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Friday, July 31, 2015

What’s the Point?

Posted by Tim Stobbs on July 29, 2015

I was chatting with someone the other day regarding my plans for early retirement and he asked a basic question: what’s the point of early retirement?

Ironically, the person asked that in a more general sense and I of course pointed out that the reason why people go after early retirement is hugely personal.  There are thousands of reasons to go after this goal, but in the end the only one that matters is your reason.  Why do you want to retire early?

There doesn’t have to be a single reason why.  In fact, I think the most successful people planning to retire early have more than a single reason.  The more reasons you have the more motivation you can bring to your plan to help you see it through.  Getting to early retirement is very much similar to training and running a long distance.  At the start you can’t go more than a few blocks before being exhausted, yet over time you get go further and further towards your goal.  But unlike running, the changes to get to an early retirement may span a few decades.  It isn’t an easy feat to do, so you have to be very sure of why you are doing this otherwise you can give up on that dream.

To me personally the best way to summarize my why is: freedom.  I love that feeling on vacation when you do what you like, when you like within a broad context of the amount of time and money you have put aside for the trip.  I just want to expand that feeling to have nearly unlimited time and a modest amount of money to do things.

For me the time is worth more than the money.  Also putting it into context when I am on vacation, like right now, I tend to focus on doing things that interest my family and me.  A lot of the time these things don’t have to be very expensive like a hike in a provincial park to see a few waterfalls then swimming at the base of the falls.  Of course this doesn’t mean I don’t spend some money on things that we want to do, we just keep in mind the fact we can’t do everything at once.  Besides, I sort of like taking things easy while on vacation.  I hate rushing around so the idea of jamming in as much as possible in a week isn’t fun.

Yet there are other reasons to seek out early retirement for me that include but aren’t limited to:

  • I like to write, but know it doesn’t pay that much. So it takes a lot of time to write a book, but your hourly rate usually sucks.  So I can’t afford to do it full time right now.
  • I dislike waking to an alarm.  Really, I never sleep in that much so why should it matter if I’m 20 minutes late some days for work anyway. (Work has a different opinion, so I keep the alarm clock for now.)
  • I dislike working full time at my day job.  I don’t hate my work, it just loses some of the fun when you have to do it for the majority of your week.
  • I love to read books and watch movies, which with a library is a fairly affordable way to entertain myself.  Add in Netflix and I could happily stay entertained for years.
  • I like to slowly fix things.  Doing a little project over two weekends rather than cramming it into a long weekend.  I like to get things right the first time and have time to think about the project.
  • Savings is natural to me.  Early retirement just defines a bit more of a goal for that money.

Are these great reasons?  Not really, but they don’t have to be as long as they make sense to you.  Find your own reasons and don’t worry if they seem silly.  After all, you only have to convince yourself.  So what are a few of your own reasons?

Putting On a Garage Sale

Posted by Tim Stobbs on July 12, 2015

Well after many years of ignoring the idea my wife finally convinced me to try running a garage sale.  Normally I’ve won this argument over the years with the simple statement of: we don’t have enough stuff to sell.  Yet because of my recent purging activities I dug my own hole on this one and finally agreed to put on a garage sale.  I really just wanted to sell a handful of things and toss the rest but my wife have having issues with tossing that much stuff so I gave in only after extracting the promise we would donate as much as possible for the leftovers but after that any left would be tossed.

Overall it was equal to a three solid days work of preparation the week before for the sale that ran over Friday evening and Saturday during the day.    It took that long just to set up the garage space, sort and price everything and put it all out on display.  We kept our pricing generally low in order to encourage sales (we were doing this more to get rid of things than make money) and we kept everything at easy to calculate amounts like $0.25, $0.50 and $1. That also included time to put together an ad and post it several different websites (for free of course).  Then I picked up some change from the bank for $220 in fives and change (which by the way was a bit too much, but you do use a lot more change than you would guess).

Our hours for the sale were Friday 3 to 7pm and were supposed to be 10 am to 6pm on Saturday.  Yet in reality we never made it that long.  We started to realize that the customer traffic on Saturday was so low that it won’t be worth keeping the sale open the full hours.  So about 2:30pm after less than 10 customers we started to clean up the garage and toss a few items in the trash and then put together a pile of stuff that we would try to donate.  Only three higher priced items were left that we will give a try to selling online.

In terms of sales honestly it wasn’t a good use of time.  We sold $253.50 in the first day and just $25.25 in the second for a total of $278.75.  A good lot of the sales came from a handful of items the two biggest ones went for $40 each and included an outdoor play structure and a crib.  Those two items sold in the first 30 minutes of the sale and I wasn’t even remotely surprised since I was answering email questions about those via our ads prior to the sale even starting.  So I learned that apparently having a few higher demand items is really helpful to drive some traffic into your sale.

Yet in terms of stuff, I have to admit that for getting rid of things it is a fairly effective way to do it especially if you want to see the get reused rather than just tossed into the trash. I would estimate at least 2/3 of our stuff sold and lots of the big things.  I understand my wife’s point of view on this one as the boys did a major purge on their toys so we have over half the items in the sale were just toys.  Those did very well for sales, one boy’s mom  bought a huge amount of our old Thomas trains.  I was also amazed about some of the things that sold.  I put out two old garage cans that I had from our previous house that I don’t use and both sold even when every person in this city has access to a large bid for their trash provided by the city.

To provide motivation for all this work we decide in advance that all the cash from the sale was going to be spending cash for our vacation and because the boys were helping haul stuff up from the basement for the sale and sort all their toys we promised them some of that money to spend during our vacation.

In the end, I’m glad it is over and I personally never want to do it again, yet my wife pointed out that will be at least one more sale…when she closes down her daycare for good when she retires we will have a huge sale prior to downsizing the house.  I suppose I could put up with that if it means she joins me in early retirement.

So do you ever put on a garage sale?  Are they worth the effort?  Or do you just shop at them?

Lack of Value

Posted by Tim Stobbs on July 6, 2015

Perhaps the most common question I get about our financial situation is something along the lines of: how do you save so much?

Well to be honest saving 65% of your income gets easy after a while, so perhaps the easier way to answer the question is simply: I value what I’m saving for.

People often have good intentions with savings so about once a year around RRSP time they think a bit more about it and consider if they are saving enough.  Yet they fail to realize something critical….if you aren’t saving now that shows me you can have good intentions until the end of time and won’t save you a dime.

Look where you are spending your money now and they shows me what you value.  Do you value comfort over convenience?  So you might end up buying more comfortable furniture rather than meals out. Or the other way?  Perhaps you value your appearance over your substance?  Then maybe you buy a knock off designer purse rather than saving for a real one.  Either way isn’t right or wrong, but merely shows you what you value in life.

Me?  I value freedom over comfort, honesty over appearance and love over convenience.  Yes it sounds a little bohemian, but it is true.  These values drive my habits and thoughts more than a spreadsheet to live the life that I do.

Which is perhaps why I drive people I little nuts when they try to understand my success.  They get confused by my willingness to spend over $300 on some higher quality wine kits, but I will rarely buy a book even when I love them.  Or the fact we only have one car when it fact it is a bit of an inconvenience once in a while.  On the surface the issues can look odd, but mainly because the values the under pin them are likely different then your own.

For example, I dress moderately nice at work, but I refuse to wear a suit.  I hate wearing suits so even when I present the highest people in the company I still wear a only a tie, not a suit jacket.  I don’t care about appearance to others that much.  Or the fact I love good food, but rarely eat out…I like to cook instead.  I value quality over convenience.

This of course leads a person to consider who exactly they are.  What are you values?  Then after that painful process of self discovery you can then push yourself to align your spending with your values.  At this point something utter fantastic happens: life gets easy.

Pardon?!?

Yes, when you are spending with your values (rather than the values of others) the decisions you make become obvious.  You know what you value so the choice to save now or spend later is obvious to you.  You spend enough to be happy in life, but know that you wants will exceed your income on a permanent basis.  So once you have arranged your spending to align to your values, saving the remainder isn’t a chore or even an effort….it merely makes good sense.

The real difficulty I’ve found is combining your family values into something that everyone can life with.  So you learn the art of compromising….a LOT.  In my case, it means we spend much more on hot water than I would ever like to, but my wife gets to enjoy her luxury of very long hot showers.  Rather than debate it every day, I got her to agree to a lower flow shower head and now shut up about the water bill.

On the flip side she has put up with my odd little projects like collecting raspberries from the backyard all summer long into a bag in the freezer so I can make a little five bottle batch of raspberry wine from scratch.  It would have been much easier to just buy the bloody berries in the first place, but I wanted to make my wine from local ones.  So we agreed, we would save half the berries.  She rolled her eyes and did it anyway…then proceeded to roll her eyes again when she tasted the first bit of the wine.  It was one of my best yet and now I’m saving berries all over again this summer.

The real trick to combining values is to know the core ones are in agreement. They don’t have to be the same, but enough alike for you to both be happy with the spending that you do.  After nearly 15 years of marriage my wife and I have that down to an art form, which is reason we stay married.

So what do you value?  Does your spending align with it?