Canadian’s Personal Finances Fiscal Cliff: Are We There Yet?

Today we hear much talk about the USA’s economy approaching the so-called “fiscal cliff.” What about your personal financial affairs? Are you at the fiscal cliff as we inch toward 2013? Canadians are swamped in debt. Monthly, we read about the rising debt-to-disposable income ratio that stands now at around the precarious 164% level.

Although the world and many at home commend our government for its brilliant fiscal management, few warn about the unsustainable personal debt levels. Indeed, our central bank chief, Mark Carney, accepted an appointment to a similar role at the prestigious Bank of England. Will his legacy here be that of hero or villain? Will history show that he held interest rates low for too long, encouraging many folks to take on debt they cannot afford?

To his credit, he, our finance minister, and prime minister have been warning Canadians about these dangerously high personal debt levels. However, Carney could curtail the rise by raising interest rates. Sure, higher rates will dampen current slow economic growth. Even so, I think short-term pain is better than the likely personal finances’ crash that might happen if debt remains at present levels, or grows.

What can Canadians do to avoid their fiscal cliff? Let us examine three vital steps.

Accept you are dangerously leveraged.
Set a mechanism in place to live with declining debt
Develop a new vocabulary to guide your behavior

Accept You Are Dangerously Leveraged

You can’t solve a problem unless you recognize it. Do you think you are carrying too much debt? Your banker might tell you no; however, you alone can answer this. Take a helicopter view. What are you and your family’s emotional responses to your debt? Are you worried? Can’t sleep? If yes, you have too much debt. Certainly, look at ratios, but this is the key barometer.

The emotional cost of debt is the first and the most significant cost. If debt is 10% of income, and is causing problems for you or at least one in your family, it is too much. Still, you must accept reality and decide to live with it, take on no more, and start a debt free lifestyle.

If you are a Christian, give this emotional stress to Jesus (Matthew 11:28).

Set A Mechanism In Place To Live With Declining Debt

People are impatient. We live in a now society. Sadly, probably you got into debt over a long period, and it is likely you will get out over an extended time. Accept this fact and learn to live with it.

Develop a strategy to live in your debt. Look at how you got there; draft principles to prevent a recurrence; and then write a financial plan – alone or with help. The plan should show concisely how, by following your principles, you might be debt free in a specific time.

If you got into debt by impulsive spending, you might develop a principle never to buy without a list and a budget. As well, when you feel you need to spend, you might want to wait 24-48 hours during which time you would talk with your spouse or accountability partner.

You will have to find what might work for you, decide if you need help, and try to get it.

Prepare a debt-meter and place on your fridge. Monthly, as you repay debt, adjust the debt-meter.

Develop a new vocabulary to guide your behavior

This sounds easy, is simple, and when you get it, will be your most effective debt control “tool.” What you believe will decide how you behave. If you believe emergencies happen and cause you to spend erratically, you won’t change your behavior. However, if you believe that apart from the timing, most “budget emergencies” can be planned and should be planned by setting aside funds regularly to meet them, you will plan accordingly.

Your car will need repairs. It will need new tires. Your furnace will go, and so on. The issue here is timing. You don’t know when these potential budget busters will happen. Even so, you know they will occur, so create a capital fund, a rainy-day fund, emergency fund, or some other means to save for these predictable events. If you accept this fact about emergencies, and understand that to get there you must sacrifice today’s consumption, this is the start of your major victory over debt.

Another key vocabulary change is to accept that you can’t mange money, you can manage only your behavior – change from money management to lifestyle management.


As we enter 2013, look at your finances. You will know if you are at the fiscal cliff. Rest assured, you do not need more money to get you through, first, you need to accept where you are. Next, set a mechanism to live where you are as you work off your debt. Then examine your vocabulary, your beliefs, and adjust them to reality.

UK Finance Minister Outlines Thinking on Bonuses

The British Chancellor of the Exchequer Alistair Darling has been intimately involved in the creation of the modern British regulatory landscape, but all this may be about to change with a General Election due within 10 months. He also succeeds arguably one of the most successful Chancellor’s in the 21st Century – the current Prime Minister, Gordon Brown – just as Tony Blair has been a tough act to follow, Darling has had to step into Brown’s shoes at The Treasury. Darling has remained silent all week since the announcement of the opposition Tory party’s proposals for the abolition of the FSA; handing prudential financial oversight to the Bank of England, a general carve up of the FSA and probable delay on RDR commitment. Today, that changed with an interview published in a leading, left-wing publication, The Tribune.

Darling on Bonuses

Bonuses are going to be a sticky issue for regulators, politicians and employers – “Bonuses are Back!” may be the cry on the Square Mile, after all, if it’s being earned they’re going to be paid or risk losing competitiveness. Darling’s response is that many bank and financial sector employees only have a job today because of the taxpayer monies used to bail out the sector and shore up the banks. For banks now owned by the UK Government, there will be no bonuses this year;

First, we do have restrictions on the banks we own in terms of bonuses; they can’t get cash bonuses this year, it’s got to be deferred, it’s got to be capable of being clawed back, the people who failed can’t get rewards and they always have to be linked to long-term success.

The interim Walker report on working practices and pay structures including bonuses, published a couple of weeks ago, seems to simply state bankers should worry about doing the job they are already being paid to do. Darling disagrees in that Walker is going further; bankers did not do their jobs to begin with which is why we ended up in the global economic mess culminating in the near-miss, banking collapse. As Darling states,

One of the causes of the trouble is that they were not doing what they were supposed do be doing. Too many of them patently didn’t even understand what was going on in their own banks.

When pressed on disclosure of who actually is paid a bonus, Darling rightly concedes that naming the recipient poses issues outside of transparency and financial regulation; after all, I certainly would not like my name published anywhere with a big number printed after it – there is a dividing line between personal security and public disclosure, though directors at the Co-Operative Bank have been making personal identity disclosure without issue. With the FSA under political fire from the Conservatives, who announced they would dismantle the regulator if elected, Darling’s responses give some insight into why Labour wants the FSA to remain and enjoy enhanced power. For instance,

A lot of these people have got to realise they just would not be working today if they did not have the insurance policy provided by the British and American taxpayers and others. That’s why it is right that the Financial Standards Authority now has the power to say to a bank that they don’t like the pay structure of a bank, it’s too risky, you can’t do it.

Also when questioned on Walker’s proposal for a voluntary rather than statutory regime, Darling’s response was,

We have gone beyond that with the FSA and its new power to say we don’t like your pay structure, it’s too risky. That’s not voluntary, because ultimately the FSA can put you off the road.

This fundamentally underlines the difference between Labour and Conservative thinking on who will regulate the banks and financial sector – Labour clearly envisages an FSA with a very wide-ranging remit and the power to assert itself in virtually any aspect it sees fit. The Conservative focus beyond dismantling the FSA is yet to become clear, but it is reasonable to assume at this stage that they see a return of the Bank of England as the banking regulator and not as an “academic” body as Labour Minister Lord Myners recently put it. The Tribune article focused on pay structure and especially bonus payments, it’s to be expected from a socialist paper, but Darling fielded answers which did take the position that pay and bonuses are actually one commercial factor to be taken into account when dealing with banks who received bail-out monies. As he went on to say,

Are You Losing Sleep Over Your Church’s Finances?

Over the years, I have kept coming back to the words of Edwin Friedman, “Stress comes less from overwork than from taking responsibility for the problems of others.” We can adapt these words for church finance: “Stress comes less from money challenges than from taking responsibility for the money problems of others.” So often pastors end up carrying the anxiety for church finances. Who is staying awake at night? It’s often the pastor, although I talked recently with a church treasurer who was losing sleep over whether there would be enough money in the account to pay the bills. In fact, the potential shortfall does not belong to the treasurer but to the church, but the treasurer is the one who was carrying all the anxiety

Family systems theory includes the idea of overfunctioning and underfunctioning, where some take too much responsibility, and others do not take enough responsibility. There is something of a dance between the two, a balance that gets created. In church finance, perhaps the most obvious example is the way that a small percentage of members frequently give the lion’s share of the budget. The 80/20 rule is operative here, with 20% of the congregation giving 80% of the money. Often it is 90/10, with 10% giving 90% percent.

The pattern is often at work in how the minister relates to the church financial life. This can be seen in a variety of ways: the minister may be the largest single giver to the congregation (and often no one knows that). Or, the minister accepts a salary year after year which is not adequate, because the church just cannot afford it – or, as is becoming increasingly common, takes a salary reduction to balance the budget (without necessarily a reduction in hours).

Overfunctioning can show up in other areas of church money. Some churches have one family or individual who can be relied on to rescue the budget at the end of the year. The other members can underfunction in their giving because they know (consciously or unconsciously) that someone will come to the rescue. Sometimes a church member will give a gift for a specific project, to underwrite a salary or to pay for a consultant if there is a problem. There’s nothing wrong with special gifts per per se, but sometimes they serve to relieve others of appropriate responsibility for the life of the church.

Overfunctioning is driven by anxiety. We feel anxious as to whether others are going to step forward and be responsible, and so we step in, either to help them, or to do it ourselves. The basic rule of the overfunctioning-underfunctioning reciprocity, as it’s called, is that underfunctioners do not step up to take responsibility until overfunctioners step down. For most of us who were born to overfunction, this is not easy. And when it’s in a high-anxiety area like money, it’s even more difficult.

When pastors and church leaders realize their own overfunctioning around money in church life, what should they do? First of all, it’s important simply to watch the pattern. How closely can you observe what you do? You do not even have to try to change what you do – if you begin to observe yourself. Beginning to recognize the pattern is an important first step.

Finance and the Spanish Property Market

We hear it every day about how property prices have dived and how repossessions are at their highest for years as the so called credit crunch continues to bite us all. But when you look at other countries throughout Europe you see a picture that may be much worse that the UK.

Take Spain for instance that in recent years has relied on foreign investment in second homes from Northern European countries and has seen a high increase in property prices, with the huge demand to have a second home in the sun. The result has seen developments all over Spain which maybe on hindsight has been a bit too optimistic, to go on at a continued rate.

To give and idea of the size of challenge with Spanish property here are some statistics:

Last Year 40% of all real estate agents closed
Property prices are expected to drop by 20% by 2009. (Many believe they already have)
Inflation is now running at 5.1%, compared with the UK at 3.8%
Spanish house sales dropped by over 34% this summer compared to last summer
New mortgages fell by 40%, compared to last year.

It is harder to determine house prices in Spain that other countries due to the process where the true value of a home is not declared at purchase to avoid paying tax on the purchase. Although a legal process it is very common, to the point that most solicitors offer this process.

It is not hard to understand that as many people are finding it harder to afford their first home, and so buying that second home is no longer an option. Even those who would have stretched their budgets, safe in the knowledge that the increase in the property price would be worth the risk, are now more humble about and return from an investment in Spain.

The Finance Minister for Spain has now admitted that they are facing their worse economic crisis ever with the property collapse, many others wonder how Spain ever thought the bubble would continue for ever and questioning why no contingency plan was put in place, or that a reduction in new properties was not planned earlier, at least giving a good chance of ready built homes maintaining their prices.

It is predicted that this current credit crunch will affect Spanish home prices until at least 2010, so new ideas are being considered to try and kick start the mortgage market again, although at this time nothing has been announced.

Although many can see the benefit to kick starting the mortgage industry and there are genuine potential borrowers who want to buy a family home rather than a second one, there are some who would question buying any property where there is no forecast of that homes value increasing, with even the possibility of negative equity.

So it is possible that the absence of mortgage may be protecting some people from buying a property that will just decrease in value, adding more pressure to an already difficult situation.
Of course the bolt on financial organizations are also feeling the squeeze. As homes remain unsold, so do the potential second home insurance policies that would normally be bought to project the investment. The credit card purchase for furniture and other essentials will also remain in the wallet and not deliver interest for banks and organizations.

Presidents and Prime Ministers And Tyranical Bullies Need To Know What They Can And Cannot Do!

So you are interested in the book of Revelation, and as a leader it is good and right and proper that you should be interested in Revelation because it will give you insights and understanding which you can get from no other source.

These verses flow from my recent reading and study of Chapter 6 and these words will not disturb or depress those who seek to know the truth of the will of God. They will lift us up and comfort us and fortress our hearts. Do take time and even make time to have a careful and prayerful reading of Revelation. It will benefit you enormously no matter where you exercise your leadership.

If it is in business or banking or finance or education and teaching the lesson revealed in Revelation will help you in ways you never thought possible. After all, it is part of the Word of God.

The night before Jesus Christ went to the cross, Jesus told His disciples the worst. Jesus prepared His men for the worst, and He said, “I tell you this to comfort you – to fortress you – to build you up – so that when it happens you will not be taken by surprise”.

These words and visions and pictures will not disturb or depress those who seek to know the truth of the will of God. They will lift us up and comfort us and fortress our hearts.

Jesus Christ has a book in His hands, and in that book there are seven seals, and as Jesus breaks each of the seven seals, He lets something loose into the world. People in business and finance and economics tell me that something has happened which was not present forty years or so ago. We used to be able to fix the economy but we can no longer do so simply.

There are four pictures of four horsemen. We even call them the four horsemen of the Apocalypse! We give them a nice sounding name that might obscure their real significance.

Revelation means revealing or unveiling, and not obscuring.

Jesus Christ is referring to four tragedies which are going to come upon the earth, and Jesus wants His disciples to know about them, so that they, and we, will not be taken by surprise.

John watches. Now remember John had heard Jesus speak of the last days when Jesus taught on the Mount of Olives, and we have the record of account of that discourse in the Gospels of Matthew and Mark and John. I want to give you as much information as I can.

When the first seal is loosed we see a warrior riding out and galloping out.

It is the picture of someone rising up with a lust for power, and in visionary language this depicts wars and rumours of war.

He is riding out to conquer, as if there is a reference to a world ruler who wants to conquer the globe.

He looks so white and so clean, that this can be deceiving, and he makes his programme so like that of Jesus Christ, that many will be deceived.

Is this the shining purity of God’s justice, against the arrogant power of evil in the world? There comes a time when God says to this putrid world, enough is enough.

Now, we must not press the detail too far. Think of these as principles rather than persons.

John sees Jesus breaking open a second seal, and a fiery red horse rides out.

The red horse may speak to us of blood, as war is depicted here. Is it civil war? Jesus had spoken in Matthew Chapter 24 of nation against nation and kingdom against kingdom, and interestingly the word for nation is ‘ethnos’. Might this be a reference to ethnic races pitting their strengths against one another? We certainly see this going on globally and world leaders need to know the significance.

Presidents and Prime Ministers need to be aware of what they can do and what they cannot do and this book can import insight and understanding and knowledge which cannot be had from any other source of Focus Group or committee!

All Jesus has to do is remove the restraints and to remove any garment of peace and the inevitable result will be war. Is this a very specific sign of battle and bloodshed?

The picture is that of a new dimension of horror and suffering, and a world crisis such as has never previously been experienced.

These visions come from the control room of history, or the great command centre. Nothing usurps the throne of God. Jesus is the Lamb who was slain, and it is because of this fact that Jesus is worthy of opening these seals. The background to all this is explained in the earlier part of the book of Revelation, but now we are dealing with detail and leaders and governments and those is authority need to know something of what is happening across the world.

Nothing is going to defeat the saints of God ultimately! Remember that, because each of these seals is going to mean trouble for the church on earth.

Sandy Shaw is Pastor of Nairn Christian Fellowship, Chaplain at Inverness Prison, and Nairn Academy, and serves on The Children’s Panel in Scotland, and has travelled extensively over these past years teaching, speaking, in America, Canada, South Africa, Australia, making 12 visits to Israel conducting Tours and Pilgrimages, and most recently in Uganda and Kenya, ministering at Pastors and Leaders Seminars, in the poor areas surrounding Kampala, Nairobi, Mombasa and Kisumu.