Monday, March 31, 2014

Getting American Movies and Music in Canada

We use a lot of purchased streaming services such as Amazon Prime, Netflix, and NHL Gamecenter.  In the US, you can watch them anywhere on your phone, tablet, computer, or TV.  When you are traveling in Canada, they usually do not work as the company has not bought the rights in Canada to the movie you want to watch.  Seems unfair, you bought the service, and you cannot use it.

The simple solution is a VPN (Virtual Private Network).  This capability routes your internet traffic through a server or node in the US so the content provider thinks you are located in the USA.

There are a couple of ways to get a VPN set up.  First, there are services that you can buy and some that are free that use someone else's node in the USA.  Second, we use our own home router as a VPN node so everything is routed through our home network.  If you have a recently purchased middle to high end home router, or if your router supports DD-WRT, you can set up your own VPN.  The ideal person to help you set this up is your child, who probably is the most capable internet expert in your household.  If you have to do it yourself because you do not have a child at home like me, here are the basic instructions.

  1. Get out the router manual and read how to set it up as a VPN server.  It will normally have a screen in the user interface that allows you to turn on the VPN, and set up accounts for yourself and others.  The screen below shows one user "whittonm" and the space where you would assign a password.
  2. You also need to click the field to "set the DDNS".  This allows your Ipad to find your network when you are traveling.  Copy the name of the DNS aka server.
  3. Now we need to set up the client on the Ipad that you will use when traveling.  On your Ipad, you would go to settings, then look for the VPN button on the left under settings.  Click this button, then select "Add VPN Configuration".
  4. Select PPTP on the top of the table (this is a type of VPN).  Fill in a description "My Home VPN" for example.  The server is the DNS name from item 2.  Account is the account name you assigned, in this case "whittonm".  The password is the password you assigned.  Make sure the "send all traffic" switch is green as this will route all traffic through your home network. 
  5. When you want to turn on your VPN on your Ipad, go to the VPN section in settings and turn on the switch at the top of the screen that says VPN (it will show green).  When you are connected, you will see a little box with VPN in the upper left corner of the Ipad screen next to the wireless status.
  6. You set up VPNs on your laptops in a similar fashion.
There are other uses for a VPN such as accessing files on your home network and encrypting traffic when you are on a public network, but I will not get into these.  You will need to set some other parameters to get things like encryption via IPSEC.

Also, this blog posting is not to help you steal content, it just helps you get the content that you legally purchased.
VPN setup screen on ASUS router

Sunday, March 30, 2014

Observations on Toronto and Canada

After a visit to Toronto, Ottawa, and Montreal, a few observations on personal finance:

  1. Toronto is clearly in a housing bubble, but the question is how does it get deflated. Evidence for a bubble?  Buyers are taking advantage of historically low interest rates to load up on housing and other household debt with no safety margin.  Rented condominiums cannot pay back the landlord's mortgage, let alone deliver a profit.  Silly actions abound such as manufactured bidding wars, people writing "love letters" to the home seller, and making bids on 100+ year old houses without a condition of inspection.  Let's hope the bubble is deflated through stagnation of prices over an extended period (5+ years) rather than a US-style crash.
  2. Food is affordable in Canada but booze is still expensive.  Coffee at Tim Hortons, the national coffee shop chain, is a particularly good value.  Just remember to say "double-double" the same way you would imitate a turkey call "gobble-gobble".
  3. Taxi fares are outrageous, particularly in Ottawa.  A 10 mile ride to the airport in an old smelly cab was $48C ($44US) with tip.  In Northern Virginia, our 12 mile ride in a rather new cab was $34US with tip.
  4. Train travel in Canada is still a good value.  The train from Toronto to Ottawa was quite reasonable.  However, Union Station during rush hour is frightening as you always feel like you are going to die in a stampede of GO Train commuters as they rush through the station on the way to the subway.
  5. Montreal is the same as always - bad roads, good food, silly politics, and bad weather.  Where else but Quebec can a government pass a law to combat gender discrimination by legalizing religious discrimination?

Monday, March 24, 2014

In Toronto, Everyone is a Real Estate Expert

After spending one night in Toronto, it seems like everyone is a real estate expert:

  • Cab driver from airport: expert on waterfront condos, construction projects, city infrastructure
  • Hotel desk clerk: expert on condos
  • Restaurant Maitre D: expert on high end homes and condos in the Annex area
On TV, the Canadian morning show featured a house staging expert and the hosts fawned all over him - "I need to talk to this guy...can I get a copy of your book?.."

I feel like I have entered a parallel universe after living with the US housing crisis for 7 years.

Friday, March 21, 2014

Saving Money on Internet Shopping or Am I Tight?

If you know me or talk to my wife, you probably think I am thrifty aka careful aka tight aka cheap.  This is true and it probably relates to some childhood problem that will be cured in future by drugs that they advertise on the TV news, but for now, I am an uncured tightwad.

One way that I save money on Internet purchases is by exploiting the Internet business model.  Websites carry advertisements for shopping sites and are paid a commission if you click on the link on the site and then buy something.  The commission varies from 2% to as much as 20%.  A number of websites are available that exploit this model and they return some of the commission to you.  Say you click on the link on their website and buy a $1200 hotel stay.  They will rebate 4% or $48 back to you by check or paypal.  Using these websites, I have received over $1600 in rebates over the last 10 years.

Obviously, the best way to use these websites is when you already decided to buy something from a site, not just because you see a link to some unknown site like  Luckily, these sites usually have deals with almost all the popular shopping sites like expedia, priceline, newegg, walmart, home depot, etc.

The one I use most often is FATWALLET.COM.  They have some Canadian shopping sites and also provide information on hot deals.
FatWallet Coupons and Deals

Another site that works is Mr. Rebates.
Mr. Rebates

A third is a British company that also has a lot of European sites, Top Cash Back.

Thursday, March 20, 2014

Doing Your Own US Income Tax - Dementia Test for Adults

The USA prides itself on having the most complicated income tax system in the world.  This keeps hundreds of thousands to millions of tax professionals in business and also gives yours truly a chance to solve a difficult brain-teaser every year.  It is kind of a SAT test for adults - if you can do your own US income tax, you still have what it takes intellectually and all those fries you ate as a kid at Woods Friendly Snack Bar have not caused dementia yet.  My income tax involves some tricky cross border stuff so perhaps it is more like an advanced test like MCAT?

I use Turbotax to help with the preparation but even it is not able to handle some of the difficult stuff like the dreaded form 1116.  Form 1116 covers foreign income tax credits, and under the Paperwork Reduction Act, it is officially estimated to take 6 hours to understand and complete this form.  Don't you love it when they name a law the opposite of its purpose?  The "Right to Work" laws are really right-to-fire and the Paperwork Reduction Act generates more paperwork.  Here are some other strange tax laws.
10 Strange But Legitimate Federal Tax Deductions
Efile Online with TurboTax

Tuesday, March 18, 2014

Life Insurance

Had an interesting discussion with some friends today on the need (or not) for life insurance.

My views:
  1. Term life insurance IS pure life insurance.  Whole Life Insurance and Universal Life Insurance are a combination of life insurance and an investment.  If you want to protect your loved ones from the consequences of your demise, get term life, it does what you need for the interval you need it, and it costs the least.
  2. You only need life insurance when you have dependents who rely on you for their care.  Husbands and wives should both have insurance as even if one of you takes care of the kids and does not draw a salary, it will be a hardship for your family if you are not around.
  3. Due to US tax and estate laws, the insurance on your life should be owned by your partner (spouse).  Talk to a tax or estate planning professional for the reasons why - it involves the settling and taxation of your estate if you die.
  4. Life insurance through your work is okay but not ideal.  If you lose your job, your life insurance usually goes away.  If you have developed a chronic disease, it may be hard to get life insurance after you lose the job.  You can buy your own life insurance privately, and not buy the life insurance through work and it is not tied to your employment.
  5. It is generally best to get a term that lines up with when your last child finishes University, or reaches an age where they will be independent.  Your goal is to protect your children until they are independent and also to protect your partner until you have built up sufficient retirement savings.  Once you have sufficient retirement savings and your children are through school, you may not need insurance since your partner will be able to live on your savings if you die.
  6. The earlier you buy the insurance, say shortly after your first child is born, the better.  You will get a lower rate and you are more likely to be healthy and not be denied insurance.
  7. Use the Internet to get the best rates, there are a lot of websites that can give you competitive quotes on term life insurance.  For example, I ran a scenario for a 37 year old overweight non-smoker wanting $1M in insurance and the range of prices was $515 to $720 per year.

Monday, March 17, 2014

Solving US to Canada Investing Problem

We are considering moving back to Canada from the USA and I am trying to figure out the possible financial issues of this move.

One issue that the cross border financial planners keep bringing up is how to manage your US investments as a Canadian resident.  They claim that US brokers will not deal with a US citizen who is not a resident of the USA.  The further claim is that your US account will be closed and you will get heavily taxed by USA and Canada on any capital gains, etc etc.  Their solution is to turn over control of your investments to them in return for a ~1% per year fee.

As a side note, I extensively searched the web, the SEC site, the OSC site, and the IRS site to see if I could find any justification for these gloom-and-doom scenarios.  I found nothing, bupkis, nada, nil, zero evidence that this is mandated by the Canadian or US government.  You do have to file forms with various government agencies, but as long as you are honest, I could not find any prohibition.

In any case, taking this as a challenge, I looked into how you can properly deal with this cross border problem without breaking any laws or paying 1% per year.

The solutions I found cover both US IRAs, mutual funds, and brokerage accounts.

  1. Open a Canadian brokerage account, see 3. below for the name of a prospective broker.
  2. For US IRAs, transfer them all to Fidelity USA, who will let you keep them and trade within them.  This will not generate any taxable events.
  3. For US stocks and ETFs, use your Canadian brokerage account that will accept stock and ETF transfers from the USA.  Interactive Brokers (Canada) is capable of doing this.
  4. US mutual funds are the last piece of the puzzle.  Canadian brokers cannot handle US mutual funds.  The solution is to convert your US mutual funds to the equivalent US ETF.  This is feasible for most Vanguard ETFs and possibly other fund families.  This is a non-taxable transfer so no capital gains or losses are generated.  Then transfer the ETFs to your Canadian brokerage.
  5. If you cannot get your mutual funds transferred as in 4., you could be forced to sell them if your US broker will not deal with a Canadian resident and they determine you are a Canadian resident.
So in the end, you still have your IRAs, stocks, and ETFs, you can trade them as needed, and you did not generate any artificial tax except for the issue noted in point 5.  Don't take this as legal or financial planning advice, this is just my solution to the problem based on what I know.  Talk with your financial or legal advisor, but watch out for the 1% solution.

Saturday, March 15, 2014

Survey to get your feedback

I notice that my readership goes up and down and I am trying to figure out if this blog is useful.  Rather than using something easy like "Survey Monkey" to create a survey like millions of others, I am using a Google tool that I found while searching the web for porn  other things.

Thursday, March 13, 2014

Searching for Air Malaysia and Funding Options for Your Child's Education

In between searching for Air Malaysia 370 on Tomnod, I am doing the Canadian CFP course.

Today, Tomnod gave me a search area with lots of waves, no ships, no islets, no oil rigs.  Only a few things that were worth flagging as "other" items and one thing that is probably a wave but vaguely looks plane-like.

I am also learning how to fund your child's education in Canada.  RESPs and the like seem best, but there was an interesting idea to use a Universal Life Policy and then potentially give it to your child at 18.  This taxes the income in the child's hands and also provides security if one or both of the parents die before the child reaches 18.  You can also decide that the child does not deserve the money and use the cash proceeds of the policy to buy a new red Corvette and hair implants when you have your mid-life crisis.

Wednesday, March 12, 2014

Found an Oil Rig and Ship, No Air Malaysia Plane

I continue to do the crowd-sourced search for the Air Malaysia plane using  So far I searched about 2K squares, found a bunch of ships and islets, along with an oil rig and ship seen below.

Eating My Own Dog Food

A popular expression in the high tech field is "eating your own dog food" - meaning using your own product and living with the consequences.  My last post was on using an IRA to pay health insurance and I am now eating my own dog food as I just withdrew money from my non-deductible IRA to cover my expenses to date.  This is in between searching for Malaysia flight 370 on - 88 map squares searched this morning with no results yet.

It was pretty painless but I did get a lot of warnings from Vanguard as I made the withdrawal online and they allowed me to withhold taxes on the transaction.  Let's see what happens.  Now back to searching for that plane.

Sunday, March 9, 2014

Withdraw Money from Your IRA Without Penalty

The Lords of Confusion (US Congress) have created the world's most complex income tax system.  In addition to allowing special tax deductions for Alapaca Farmers, there are some advantages for you, my unemployed COBRA heath insurance brethren.

Normally, if you are under 59 1/2 (the half is just there to screw up integer based legacy COBOL programs), you pay a 10% penalty in addition to normal tax if you withdraw from an IRA.  However, if you are unemployed, the 10% penalty is waived if you use the withdrawal to buy health insurance.  The Alpaca farmers have not found a way to get Alpaca IRA benefits, but you can get some help buying health insurance.

Friday, March 7, 2014

Nothing is Less Expensive in Canada, Except Health Care

Canadians know that they pay more than Americans for nearly everything - clothes, electronics, taxes, milk, eggs, cars, liquor, and gasoline.  Why?  My opinion is that the restrictions on cross border shipments and unique labeling including French and the even-more-dreaded metric measurements means that all logistics are within Canada.  This means that business cannot take advantage of the low cost systems 100 miles (160 km) to the South.  The monopolies and organized farmers don't help either.

Whatever the reason, Canadians know that even with a devalued dollar, it is cheaper to buy in the USA.  This seems to have spawned a whole range of workarounds for Canadians:

  1. The tried and true cross border shopping involves wearing your oldest clothes across the border, then buying lots of stuff, putting it on, putting the old clothes in the trash at the US mall, and telling the Canada Customs dude that "you have nothing to declare".  If you cannot wear it, hide it in your child's diaper bag or similar innocent spot.
  2. Shop US internet stores and ship to the many depots in Buffalo, Ogdensburg, and other US border cities.  For a small fee, they hold the package, then you drive across the border and pick up your goods, employing subterfuge as in 1. to cross back to canada.  
  3. Do the cross border shopping but swear you were in the US for a week to get maximum exemption.  This has fallen from favor (favour) since we learned that the US is sharing information with the Canadian government.  It is rumored that this intelligence deal involves Canada never sending Bieber to the US ever again.  Let's ask Richard Snowden when he gets back from Crimea?
  4. Get your relative or friend in the USA to buy the goods and send them to you as a "gift" and hope that the Canada Customs people are on a break drinking double-double Tim Hortons Coffee when your package is inspected.  Ask your friend to halve the price you paid when filling out the customs forms helps too.
  5. Buy something on Ebay and beg the seller to call it a gift when doing the forms.
  6. Buy goods as in 1. or 2. but declare your stuff and pay all taxes and duties.  Your Canadian friends will ridicule you and probably kick you out of the Margaret Atwood - Farley Mowat Book Club for this.  The only thing less Canadian than this is disliking hockey and curling.

Thursday, March 6, 2014

Newspaper Boys to Men or How I Learned the Value of Money

My first job at 10 was delivering newspapers for the now defunct afternoon Montreal Star, then I moved up to the more desired morning Montreal Gazette.  As a paperboy, you were essentially an independent business - you had a "route" of a few blocks (30-50 papers), you bought the papers in bulk, you collected the money from the subscribers, and you delivered the papers.  The Newspaper provided the customer service.  You learned about how to lose and make money - if you bought too many papers or did not collect all the money, you lost.  You learned about customer service - if you did not deliver on time, the paper was damaged, or there was another problem, you got complaints from the paper and you could lose your route (business).  You learned about dealing with customers - like the guy that always tried to pay a $1.25 weekly bill with a $20 bill that I could not change, or the guy that gave me at 12 years old a bottle of Old Spice aftershave he did not want.  It was good experience, taught you a lot, and financed my hobbies.

Today, all newspapers are delivered by men in vehicles who cover hundreds of subscribers, so the paperboy experience is gone.  How do children learn about business today?  Working in a fast food store after you turn 16 or 18 is certainly a possibility, but you don't get any "running a business" experience since you are an employee.  One friend of mine had a great idea and got his kids into Ebay.  If you want the latest tablet or skateboard, you need to sell the old one and combine it with your allowance to buy something new.  Ebay has all the elements of the old paper boy experience - losing money if you don't charge enough to cover fees and shipping, customer problems like the dude that does not pay or says he did not get the item, and customer service issues.  I think it is a great idea.

And about those paper "men" that chuck papers onto the end of my driveway.  My Wall Street Journal is never delivered if there is a snowfall of more than 0.5 inches within the preceding three days and my Washington Post is delivered by a guy that encloses a cheap cheesy Christmas card at Holiday time with a self-addressed unstamped envelope for his tip, but at least he usually delivers in spite of the weather.  The Gazette or Star would have fired them and got another ambitious kid to take over the route.

Monday, March 3, 2014

Winter is Back!

Winter is Back in Virginia
Remember my tips and techniques for late middle age snow shovelling  ->>here<<-

Sunday, March 2, 2014

Low Cost Index Funds Advantage

Why are low cost index mutual funds superior to high cost managed funds?  You can scan the popular press and see articles telling you why but let's look at my experience:

  • In 1984, I started buying a top-rated Canadian mutual fund called "Dynamic Fund of Canada", now called "Dynamic Value Fund of Canada".  It is no load but has a 2% management fee.
  • In 1998, after I moved to the USA, I started buying a top rated low cost index mutual fund "Vanguard Total Stock Market Index Fund".  It is no load and has a 0.17% management fee.
I don't have the ability to easily analyze my early returns before the introduction of the PC and Quicken, but I can compare performance between 1998 and 2014.
  • The Dynamic Fund returned 8.29%.  A $10,000 investment in 1998 would be worth $35,800.
  • The Vanguard Fund returned 8.90%.  A $10,000 investment in 1998 would be worth $39,100.  This is 9% more than the managed high cost fund.
Clearly, the higher cost fund has not done as well.