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Tuesday, March 3, 2015

Feb 2015 – Net Worth

Posted by Tim Stobbs on March 3, 2015

The following is an update of Tim’s plan to retire early in 38 more months.  Please note we are mortgage free.

Our ultimate goal between investments and the home equity is a net worth of around $1 million.  The investment part of that target is $600,000 (or higher).

Investments

Account (Contribution), [+/- Gain or Loss less contributions]

RRSP $42,430 ($0), [+$1210]
LIRA $15,350 ($0), [+$490]
TFSA $56,510 ($2500), [-$830]
Pension $117,690 ($887), [+$2222]
Wife’s RRSP $75,260 ($500), [+$2000]
Wife’s TFSA $48,010 ($0), [+1350]
High Interest Savings Account $2320 (+$600),[+$10]

Investment Net Worth $361,280 ($4477), [+$6,452 or +1.8%]

(YTD Contribution: $12,783), [YTD Gain: $18,546 or +5.2%]

Home Equity

Estimate $400,000

Spending

Last Month $1664

We prepaid for our veggies order for the summer already which was around $320.

Trailing Last 12 Month Average $2566 (or $30,795 for the last 12 months)

Results

PF Score: 24.7 {Target 32}

Net Worth ~$761,280

Commentary:

Well that’s the end of our TFSA contribution room for the year.  We finished maxing out both accounts (note there was a small error in Jan update that didn’t reflect a part contribution to my TFSA), so now we need to do some stock shopping.

Speaking of stocks the markets have done very well so far in 2015, which is interesting to note that the gains are exceeding our contributions…ah the joy of compounding! It’s nice to know that my money can grow faster than I can save it at times. ;)

We plan to get started on our taxes here right away and try to get our refund a bit earlier this year.  Normally I have had to wait until the bitter end to file because of the investment accounts, but I shouldn’t see any T3 slips this year as we moved everything into tax sheltered accounts a while back.  The only sad part is this likely won’t happen again as we will run out any contribution room in our RRSP and TFSA accounts this year and so will be back to taxable accounts at some point in 2015. *sigh*

Any questions?

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A History of Labour – Part IV

Posted by Tim Stobbs on February 27, 2015

UnemploymentWelcome to the Wasteland (Year 2 AD – After Degree)

Overall in my life I don’t actually regret much.  I’m fairly happy with where I am and what I’m doing but I have to look back at this particular period of my life as a bit of an exception.  After all, I was free from my soul eating employer wasn’t I?  No work to go to, lots of time to relax and kick back and guess what…I blew it.

What the F*&%$?!?!? You say.  Yes, I blew it.  I didn’t sleep in everyday, I didn’t read lots of books or catch up on watching movies…instead like a trained slave that was used to the beatings, when the master wasn’t there I flogged myself instead.  My two major mistakes were:

  • I worried the entire time I was unemployed about money.
  • I treated my job search as a job.

The first one was somewhat defensible.  I didn’t have a whole lot of savings at that point in my life and I owned a LOT of money between my wife and I.  After all we had just under $60,000 in debt from university and I signed a $18,000 car lease which was also draining us monthly.  So in fact, if I didn’t get a job when my Unemployment Insurance checks finally stopped coming in I would rapidly go from treading water to screwed in a matter of weeks.  Yes my wife had a job, but given our expenses and limited savings we didn’t have a big cushion (and I wanted to avoid tapping our limited RRSP savings).

Aside: Also when looking back at these months I realized something….this was the genesis moment of my dreams of early retirement even before I found out about the concept.  How? I realize now I never wanted to be in the situation of worry about money like that ever again.  So later on in life when I did come across the idea of early retirement, it was extremely appealing to me.

Yet I do think I worried about this way more than I needed to, which lead me to my second mistake.

I had previously read some well meaning advice on job hunting that you should treat your job search as a job, which being young I assumed meant work on it for like 6 to 8 hours a day.  So I got up each week day and pretend I had a job of finding a job.  So I gave myself a few coffee breaks and a lunch hour but overall spent most of my days looking at job ads and writing up job applications, cover letters and redoing my resume.

Yes, I can see you shaking your head at the stupidity of it because frankly looking back I agree.  I didn’t know that spending more time at something doesn’t always increase the productivity of the activity.  In fact, I could have likely done just as an effective job search in perhaps 2 to 3 hours a day, but I manged to drag out the misery out to six or eight hours a day.  See what I mean by flogging myself.

Then of course because of my worry about running out of money I would feel guilty when I did stop looking early any given day and it would just fall into a negative feedback loop.  I won’t do fun things because of fear of running out of money, feel worse, still not have a job, feel even more guilty and clamp down even harder on our spending.  Fairly sick eh?

Of course I as didn’t realize that engineer jobs looking for 2 to 3 years experience was particularly an endangered species, and I felt I was under qualified for the jobs that were looking for 5 to 7 years experience.  Also keep in mind that after my last job, I was being a hell of lot more picky about getting a new job.  I wanted to avoid oil and gas, which when you live in Alberta cuts out a LOT of jobs.   So this likely went on much longer than it had to.  In the end, what broke me out of this cycle was I decided to widen my job search to pick up just about any decent paying job (ie: higher pay than minimum wage) and I applied for a Customer Service Desk job at a chemical distribution company.

I still actually recall the exact moment I decided I wanted to work at that company.  It happened just before the interview before I knew what the job involved, what it paid or even what the hell was a chemical distribution company.  While I was waiting for the interview of the reception area I watched the staff come up the receptionist and chat with her.  They joked, told stories and smiled a lot more than my previous workplace.  It actually gave me a powerful sense of deja vu to how my immediate family treated each other.

So after two rounds of interviews I was thrilled to be offer a job and finally move out of my self imposed wasteland.

Summary

Lessons Learned

  • Working longer on something doesn’t make it better.
  • Worrying about things you can’t control is rather pointless.
  • Fear of running out of money can be a powerful fear.
  • Learn to have some fun once in a while regardless of your financial situation.  You don’t have to break the bank having a good time.

Financial

  • Progress was non-existent at this point in life.  If anything we went backwards for a few months.

Affordable Coffee from a K-Cup?

Posted by Tim Stobbs on February 25, 2015

Over the holidays I have a well meaning gift to my wife and I of a Kurig coffee machine.  It’s just one brand of several types out that that use disposal coffee pods and at first I’m completely admit my first thought was: what the hell am I going to do with this?

You see I already know from using K-cups at work that the little pods are not cheap like around $0.75 to $0.80 per pod.  So when you have already been drinking dripped brewed coffee for years why the hell would I want to spend a small fortune buying little expensive coffee pods?

Yet cost isn’t everything in life so when my wife suggested we give it a try before making up our minds I thought: oh why not?  If it is bad, we just get rid of it.

Anyways, during our initial use of the machine I had to admit it was handy to have around when you just want a single cup of coffee.  My wife particularly liked it after lunch since she usually just heated up the old coffee that was made that morning…which is you ever microwave old coffee you know that isn’t that good.  For her she was getting a much better cup of coffee after lunch and since she only drank that one cup it didn’t make sense to make a second pot of coffee.

Yet the cost of those K-cups was driving me nuts…there had to be a better way.  So I turn to good old Google for a solution and come across reusable K-cup pods (which apparently won’t work with the new 2.0 machines unless you hack them…just Google it).  I’m like, oh ya!  More less waste and you can use your own ground coffee in them so you can even have the same old coffee that I’m used to in my morning pot of coffee.

Except it appears some of them by design are a bit of pain to use as you have to replace one section of the machine to use them, which seems sort of pointless to me.  Anyway after digging around in Amazon’s website I come across one that looks just like a regular K-cup.  No parts to change out, just put your coffee in close the lid and brew.  Also you can get two of these little reusable K-cup in a package for around $15.  So I decide to give it a try and order them.

Well when I get them I had a look at them and it seemed fairly easy to use them.  We played with the amount of coffee you need to add to get a damn close copy to the taste of my morning drip pot of coffee. Yet after that is is all good.  The reuseable is easy to use and saves you a small fortune in buying all disposal K-cups.  The only real downside the reuseable K-cup is you end up using a bit more coffee per cup than you would with a traditional drip brewer.   So there is a bit of an increased cost to using them, but it isn’t huge by any means perhaps 1/2 tsp extra per cup, but this mainly because we like our coffee strong.  I don’t have exact values, but I would approximate our savings as 60% less than a regular K-cup.

In our case this is saved by making a smaller pot first thing in the morning, so overall it likely not much more coffee usage in the house by having the machine in the house.  I estimate the reuseable K-cups are about 20% more expensive than our usual drip pots of coffee.

Then my wife has a brain wave which I love…why not just buy flavour coffee in disposal K-cups.  After all you never really want more than a cup of flavour coffee at a time (ok, at least we do).  Also to limit our spending on this we choose to only buy the disposal K-cups with our spending cash.  It should be a treat, not a everyday thing.

So all in all, I have to say I’m surprised to be agreeing to keeping the machine in the house.  I noticed in the instructions that it can go from stone cold water to ready in just four minutes.  So rather than keeping it on and plugin all the time I put it on a power bar and shut it down when we aren’t using it.  That helps keep the power bills down from just leaving it plugin all the time.

In the end, it is possible to have one of these machines in your house and not spend a small fortune on K-cups.  Just buy one of the reusable K-cup and take the extra 15 seconds to fill it up and empty after you are done.  Does anyone else use these machines regularly?  Any other tips to share?  I’m still mostly new to this.