Me and My Money

Financial forensics

Posted November 25, 2011
Originally Published February 19, 2009

Q: I was in a long term relationship which left me with $30,000 of debt. Most of it was money I borrowed for a down payment which he promised to pay back and never did. I have recently met someone and I am wondering if you have any suggestions about how to tell if someone is financially responsible without hiring a private detective? Mukta S.

A: You hate to think that you’d base a decision about sharing your life with someone on how they handle money … on the other hand. You’ve already been burned so caution is in order. Most private detectives don’t have financial forensics training so you’re better off using your own powers of observation.

There are certainly some red flags that indicate poor money management skills. Here are a few. He lives at home but has no savings. He has a modest income (nothing wrong with that) but also has lots of expensive stuff. If he borrows money from you or lets you pay for things like restaurant meals but doesn’t ante up, I’d be worried. Also, if he outstanding loans from family members but nothing tangible to show for them, such as a home, it may indicate financial irresponsibility. And finally, if you know he uses a cheque cashing or pay day loan service I’d move forward in this relationship very slowly until you find out why he can’t live within his means.

Q: I have a sister with cerebral palsy and the whole family has always helped her out. She gets provincial disability payments and I have just heard about a new savings plan for the disabled. How will it affect her disability payments? Trina M.

A: Sometimes government angels smile upon us. The new Registered Disability Savings Plan is manna from Harper & Co and the first of its kind in the world, by the way. Basically the RDSP amounts to a tax sheltered savings plan with the plan holder’s deposits topped up by the government in the form of grants and bonds based on income. Until now Canada has steadfastly forced the disabled to live in poverty without assets in order to receive paltry support payments. This is a fresh and humane wind of change in attitude.

All provinces and territories except Quebec, New Brunswick, PEI and Nunuvut have announced there will be no clawback of disability support if an individual is receiving RDSP grants and the plan will not be considered an asset which means it can grow without affecting provincial payments. But even in those mean spirited provinces (Nunuvut has yet to announce its intentions) the disabled can receive some benefit from the RDSP. Check out these excellent sites, http://rdsp.wordpress.com and www.rdsp.com for complete details. The deadline for application is March 2 so make haste. Only the Royal Bank and the Bank of Montreal are set up for these accounts and you must be eligible for a Disability Tax Certificate in order to apply.

Q: My wife and I are saving for a house in 3 years (hopefully) and we are disagreeing about how to invest the money. We have a joint savings account for this but now we are thinking that we should save separately because it is causing arguments. Arvid S.
A: Beware the lure of the market. With a time frame shorter than seven or eight years any investment except for a bond that matures within that period or a cash type investment, GICs, high interest savings account, is out of the question. And keep your foot off your backside if the market roars over the next three years and you are left the meager return of cash savings. The money will be safe and that is where it needs to be.

Financial journalist Alison Griffiths is the host of Maxed Out and Dollars and Sense on the W Network and VIVA.

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