop for $400 (since reduced to $379).  I also got an 8 GB memory card (there isn’t one with the camera) and a camera bag ($21).  I decided to try my “negotiating” skills when purchasing and asked the salesperson if I get a reduction in price for any of the items.  She told me yes, I could get a “package deal” – I was pretty pleased with myself but what she did was lower the price of the camera to $330 and add in a $100 extended warrantee (4 years).  The net effect was that I could have the extended warrantee for $30.  I wasn’t going to accept it since I hate EWs (I think generally they are a ripoff) however I thought that paying less than 10% of the purchase price for 3 additional years of warrantee wasn’t a bad deal.  Normally the extended warrantee costs are 30-40% of the purchase price which makes it hard to come out ahead.  It also includes an “annual lense cleaning” which I had never had done on my old camera but I figured I could probably do it once before the warrantee ran out.

After-purchase thoughts

I’ve had the camera for a couple of weeks and it is fantastic.  It’s hard to believe how much difference there is in this camera and my old Canon.  Ironically I think I paid $500 for the old camera 7 years ago and my new camera cost $400 for something far superior.

Some things that I really like and didn’t necessarily expect:

• Picture quality.  I don’t really know anything about cameras or photography and most of my pics so far have looked pretty good.  Even the inside shots are pretty decent.
• Video.   The video quality is amazing.  I had assumed it would be a bit better than the rather bad video of my old camera but I was quite amazed at how good it was.  The camera has a speaker so you can listen to the video sound when replaying it on the camera.
• Zoom.   The zoom is quite impressive.  It doesn’t compare to a larger camera with the add-on zoom lense but it’s pretty good.  Again, a huge improvement over the old camera.
• Size and portability.  The camera is only a bit bigger than my old camera so it fits into a small camera bag and can be strapped onto my belt.  I have no problem taking it anywhere.  I knew this before I bought it but it’s still worth mentioning since it is one of the big benefits of this particular camera.

Read my review of the Sony DLSR A350 camera.

Part of most job interviews is where they ask you about your current salary or salary history.  This is obviously valuable information for the other side of the negotiation to know, as it tells them exactly what amount of money you were willing to work for.  At it’s core, while useful for them to know, I think it’s a highly inappropriate question.

I have a somewhat skewed view of employment compared to many people.  I have been an employee at a large number of venues (from McDonald’s to Nortel), a manager (with 4 people working for me), a sole-proprietor (from a paper boy through to running my own software company), a contract worker, and a dot-com startup employee.  I’ve worked in industries from server management software to hospitality / tourism to education.  All together this allows me to see employment as a fairly balanced process, employees need jobs and businesses need employees.  The market rate for the work is how badly each side needs the other.

The dot-com boom (and bust), which I caught the tail-end of in San Francisco, was the far side of the pendulum where employees were in the drivers seat.  Companies were desperate for tech workers, and some employees developed prima-donna attitudes.  While this certainly wasn’t right (as I used to tell the CEO of my company when he hand-delivered my morning coffee and I was chastising him for not putting enough milk in it), the standard attitude prima-donna attitude of the employer isn’t right either.

Asking for a salary history is an example of this.  How is it any business of a potential employer what you’re being paid at your current or previous jobs?  This is between the previous companies and yourself and has nothing to do with potential employers.  If you were to turn the question around and ask them to provide a copy of last weeks payroll to all the employees in the company (or even asked the salaries of everyone working comparable positions at the company or what they’ve budgeted for the position) there’s no way they would answer.

No one likes answering this question, but I think enough people feel intimidated by the interview process that they do (and it has become a standard question).

How Answering Hurts You

The company obviously has a range they want to pay for the position, you have a range in salary you’re hoping to earn.  If you’re lucky there’s an overlap and both side want to a) come to an agreement and b) have that agreement be the best possible deal for them (low salary for the company, high salary for the employee).

The problem is, if your current salary is very low, it may be below what they’d intended to pay, in which case they’ll happily match your current salary (or give you a small bump that’s still below what they originally intended as the low-end).  For someone who had to temporarily take a job at a lower salary, this can make it a very painful process to claw there way back up to what they should be getting paid.

Conversely, if you quote too high a salary, they might just decide that you’ll be unhappy working for what they can afford to pay you and not offer you the position.  You may have considered the salary they’re willing to offer, but by having quoted the high number you never get a chance to hear their offer.

I don’t advocate lying, even in answer to inappropriate questions, but there’s extra reason not to lie here:  a lie can STILL hurt you if it’s the wrong number.

Ways To Evade The Question

This is a tough one (much harder than the old “don’t be the first to mention a number” idea).  In truth, I’ve always been fairly confident that I’m getting paid market rate (and have been happy to negotiate with an offer letter in hand) and have provided this salary history information when asked.  I don’t think I will if I’m ever asked in the future however.  Off the cuff, some ways I’d consider answering would be:

1. “Unfortunately that’s priviliged information I’m not able to share.”
   • PRO:  Quickly ends the discussion, if pressed you can say that YOU make it privileged, not the previous employers (much like when someone tells you “sorry that’s against our policy” as a “reason” why they can’t do something).
   • CON:  You come across as somewhat aggressive, which for most jobs isn’t the image you want to convey.
2. “I’d like to focus on whether I’m a fit for this position, and I’m sure we can work something out with salary after we’ve determined that.”
   • PRO:  Taps into the “don’t talk numbers” game, and they might let it go without firming it up.
   • CON:  Probably they won’t accept the attempt to sidetrack things and will try to pin you down.
3. “Why would you like to know that information?”
   • PRO:  If you ask this sincerely and don’t come across as defensive, it may give you a chance to just talk philosophically about salary information (perhaps discuss some of the points in the section above) and you both may agree to just leave this question unanswered.  Depending on why they say they want to know, you may be able to answer the underlying question without providing the history.
   • CON:  They may not take it as sincere and you may come across as aggressive.  They might just say it’s part of their interview process and not provide a rationale (and demand an answer).
4. “I’d be happy to give you that information, but first could you please tell me what salaries people currently in this position at this company are earning”
   • PRO:  Clearly makes the point that this is a one-sided questions that is clearly inappropriate.
   • CON:  Most people don’t hire smart-asses, so you’ve probably just talked them out of hiring you.
5. “Well, I don’t think my recent salary history is relevant because of XYZ”
   • PRO:  If you have a solid reason (such as learning something new at your most recent position or being overpaid for some reason) they might accept that as a reason not to answer.
   • CON:  In all likelihood they’ll just say “we’ll take that into consideration” and still want to know.
6. “My last job paid $1,000,000 annually, and the job before that paid $1 / year”
   • PRO:  Perhaps as a second attempt to deflect after one of the early responses, humour may be able to put off the question.
   • CON:  Even when it’s an obvious lie, deceit as part of a job interview may not be the best idea.

How do you answer when you’re asked about your salary history for a job?  Do you feel this is a reasonable question?  Any ideas for better responses than I’ve come up with?

[Edit from Mike:  Please note this post has no affiliate links and no compensation was received for this post from MNBA or anyone else – Henry just really likes the card]

I was pleasantly surprised when I first read about MBNA Smart Cash Credit Card on redflagdeals.com. 3% cashback on groceries and gas up to 600 dollars spent a month. Yup, that is correct. Comprehensive insurance benefits that includes 1 million dollar travel accident insurance. Yup, that is correct. No annual fee. Yup, that is correct.  MNBA already offered one of the best no-fee Canadian rewards cards but this one is even better.

What is included?

• 3% cashback on groceries and gas (600 dollars spending limit)
• 1% cashback on other purchases
• Cashback is mailed out in 50 dollar accumulated increments
• No annual fees

Sign Up Bonus:

5% cashback on groceries and gas for the first six month (600 dollars spending limit) which gets lowered to the normal 3% after 6 months.

Platinum Plus’ Insurance Package

• MasterRental: Auto-Collision Rental Insurance with $200,000 Accidental Death Benefit
• MasterTrip: $1,000,000 Common Carrier Travel Accident Insurance
• MasterPurchase: Purchase Assurance and Extended Warranty

What is missing from this card?

• No road side assistance.
• No trip interruption insurance.
• No luggage insurance.

Who is eligible to get this card?

• Regular Card: Students who is looking for their first credit card.
• Platinum Plus Card: People with established Credit.

If you are a student then apply for the regular card – once you establish a credit history, you can call in and they can upgrade your card to Platinum Plus. MBNA is willing to give students Platinum Plus Card, once a credit history is established.

Final Thoughts

I am a proud owner of MBNA Smart Cash Platinum Plus Mastercard and I use it all the time. If you don’t have a premium credit card, MBNA Smart Cash Platinum Plus Mastercard is the card to get. For best application results, you should call during the day to reach a consultant at MBNA Ottawa Call Center and make a follow up call on the next day to get your credit card approved. I got my card within two weeks of application. Use your card as much as possible during the first six months to get the bonus cashback. Last not least, be ready for those cashback cheques in the mail!!!

More information – American cash back credit cards

Best cash back credit cards

I’ve written about begging before.  As long term readers can probably guess, I’m fairly opposed to it (heck, I’ll even tell people off for begging in “World of Warcraft”).  Aggressive panhandlers are one thing, but at least their actions are usually motivated by a personal and immediate need.  Others have actually chosen begging as a career, and often make very good salaries doing so (or managing other people who do it on their behalf).

The brother of a family friend does fund raising for universities.  He basically hooks up with a school, and is given the mandate to boost donations from alumni.  He’s paid 10% of whatever he raises for the school (and is given a staff to help him with marketing, calling alumni, etc).  This can certainly rub people the wrong way (when they make a donation, they probably don’t realize that 10%+ is being taken off of the top to pay this guy), but from the university’s perspective, they’re way ahead (even after giving him his cut) if he can dramatically increase the donations.

At the beginning of the year Michael O’Mahoney left his job as the head of the “Sick Kids” fundraising arm, a position which paid $624,103 in salary and benefits.  Anyone who has spent time downtown in Toronto has seen the Sick Kid canvassers, who flank a sidewalk in pairs making it impossible to walk past without being solicited from one of them.  It’s pretty had to get angry at people fund raising for children who are ill, and to their credit they aren’t pushy at all, but it’s always bothered me that these young kids are being paid to shake down pedestrians.  Friends have insisted to me that they’re volunteers, not paid employees, but after I looked into it (I asked them on the street and looked on-line) it became quite clear that they are paid – currently starting at $12 / hour.

It has been so successful that recently the Red Cross has adopted a similar campaign here in KW (shaking down employees outside of RIM).  I suspect in the current economic climate, a number of students would be tempted to do this as a summer job – $12 / hour is a lot better than they’d be earning at fast food or doing yard work.

When I was a child my mother used to go door-to-door collecting for the CNIB (her grandmother was blind and glaucoma runs in the family).  This was begging as well, but I feel more comfortable with her doing this as a volunteer than someone being paid to do so. Even if someone supports being paid to fund raise, should people be getting rich doing so? (as in the case with 10% of school donations or an annual salary that’s more than 1/2 a million dollars).  I’m pretty sure this would bother many donors.

One of my math teachers in high school (a raging Scot) ranted one time about how he wouldn’t let his daughter participate in school fund raising activities because he didn’t want her “begging from the neighbours”.  The same guy compared an annual all-school hockey tournament to Nazi Germany, so at the time I thought he was a few cards short of a deck.  As I’ve gotten older, I’ve come to appreciate his perspective, and I think I’d be reluctant to allow my children to participate for the same reasons.

A friend of mine donated to Sick Kids the first time he encountered them on the street.  After he gave them $20, he was subjected to a continuous stream of requests for more money (phone calls, letters, etc).  He figures they quickly burned through the $20 trying to get more money out of him and he eventually insisted they take him off of all their lists as he was sick of being disturbed (and has said he’ll never donate to them again).

In late 2006 a scandal erupted with the Canadian arm of Mothers Against Drunk Driving that they were using almost all the funds raised to pay salaries and fuel additional fund raising activities with very little going to actually combat drunk driving.  My experience with non-profits has sadly been that this isn’t terribly unusual.  Good intentions are considered worth as much as actually accomplishing something.

“The Road to Hell: The Ravaging Effects of Foreign Aid and International Charity” by Michael Maren is an amazing book that details his desperate attempts to do good work in Africa, while being confronted with the reality that his work either was ineffective or actually harmful to the people he wanted to help (and was subverted for the benefit of those in power at the NPOs and in the African nations).

Do you donate money to charitable causes?  If you do, how do you ensure that your donation will be used effectively?  How do you pick where to donate?  Do you think it is reasonable for people to be paid for fund raising?

I received notice in the mail recently that the RBC 1% rebate has been paid out in all our 4 accounts that I moved their last year to take advantage of their 1% rebate deal.  Basically the offer was that if you transferred any money from other brokerages to RBC they would pay you 1% of the value of the assets.  Of course you had to wait for the money – I didn’t receive mine until June of this year so they make sure you can’t just transfer the money, get the rebate and transfer out which makes sense.  I only wish they had paid the 1% on current asset value and not the value as of last year which was lower.  Given that the transfer involved about 2-3 hours work in total, it was well worth the effort.

Now that the rebate has been paid I can either stay with RBC (not!) or switch back to Questrade discount brokerage since I rather like them.

Did anyone else take advantage of this deal?  Are you staying with RBC or switching to another discount broker?

If you are planning to move back to Questrade then read about the Returning to Questrade deal on transfer fees.

As a quick clarification, the “relationships” in this title refers to any people who have an ongoing association with each other, not exclusively romantic relationships.

Thicken My Wallet recently wrote a great post on negotiation which addresses negotiation where you have an ongoing relationship with the other party.  Most of my negotiation posts have dealt with “one off” transactions where you never expect to do business with the person again.  It’s definitely a different game when you keep interacting after the deal is done.

In game theory, they take a mathematical approach to strategic situations (where your best action depends on the actions of others).  The answer changes dramatically whether it’s a single iteration game, or a multiple iteration game.

Years ago I got working at a software consulting company (other companies would hire them to develop software).  During the negotiations the owner played all sorts of games with me.  One that he managed to pull off was he described the position as a “Java developer” role, and twice said “there are a couple projects in the works, so we don’t know EXACTLY which you’ll be working on when you first start”.  At the time, I didn’t pay much attention to this, but it turned out (once I’d signed the contract) that rather than doing development, they were going to have me doing application work for 6 months.  This is fine for what it is, but the consequence for me is that I would lose 6 months of skill development (I would be learning completely non-transferable skills for using that specific software application:  something I had no interest in, which he realized and why he downplayed it).  Before me they’d had a high school student working on it, so that gives an idea of how “challenging” the work was (but they needed it done, which is fair from a business perspective).

Tricking me into working on something other than what I’d expected turned out to be a very costly mistake for both of us.  I *MAY* have still accepted the job if they’d been upfront about what I’d be doing, told me that was what the business needed at that time, and given me a firm commitment WHEN I’d get back to doing the work I actually wanted to do.  As it played out, I couldn’t get over the fact that they’d pulled a bait-and-switch on me, and they remained unrepentant (with the owner repeatedly telling me he’s a sales guy so he naturally “puts the best spin on things”).  By the time we went our separate ways, they’d wasted a lot of money bringing me on board, and I’d wasted a lot of time finding and getting up to speed in a position which wasn’t a good fit for me.  Since then I won’t take a job if they can’t tell me EXACTLY what I’ll be working on day-one (and most companies have been able to tell me this – why would they be hiring someone if they don’t know what for?).

I’m constantly amazed how hard organizations haggle with employees over hirings and raises, and they don’t seem to factor in that they will have to work with this person for the period of their employement.  I’ve been treated rudely by people involved in the hiring at a number of organizations, and it blows my mind that they’d jeopardize me as a potential employee over something as silly as bad manners.  One interview I went to there were three men and two of them kept surfing on a notebook and whispering back and forth during the interview.  They asked me back for another round, and I declined, telling them if they couldn’t be bothered to give me their attention during an interview, I didn’t want to work with them.

People who are really strong hagglers / negotiators can get themselves in trouble if they keep getting good deals off of friends and family.  You might be able to convince the wife to do the dishes 4 nights in a row, but the fact that she agrees doesn’t mean she’s going to be happy about it.  It saddens me to see marriages degenerate into a state of war, where each disagreement becomes a battle, and winning the battle just causes more problems down the road.  Eventually both sides lose when the relationship can’t handle any more strain and is dissolved.

Recently I was talking to a friend-of-a-friend who is involved locally in real estate.  I’d asked him for a copy of the “offer to purchase” he’d last used when he bought a property without an agent.  He was willing to give me a copy, but wanted me to take him out to a fancy restaurant in exchange (with $35 entrees and $50 bottles of wine).  Rather than going out for a $150+ dinner, I just bought an offer to purchase at the book store for $15.  A month later, he told me he was going to be out of town and asked if I could show one of his properties for him.  Unsurprisingly, I wasn’t able to make the time to help him out.  He tried to get a killer good deal out of me for a copy of an offer to purchase, and burned the relationship with someone local who was familiar with real estate investing.

Some salespeople (real estate agents particularly like to do this) will try to sell themselves as focusing on the long term relationship (with the implicit commitment that they’ll give you a fair deal because they want to do business in the future and get referrals from you).  My experience has been that they realize they aren’t guaranteed future business or referrals and will (rationally) push to get the best deal for themselves in each transaction.  I don’t blame them for this, but it irks me when they pretend that they’re advisers (instead of salespeople) and are investing in the relationship (when they’re maximizing their short term benefit).

As Thicken My Wallet suggests in his posts, there are times when a negotiation is a one-off deal.  Other times you’re going to keep interacting with the person in the future.  When you’re going to have future interactions, it doesn’t mean you have to give them everything they want.  Instead, factor that value of these future interactions into the negotiations, and make sure that you aren’t pushing for a good short term benefit (that will cost you over the long term).

Have you had any experiences where people pushed hard for the best immediate deal and it hurt them long term?