Posted by Dave on June 14, 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.
Sometime in the middle of the 40+ hours of studying for a taxation exam I wrote last Thursday I gained a roommate. My sister moved cities and is now living with my wife and I for the foreseeable future as she can’t afford to live on her own due to her finances (debt) being out of control. It seems that in the couple of years since she got out of college she has managed to rack up a considerable amount of debt, to the point that living by herself at and being able to eat is now a choice between the two.
So, I have essentially become a “parent” to a 24-year-old girl. From a financial perspective, it is most definitely not ideal because of the extra cost of supporting another person. It’s nice hanging out with my sister, since the last time we lived together was when she was 11 and I was 18, which meant we really didn’t have much in common, so we have a chance to connect now as adults.
Due to her financial state and the fact that she is now living for free in my house we have essentially taken over running her finances, mostly through setting up “rules” that we expect her to follow. If she doesn’t follow the rules, we’ll give her a couple of months to get first and last month’s rent and she is welcome to live her life how she would like.
So, what are the rules?
1) Pay off the debt as quickly as possible. We looked at her monthly expenses, her wages at her current job, and her debt. We gave her $50 a month to spend on whatever she wanted and told her to the rest needed to go to pay down her debt.
2) Follow Up on progress. We told her that we would like to see a copy of her pay stub and credit card statement to ensure that she was doing what she said she was doing…..We figure if we are going to be supporting a roommate we would like to ensure that she is carrying out her end of the bargain.
3) I’m not the bad cop. Not really a rule, but we explained that we weren’t the bad guys here. What we are intending to do is to help her get out of debt, an opportunity to start fresh – we would prefer that she takes it and not resent us for being the “heavy” in this situation. I’m sure at some point she will, but we thought we would discuss it prior to it happening.
So far (it’s been a week) the arrangement has been agreed to, I’m not sure how it will go over the next year or so she will be staying with us, I guess we’ll have to see. My wife and I understand that someone who has lived with very little financial structure or discipline this will be a big change, but we hope she makes the most of the opportunity.
Have you helped a family member out before? How did it work out?
Posted by Robert on June 13, 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 was flipping through a back issue of MoneySense magazine at the library. It was interesting, because it presented a viewpoint so different from this blog. It presented stories of people who were more or less successful in saving for their retirement. It seems like for so many people, saving is a huge sacrifice. Even the editorial weighed in, suggesting that there’s an optimal saving amount. Saving too little would lead to hardship in retirement, having to scale back from the lifestyle the person was used to. I can agree with this. Saving too much was presented as unhealthy, unnecessarily penalizing the current self for the benefit of the future self. “Save just enough to be able to maintain your lifestyle at age 65 when you give up full-time work,” seemed to be the message.
The funny thing, to me at least, is the idea that a person should spend all of their income, except the amount that’s needed for debt repayment and savings. I guess for most people, this is no trouble. In fact, if it weren’t for mandatory debt repayment, such as mortgage payments, most people would probably spend it all. But I started with a very modest salary and, as I earned more, I only allowed my month-to-month spending to increase by relatively small increments. I put all the rest of the money toward debt repayment and savings. It seems that isn’t normal.
According to one of the MoneySense articles, it may not be healthy either. They shared the story of a couple who had managed to accumulate $2 million, but wouldn’t allow themselves to spend on a cup of Tim Hortons coffee. My first response was that they probably bought the expensive stuff and brewed it themselves, but it turns out they went into counseling for their “problem.” I don’t think that citing an extreme example proves the point, but I have advised people to try and find a balance so they won’t have much more to spend now compared to later, or much more to spend later compared to now.
Did I deprive my current self in contrast to my future self? I don’t feel that I did, because my purpose was clear. I spent far less than I was able, but I owe nothing on my house and my lifestyle is sustainable, whether I’m working or not. What’s more important to me and my family is that we’re not sacrificing. We’re spending more than when I first started working (about 50% more). And I doubt that we’re spending much less than most people our age. We have everything we need, and on top of that, I have the time and energy to spend with my kids while they still appreciate it.
Over-saving is better than overspending. But the optimal amount of saving depends on your goals. If you plan to work until 65, you may as well spend everything besides debt repayment and savings. But if you want to retire earlier, saving well over 10% of your income will be very helpful.
After saving large amounts, is it hard to bring yourself to spend? Would you consider that a problem?
Posted by Canadian Dream on June 9, 2011
You can only push people so far before something in them snaps. This recently happened with me and my day job, so yesterday I quit. For the longest time I kept telling myself I couldn’t do that since I didn’t want to give up my current situation with Friday’s off…yet even after a while that wasn’t a good enough reason to stay around.
So what was wrong with my job? On the surface, not much. I like my co-workers, my work and I felt I was being well compensated for my time and my company was very supportive of my other job as a school board trustee. Yet the problem in a nut shell was I was incompatible with my supervisor. You see we didn’t choose each other at all. He got assigned to be my boss after my old one transferred positions and I felt I have to give my new boss a fair try (its been over a year now). We had our problems working together and I tried to discuss the issues and propose some solutions, but in the end not enough progress was made. I felt like I was banging my head against a wall in frustration, so it was time to move on regardless of what that might cost me. If you are routinely unhappy are your job, it doesn’t matter what the other reasons are for sticking around it is time to move on.
Apparently, I’m not alone on this situation as I came across a few statistics on why people leave their jobs and their direct supervisor accounts for 30 to 35% of why people quit. In some respects I’m amazed I lasted this long as I could have quit at any time in the last year and been fine. My other income make me ineligible for Employment Insurance and we have enough savings that I could literally not work for years (yes, I used the plural there correctly). Yet I’m stubborn and had to try to work the situation out prior to quitting.
So am I unemployed? No, I’m just transferring to a new position down the hall. Actually the position that opened up is very similar to the work I do now, but just has a different focus. Rather than working with proposals on air emissions regulations, I’m going to be working with on a broader scope of environmental regulations but excludes air emissions. Also I have a bit of bonus situation of I got to recently work with my future boss on a joint project between the departments, so I already know I like working with her.
While this change of jobs was largely precipitated by me being unhappy in my current position, there are a few fall outs financially about this change. First up is I’ve given up my 80% working schedule. So while I’m somewhat sad to see that go, it isn’t all bad as I did manage to negotiate a 90% work arrangement with the new job. So I will shift from having every Friday off to having only every second Friday off. Which isn’t a huge deal as I’ve grown comfortable enough with my other position as trustee on the school board that I can handle the change. This also means I’m basically getting a 10% raise which makes my recent 20 month dash to finish the mortgage just shifted from challenge to easily done.
The other price I’m paying for this move won’t come due for a few years, but I have accepted a lower job classification. In English, it means my maximum pay possible at my job just got cut back severely. Which is some respects you think would matter more, but it really doesn’t at all for me. The pay ranges move annually for inflation adjustments which is all I require for my retirement plan. Also I do work on other things that provide some additional income anyway, so the lack of bigger raises at one job isn’t that particularly limiting to me.
So have you ever left a job because you were unhappy? Is so, what was driving you nuts? If not, what has driven you nuts at some of your jobs?
