Posted by Tim Stobbs on July 4, 2007
A while back I had the following comment by Turney left on my post about Living Below Your Means.
(LBYM)What a quaint idea! All kidding aside, my husband and I have done this all our working and non-working lives and we’ve been able to do all sorts of things most people only dream of. While we fully retired when we were 50, we’re now 55 and we’ve been semi-retired since we were 40. We are very conservative investors but pay minimal tax due to those dividend paying stocks and limited withdrawals from our RRSp’s. Consequently our investments are growing not decreasing. It’s too bad more investment advisors don’t give you the scoop on actual taxes payable with a conservative portfolio. Forget those mutual funds that have high MER’s and trade stocks incessantly.
Another key to LBYM is that as Canada is one of the richest countries in the world, we can live very easily with items that have been discarded by people. Second-hand stores are abound with wonderful almost new items. And you are helping the environment. We have a lot to learn from our parents who never threw anything useful out.
It’s all about making choices. What do you really want? You can’t have it all but you can have many adventures. Last winter, we took a month and travelled by local bus through Mexico at for the cost of one week for two at an expensive resort. What memories!
In response to this I asked Turney to provide some more details about how they semi-retired at 40. She was kind enough to provide a wonderful story that I hope you will enjoy.
First, we paid off the mortgage on our first $28,000 house in 5 years. This was done by living on one income , mine, even though I only worked as a piano teacher at home. My husband was only taking home $150 a week at the time and the mortgage was $250 a month at 13% interest rate. We then saved for our next home for 3 years and bought a nice 2 bedroom bungalow in a small town. My husband could walk to work , so we only needed one small car and I worked at home. No babysitters for our son, either.
After buying the new house, I went to university and got a 4 year degree in 3 years and then my C.A. designation. Commuted with friends and bought very little. However, we always traveled, usually camping. Since our 40’s we have taken extensive trips. I worked part time and my husband was now working part time also.
Our hobbies or interests are very inexpensive, hiking, biking and in the winter cross-country skiing.
We now travel in the winter but our 5th wheel is 30 years old and in very good shape. However, we carry kayaks, bicycles and a small motorcycle. We use solar panels so that we don’t need to pay exorbitant camping fees. The total cost of a Dodge truck, 5th wheel and all our equipment is under $25,000. and we will probably be able to sell the 5th wheel for what we paid for it when we decide to sell. My husband is very capable of fixing and maintaining what we own, so we have saved a small fortune over the years. I also love cooking, so we eat out very little.
The C.A. designation has enabled me to keep our taxes low and choose the right investments for our situation. Dividend paying stock and capital gains split between us keep our income very low.
We live very well for under $30,000 a year. But don’t think we have really sacrificed everything to reach this goal. We had had a lot of fun too even when we were saving.
It really means that you need to keep your expenses as low as possible. Living close to our work really helped us. Having inexpensive hobbies helped us. Travelling on the cheap helped too. Being self-sufficient was a huge help. No debt was a big factor. Waiting and saving for what we wanted was very important too.
Hope I don’t sound too preachy. Good luck to you in your endeavour. I’m sure it will work out if this is what you want.
So there you go folks a story of how anyone can really retire early. All it takes is answering one question, As Turney said, “What do you really want?”