Beware of the Hot Water Challenge

The internet has been responsible for starting all manner of trends, some very positive and some not so. Among the most troubling in the latter category is the Hot Water Challenge, where people are dared to drink boiling water. While any reasonably intelligent adult would recognize that this is a very bad idea, children do not yet have such reasoning powers and that has already led to tragedy.

Eight year-old Florida native Ki’ari Pope accepted a challenge to drink boiling water through a straw. This dare was inspired by a social media video that Pope and a cousin had just watched. The child drank a large gulp of the scalding liquid, burning her mouth and throat, and losing the ability to talk. Pope suffered complications for months afterward before developing problems breathing two weeks ago. She lapsed into unconsciousness and died shortly after on July 31st.

This leads to the inevitable question of access: should children be kept off of the internet until they have reached a certain age? Parents know that it is largely impossible to police what children do online, so education seems to be the only other alternative. That means talking to your kids about what they are doing online, discussing the latest “challenges” that are appearing, and trying to stay ahead of the game.

Most would not find that advice to be very encouraging, but there appears to be little else to do at the moment. Many parents will say that they are already busy enough, but tragedy, such as the one that hit the Pope family, will leave you scarred forever. Take the time to make sure your children understand that just because they see something online or on TV or in a movie, that doesn’t mean it is safe for them to do in real life.

Benefits of Prefabricated Homes

Building a home is a monumental time in anyone’s life—especially if it just so happens to be your first home after renting for a long time. Building your own home provides a lot of choice, opportunity, and personalization, which can not only become overwhelming emotionally, but also costly to your wallet. This is often where beautiful prefabricated homes come into play. Lets review some of their significant benefits now:

Impact on the Environment

When you have a prefabricated home, both during construction as well as after, you can reap the rewards from a lessened impact on the environment. The fact that they are prefabricated means there is far less material waste, which means less strain on landfills and the overall environment. In addition, you can actually have prefabricated green homes in some cases, which means you can reap the rewards long after the home is finished and you are living in it.

Reliable Construction Schedule

Royal Homes are Ontario home builders, and with their expertise comes the significant benefit of a reliable construction schedule for all prefabricated homes. Since their homes are constructed in a facility rather than on the land, they are able to avoid delays from inclement weather, season changes, et cetera. Thus, workers can continue building even with a thunderstorm raging on outside. Not only will this provide a far more accurate idea of when the house will be ready to live in, but it also leads into the third benefit in this article.

Affordable Construction Costs

Building a home can get very expensive when you consider delays in construction, unforeseen material costs, et cetera. This is not the case with prefabricated homes. As you know from the previous benefit, prefabricated homes come with a reliable construction schedule free from the common delays due to weather and seasonal changes. Thus, you know you won’t have to wait and pay for things during a delay: there won’t be one in the first place.

You will also know all of the material needed for each prefabricated home, since they are based on templates. This means a dramatic reduction in unforeseen material requirements.

How Can I Invest a Small Amount of Money?

There are a lot of people out there who let their money sit in a low interest savings account because they think they just don’t have enough to get involved in investments. Banks count on that, which is one reason they get away with offering such criminally low interest rates.

However, you don’t actually need a huge sum to test the waters. Here are few ways to invest small amounts of cash and still possibly have them pay off handsomely for you:

Keep a Handle on Your Debt

This may not sound like investing, but it is making you money, so that is essentially the same thing. People would drop dead from shame and horror to learn how much money they waste in interest over the course of a lifetime due to outstanding debt. Don’t be one of them.

Loan to Friends

Have a friend in need? Well, be a friend indeed by loaning them some money. Offer a better interest rate than the banks. You can also take advantage of peer-to-peer lending services that handle all of the particulars for you.

Robo-Advisors

Don’t feel confident about your ability to pick stocks? Some companies offer what are known as robo-advisors. These programs automatically select investment opportunities for you based on information users provide when signing up (e.g. the degree of risk you are comfortable with).

Invest in Your Children’s Education

By starting to put money away early for your child’s college funds, you can earn a great amount of interest over the years. Of course, if your kid goes on to have a great career, they will also likely pay you back in generous ways.

Diversify

Even though you are not betting the farm, it is still not wise to put all of your eggs in one basket. Make a series of small investments, rather than putting everything into just one.

Canadians’ Debt Levels Still a Concern

Debt levels in Canada have been of great concern to officials for some time now. The general perception is that people in financial trouble are wildly irresponsible with their money, deadbeats, or both. While there are certainly people like that out there, the truth of the matter is that a large percentage of honest, hardworking folks are carrying around debt levels that far exceed comfortable levels. Increasingly, people are relying on such sources of easy cash as payday loans, credit cards, and lines of credits just to get by from month-to-month, with no tangible source of financial relief on the horizon to wipe away those debts.

According to Statistics Canada, for every dollar of disposable income they have, Canadians owe about $1.67. That is a substantial amount and leaves many living their lives with very little margin for error. Unfortunately, life constantly throws unexpected things our ways, like repairs, replacements, even lawsuits. Not having money on-hand to deal with such issues can lead to even bigger problems. Those may not only result in financial ruin, but declines in both a person’s health and mental health.

The main takeaway is that we need to return to the days when people’s lives were funded only by their cash flow and credit was something you used solely in times of emergency. Of course, in our consumer culture, we are constantly bombarded with advertising stating how much we need certain things, almost none of which are absolutely necessary for leading a comfortable and successful existence.

One thing that has saved some consumers is the increasing willingness of companies to negotiate proposals where the debtor would only have to pay back a portion of what they owe. This has helped reduce the number of personal bankruptcies from what they might be, though these also remain distressingly high.

What the Interest Rate Hike Means for Mortgage-Holders

On July 12, 2017, the Bank of Canada raised its key interest rate from 0.50% to 0.75%. Canada’s five biggest banks immediately followed suite, matching the 0.25% increase in their prime interest rates.

The move came as no surprise to economists, who have been predicting a rate increase for some time now in response to record-high levels of consumer spending, housing prices, and household debt in Canada. But for many ordinary Canadians, who haven’t seen rates go up since 2010, the hike is alarming.

Some of you will have already felt the effects of the change. Others are still wondering if (and how) it will impact their day-to-day lives. We’ve examined how the new interest rate will impact two key areas: mortgages and the value of the Canadian dollar, and individuals like you.

What Does the Interest Rate Do?

As Canada’s central bank, the Bank of Canada sets the overnight interest rate. This is the rate banks pay to make one-day loans to each other. When the overnight interest rate goes up, banks usually increase their prime interest rate as well – which is what happened this week.

A bank’s prime interest rate is the rate banks use to calculate a variety of loans, including variable-rate mortgages and lines of credit. The five biggest Canadian banks (TD Canada Trust, Bank of Montreal, Scotiabank, and CIBC) all had a rate of 2.70% before the change. In response to the Bank of Canada’s change, they bumped the rate up to 2.95%.

That means bank customers with loans based on the prime rate will see their interest payments go up immediately.

Value of the Canadian Dollar

After the announcement went public, the value of the loonie shot up from 77.40 to 78.70 cents on the American dollar. That’s the highest the dollar has been since August of 2016. Some economists, including Adam Button of Forexlive.com and Scotiabank strategist Eric Theoret, predict it could hit 80 cents this year.

The cause? Confidence, according to Theoret. Though markets saw the rate increase coming, people were surprised by the Bank of Canada governor’s confidence in the move. This, along with positive economic data, shows the Canadian economy doing well and recovering from the recent oil-slump.

Mortgages and Housing Market

As mentioned, people with variable-rate mortgages will see an immediate uptick in the amount of interest they pay to lenders. The change could impact those with fixed-rate mortgages as well, as they could see higher rates when it comes time to renew.

For some, the change will be difficult to cope with. 0.25% is no small increase for those who are already struggling to pay their mortgages. It will be especially difficult for would-be house flippers who purchased a second or third home at the height of the housing boom in hope of a quick turn-around, seeing as the housing market has cooled since the spring.

But that’s not the only way the interest rate hike could impact housing. The other effect is harder to predict, but sure to be felt: a shift in consumer sentiment.

Preet Banerjee, the author of Stop Over-Thinking Your Money!, predicts the rate hike will change how Canadian consumers think about spending and borrowing.

“Because interest rates have fallen, and because borrowing money has become normalized, this could represent a real problem for them because they’ve gotten used to living month-to-month, paycheque-to-paycheque as a lot of people do, with very low costs of interest,” says Banerjee.

Right now, an alarming number of Canadians are comfortable carrying high debt loads and saving little to no money each month. Banerjee argues the interest rate hike could serve as a wake-up call.

This could only accelerate the recent dip in house prices, as consumers take a step back and wait for the right time to jump into the market. With real estate and financial services making up 20% of the Canadian economy, even small shifts in the market could have drastic effects on our economy overall.

Are Drive-Ins a Wise Investment?

Drive-ins were incredibly prolific in the 1950s. The combination of readily available and affordable cars, and teenagers looking to get away from their parents led to these outdoor cinemas enjoying considerable popularity.

However, the drive-in’s heyday started to decline in the ’70s and by the mid-80s, they were closing in droves. Home video caused many people to stay home, but one of the major considerations was the value of the land. As many towns expanded outwards, the drive-ins were no longer located far away. That increased the value of those particular plots, which were soon worth far when converted into shopping centers.

Drive-ins will never experience that kind of popularity again, but they have been getting more press lately, thanks to nostalgia and the fact that it is easier and cheaper to take a family to a drive-in than a multiplex.

As of this year, there are only 338 drive-ins left in the United States. A few decades back, it was not so unusual to have more than one in a single town; now you can drive through large sections of the country and not find a single one. In addition to fighting against the many forms of entertainment readily available, a good number could not afford the recent switch to digital projection and closed.

So, is a drive-in a good business investment? There are a few left that enjoy steady, large crowds, but generally, there are a lot safer ways for you to invest your money. If you do decide to open one, choose an area that is well away from expanding populations centers, but not so far away that people do not want to make the drive. Families tend to make up the lion’s share of patrons these days, so exhibitors tend to focus on booking movies that attract this demographic.

More Developments for Sears Canada

In the week since my previous post on Sears Canada, more news has come to light. While the majority shareholders in the company mull over their options, word has surfaced that the company’s pension fund may become a victim of the court-ordered restructuring.

The company announced that retirement benefits have been suspended for their employees. In addition to the loss of finances, the discontinuation of regular pension fund payout levels would likely also mean the termination of retiree health and life insurance benefits. With the pension plan currently underfunded, there is a very real chance this could occur. And you thought the loss of 59 locations, many jobs, and no termination packages was as bad as this could get?

There is something particularly despicable about robbing people of their pension benefits. The lure of a pension and financial freedom in your golden years causes many people to stay with a firm longer (sometimes much longer) than they would otherwise. That sort of employee loyalty is gained under false pretenses when you fail to protect their pensions in times of company financial strife. Sears’ problems are not the fault of their employees, but of systematic mismanagement in the C-suite. Will those men and women suffer in the same way? Probably not.

The law does not help the retirees’ case. They are considered to be the equivalent of unsecured creditors and that means their claims rank after those of banks and other secured creditors. Likely that means while they will get something, it will fall far short of the benefits they expected to receive until the end of their lives.

Such news is especially unfortunate for people this age because many are no longer in sufficient health to get a new job. This can lead to depression and anxiety woes, on top of the money concerns involved.