Strange Thoughts

Perhaps in practice for being sleep deprived soon I’ve been having the occasional odd thought running through my brain.  Rather than keep them all to myself I thought I would share some of them.

  • Why do we plan our spending for 40 years in retirement when in our working lives we don’t do it for even five years?  For example in retirement I know the exact amount I will be spending each year and I even plan my major purchases, but now I don’t know what I’m going to buy in 6 months.  Perhaps it’s just me or are we all doing this the wrong way.  Should you just pick a retirement income and then just try to live with it?  After all I adjust to changes now, why can’t I do it in retirement?
  • Baby smell is fake.  You know the wonderful scent from baby products, well it is completely artificial.  Babies without those products don’t smell nice like that.  So if a baby doesn’t use those products will they be loved any less?  No, of course not, so why do we spend so much money on our personal grooming products? Is just being clean enough to find social acceptance?
  • Why do governments waste our money creating new tax credits that cost more to us collectively than we get back in savings?  For example, the bus pass tax credit.  Really I did the math that is hardly going to turn anyone into a mass transit user.  It would have been more effective to double the tax on gas and then give the cities the money to upgrade their transit systems.
  • Why do people defend the way things are?  I mean really folks just because you’ve always been wrong about doing something doesn’t make it right.  I’ve see some poorly thought out processes where I take one look and think I can save you half the work (Yes, I’m a hell raiser to have as an employee and no I don’t think I’m always right.  I just can bullshit well when I’m not right.)
  • I’m sure my wife reads this blog just to keep up to date on our finances some days.  I know I’ve written a post now and again where she mentions afterwards that she didn’t know that.  Perhaps I need to start a discussion board for spouses of PF bloggers.  They can act as a support group for each as they think: who is this Smith and why is he so interested in our mortgage? Is it really useful to know your net worth down to the last dollar on a monthly basis? Have you ever wanted to tell your spouse you went and bought a car without their knowledge just to see the look on their face?

Feel free to add your own strange thought in a comment.

One Week to Go and the Result of the Plan

With a week to go to the due date of our second child I’m a little busy. I’m cleaning up the house, freezing extra leftovers, clearing my desk at work and checking up on my plan. Our original goal of the plan was to save about $7600 in 8 months.

That goal changed around the new year with my last raise and the decision to cut back my leave from 8 weeks down to 6 weeks. I revised the total required to $5200 after getting an estimate of my benefits cost from HR while I’m on leave. As of last night our total savings was $5500. So we have made our goal!

What I find interesting about all this is I could have still made the first goal. I spend $1400 of our original savings on a stock, we put $900 of a bonus into RRSP’s and I don’t even have my $1700 tax refund yet. With those included I would have saved $9500 in eight months. WOW!

So how do you save like mad for a short term goal? Well over the last few months I’ve learned a few things.

  • Do a Cash Flow Projection – This is the major source of our savings. We projected all incoming cash from all expected sources for 8 months and declared them savings before they ever arrived in our chequing account.
  • Redirect existing savings – We moved about $200/month from early retirement savings over to baby savings.
  • Cut your spending just a little bit more – I already had a cheap food bill, we cut it back just a little bit more by trying to eat more beans, chickpeas and lentils.  We ate some new recipes (creamy chickpea soup rocks!) and also saved a few extra dollars each month.
  • Save Surprises – We had two surprises that really helped.  One was that $900 bonus cheque I mentioned above and the other was our heating bill for the winter was much cheaper than I originally had in the budget.  So we banked an extra $300 for heating money we didn’t use.

So what’s your tip for saving for a short term goal?  If you have one please share.

Book Review: Rags to Retirement

Rags to Retirement by Gail Liberman and Alan Lavine was a different type of retirement book.  Mainly for the fact it is a series of twelve profiles on various people who retired on much less than people would think is possible and still consider themselves happy in retirement.

I like this book because it shows both sides of several different lifestyles that people live in retirement.  It shows what works for their lifestyle and what are some issues they have to worry about. Some examples include: a couple that travel and live in an RV for retirement, one guy who lives on a boat, a couple living in South America and many other interesting situations.

The book was written in 2003, so obviously some of the numbers are outdated, but it does provide some interesting notes of people who had just been through a bear market and all retired on less than a million dollars.  It also discusses what costs these people have to be careful of, such as health care (it is a US based book).

The other thing I liked about the book was the honesty about these people’s lives.  For example, this one couple had major health problems and a were forced to put some expenses on a credit card.  The don’t regret their situation, but merely do the best they can with it.   Actually the one thing that stuck me the most about the stories of these peoples lives was none of them regret their retirement, even when some of them have had some fairly awful things happen to them (ie: a stroke to one fellow who forced him into retirement).

The other theme that came out of each story was the support of others around them when things got bad.  This I feel is a key point to take away from this book.  You are not alone and shouldn’t be in all things.  Even in your retirement, it is ok to get help from other people.

So if your looking for a book that is more about experience and different lifestyle options I would recommend this book.  Yet if you are looking for some numbers I would pass this one by as it is outdated and doesn’t provide all that much detail.