Early Retirement with Kids

Posted by Robert on April 11, 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 have three young children, ages 2, 4 and 6. They are a big part of my life, and all I know about trying to retire early is intertwined with having children. In some ways, having kids makes it harder to retire early, but in other ways they make it easier. There are lots of ways that parents could spend bundles of money based on having children. On the other hand, children prevent parents from spending bundles of money on themselves. Without suggesting that there is any one “right” way to do it, here is how we approach saving money while having kids.

One of the choices we made early on was not to get cable. It reduces our monthly costs, but there is also the benefit (as I’ve noticed when the kids watch shows on cable elsewhere) that they don’t see advertising. This past week, while we’ve been on vacation, my oldest has sat in front of the TV while each advertisement for toys plays, saying “I want that, I want that, I want that.” There is no chance that we’ll get cable at home. Instead, we watch DVDs, some of which we bought at garage sales, some of which were gifts from grandparents, some of which we borrow from the library. In each case, there is little or no cost, but the kids still get to enjoy watching many different shows.

The library is actually one of my favourite places. For a nominal annual fee of $12, we have almost unlimited access to books, CDs and DVDs. It’s an indoor place to go during the winter and has the additional benefit for the kids that if they learn to love reading, it will boost their academic performance. We have internet and a computer at home, but if we didn’t, the library also provides access to computers with office software and internet access.

We take our kids to a variety of local playgrounds. In fact, we chose our house based on it’s proximity to a large playground and a community lake. Having these amenities nearby avoids wanting to build a playground in the back yard or wanting to put the kids in activity classes. Eventually, they’ll probably play community soccer or basketball, but we won’t put them in expensive and time-consuming sports like hockey. They can develop social skills while playing in an unstructured setting outdoors.

We are very fortunate to have high quality public schools, which our kids will attend. In each of these areas, we benefit from public goods and programs which are free or almost free and available to all. I want to be able to spend time with my kids while they’re young, not only when they’re teenagers and no longer want to be close to their family. It reduces the cost of programs and nannying, but it’s also what makes early retirement worthwhile for me.

The children do impose some limitations on the things I would otherwise choose to do with my time and money. I won’t take them to eat in expensive restaurants because they wouldn’t be well-behaved, but also because it would be wasted on them. I wouldn’t take them on vacation to Europe for sight-seeing, because the airfare and hotel cost would be prohibitive and it wouldn’t be memorable for them. Instead, on the occasions we eat out, it’s generally fast food (or Asian food) that is quick, inexpensive and casual. Our family vacation has been to Phoenix during spring break, where we have friends and cousins for the kids to play with, family activities and people to stay with.

There seems to be little comparison to retiring early with and without children. Both are possible, but each will be a different journey. Without debating whether or not a person should have children, which is a personal choice, how has having or not having children has affected your journey?

Celebrate Your Success

Posted by Canadian Dream on April 8, 2011

Success is a wonderful thing.  It is great to accomplish your goals and move forward to the next challenge.  At the same time I think I’m just as guilty as everyone else of not remembering to take the time to actually celebrate what I accomplish a lot of the time.  I’m so busy moving along to the next item that I don’t acknowledge what I’ve done.

For example, I recently published my book Free at 45, but failed to acknowledge the fact that was one of my goals for the year.  I got so busy mailing out review copies, pre-orders and following up on sales leads that I complete forgot to take the time to go say to myself: Ya!

Another success I didn’t even realize until recently was the fact I’ve paid off over half my original mortgage on this house.  That is over $75,000 in debt paid off.  That is a fairly big deal, but I again didn’t celebrate in any way at all.

So what gives?  Why don’t we celebrate our success more often?  To some degree I believe that is driven by my frugal nature, I don’t want to celebrate every little thing otherwise it will become a meaningless gesture.  At the same time I don’t think avoiding all celebrations is healthy either since you can get discouraged and sucked down into worrying about the next thing so much that you don’t stop and enjoy life.

In the end, I’m breaking open a special bottle of wine this weekend and celebrating my recent successes.  So what success have you accomplished lately?  Did you remember to celebrate it?

Bridging the Divide

Posted by Canadian Dream on April 7, 2011

For a while now I’ve been rolling around the idea of semi-retirement in my head, but I’ve also had an issue with planning something like that.  You see I’m a little unsure on how to pick the minimum to earn each year during those years and then how do you transit then to full retirement.  It’s always been a divide I have yet to come up with a good way to bridge since I’m aware that any income I could generate from writing would be erratic at best.

So yesterday while discussing that issue, out of the blue, my lovely wife asks me a question “Would you be willing to go back to school for a bit?”  I have no idea what she is talking about, but I reply “Depending on what, yes.”  Then she lays out her idea: I could work in her daycare.  Pardon!?!  Then she reminds me of a interesting fact that if she had a second employee she can take on some extra kids.  The profit margin at that point would likely be close enough to cover are entire budget once the house is paid off.  Therefore allowing the investments to grow at their full rate, but you could always fall back to the investments if you have a low period of income.

I stare at my wife in nearly shock.  In a two minutes she has manage to propose an simple, realistic solution to bridging the divide when I had yet to come up with a plan after rolling the idea around in my head for the last few months.  If I haven’t mention it lately, I really do love my wife.

While I’m not sold on the idea entirely yet, it does provide a potential base for me to actually run a full-blown analysis on semi-retirement.  This partly rolls out of the fact the way I wife picks her clients.  She takes great care to ensure her clients will fit in well with the other kids in care and the parents will work out as well.  So the result of that is her income stream is very stable and she has very low turn over of clients.

So you might be wondering, why I would bother looking at semi-retirement when I am already on track to retire at 45? The reason is actually rather simple.  I like the idea of transitioning out of work more slowly.  I think a full stop on work at 45 could be a little too much at once.  So that is why I’ve been rolling the idea around in my head.

If you were semi-retiring, what would you be willing to do to bridge the divide between full work and full retirement?