Your Money Book

Identity theft is one of the fastest growing crimes in the country. It is really nasty, very time consuming to deal with, a LOT of hassle, and it is only going to continue to grow for years to come. Almost everything law enforcement can do is after the fact, and that puts the onus on us to protect ourselves.

One of my biggest pet peeves is people on their cell phones in public. More so, when they have a loud voice, and really seem to want the whole world to hear their conversations. I’m sharing that for a reason, because two weeks ago, I was in the business class lounge at the Denver airport, looking for an hour of peace and quiet. Unfortunately, it turned out I was stuck three seats down from a man named Walter, and Walter was on a mission. He was on the worlds’ longest phone call to Wells Fargo attempting to get the interest income on one of his wife’s accounts for his tax return.

It was obvious from the one side of the conversation that Walter was not having much luck. Gee, like he couldn’t have guessed that privacy laws don’t give him access to other people’s financial information.! But, undeterred, Walter barged ahead.

The first thing he shared, in his rather loud voice, was his social security number and date of birth. That was just the beginning with what the customer service rep was obviously asking him, in order to establish his identity. That was followed by his Wells Fargo credit card number and security code. Becoming more frustrated that he wasn’t getting anywhere, the next thing Walter volunteered was his personal account number and transit number where his main investments were held.

By now, anyone who was interested in Walter had more than enough information to steal his identity, and over $50,000 out of his accounts, based on what a frustrated Walter shared during his call. To my way of thinking, it was not only rude, but totally irresponsible! But think about how much of your information is so easily accessible while you’re having a chuckle about Walter’s stupidity. From your Facebook privacy settings, to not having virus software when you do your on-line banking, or simply throwing mail with all kinds of personal information in the garbage, it’s you that has to be pro-active.

You cannot simply pay $10 to $20 a month to someone and hope everything will be OK. Hope is the worst form of identity theft protection. Unfortunately, nine out of every ten companies that promise to protect you do no such thing. Based on our population, around four percent of us will fall victim to identity theft in a year. As a result, these companies who promise to protect you are playing a numbers game. They receive huge amounts of money each month in premiums, and have to pay out only about four percent – if anything at all! In the meantime, millions of people are paying monthly premiums, thinking and hoping that they’re protected.

The basic, simple, easy, and common sense things you have to do:

-Don’t keep your entire life in your wallet or purse. You do not need to have access to 10 credit cards, your social insurance number, and a bunch of other personal stuff that identity thieves would love to have.
-Get a shredder and use it. Do not put personal papers or credit card mailings directly into your recycling or garbage.
-Always, always check your credit card and bank statements for something strange or unauthorized. You only have 60 days to challenge something or you own it, and have to pay it.
-If you have had your identity stolen, your first stop is the police station. I don’t care if it was a relative or stranger. You have to protect yourself and that starts with filing a report or creditors tend not to believe you – and rightly so.

The three big financial stories of the last week are all inter-connected, and do affect us all, directly or indirectly:

Last week, the U.S. Security and Exchange Commission charged the investment giant Goldman Sachs, with civil fraud. They are alleging, and it’s only that, until proven in court, that they defrauded investors out of over a billion dollars in selling mortgage backed securities. In the U.S., those are the mortgage packages sold all over the world, and probably in your mutual funds or pension plan, too. Yet, at the same time as they were selling and promoting these, Goldman Sachs was also betting that they would default sooner or later. At yesterday’s hearings in the Senate, there were a bunch of internal e-mails released where their big cheeses actually described these mortgage packages (so call collateralized debt obligations) as crap. Nice they were selling them to investors all over the world, while that’s what they thought of them. Stay tuned, there’s lots more to unfold here.

Yesterday also brought the official word that rating agencies have downgraded the debt that the Government of Greece owes to junk status. In other words, they’ve decided it’s the highest risk debt there is. It’s another lesson for you, me, and governments everywhere, especially in some European countries, that borrowing only works for so long. Greece has a lot of social programs, a very bloated civil service, and debt as far as they eye can see. What the government doesn’t want to do is to increase taxes, increase sales taxes, or to start making drastic cuts to government spending. It looks like now they will be forced to. Until they do, the rich cousin of Europe, Germany, has no intention of lending any more money to Greece. Their thinking is that the drastic cuts have to come first, and Greece has to first show that they can live on what they make. Gee, kind of like we have to – or should! Until then, more refinancing and more loans becomes like giving a drunk another drink.

Ironically, it was Goldmans Sachs who worked with the Greek government a few years back to convert some of their debt into complex financial instruments that nobody could really understand. It did make their finances look a lot better than they actually were. That is what it took to get Greece admitted to the European Union at the time. Ah, shuffling debt around, like we don’t often do that, transferring money from credit cards to lines of credit, and so on. But the chickens always come home to roost.

Finally, as a result of the debt rating for Greece, our Canadian dollar dropped over a cent. It did, but what really happened is that the U.S. dollar rose a lot. Investors were fleeing the Euro and getting their money out of the volatile environment over there, and going to a safe haven for their money – which is the U.S. So it was way more of a U.S. dollar increase than a Canadian dollar drop. The good news is that the U.S. needs investments. Now, we’re talking trillions here, not “you and me” amounts of money. And more money into the U.S. economy allows them to keep interest rates low for some time yet, and that’ll help the economy to speed up, and gives time for the housing market to heal.

Yes, we’re all in this together. What happens in Greece affects us. Because we’re all in one economy together, and money, debt financing, and investments don’t have any borders. Whether we like it or not, some far away problem becomes our problem literally overnight.

After a week in Kansas, I wanted to share a couple of U.S. stories from the world of finance and credit. They’re certainly insights that make you think or just shake your head:

You knew this day had to come: Atlantic City is the #2 gambling destination after Las Vegas in the US. Within ten hours of Atlantic City, there are more than 100 million people to draw from, and that’s a pretty huge market. While it’s possible to get cash advances from credit and debit cards in every casino on the planet, Atlantic City has gone one big step further. Gaming laws have now been amended to actually allow people to use their credit cards right at the blackjack and craps tables for a cash advance! Yes, you heard that correctly. Just sit down at the blackjack table and pull out your credit card. So far, only the Trump Taj Mahal has implemented it. But you know it’s only a matter of time before every casino in Atlantic City, and then Vegas, will roll this out, just to keep up.

JP Morgan Chase, one of the big six credit card issuers who control two-thirds of all credit cards, just announced doing away with a bunch of affinity cards. Those are cards for a specific retailer, where the merchant receives a kick-back. Gone are the Avon card and Starbucks. And if you’re a basketball fan, they also couldn’t get enough interest in the credit cards for the Detroit Pistons and Orlando Magic. Gee, you think the world can do without a few more credit cards??

On television, there’s more and more happy talk about the U.S. economy. While that may be true, in some areas, the foundation of people feeling more secure about their finances is always the value and equity in their homes. And that isn’t getting much better in many of the so-called “bubble states, where there are still over 3 million foreclosures expected this year alone.
But the no-service Bank of America is now seeing the light, and are prepared to do principal reductions of up to 30% on people under water. That is, they’re actually now prepared to help, after writing off billions of dollars in foreclosures. Principal reductions means they will actually cut the balance that people owe on a home that may be worth half of their mortgage. It’ll apply only to sub prime mortgages with insane interest rates, but it’s a start to actually help people and give them concrete hope. They finally figured out that they didn’t need to lose tens of billions of dollars kicking families out of their homes, and then take a massive bath on trying to sell literally millions of empty houses. This is going to be less than half as expensive for the bank in the long run. Too little too late for a ton of families but better late than never…

Two weeks ago we talked about the risk of variable rate mortgages, in an environment where you have to know rates will start to jump up, vs. a fixed rate mortgage. Weren’t we smart, since five days later, the banks raised their five-year rates by 0.6%. And that’s just the start – stay tuned for more increases.

The story had a number of people ask some questions. So here are some of the notes of what you should keep in mind:

On a current fixed mortgage, the bank has guaranteed the rate, but you have signed for a penalty to get out of it. That is normally three months of interest, or something called an interest differential. That is the today rate vs. your rate right now, and takes the difference of what the bank would now be out if you just kept going.

The longer you have left on your current term, the higher that amount. Rough rule of thumb is that two years left or more, it probably won’t make sense to re-mortgage to today’s lower rate. If you have a year or so left, it’d be the three months of interest as a penalty.

But will paying this penalty and getting the chance to do a new mortgage save you money? That depends on what the saving in the rate is from your current mortgage to what you can negotiate today. It also depends on how long you intend to stay in your home. If you’re moving in the next year, there’s no way you’ll save money, you’ll just pay the penalty and won’t be around long enough to get the benefit of the lower rate. If you intend to stay in your home for a number of years, the savings will start to add up quickly.

What you need to do is:

-Get the amount of the penalty. There’s no cost to get it, but at least you’ll know.
-Your bank will offer you a blended rate. They’ll take the penalty and include it in your new mortgage payment. That may be what you can do, but don’t start there. Blending it in is not the same as shopping around for what may be a much better rate in the first place!
-Always get three quotes, and make one of them from the credit union. Their rates are the same or better, AND you will get money back at the end of the year through profit sharing, since you will be a member, not just a customer! For me, that’s like getting a quarter of a percent refunded each year.
-Lenders will guarantee a rate in writing for 60 days. That will let you shop around while you are protected on today’s rates, should they jump again! It does not mean you’re committed, or on the hook. It’s just a guarantee if you want to take advantage of it.
-Negotiate! You will always be able to get around ¾ to one full percent off their posted rates. Remember that posted rates are like the sticker price of a car – and who pays that?
-If you have a variable rate and want to fix it, or want to re-do your mortgage to a lower rate, you have to get the quotes and be prepared to take your business elsewhere.
-Yes, you can negotiate the penalty amount if they get to keep your business. I had a rental property with Scotiabank a decade ago. They wouldn’t budge on the three month penalty when I sold. But that meant they lost my principal residence mortgage. They made $1100 in penalty fees and have lost out on over $40,000 of interest income, because I walked. That didn’t make sense to me, but I got a great deal at the credit union for an hour of work.
-Last, but not least: When your lender says they “can’t” negotiate on the penalty, or the rate on a new mortgage, that’s just not true at all. Can’t means won’t! Remember that or it will cost you a lot of money. Yes they can, with approval of a manager, or even a regional manager. No does not mean no!

If you’re a homeowner and have a mortgage, the next few minutes could save you tens of thousands of dollars, or create a financial nightmare for you in the next two or three years or so. It’s up to you, but let me explain:

I’m looking at a national newspaper ad that has been running over and over again across the country, from one of the big banks marketing adjustable rate, or variable rate, mortgage loans. While the rate is really low, you have to remember that it is not a fixed rate, it will adjust when rates change, and that risk or gamble is entirely yours.

For most of us, it’s critical that you remember that your best interest rate is always your worst mortgage. That’s simply because YOU are taking on all the risk of rising interest rates. Right now, rates are at or near the lowest they’ve ever been. When rates change, where do they have to go? It has to be a rate INCREASE, and your mortgage loan will rise right along with it.

Right now, there are literally millions of families in the U.S. that can attest to that, because they took the mortgage gamble and did not choose a fixed rate. As a result, they just couldn’t afford the payments when rates started to increase. The rough rule of thumb is that every $100,000 you owe will jump your payment $70 for a one percent rate increase. So if you owe $200,000, that’d be $140, and if you owe $200,000 and rates go up two percent, that’s about a $280 higher payment a month.

Now, a bunch of economists in the same room couldn’t agree on what day it is today. And with that in mind, you need to remember that none of us have a crystal ball. But we do know for a fact that rates will go up sooner or later. BMO Capital Markets did a research report in December that predicted rates will rise by four percent between this year and 2012. Others believe we’ll be at current rates for another year or two. I don’t have the answer, just the heads up, and some options.

Gary Marr is a national financial writer. He had a column last year claiming his biggest mistake when he was younger was to take a fixed-rate mortgage. For him, and most of his readers, that’s great. He has the monthly cash-flow and income to ride out any rate increases and not feel the pain. But when we talked about the poll a few weeks ago, that more than 60% of families live paycheque to paycheque, tell me where those families are supposed to find another $200 to $400 a month? Should those families gamble on the temporary low rates, or take the sure thing and have a fixed rate mortgage?

Debt and credit are not about logic, they’re way more about emotions. It isn’t logical to charge something on a 20% credit card. Is it logical to finance a car for seven or eight years just to get a slightly lower payment than a four-year loan? Does it make sense to go to a payday lender at 400 plus percent, or to finance that “don’t pay for six months” when two-thirds don’t pay it off, and the rate is around 30%? Or is it logical to take that line of credit, gambling our home as collateral, and pay interest only, knowing we’ll be paying that for the rest of our lives?

None of that is about logic, or we wouldn’t do it in the first place. So I would suggest that the last thing most of us on a budget need is to have more uncertainty with our largest debt and our biggest monthly payment. The math makes an adjustable rate a better deal today, and for another year or two. If it were only about math and logic, wouldn’t we all be debt free?

I don’t have the answers. But I do know that knowledge is power and when we know all of our options, think ahead and consider the consequences, both good and bad, we’re light years ahead of 90% of the world. And when we’re informed we won’t turn our dream home into a nightmare mortgage down the road.

According to the Washington Post, the on-line cost of hiring a hacker to break into someone’s e mail accounts is now down to $30. And hackers have an almost 100% success rate. But the majority of the buyers from these hackers are actually boyfriends, girlfriends, or spouses. The point is, that for your on-line banking, or anything on-line, you need a better password than most people have! Because the most common password is still 1234 and that’s nuts.

When is a deal actually a deal when we’re financing huge amounts of money? Here, and in the U.S., I keep seeing ads for houses and lots that are supposed to be incredible deals at 50% off. Off what? I’ve seen these ads in Ontario, and for resorts in BC. Lots that were originally listed at $500,000 are now half price. But that’s a phony figure, because the original price of the lots are just made up, and hoping that someone will pay it. What matters is what the house or the lot is appraised at TODAY, not what it’s listed for. Whether you’re selling your home, your car, or anything else, it’s the TODAY value, no what it was somewhere in the past! Careful with that, and don’t get trapped in the hype of an advertisement.

Kelly Blue Book just published their 2010 list of vehicles with their retained value and depreciation: Less than HALF of all new vehicles this year are projected to be worth 20% or more after five years. That is a staggering figure. The brands that will best hold their values:
Number one is Lexus, followed by Toyota (and that’s not accurate anymore with their current problems) and Honda. The only European brand in the top tier of vehicles that hold their resale value is BMW, which is fourth, and Subaru rounds up the top five.

Overall, the average vehicle will be worth 32% of new vehicle price in five years. So remember that the longer you keep the vehicle, the less it matters. But the shorter buying cycle, or anyone fleasing…I mean leasing the vehicle, the more you will feel some real financial pain of paying for the depreciation.

Have you heard of the Visa Black credit card? Well, they just sent me an invite. It’s a great looking, high quality, wedding-type invitation. But inside, it’s just another credit card application with great marketing. You are hereby invited to join an exclusive club limited to only one percent of the population. But at 13.25%, the rate isn’t very exclusive, and the annual fee is $495. But the card is made with actual carbon and guaranteed to get you noticed. Really? Is that why I need a credit card? It also talks about “fantastic rewards,” but doesn’t list any of them at all. I’m afraid I’d be getting a plain burger for the price of a steak.

Good old CBC is now getting into the product placement market. A lot of it will be with TD/Canada Trust. The bank will show up (OK, not show up – pay to be included is more like it) on Being Erica, Little Mosque on the Prairie and Hartland.

Every Wednesday we spend a few minutes looking out for your wallet. Today, I wanted to share a few updates, and some consumer stories that we should all be aware of.

You and I know that money certainly does talk. Unfortunately, for most of us, it just says goodbye.

Since May last year, we’ve talked about waiting before getting stuck with another three year cell phone contract. I hope you listened, as a new national cell phone provider called Wind is now blowing across the country, a few cities a month. Their unlimited plans are $45 and not the rip-off system access fee. Hang in there for a while longer, because competition will keep driving prices down, and your wallet will thank you. Last year, I told you that I got rid of my $35 plan for a pay as you go package. I just loaded $100 on my phone, so my cost per month is now under $9!

Do you want to volunteer to get robbed? I didn’t think so – but let me explain:
All kinds of new and really popular applications for iPhones, Facebook, and the likes let you share with people where you are. But thieves also love it. All they need to do is see where you are, and it’ll tell them exactly how much time they have to rob your home. There’s a great web site to explain it to you called: pleaserobme.com
Two of these programs are Four Square and Bright Kite. It’ll notify people that you’ve just checked in to Safeway Rutland, for instance. That’ll mean you’ll be away from home for, what? An hour or so? If you’ve just checked in to the Coast Hotel in Vancouver, they’ve got a day, at least.

On Facebook, it’s even simpler. What’s greater and more current than posting some pictures while you’re on holidays? It may seem like a great idea, but thieves know you’re in Mexico and certainly not at home. Never post your pictures until you get back.
With a bunch of Provinces and Federal Budget last week, I found a great quote that certainly applies today: “The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt.”—That came from Cicero, a Roman philosopher in 43 BC. You’d think in over 2,000 years we’d have learned something? Apparently not…

A quick update on Arizona: For over two years now, I’ve been saying I want to buy an investment property in Phoenix. I also keep saying wait a little longer, and then longer, and then wait some more. Well, I can now say: wait a little longer. According to Moody’s Economy.com the Phoenix market may drop another 23% in 2010. Not to mention rental rates are plummeting as well. So it’s another year of hurry up and wait.

Just because the U.S. media has moved on to new and sexier stories, doesn’t mean the foreclosure problems in the US are solved, or even getting much better: In a four day foreclosure auction in Detroit last month, there were 9,000 homes on the auction block. But get this: 80% of them didn’t even get an opening minimum bid of $500! Yes, you could have purchased over 7,000 homes for $500 each! Sure, it’s Detroit. But that’s depressing to think about.

Yesterday, the Finance Minister announced a number of new regulations designed to tighten the lending standards for mortgages insured through CMHC. The main three are:

-Refinancing is now capped to 90% of appraised value, down from 95%
-Mortgages on investment properties now require a minimum of 20% down payment
-First time home buyers must have enough documented income to qualify for the payment equivalent of a five year fixed rate mortgage. The buyer may choose a variable rate option at a lower payment, but the income has to be there to be able to make higher payments in anticipation of rate increases.

In practical terms, on a $200,000 mortgage, the buyer needs to qualify for a $1065 payment of a five year term, even if they choose a variable rate mortgage that would actually be $923 a month. (Currently at 4.09% vs. 2.75%). That translates to an additional $345 a month of income, or reducing other monthly payments by $138 a month.

That brings me to my trip to Vegas last week. Vegas is one of the ground zero cities in the U.S. mortgage meltdown. The city that never sleeps had a decade of building house after house, and selling it to investors with no money down, gambling they’d be able to flip it at a higher price to the next buyer – kind of a legal pyramid scheme. And homeowners saw the value of their homes double and triple over a decade and, on average, cashed out their equity every two and a half years, for an average of $30,000 each time.

Now that the music has stopped and reality has set in, the majority of residents owe way more on their homes than the value. You won’t see the devastation on the strip, but drive a few miles north on I-95, and you see foreclosures and bank owned sales, after foreclosure and empty homes.

An even bigger problem are the upscale, luxury condominium projects that just came on line in the last year. They’re 20-30 stories, often, like the Panorama complex, multiple towers – and pretty much empty. At the end of the strip is a twin tower called One – Las Vegas. I saw four cars and a security guard. I’m guessing one entire tower of 20 some stories is empty.

Visitors to Vegas are down 10%, and I’m surprised it’s not way higher. The casinos, hotels, and malls are noticeably empty. Gambling revenue is also way down and the hotel occupancy rates are the lowest since 1984. The Tropicana is in bankruptcy, and even Hooters Casino is in default on their loans.

Unemployment is over 13%, and expected to peak at about 14.5%. Vegas has the greatest fall in personal incomes, highest national foreclosure rate, and the largest percentage of homeowners who owe more than their home is worth.

THAT is the end result of a real estate bubble and insane speculation of buying homes people couldn’t afford, with teaser, variable rate mortgages and no down payments. It works for a while, but it’ll always come to an end. THAT is why the Finance Minister preemptively amended mortgage rules before we potentially get to that point.

Every kid puts their hand on a hot stove once. Yet us adults keep making stupid financial gambles over and over, somehow thinking the next time will be different. Yes, it’s our money, but when our gambling starts to affect the overall economy, it is reasonable for the government to set some basic ground rules.

My rules, and advice for anyone who will listen, go way beyond that:

-Broke people shouldn’t buy or own homes.
-Never buy an investment property without at least 50% down. Because when the roof needs to be fixed or there’s no tenant for two months – you’ll lose it all.
-First time home buyers need to be debt free and have 20% down to avoid our outrageously expensive mortgage insurance in the first place. It’ll make it a dream home, not a mortgage and debt nightmare.

This week, RBC released their Consumer Outlook survey, and it shows that more and more of us are worried about our debt load. I think that’s great news in that we’re finally getting real and seeing that borrowing money does not work, and being broke is not a fun way to go through life.

Fundamentally, it’s a real problem when we stay optimistic about our debts. THAT is what gets us broke! When we talk ourselves into buying this or that on credit, thinking that the payment isn’t that big a deal, we’re on a slippery slope of trouble. We block out the fact that it might take two minutes to spend it, but it’ll take years to pay it off!

A way better mindset is to be pessimistic about our debts and optimistic about our incomes. Instead, the survey shows that we believe we can become debt free reasonably quickly, but we’re worried about our job security. To me, that’s the wrong way around. We should be pessimistic about our finances. It’s what makes us realize maybe we can’t pay that payment for years, what happens when rates go up, I’m going to be in trouble if I carry my credit card at the max, and so on.

Yet, on the income side, 24% of us are worried about a job loss. To put it in perspective, however, the unemployment rate is 8.5%. But 5.5% or so is full employment. We know that from just a year or so ago. So, the real unemployment rate is around 3% and 24% of us worry. That’s a total disconnect between the two!

On the optimistic side, thinking we’ll pay off our debts pretty quickly, the numbers are even more surprising:

18-34 year olds expect to be debt free by age 43.
35-54 year olds think it’ll be at age 59. Yet, the group that’s closest to that age, those age 55 and older, think it’ll be at least until age 66! So a heads up to those under age 34: It ain’t going to happen! No way, no how – honestly. Sorry to be the bearer of bad news, but the reality is that you’ll likely have a mortgage payment of 25 to 30 years which right there, alone, makes it impossible.

And almost everyone under age 54 has a car payment. The average car payment is $480, financed over seven years. What’s a seven year old car worth? Exactly. So what happens then? We finance another one and go on another seven year broke cycle. Skipping one of these seven year finance cycles and putting that money into an investment account or RRSP will be over a million dollars when you retire. Instead, we buy something that’s worth less and less each month and keep paying and paying.

Keep in mind that every time you commit to a payment, you’re voluntarily taking a pay cut! That payment has to be made, so it’s money you no longer get to keep! It may be that $200 credit card payment, $400 car, the financed furniture, or whatever. Yet, if our boss wants to give us a pay cut we go insane. But we do it to ourselves every time we borrow!

One more thing which will become really important to all of our finances over the next year or so: The RBC survey showed that only 57% of us think interest rates will go higher. Excuse me? Rates are the lowest they’ve been in generations. So when they move, where do they HAVE to go? Up! And every line of credit and every variable mortgage will take some big jumps. The It’s Your Money book has a chart that asks how ready we are for the next rate increase. Anyone with just $150,000 of debt being hit with a 3% rate increase will spend another $329 after tax for nothing but more interest. And if we say we’re broke now, where’s that $329 going to come from?

What can we do? The really easy basics that 90% of us won’t do:
-Stop borrowing – period. When you’re in a hole, it makes sense to stop digging. Debt is NOT your friend.
-Do a written budget each month to know, not guess where your money is going
-Stop going to a restaurant unless you work there
-If your car is financed – sell it, no matter what you owe. That saved payment alone will likely get all your other debts paid off within a year. Drive a $2,000 beater for a couple of years until you’re debt free.
-Pay yourself first: Have some money taken right off your pay, or out of your bank account towards savings. If you don’t see it, you can’t spend it.
-Leave the credit cards with a relative. Out of sight, out of mind, and start paying in cash or by debit card.
-Get an emergency savings account of two weeks income so the next crisis will just be an inconvenience.

We know technology is taking over more and more of our lives, and the area of credit, banking and finance is no exception.So I wanted to share two big inventions that you have to know will be pretty commonly used within the next year or two:

The first one is called person to person banking, or mobile to mobile. Starting in the spring, if you owe your buddy 20 bucks, or need to cover half of a restaurant tab, you’ll no longer need to find an ATM, or your checkbook. You just need to get your friend’s e-mail address or telephone number, and you can send the money directly from your cell phone in a few seconds.

It’s already rolled out in Europe and Asia, and will easily be embraced by tech people and the 20-something age group first, because they have grown up with the internet and on-line shopping. But the rest of us will follow, because over half the population now does some kind of on-line banking.

If you remember, the first big one is and was Paypal. An on-line company that allowed you to pay for your E-bay purchases from your credit card or bank account. That company was so successful, E-bay purchased them. It was also something the banks had no interest in at the time, thinking there’d really be no demand for on-line payment services. They were dead wrong, since Paypal now has 78 million active accounts.

But this time, when it comes to mobile person-to-person, the banks are at the front of the line to implement this technology. They’re thinking maybe 25 cents a transaction as a fee. Now, that might not sound like much, but like all their other fees and service charges, it’ll add up to a few bucks a person, and billions in total revenue.

PNC Financial and the credit union of Boeing are at the front of the line to roll out this new technology. MasterCard is working with a different provider, and Visa is already testing the program through US Bancorp.

Here’s how it works: You simply sign up for the service with your bank or another provider. Enter someone’s e-mail address or phone number to send the money, and it’ll be debited right from your account, just like any other bill payment you do on-line. The receiver just chooses to have the money deposited to a checking account or a credit card as a payment. And the great news is that cell phones are way more secure than any computer system. They are way harder to hack into, making this new person-to-person banking system safer than any of your current on-line payments.

The second one is very cool, as well. How would you like to do almost all of your banking in your housecoat, right from your computer? Within the next year, you’ll be able to make any bank deposit right from your computer at home without ever leaving your home, business, or office.

You just need to scan the cheques you’re depositing, and e-mail that scan to your bank. The financial institution processes the deposit with all those transit and account numbers on the bottom of the cheque. They’ve got the numbers on a scan, so they don’t need the original! You can literally throw the cheque away after it’s received. It really is that simple with just a computer and a scanner. Plus, going one step further, one bank in the U.S. has already started taking deposits done electronically with your smart phone.

A little less lofty is that one in five ATM’s in the U.S., not in Canada yet, scans your deposits the same way. You’re still leaving the house, but your ATM receipt is the actual scan copy of what you deposited as a receipt. Fidelity Investments ATMs were among the first, but it’s getting pretty common already. I’ve done it a number of times in the States and it’s really slick to have that copy as a receipt. What’s great is that this saves the banks a fortune, too. The payback on the software is only 14 months. But first the Canadian no-service banks need to get the software sooner, rather than later, please!