Posted by Tim Stobbs on April 6, 2011
I started at the digital readout on the till and read the number again, it came to just under $100 with tax. I was I looked down to what I was buying: a table lamp. My frugal mind was having a hell of a time processing this purchase and I was finding it a little hard to bring up my hand that held the cash. I managed to ask myself one last time: had I lost my mind?
The lamp in question was a Tiffany table lamp (ie: stain glass lamp shade) which I will completely admit I didn’t need. This purchase was purely a ‘I want it.’ Yet this wasn’t an overnight want, but rather I’ve literally been looking on/off again for a few years for the right lamp at the right price. So far in my search many of the lamps were out of my price range, regardless of how much I know these are worth I just can’t bring myself to spend more than $100, so my max price range was $99.99 with tax. The other complicating factor on when I would find a lamp under $100 was the colours were often wrong like pale pink and yellow….ick or the wrong pattern as I wasn’t settling for flowers or overly geometric patterns.
In fact I wasn’t prepared to settle at all on the style/colour I wanted or the price I was willing to pay. Those were the rules for this want, I was only ever going to buy one of these lamps in my lifetime so I better damn well LOVE IT. So far about a week later I still walk into my living room and smile. Yes I still love that damn lamp.
So what did my overly priced method of having a reading light teach me?
- It is ok to just purely want some things. Not everything you buy must be practically, buying the odd item for pure beauty is ok.
- Set rules around the want to avoid going too far. Wants are highly emotion things, so you need some level of logical rules to follow to keep you spending on it in check.
- Keep some money for wants. I paid for my lamp with a little excess spending cash I had previously built up. This happens to me every once in a while, as I don’t really buy much for long periods when I’m busy. So I roll it over into these odd purchases.
- Don’t settle. Buy only want you REALLY want, if you are not sure, then wait and think about it more. Put the item on 30 day wait list if you have to or you will regret buying the want and may end buying something else down the road because your not happy.
What have your ‘want’ items taught you? Or what was the last purely want item that you bought?
Posted by Dave on April 5, 2011
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.
[Editor's Note: Recall this blog has a disclaimer towards the bottom of the far right column. The following is strictly the opinion of the writer and not a recommendation for you to try something similar.]
Dieting is a huge business, these companies spend a ridiculous amount of money on advertising to get you into their programs where they basically tell you (from what I can understand) to eat less food every day. The whole idea of a diet is to create a calorie deficiency so that you’re burning more calories than you’re consuming. The vast majority of diets attempt to do this by calorie or point counting or portion control by carefully measured pre-made foods.
I have a different idea and have implemented it over the past month or so, not so much for weight-loss purposes more so because of the health benefits that are being found in study after study over the past year or two – I just don’t eat for a couple of days a week.
This periodic fasting has a couple of impacts in my life:
Money
I don’t eat for 24 hours at a time – I eat a normal breakfast or lunch, stop eating at noon one day and start eating at around lunch the next day. In the process I miss 2 meals (Dinner and Breakfast), doing this a couple of days a week, I’m not paying for 4 meals per week (out of 21), effectively decreasing my grocery bill by 20%. This kind of eating takes a little bit more planning around leftovers, so that things aren’t staying in the fridge for extended periods but there has been a noticeable decrease in my household grocery bill.
Health
The main reason why I started doing this was for health purposes. I would prefer to live longer than average, and from reading various books and research studies this method of eating seemed to provide the best chance of achieving this. In a recent study from the American College of Cardiology in New Orleans it was found that “Fasting causes hunger or stress. In response, the body releases more cholesterol, allowing it to utilize fat as a source of fuel, instead of glucose. This decreases the number of fat cells in the body” (1)
In addition this same study “confirmed earlier findings about the effects of fasting on human growth hormone (HGH), a metabolic protein. HGH works to protect lean muscle and metabolic balance, a response triggered and accelerated by fasting. During the 24-hour fasting periods, HGH increased an average of 1,300 percent in women, and nearly 2,000 percent in men.”(1)
I realize that this is just one study with a relatively small sample size (200 people), but there are many others that have been done over the past decade or so that show similar positive results. For me health wise, I haven’t experienced any negative effects – in fact I would say that I have been able to lift heavier weight now than prior to eating this way (I have been setting personal bests in squats, and bench press in the last few weeks).
So, although kind of different it is a method that saves money while not really changing what you eat, more when you eat. The health benefits associated with this type of diet are also significant, both for weight maintenance as well as overall health.
Would you think about such a drastic change in your diet for money or health?
(1)A summary of the study can be found here
(2) A really good source of information for Intermittent Fasting can be found at http://www.leangains.com/
Posted by Robert on April 4, 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.
Financially, it is really simple to work toward retirement. There are only two variables to focus on: spending and investment income. By focusing on these essential variables, a person can track their progress toward retirement quite effectively. Once this part of the plan is on track, there are many other variables that can add complications. But the basic theory is simple.
How much do you regularly spend on your lifestyle? Surprisingly, many people can’t directly answer this question without resorting to a vague qualifier like “all of it.” In order to plan how much income a person will need to support their lifestyle without working, they need to understand how much they spend in a typical month or year. This might require facing some uncomfortable facts. But it should be a simple matter of gathering the last three bank statements and finding out how much money came out of the account each month.
Can you regularly spend less? This step is optional, but for those of us who would like to retire early, it brings the goal closer. The less a person spends in a typical month, the less income they require from other sources in order to meet their financial needs. In this way, it would be helpful to work on reducing lifestyle spending a little each month, not by sacrificing or giving up needs, but by being aware of waste and inefficiencies.
Finally, start to develop another source of income. This is where things can become complicated, because there are many equally valid ways to produce investment income. It could come from rental real estate, stock market profits or dividends, bond or GIC interest, a trust fund or a pension. The key here is that the income should be “passive” in the sense that there isn’t a need to work for it. In the sense that retiring means not working, this passive income can replace your present earned income.
Many people are visual in understanding their progress toward goals. By charting lifestyle spending and investment income each month, a person should be able to see spending fall and income rise until the point where they meet. At that point, retirement becomes a financial possibility. Tim and Dave both plan to reach this point at age 45 by spending reasonably. Some people may be motivated to spend very little in order to reach this point earlier. I have focused on producing high income from stocks in order to reach this point earlier.
There are a number of ways to reach the financial point of being able to retire. These are the simple variables to focus on first. Then, add in the additional variables of an emergency fund, insurance, a safety buffer, a variety of sources of income (diversification), a backup plan, and the possibility of pension income that won’t start for many years in the future.
Do you know how much you spend? How much passive income can you produce? What do you need to do to make those two lines cross?
