Boring Personal Finance

This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any.  Dave is from Ontario and is working towards his CGA certification.

I have never had a super-flashy personal finance plan.  I have never been in a significant amount of debt,.  Yet even when I met my future wife and she did have some debt, we worked out a plan and got her out of debt as quickly as possible.  In a word, my personal finance story is pretty bland.  Now, and for the next four or five years, my goal is to get rid of the only debt I am carrying at the moment, which is the mortgage on the house that I purchased in the summer of 2009.

Paying off a significant debt has got to be the least exciting thing to do with money.  It would be considerably more exciting saving up for something fun to buy (like a car or a big screen television) or investing in the stock market (which is essentially gambling in a widely accepted venue).  My wife and I get excited over every $10,000 we pay off, but there are so many of those crossroads ahead (we just crossed the $130,000 threshold) that right now it’s hard to see the end.

Having a boring personal finance plan is better than the alternative – I’m glad that at some point in my life I haven’t ended up in a $50,000 debt-hole that I had to dig out of.  I enjoy reading stories about this topic, I find them both very interesting and educational but I don’t think that the stress involved with those types of situations would be very beneficial.

It was mostly through luck that I didn’t end up in a bad money situation – I wasn’t taught personal finance at any point growing up.  The only reason I didn’t end up in significant debt was that I didn’t really want anything extravagant – I bought a cheap(ish) car, didn’t rack up credit card debt and made sure that I paid off my student loans as soon as I got out of school.  At the time, what I was doing just really made sense, it wasn’t until I got really interested in personal finance that I realized how lucky I was.

So, I continue on with my boring financial plan.  It’s not that I live a boring life, it’s more that I spend my money in a boring way.  I don’t really have any plans of changing my plans in the short or long-term because what I’m doing allows me to have fun doing the things I like to do (such as the all-inclusive vacation I went on in December) it just seems very “un-exciting” being in the middle of a long-term goal.

Is your financial plan exciting?  If it’s as boring as mine is right now, with a single (although large) long-term goal in mind how do you maintain your financial discipline?

9 thoughts on “Boring Personal Finance”

  1. We build up the small things that we enjoy to make them seem important. For example, we both take lunches and have dinner at home throughout the week. On Fridays we always are able to grab sushi, subs, or go out for dinner. While dinner out is not a huge expense going out, relaxing and enjoying good food is definitely something to look forward to throughout the work week. Just the same as you look forward to your all inclusive vacation look forward to the little things just as much. This is a strategy that works for us as we have short terms goals which we enjoy almost every week, mid-term goals such as vacations and are still able to leave the focus on the long term goals such as retirement.

  2. We’re pretty boring, but we have a lot more debt than you, Dave. Our mortgage is sizeable, but less than 2x our combined income. We (boring) increase how much we pay bi-weekly by 20% every year to take this debt down. We have my student loans (they never die!) which we may try to eliminate this year and a small family loan from my Dad (our lowest interest rate and he insists we pay higher interest debts before repaying his LOC).

    Other than this we contribute to our TFSA and RRSP using ETFs and solid dividend companies.

    Where we aren’t “boring” is that we practice the Smith Manoeuvre …. but even this hasn’t been exciting as we focus on blue chip aristocrat CDN dividend companies.

    YAWN

  3. We are now firmly in the zone – the boring but progressing steadily toward our goals zone. Our day to day mortgage, utilities, groceries and gas consume 55% of our take home pay. The other 45% goes (normally) to one of the savings/debt reduction buckets: RRSPs, extra mortgage payments, TFSAs, etc. Every Friday like clock work I pay off that week’s charges to the VISA (everything but mortgage, property taxes and hydro go here). Then I skim off everything above ~$1000 in the account and send it off to one of our savings buckets. We leave $1k in the bank to avoid any charges and to keep a small easily accessible emergency fund on hand.

    We’ve been in this mode now for about 3yrs. Spend very little, buy everything on the CC for Aeroplan points, pay it off weekly, and skim off all the excess immediately either pay down the mortgage or put it away for early retirement. The only time we break the boring routine is when we decide to take a holiday, which is about every two years. We figure out what the trip will cost and then just stop skimming off the excess for the required number of weeks to save up the funds to go. Then we immediately go back to regularly scheduled programming.

    Yup, boring, but effective. I find that if your “normal” routine is to spend only the bare essentials and save the rest, you put far more scrutiny on any non-essential spending.

  4. Yeah it’s kind of boring being on auto-pilot. I tried to create a bit of excitement for myself this last year by having a spending challenge month, some grocery challenges, this last month I tried to see if I could get bang on with my monthly spending budget – ended up $5 over…
    For xmas I bought my youngest kid a digital piggy bank. He gets totally stoked at every $10 increment. If I ever used cash, I’d totally get one for myself. Hmm. That sounds kind of weird.

  5. I never thought paying down/off debt was boring.

    When I refinanced my mortgage and reduced my monthly payment by $200, it was nice being able to have more $$ available to make additional investments in my mutual funds. These included larger investments as well as more frequent ones.

    When I paid off the mortgage, I quickly saw that it took only one biweekly paycheck to cover all my monthly expenses. The other paycheck was gravy, free to spend or invest (mostly the latter, of course). Also, when I paid off the mortgage, I received this big blob of papers I had not seen since I first bought my co-op apartment. These papers included the original stock certificate of ownership the bank had held for the previous 9 years. Now it was all mine.

  6. My personal finance is most definitely a snooze-fest. Saving money is so incremental – it’s about little changes that add up over time to make a difference. The speed with which they add up can at times feel like watching paint dry…

    As per investing, I’ve just signed up for a TD E-Trade account to invest in index funds, which is just about the dullest investment strategy on the planet. Slow and steady wins the race. 😉

  7. Dave, I think you may have mentioned this before.. but with a primary focus being paying off your mortgage, what kind of money are you putting into TFSA or RRSP?

  8. My plan is exciting! We are getting out of debt! How can that not be exciting? After three n a half years, we only have a year and a half to go. Yay! I get happier n happier each month. I can’t wait. I don’t think our plan is boring at all. Our plan is probably no different than each of yours, but i think differently. Each paycheck that dwindles the amount owed makes me glow with happiness. Each check that stays in the bank till it’s time to pay a bill makes me grateful I have job. I’m happy I’m not dependent on anyone. that’s my story n I’m sticking to it!

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