Posted by Robert on March 28, 2011
This is a guest post by Robert, who lives in Calgary and works as a financial adviser. He is married, has three kids and plans to retire at age 35. Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.
I didn’t begin my career thinking, “I want out as quickly as possible.” I’ve been fortunate to be able to work in financial advice, where I have a real interest. I enjoy talking with people about their finances and helping them organize for more efficiency and a greater probability of success. Having said that, it was my second choice, and I’ve always wanted to live with my family overseas. That’s my dream, and when I started thinking (over two years ago) how to realistically achieve it, early retirement presented itself as an idea that would allow me to mitigate as much of the risk as possible. If I’m financially independent, then I know my family will be stable, working only to cover the cost of the kids’ school and any extras, such as travel. But how do I explain this unorthodox life choice to others?
My concerns were first, that people wouldn’t understand. Why would I want to limit my lifestyle to a fixed income, when I could continue to be successful at work and earn six figures? And second, that people would feel jealous, wondering why I’m able to stop working before 40 when they’re uncertain about being able to retire at 65. I first had to tell my parents, since I work with my father and we will be moving their grandchildren far away. I must admit they were shocked. When we sat down with them, in our house, and explained what we wanted to do, the timeline we had in mind (six years) and the amount of money we have and need, they were surprised by the audacity of our plans, but also supportive that we were able to find something to be excited about and to work towards.
I work in a small office of under 10 people. Everyone at work knows of my plans, but I have explained that “I’m going back to school to become a teacher in a couple years, then moving abroad.” I leave out the “retirement” aspect, because I don’t know how to answer the obvious question, “How did you manage that?” and the implication, “and why am I nowhere near?” But it keeps coming up in little ways. Recently, one of the administrators came to me and said, “We got a notice that your life insurance isn’t paid for and will expire. Aren’t you going to pay it?” I explained that my house is paid for now, so it became unnecessary. She asked, “How did you manage that? Did you sell some investments?” Actually, I had, so I agreed with that, but she paused and asked, “Don’t you need the insurance to take care of your wife and kids?” They’re already taken care of because we are working toward financial independence. But I just said, “Don’t worry, we’ve thought of that and they’ll be taken care of.” I didn’t want to say more, and she left it at that.
A few weeks ago, my wife and I met up with a friend of my parents, whose family I had grown up with. We’re both involved in some similar projects around public education, so we were describing to her our plan to go back to school and then teach in international schools. She thought that was great, but pointed out that I have a good paying job and asked why I would leave it. “I’ve gone as far as I can in this job” is something I like to say. “I’ve enjoyed it and I’ve really learned a lot. Now I’d like to move on to something new, something that makes a difference in another way.” She liked that, but she’s smart. She asked about the money, and I admitted that we’ll have enough. “To retire?” she asked. She had guessed what I meant and she was impressed. I realized that many people equate money with intelligence and assume that smarter people have more money and people with money must be smart (not necessarily true). But I wouldn’t expect her to be jealous, since she has a six figure government income and her husband has a public pension.
A couple of my clients at work were personal friends before they became clients. One in particular seems to be on the traditional hamster wheel: earn more, spend more, repeat. I know that he’s worked quite hard to have more money, which he seems to use to have some of the nicer things in life. But he doesn’t seem to understand the fundamental idea of saving and investing. He asked me just the other day: why do you seem to be transitioning out of the business? I found it easiest to explain that I’m planning on going back to school. For him, this seemed to be a fully satisfactory response.
With all the people above, I don’t have a standard explanation of my situation and plans. I still don’t feel comfortable explaining that if I had to stop working, I’d be financially secure, and that will allow us to launch the next part of our life. There’s no secret how to get to this point (earn good income, stay out of debt and live below your means). But not everyone can do it and I fear that people may feel jealous of what they don’t have and don’t understand. Maybe that’s selfish and irrational and I should use my situation as an example for those around me. What do you think?
Posted by Canadian Dream on March 25, 2011
So after some considerable thought I’m considering getting a tablet…yes I know I’ve mocked the iPad for a while on this blog. Yet now that there is starting to be some competition in the market and the addition of cameras I’ve readjusting my initial impression of the devices as it might solve one particular issue I’ve had for a while now. I don’t own anything that allows me to easily work on Word files just about anywhere. Yes I do have a laptop, but the thing is heavy so I dislike taking it along except to places where I know I will need it and my iPod Touch is good for a quick email, but sucks for writing a chapter in a book. Yet with the market changes so fast right now I think I’m going to sit on the sidelines for a while and wait for the prices to drop, so this item is going on a six month wait list. At that point I’ll look again at the market and decide if this ‘want’ is just tech lust or something I could actually use.
Now onto this week’s links:
Jim Yih has a good post reminding people you don’t pay half your salary to tax.
I love this post from Thicken My Wallet when he asks is it time to end tax deduction and tax credits…mmm I would love a one page tax form.
Can money buy anything…include a wife?!? One guy is trying it out for $10,000. See here.
Excuses…oh yes we are good at those. Here is five excuse for holding you back from wealth.
I have to admire Krystal’s goal this year of earning an additional $25,000 from her freelancing work. Here is her progress so far.
Over at Moneyville.ca, the question is asked: can you live with just 100 things? It’s an inspiring read. It’s got me thinking about some of my recent work to get rid of my excess stuff.
An interesting post on the conflict of building wealth for yourself and helping others from Bripblap.
Posted by Canadian Dream on March 24, 2011
Here is an interesting thought: can you go an entire day without money? Not earning any, or spending any. Given how often we use or make money that would be difficult, but possible. Now, can you do the same thing for a weekend, a month, or how about… a year? If you are like me, the first thought you have is you would have to be insane, which granted is what many people though when Mark Boyle did the same thing for an entire year. He then wrote about the experience in a book called The Moneyless Man.
As social experiment goes this one was definitely on the fringe, but like any experiment there has to be some ground rules. For example, Mark could barter for things, that he could accept things in any normal context (like dinner at a friend’s house, but not every day). He would also try to reduce his fossil fuel usage to nothing and try to help others where possible. That last point is rather critical to Mark’s theory about the experiment.
You see Mark makes the argument that money has left us disconnected from the world around us. We have little idea of where the products we use come from and the difficulty in making them or the society costs we pay in pollution. Money also changes the game from cooperation to competition. People prior to money were just in the habit of helping each other: for example you help me with my harvest and I will help with yours. Now days we typically expect to be paid for a similar arrangement. So the heart of Mark’s experiment would do two things: one bring him back into difficulty of having to either make, borrow or trade for everything he needs to live. The second part would be to try and get into the habit of helping others with no expectation of getting something back.
The second point might not seem all that important until you realize prior to the invention of money our economy worked on the idea of you give support to others and receive support in return. Typically these daily exchanges weren’t kept track of like money so by giving freely Mark hoped to get back to that concept just a little bit.
Now the majority of the book is the strange tale of how Mark spends his year without money and how it works out. Overall the entire thing comes together fairly well for him. He gets a free trailer from someone who does want theirs anymore and sets it up on an organic farm in exchange for working at the farm three days a week, so that was his shelter. For food he grew some of his own on the land near the farm or he bartered for some, forged for wild food or hit a dumpster or two for perfectly acceptable food that was still in its packaging (just one day past its expiry date). Then transportation was with a bike and he did buy a small solar panel prior the experiment to charge a cellphone (incoming calls only or 911) and his laptop (so he could write about his experience on his blog or email others).
Overall the book was an entertaining read and it reminded me of a fact a lot of people forget: there is no one right way to live. While Mark’s lifestyle would be a completely not for you, it doesn’t invalidate that it might work for him or others. What’s struck me as interesting about the experiment was basically a large part of it was based on the fact of using what other didn’t want anymore. We waste so much as a society that in moderate climates, like England, it is possible to live off that waste stream. Obviously it can’t work for anyone since you need a certain amount of waste to sustain those that choose this way to live that way, but if it turns your crank have fun.
If nothing else I enjoyed reading this book as a reminder. We often talk about needing so much money to hit early retirement, but the fact is if you just want out of the system you don’t even need a dime to do that (depending on where you live). It may not be for you, but it is an interesting reminder of you can get buy on less than you think.
So would you ever try something like this? Or at what point in your life did you live on the lowest amount of money? I personally recall right after university and prior to my first career job, my wife and I both made about $6 or $7/hour and we managed to do fairly good. We were broke, but happy.
