Bad Day at MSNBC

Canada Day 5

Best Food: The Keg and Montana's
Worst Food: Wayne Gretzky's and Tuckers

I love listening to Canadian's opinions of the US and learning about how their systems are different.

I am convinced the US needs to modify our 401k system to be similar to Canada's Registered Retirement Savings Plan.

It is very similar to our plan, but has a few basic principles that I think are lost in our plan:

While very Socialist, Canada (the Govt') does not want to pay for your retirement, so they make it very easy and risk free to start or catch up saving for your retirement.

The key differences are:
-You can contribute up to 18% of your salary (minus any pensions to a specified maximum)
-If you don't contribute your max one year don't worry, you can carry over that amount you did not contribute to next year...or over and over forever until that one great year where you can make a big investment in your retirement.
-And to make it low risk, if you ever need that money back, you can do so at any age without any penalty aside from paying current income tax rates (it is your money right?)

Canadian RRSP

This keeps people off of goverment assistance for retirement because there is literally no risk to maximizing your retirement savings.

How many Americans are gun shy about saving in a 401k because it is gone until you are 59 1/2?
"I'd contribute more, but what if we buy a house in a few years, or what if we have a baby, or what if we get sick, or get laid off?"
All of these concerns go away when you can constantly maximize your savings and still use it as an emergency fund if needed.

This is the only system I have ever heard of that guarantees you will retire with the maximum amount possible while still being able to have some funds to cover you if you are out of work or have some tough years.

Here are 2 other crazy benefits:
Special withdrawal programs

Home Buyer's Plan (HBP)
While the original purpose of RRSPs was to help Canadians save for retirement, it is possible to use RRSP funds to help purchase one's first home under what is known as the Home Buyer's Plan. Canadians can borrow, tax-free, up to $20,000 from their RRSP (and another $20,000 from a spousal RRSP) towards buying their residence. This loan has to be repaid within 15 years after two years of grace. Contrary to popular belief, this plan can be used more than once per lifetime, as long as the borrower did not own a residence in the previous five years, and has fully repaid any previous loans under this plan.


Lifelong Learning Plan (LLP)
Similarly to the Home Buyer's Plan, the Life-Long Learning Plan allows for temporary diversions of tax-free funds from an RRSP. This program allows individuals to borrow from an RRSP to go or return to post-secondary school. The user may withdraw up to $10,000 per year to a maximum of $20,000. The first repayment under the LLP will be due at the earliest of the following 2 dates:

1. 60 days after the 5th year following the 1st withdrawal

2. The 2nd year after the last year the student was enrolled in full-time studies

Toronto Day 1

After eating at Wayne Gretzky's downtown, we stopped in to grab some quick groceries.
Before paying the 13% sales tax, we noticed a lot of the products were identical to what we have but with different names.
We do this as well, the Arctic Ice Gillette deodorant is named Storm Force for Canada.
Junior Mints are...Juniors.
Caramello's are.. CaraMilks.
Hot Pockets are...Hot Stuffs(They taste just like a hot stuff).

Much to my co-workers dismay, this is our 6th trip to Toronto and we have yet to find any Diet Mountain Dew.

Polish Horse Shoes

We had a work off site this week and I learned a great new game.
Game play was stale until I showed up and brought out the hammer to knock the bottle (Gatorade) off the pole.
Here is a video I found on You Tube explaining the rules.

Bailout

I have no idea how changing the AMT rules or adjusting the tax cap on rum imports will help the bailout...but it's in the plan that passed the Senate.

The bigger issue is there is no bailout that will fix the economy quickly. And it will not address those who cannot afford their current homes, which will continue to hurt the economy for a while. I think the bailout plan needs to allow those who can't afford their current loans to switch to a fixed loan at no cost. That is the only hope of them being able to keep their homes and no hurt the economy.
There is no sense in placing blame, some were sold bum loans from greedy banks, others over extended themselves thinking house values will make them rich quickly. To Dale's point, their money is now tied up in a house at a lower value than they paid, and it prevents them from doing other things to help the economy.

There are 3 players in this.

The Lending Banks who are about to fail because these bad sub prime loans are preventing them from loaning new money or even staying in business. They are making this worse by not lending new money to people with good credit who could help the economy grow.

The owners of sub prime loans, who can't afford their mortgage especially since many are ARMs or Interest only and about to increase. They are making it worse by not making payments or defaulting on loans.

The rest of us who are the real victims, who just want it to be over to fix the economy while keeping the banks open to keep our retirements safe. We are making it worse by panicing and taking out money out of the banks, leaving them less money to loan out or keep them in business.

What the Bailout would have to do to fix our behaviors that are making the situation worse:
1. To help the majority of us, the bailout would have to restore confidence that the banks will be OK or are protected. This will prevent the majority of us from making a run on the bank and keep our retirements safe (for those in mostly bonds, the stock market will have to wait for the economy). Really anything that prevents the bank from failing should restore enough confidence to prevent a run on the banks.

2. To help out the Banks, the bailout would have to stop people from taking money out of the banks AND free them up from these bad loans to allow them to lend people new money for cars, credit cards etc.

There is nothing I have heard currently that will help those who can't afford their homes. These people will continue to hurt the economy for a long time because all of their income is tied up in the mortgage vs being able to contribute to the economy.
The economy will not turn around quickly until these people get help OR are left behind as the rest of the economy will eventually start to grow again without them after a painful recession. Either way house values should not increase until after the economy and stock market start to grow.

All this being said, I do not agree with the bailout being funded 100% by taxpayers. I heard an idea early on of the Gov't using taxpayer money for the bailout, then issue bonds to cover it so effectively only those who opt to buy those bonds (hopefully at decent rates charged to the banks) pay for the bailout. I like that idea better than throwing tax money only at the issue.

Bailout

Let's not forget the small companies in need of a bailout, like Dave's Retirement LLC.
$5MM or 0.0007% of the bailout should keep this company afloat.

Lessons from the Blackout

After 80 hours, we have power.

Here are some of my observations.
1. I don't NEED too much on a daily basis to survive.
I live close enough to work that I only need gas every week, so I never had to wait in any big lines. For only 2 w/o a baby we didn't need too much food. so I never felt anything was a crisis.

2. The iphone was plenty to keep me in touch.
Sure I missed some of my TV shows and a whole week of football, but I never really felt out of touch because I could keep my phone charged enough to get all the news I needed.

3. I have never slept better.
I think it must have been hours of relaxing candlelight w/o TV that made me sleep like a log. I'm sure the fact that there were no streetlights or houselights helped too.

4. It was interesting how much people tried to carry on life as usual, when most of our basic needs were not being met. "No food or power? Lets hop in this room and talk about deodorant."

5. It's fun to be resourceful. I brought our laptops to work to charge them for the sole purpose of using USB cables to charge the iphone from the laptop at night (what good is a laptop if your internet is down?)

6. We did have a good supply of batteries, flashlights and LED crank lanterns.

The two things I really wish I had:
1. A grill. After dragging my feet all summer after enjoying our grill at Hocking Hills I should have had one for cooking.
2. A solar powered backpack w/ all the phone attachments etc. We saw them in Yellow Springs for cheap.

Other things I will probably be sure to have on hand:
3. A battery powered radio (not named my VW)
4. A broad disaster kit including water purifying tablets, and some form of heat maybe my gas fireplace.

But overall it reinforces what I thought during Katrina which is the government cannot take care of you so you have to be able to fend for yourself.