The treat

Blake bought a house, and being a good and guilty blog dog feels compelled to explain: “With one munchkin in hand, another around the corner and a wife filled with FOMO I finally caved.” Happens. He signed up for a five-year variable-rate mortgage at just over 3% and didn’t think about it again. Until yesterday.

“So I’m less than a year into a five year term with a variable mortgage and out of the blue, TD calls me to ask if I’d be interested in locking into a fixed rate mortgage at 2.84%. I was so confused by this I thought it was scam. I’ve never heard of banks offering cheaper rates on fixed mortgages. If my variable rate stayed flat, the savings on a 28 basis point reduction would be meaningful. I must admit I’m tempted by it, but if anything it says the most about how TD sees the future. And if they are right, a variable is probably smart.

“I’m interested to know your thoughts on (from what I can tell) is a very rare practice by a bank, what it says about the future, and how you would proceed, given your recent advice to “lock in now”.”

Interesting question in light of what the Bank of Canada’s just done. Which was nothing. No rate cut on Wednesday. No doomer talk. And there’ll be no drop in the Canadian prime rate until sometime in 2020. Why? More stimulus is not needed. The economy’s in passable shape. Inflation is back. So is the trade surplus. Lots of jobs created so far in 2019. Real estate looks stable. And dropping rates would just encourage more debt. Lord knows we have enough. So, no cut. In fact a significant number of economists agree the bank would like to see the next move being higher, not lower.

Meanwhile lenders are scrambling for business. There’s still a 1.99% two-year mortgage available in Ontario. Two-year money is out there at less than 2.5%. All the banks have dropped their five-year price well below 3%. And you can pick up a 10-year mortgage now for 2.89%, which is the lowest rate…ever.

Meanwhile in the US the Fed is still universally expected to cut its rate a little (a quarter point) at the end of the month after a string of nine increases. How come? Says analyst Ed Pennock: “These cuts are pre-emptive. They are not trying to reverse negative growth. They are “insurance” against that slowdown. Thus they are much more potent. The US will have the “wind at its back”.

Yes, just as the president wants as he hurtles toward the 2020 vote. More economic growth. No unemployment. An expansion that won’t quit. A rate cut by the Fed will goose consumer spending plus encourage the stock market to melt up. It’s Trump heaven.

What’s it mean?

No change in the prime here for the rest of the year, and probably longer. So,  no change likely in the stress test, which remains at more than 5%. Ouch. Stock markets advance to new record highs – that could happen this week. Meanwhile Blake’s variable-rate loan is unlikely to get any cheaper for a while, and possibly never. Central bankers don’t want to drop the cost of money because when things really hit the fan next time, they’ll be out of bullets. If you’ve been waiting for a significant decrease in your loan rate, stop. Not happening. Lock in. Inflation is 2.4% so a mortgage at 2.8% is damn near free money. This is a treat. A gift, Blake. Take it.

Yesterday the question was posed as to whether or not the steerage section likes reading posts by its deplorable members, or if this blog would be less pathetic without them. So far the results are mixed. Thus, the Vox Canabis will continue for two more days. If you hate it, go hang out at Generation Squeeze.

In the year ‘Matsebula’ deployed to Afghanistan he got a pup named Peppy. She’s nine now, “an old girl, but still loves to catch squirrels in our yard and gardening with my wife, We are blessed to have her.”

The ex-soldier has some life lessons to impart.

 2015 – worst year ever. March 2015: Broke my back – Army accident. 5-disc fusion, 10 screws, two rods, 7 months off work. May 2015: Discover a leaking basement in our recently purchased house, basement was developed without permits. Sellers’ disclosures were a complete fabrication. July 2015: Father in law passed away at 62 suddenly from a brain aneurysm.

We went out to help get things together and for the funeral. In their early 60’s: mortgage, LOC, leased sports car, leased truck. Camper, sheep, donkeys, life insurance policy for $50K(!!!). Including equity in the house, net worth $170K in total. No investments. Of necessity, the house, cars, truck, sheep, donkeys, camper were all liquidated or returned. It is a sad memory to have had to dismantle someone’s life and dreams like that.

The day after he died there were two phone calls. First, the insurance policy he had requested was approved and ready for signature, but he wasn’t alive to sign it. Second, he had been selected as the CEO at a Canada-based international NGO, starting in a couple of weeks.

Meanwhile, back at the ranch, we worked title insurance claims for $163K. We laid out another $40K beyond that. We sued, eventually settling after imposing $150K in pain on the liars. Not a smart idea to hire a partner at $400/hour instead of settling early. Life is hard when you make bad choices.

We moved back to Calgary in early 2018. The company wouldn’t buy the house out, so we took a lowball offer despite the wailing and gnashing of teeth by our realtor (won’t somebody think of the children real estate market!!!).

After all of this, life is good. We are rebuilding, getting ready to build a house in 2020, which we can afford with good income and room for investing and other parts of life.

What I’ve learned is that truisms are often disguised wisdom. I have learned that life and health are gifts, not guarantees. Your kids love you because you’re you, not because you are ‘somebody.’ When things go wrong, they tend to go wrong, all caps WRONG. Life insurance is critical. Saving money is critical. Inheritances need to be invested, not spent. CPP and OAS with no other investments equals poverty. Facing up to the situation while you have the cognitive ability and self-awareness to do so is critical. Everyone dies, it’s just a question of when. Realtors are (often) incompetent and do not operate in your best interest. Title insurance is a must (many conveyancers use FCT, personal experience, no affiliation). Check permits; no permits = no purchase. Cash emergency fund is critical, cash is very different than a line of credit when things get real. Avoid litigation unless you are hellbent on principle, in which case (1) fill your boots BUT… (2) avoid diminishing returns. Vengeance must be combined with logic. Rebuilding is okay, no shame in that. Pitter patter get at ‘er, complaining just delays the inevitable, and makes the suck last longer.

Finally, a regular poster who has traveled through unemployment, physical challenges and (obviously) a language barrier. “Plz just identify me as ‘he who write with accent’”, he says. Obviously.

If you are planning to red this, please don’t. Just scroll past it, to the comment section!

Ever since I red that some of rabbles like me from comments section could be published as a guest post, I found myself in constant state thought should I do it. It didn’t take a long for my impulsiveness to overcome fear of embarrassment and I started typing. As I always had propensity to do or say something preposterous, and shortly after to find myself in predicament for doing it, its guaranteed that soon after I click on send button  won’t be long before indigestion kicks in, but I dealt with it before, so I know what’s working, one bourbon one scotch one beer, repeat if necessary.

I was, and still am, a bit of an idiot, so to help myself with my character defects and lack of formal education, over the years I red book or two on a topic how to improve yourself, that definitely didn’t fixed a problem. But majority of knowledge was gained thru making same mistake multiple times.  Undoubtedly reading some stuff that I found in books and on internet was helpful. Yes small measurable progress was made.

During the by the looks of it failed quest to improve and learn myself new stuff so I can better my family, in 2011-ish I came across this blog, and ever since I visited it daily. And around same time I red Martin Seligman, study about pursuit of happiness and learned helplessness. Interesting what good attitude can do for you, and how much being victim will set you back.

Now serious stuff, Climate change real or not, pollution and inequality, are all problems that need solving, preferably in our life time. None all of them are going away any time soon. Luckily for us in Canada we just have to deal with 2 out of those 3 problems, government already went ahead and it will fix weather thru higher taxation. Isn’t that being proactive or what?

As a world accelerate and new technologies and services bring even more disruption, gap will get wider and wider. What we have now is to much lateral but not enough upwards mobility everywhere. In my opinion there are two “worlds” with two uneven societies, one that is aggressively progressing and second one that is stagnant or its in slow decline, but dynamics are same in both, inequality is getting worst. How to fix all this is beyond me.

For us its a still uphill battle, we are nowhere near our goal, which is quite modest (not to eat cat food in retirement). One thing that worked for me and my family, is to look for new ideas and seek guidance, constantly, what this blog and comment section offered every day. And I dare to say that, on some days dystopian surrealism comments are more interesting, and definitely easier to read, for me anyways. My only beef with blog there are always at least word or two that I didn’t heard before, so I have to google them, I don’t know why he does it…

But one thing is for sure, i stated lots of obvious,  and since I started reading this blog in 2011-ish, my English, spelling, grammar, financial knowledge and our liquid net-worth greatly improved. Mr T, thank you, is all I am saying.