Unconventional Journey towards Unconventional Retirement

Posted by Tim Stobbs on May 5, 2011

This is a guest post by Martin, who is preparing for retirement within the next 5 years; no later than his 40th birthday.  He is married, has 2 young children and lives and works in rural Alberta as a regional finance manager for a large energy company.

Relative to those around me, I’ve lead an unconventional life.

It started out common enough.  I grew up in a rural middle class upbringing, uneventful yet memorable at the same time.  Perhaps time has softened my perception of it a bit, but I have no complaints.  Like most small town teenagers, the desire to break out took hold of me; carrying me off to university, arming me with commerce degree.

Following the path of so many others at the time, I migrated to Calgary and began my career, but not before stretching my boundaries during a half-year backpacking adventure overseas (again, not overly unconventional).  Like every other young college grad in the downtown towers, I worked hard trying to learn the rules of the corporate world and unlock the path up the ladder.

It was during these first few years when disillusionment started to creep in.  It was a combination of many things about the big city and the corporate world that seemed misaligned with my personality, beliefs and values.  I was slowly realizing that doing things the conventional way was not going to lead me to ultimate happiness.  Not knowing how to change the scene I was in, I continued on.

I’ve struggled for a long time to characterize what happened next.  I hate to call it luck as it implies that I had nothing to do with it, but it was more luck than anything else.  I received an unsolicited offer from a former colleague to work overseas in the Middle East (on a rotational basis; one month working followed by one month off).  It couldn’t have come at a better time and it thrust me headfirst into the unconventional.

Over the next four years, my wife quit her job, we moved out of the city, simplified our life, travelled the world and reacquired a sense of purpose.  This re-grounding lead us to having children and settling back into a more conventional rural life in the foothills of Alberta’s Rockies where we live and work today.

Through a combination of good earnings, fortunate real estate decisions and valuable stock options, we always knew we were well ahead in the game.  Along with our very modest lifestyle and retirement plans, we knew that early retirement was on our horizon, just not as close as we are planning for now.  The tipping point came a year ago while I was enjoying a leave of absence after the birth of our second child.  I decided it was time to engage the idea of early early retirement, and begin searching for sources outside of the rhetoric of the mainstream.  I found that blogs such as this offered the most honest and genuine perspective on the topic.  I dove in and became much more informed on the process involved in unconventional retirement planning and became energized and focused.

As our plans stand right now, we are within 5 years from early early retirement.  Five years out would put us at 39 years old with our kids being 8 and 6.  The items I’m currently working at are expense analysis, quantifying the cost of kids and their effect on our cash flow and hobby/interest development.

My job and career will not allow me to ease into retirement by going part-time.  I am going to go from dedicating 55-60 hrs a week (include commute time) to my employer to gifting that same time and more to my family, friends, community and myself.  I’m not foolish enough to think that it will be a seamless transition.  One of the activities that I would like to get back into is writing, starting with guest posting.  I’m very appreciative of the opportunity and am looking forward to sharing my thoughts from my own journey.  Hopefully, I can inspire others out there as I have been inspired.

Life After Debt

Posted by Tim Stobbs on May 4, 2011

Debt is so ingrained into our everyday life that most people would consider it almost unusual to meet someone who is completely debt free.  No mortgage, car payment or even a line of credit.  In some regards, life after debt sounds a lot like life after death…it sounds good, but until you see it, it is a little hard to believe in.

While I’m not debt free yet, I have made a lot of progress to becoming debt free.  It hasn’t been easy road to travel, since too often the lure of new goods can pull you back off the path  (for example: ebook readers, new surround systems, or shoes…depending your particular vice).  Perhaps that is why life after debt is hard to understand for some people as once you achieve that level of success the results are invisible to most people.  Being debt free in some regards would often result in you looking poorer to others as you tend to drive an older car and live in a modest house.

Often the accumulation of debt is a direct result of a desire to compete with others.  In an attempt to keep up with the Jones, we buy the newer car even if the old one was fine or get a kitchen reno even when we don’t cook that much in it.  In some regards being debt free is the exact opposite behaviour as you often can’t be in competition with your neighbours since you don’t know what their debt levels are at and may in fact never know.  So be choosing to go after being debt free you exchange an external competition for an internal one.  While some blogs like this one, do you give you an idea of others debt loads often the comparison isn’t correct because of geography, income or even goals.  So in the end the desire to move past your debt is a battleground that solely exists in your head.

So how do you compete against someone who knows your every move before you do it?  You have to main weapons to defeat yourself and your debt: logic and emotion.  The logic side is the one most people are familiar with, as it includes budgets, monthly saving targets and spreadsheet plans full of numbers.  If logic worked by itself everyone would be rich since it would be easy to plan or even have someone help you plan your way out of debt.  Yet it doesn’t work that way, since far too often the emotion side gets in the way.  Emotion is a fantastic way to over ride logic as the ‘right‘ way to go ‘feels‘ that way, regards of the fact the numbers are saving: you can’t afford that.

Yet since we can’t get rid of emotion, you must instead try to accept that and then use it as best as you can to support your logical plan.  This is where you start trying to get your mind to work with you by the oldest trick in the book…you bribe yourself.  Do not under estimate how critical rewards are to changing and enforcing behaviour, but in the end it won’t be enough.  You also have to make the behaviour easy to do and make the wrong thing hard to do.  So how do you do that?  Here is an example, you could set up automatic payments to your debt so you don’t have to do anything to pay it off.  Then you also setup a few points in time where you reward yourself for paying off debt and even have a bonus reward if you get it done faster than the plan.  Last, but not least, you leave your credit card at home and keep your limits on your debit card low so you can’t get back into debt easily.  While doing all of this may seem like over kill, that is the point.  Your playing poker here with someone who knows your cards…you only hope to win is massively over strategically plan for that fact.

So now that you are armed, go out there and slay that debt.  Your opponent is a little to smart for their own good, so be careful for their tricks or you might end up in a cave clutching your gold card and calling it ‘your precious’ between rounds of saying ‘charge it’ at the mall.’

The List

Posted by Dave on May 3, 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.

In the past few years, as I read more and learn about different methods of organization I began to create lists.  I’ve found lists to be quite helpful in my job as I am able to define where my priorities lie and move away from (for me anyways) an inefficient method of multi-tasking.  The list that helps my wife and I with our finances the most is a list of “wants”.  Currently on this list (in no order of priority) are:  A king-sized bed, a 60-inch television, new carpet for our stairways, a fence and deck in our backyard, a vacation next year,  as well as various other items (our recently purchased car was on this list).

Currently, my wife and I have approximately 15-20% of our monthly earnings available to spend on “stuff” that we like to buy (dinners out, booze, clothes, etc), the rest of our money goes towards savings and paying off our mortgage.  If there is something big that we would both like, it gets added to the list and we save for it together.

If we were to not buy everything off of our list (currently and in the future) we would probably be able to retire 5 to 7 years earlier.  Since if we were to eliminate all consumerism from our spending and utilize that last 15-20% of our spending to invest, we would reach our goals much more quickly.

What the list represents is also a compromise between my spouse and I.  I would prefer (usually) to not spend money if at all possible, while she would like to live a more “normal” life that includes creature comforts.  Rather than battling over every item, we put it on our master list and if the item is still wanted when we have the savings available, we buy it.  If we lived a Spartan existence I have a feeling that there would be some marital discord, as I have been told in the past that that is not the kind of party that my wife signed up for.

So, this is how my household system of buying  large items works– there are probably better ways to go about deciding on “big-ticket” items (or as I mentioned, not buying them at all), but this system keeps all parties involved happy, and curtails impulse purchases that would probably end up creating debt, which is a situation that I think a lot of people get into.

Do you have a similar system of deciding on large purchases?  Do you just not buy the kind of “stuff” that I mentioned on my list in order to retire several years earlier?