4 ways to avoid a financial crisis before it happens

By Lidia Staron

Special to the Financial Independence Hub

Do you want to avoid a financial crisis before it happens? Everyone does, but few are willing to take the essential steps. You might have heard rumors of a significant economic crisis just looming around the corner. Whether it happens at a personal or national level, it feels good to know that you have done something to avoid it or at least soften its impact in your life.

In this post, let us take a look at some of the most effective ways to avoid a financial crisis before it happens:

1.) Save before you spend

Benjamin Franklin said “a penny saved is a penny earned.” Nothing can be truer than that! Every time you spend on something, you take out cash from your pocket. It decreases your wealth. Spending on unnecessary things may mean that you could have used precious resources for other things.

Now, it doesn’t mean that enjoying the fruits of your labor and buying things that you love are bad things. The point is that sometimes you just have to make small sacrifices today to enjoy great rewards in the future. And that’s precisely what saving can do for you.

The best way to avoid a financial crisis is as simple as saving a penny a day. You can then gradually increase your savings each month. It may sound small at first, but great things start from little things. The key here is consistency. Just keep on saving, and you will soon see how it can help you become financially secure.

2.) Make a Budget

It’s helpful to be reminded of this adage, “If you failed to plan, you planned to fail.” Budgeting is a form of planning for the future. Some people mistakenly thought that they could go on with their lives without a budget. Almost always, without fail, those who don’t have a budget are the same people who are in a financial strait.

Making a budget does not have to be complicated. It only takes a few minutes. Decide where your money goes and ensure that you track every penny from your wallet. If you made a personal loan online, then make it a point to pay off debt first as much as possible before spending on things that are just optional. Continue Reading…

Prosperium Q&A Part 2; Dawn of the Prosperity Economy

Prosperium Inc. CEO Doug Coyle

The following is Part 2 of a sponsored Q&A with the founders of the firm behind Canada’s new Prosperium cybercurrency. Doug Coyle, pictured on the left, is the Chief Executive Officer of Toronto-based Prosperium Inc. Tony Humble is President and Chief Organizational Officer. You can find the introductory blog in this series by clicking on Blockchain Revolution, Global Prosperity and Prosperium. Also, a new white paper has just been published.

The pre-Sale rollout plan for Prosperium tokens

Jon Chevreau: Let’s resume with a recap how you’re rolling out Prosperium units and how pricing steps up over time.

Doug Coyle: Our currency Prosperium does have a period at the beginning, which we call our Presale period, when accredited investors can buy the coin at a value that is rising over time. The current value that we’re offering our token at is $2 per token for the presale token. That will be stepped up to $2, $4, $6, $8, $10, $15, $20, then by increments of $10 until finally it gets to $100 per presale token.

That price is based upon the network value; as we accomplish various milestones and increase the value and utility of the Prosperium platform and token the market price increases steadily; but once you reach $100 it then converts at 100 to 1 so one Prosperium token becomes 100 Prosperium “dollars” at a 1 to 1 ratio. It becomes stable at that point. That means that 1 Prosperium dollar is equal to one Canadian dollar. From then on it’s stabilized by smart contracts so it becomes very easy for someone to look at their Smartphone, see their balance is 1000 Prosperium dollars and they know what they what can buy with one thousand Prosperium dollars since it’s equal to C$1,000.

Jon: And outside Canada?

Doug: Each country will have its own Prosperium token that matches the local fiat currency. So in England, one Prosperium pound will equal one UK pound; same with the peso or the US dollar etc. We are set to be a stable-value token in all countries that accept us: wherver the regulators accept our platform so people are able to trade in a currency and know the price of anything in Prosperium dollars or tokens.

This is very different than Bitcoin because right now Bitcoin is worth around $4,000. So on any given day how do know how much the price of a cup of coffee is in Bitcoin? You don’t, not without doing a bit of a calculation or having your phone do it for you. So it’s a big advantage having a stable-value currency for everyday use that you can trust won’t fluctuate and be volatile while they hold it and that they know the price of things in that currency.

Fiat currencies vs cybercurrencies

Hub CFO Jon Chevreau

Jon: You used the term fiat currency just now. Can you comment on traditional “money” and so-called fiat currencies like the dollar, Euro etc.? There’s nothing magical about the value of a dollar except that it’s dictated by governments, right? At least since it’s no longer backed by gold.

Doug: You’re right: part of understanding how to design a currency for Prosperium is understanding the mechanism that all currencies play in an economy; an economy is just a community of people trading their work with each other: goods and services. The economy, the GNP or GDP, is just the sum of all those transactions in that community; so what is money? Money is just a trusted accounting system; and the important word there is trusted. If you’re in an economy or country that has its currency backed by gold or silver or some commodity, you’re using that commodity to create that trust factor; you’re trusting that gold will be relatively stable over time.

If you live in a country like Canada or the United States, or most of the world now, it’s not backed by a commodity like gold or silver but by the promise of the sovereign: of the government.  You are relying on the fact that the government will say yes, we’re going to back that dollar and manage it and keep it at a relatively stable value. You can question how much you can trust any sovereign to handle money but that’s the theory. So you have those two systems of creating trust; backed by a commodity or backed by the promise of a sovereign.

Jon: Do you use the term fiat?

Doug: Yes, we use the term fiat. Fiat just means by demand or by order. I as the king demand, or order, that this piece of paper here is worth one Canadian dollar.

What is backing Prosperium?

Jon: At least when it was backed by gold, it was finite, like Bitcoin. But now it’s potentially infinite? Look at Zimbabwe and what happens with inflation when it’s backed by nothing? Or Venezuela.

Doug: Yes, which raises a very interesting question. What is backing Prosperium? In our case, it’s a very concrete thing that backs it. New currency can be created; you have to remember that all currency is created. Continue Reading…

A Q&A with the founders of the new Prosperium Cryptocurrency

Prosperium Inc. CEO Doug Coyle (L); President and COO Tony Humble (R)

The following is a sponsored Q&A with the founders of the firm behind Canada’s new Prosperium cyryptocurrency.

Tony Humble is President and Chief Organizational Officer of Toronto-based Prosperium Inc. and Doug Coyle is Chief Executive Officer (both pictured on the left).

You can find the introductory blog in this series by clicking on Blockchain Revolution, Global Prosperity and Prosperium.  

Also, a new white paper has just been published. The overall Prosperous business model is described on its home page. And for a layperson’s perspective, see Tony’s blog

The Q&A will continue tomorrow. 


Jon Chevreau: In the first blog, we mentioned Ethereum and Prospereum as two examples of cryptocurrencies spawned in Canada. Clearly, the name Ethereum inspired your name and it was a clever stroke to get the word Prosper in there too. Can you confirm this genesis of the name?

Tony Humble

Tony Humble: Well, the name Prosperium was a natural, but we tried a few others first, like Prosperus, as in “prosper us all” and “prosperous” and ProsperX.  But the elemental affinity with Ethereum was irresistible:  like atomic bonds.  Ethereum is named for both a celestial region and an “element” in the periodic table.  On earth, it is both a currency and a platform for smart blockchain contracts: revolutionary and brilliant.

Jon: Can you elaborate on what the name means in practice, relative to Ethereum? Is it the same business model?

Tony: Like Bitcoin, the total number of coins issued by Etherium will be fixed, aiming for continuous growth in value.  In comparison, Prosperium is also named as an element, is a crypto-currency, and is a platform:  for growth in real prosperity.  In contrast, however, once Prosperium has reached a target value it will be fixed in price and supported at that value, but the number of coins issued will continue to grow.  It will be minted for measurable value, created by regional accelerators to generate jobs and production, and its use for transactional purposes will be tracked on the Prosperium blockchain.  It will be 100% open and auditable by governments, and will maintain a large reserve to support the price in the marketplace.

Jon: A prospectus for Canada’s first Bitcoin ETF was recently filed. I’m not sure if that shows your timing is impeccable or whether you’re late to the party?

Doug Coyle: I do see that there are more and more ETF funds being launched in Canada and around the world for Bitcoin.

Jon: Starting with the Winklevoss twins of Facebook fame?

Doug: Yes, they tried to get a Bitcoin ETF going and ran into some barriers but they prepared the ground a great deal. I feel it’s adding infrastructure so I’m in favor of multiple ETFs for Bitcoin or any other crypto currency being established.

Jon: Is Prosperium going that route?

Doug: Not directly. In some ways we do provide the ability for clients who hold Prosperium tokens to trade those tokens and eventually the currency itself will be freely trading; so we have a very sophisticated way of doing a — call it an ETF — but we hold a reserve account that is core to how we stabilize the Prosperium coin. Buyers can find a ready market there at all times; they don’t have to count on any broker to find a match on buying and selling; it’s all done automatically in the software.

Why Prosperium isn’t going the ICO route

Jon: You chose not to go the ICO (Initial Coin Offering) route although it sounds like you were thinking about it. Why not, or are you doing the same thing under a different name? Continue Reading…

Half of us fear rising interest rates will be negative for our finances

Now that interest rates have finally appeared to bottom, consumers are starting to worry about the prospect of rising rates and their impact on their personal finances.

This is explored in my latest article, which is in Monday’s Financial Post (e-paper and online). You can access it by clicking on this self-explanatory highlighted headline: Only a quarter of Canadians have a  rainy day fund, but more than half worry about rising rates.

It describes a new Forum Research Inc. poll that shows more than half of Canadians (51%) fear rising rates will negatively impact their personal finances. The national poll of 1,350 voting-age adults was conducted after the Bank of Canada raised the prime interest rate from 0.75 to 1% on September 6th, which in turn followed an initial 0.25% hike in July.

After an amazing run of nine years of ultra-low interest rates, it’s clear consumers are starting to fret the party is over. Anyone with variable-rate mortgages might well be petrified that interest rates could again reach the high teens, as they did in the early 1980s. Little wonder that many homeowners are starting to “lock in” to fixed mortgages while rates are still relatively low.

Of course, as Credit Canada’s Laurie Campbell notes, for the longest time it’s paid to stay variable and flexible, whether with a variable-rate mortgage or a line of credit. It does cost a bit more to “lock in” to fixed mortgages, as Campbell notes, but the ability to sleep well at night in my opinion more than makes up for the difference.

While the poll asked specifically how consumers felt about the second hike, “they are worried more are coming,” Forum Research president Lorne Bozinoff told me. 12% say the negative effect will be extreme. However, 17% believe rate hikes will have some positive aspects:  you’d expect debt-free seniors to welcome higher returns on GICs and fixed-income investments. Another 38% don’t think it will have an effect either way.

Lorne Bozinoff

A quarter have no emergency savings at all

Bozinoff is more concerned that 26% of respondents have no emergency savings, and 40% have a cushion of a month or less: 9% have less than a month and 11% just a one-month cushion.

Financial planners generally recommend three to six months as a hedge against job loss or other setbacks. A minority do: 14% have two to three months, 9% four to five months, and 13% six months to a year. Only 15% have a year or more and predictably, 56% of the latter group are 55 or older. Continue Reading…

Debt Ceiling to rise: “Clark … Could you maybe spare a little extra cash?”

By Kevin Flanagan, WisdomTree Investments

Special to the Financial Independence Hub

I’ve written a couple of posts about the debt ceiling debate over the last few weeks, but let’s move past that topic and assume the U.S. government will be able to resume its borrowing needs in full, come the fourth quarter. (Editor’s Note: On Thursday, President Trump struck a deal with Democrat leaders to raise the debt limit and finance the Government until mid-December.)

What will investors find when Treasury has the ability to come to market with its full arsenal of t-bill and coupon issuances? The latest press briefing from the nation’s debt managers reminded me of the scene from the movie National Lampoon’s Vacation when Cousin Eddie asks Clark, “Could you maybe spare a little extra cash?”

The Details

For the period of July through September, Treasury estimates it will borrow $96 billion in net marketable debt, but its financing requirement will then ramp up to a hefty $501 billion in the fourth quarter. Remember, the calendar’s fourth quarter is actually the first quarter of fiscal year (FY) 2018. To put the fourth quarter number into perspective, the figure would be more than the projected $426 billion for all of FY 2017 combined, underscoring the added burden for the upcoming quarter.

The “Whys”

What’s causing such a huge increase in the government’s borrowing needs? First, the underlying budget deficit will need to be addressed. For the record, thus far in FY 2017, the red ink total has come in at -$523 billion through June, leaving one-quarter of the current fiscal year still remaining. For FY 2018, the Office of Management and Budget is projecting the deficit to come in at -$589 billion, up $149 billion from the prior estimate. Second on the list is Treasury’s goal to lift its quarter-end cash balance back to a more “normal” level of $360 billion for the end of December.

The debt managers foresee their September quarter-end balance dropping down to a low of $60 billion, compared to $353 billion a year ago. This drawdown reflects outlays that will be needed as a result of the stagnant debt ceiling. Along those lines, Treasury stated that it “expects to be able to fund the government through the end of September.”

The Final Piece

Continue Reading…