Posted by Dave on July 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.
Last Thursday at about 11 a.m., I started trying to talk myself out of going to the gym. This is about a bi-weekly event and there are times that I actually just don’t bother going due to my persuasive arguments (It’s not fun; I’ll feel sore after; I already worked out twice this week, is a third time really going to do anything? And more). I ended up going and getting it done, but I was thinking that this kind of thinking could easily be applied to my personal finance plans.
It would be so easy to stop using around 75% of my paycheque to pay off my mortgage and ensure a healthy level of savings. It would be easy to have a more conventional financial plan where I would retire when I’m “supposed” to, which if you listen to the news is somewhere around age 70-75 these days (the experts are very worried people will outlive their investments) rather than carrying on with my current plan.
I see a couple of problems with this for me:
1) I would have to work an extra 20 or 30 years
I don’t want to work any longer than I have to, giving up more than one-third of my day to earn money for “stuff”. I was reading the book “Beatrice and Virgil” by Yann Martel a little while ago and the quote “Your days on this earth are counted, you might as well make the best of it” really hit home. For some people, making the best of their days includes working 40-60 hours a week at a job. For me, I have other things I would rather be doing, which do not include waking up 5 days a week to give up most of my waking hours.
2) I don’t know what I would spend the extra money on
I know a few people who make significantly more money than my wife and I and they seem to find a way to spend it, either on big houses, expensive hobbies, vacations or any number of things. For me, I don’t really get a lot of enjoyment out of spending most of my paycheque on items that don’t make more money (or at least the possibility of it) or reduce the money that I owe. I try to ensure that, for the most part, the money I make from work is spent as efficiently as possible, hopefully meaning I work as short a period as I can.
The bottom line is however, I’m sure I would find a way to spend the money (somehow) – I did it for a few years before I put together a financial plan and most people continue to essentially break even (or go into debt) month after month.
I think that once I realized that there is a better way to do things financially and that I could be doing exactly what I wanted all the time (retiring), rather than working at the office during the best hours of the day my goals changed significantly.
How do you keep yourself from “falling off the wagon”, or staying the course of your goals?
Posted by Robert on July 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.
A journalist friend of mine, Jeremy Nolais at the Metro (free daily) in Calgary, decided that he and his girlfriend would live solely off two minimum wage incomes for a month. They wanted to find out if the minimum wage was really survivable in Calgary. You can read his experiences at http://www.metronews.ca/calgary/blog/874283.
It turns out that living on less isn’t so bad. It simply requires a different way of thinking about acquiring the things you need. In Jeremy’s case, after his regular bills and commitments, he had about $100 each week for needs like food, fuel and entertainment. Partway through the month-long experiment, his work bag broke. So he put out the call on Twitter asking if anyone could donate a new one. This solved a problem for me, since I had a like-new shoulder bag in my basement that I didn’t know what to do with, and Jeremy appreciated not having to buy one.
Other situations can also be addressed without money. Instead of going out to eat at a fancy restaurant, a breakfast at IKEA costs just $1. Jeremy didn’t mention it, but there are cartoons to watch, too. 
Instead of going to the barber, he had his girlfriend cut his hair. I do this too, but I refuse to impose the same rigour on my wife; she goes to an experienced hair stylist. A walk through the park can make an enjoyable date.
Jeremy found that a deliberate approach to grocery shopping was needed. First, eat something so that you’re not shopping hungry. Then, take a list to avoid impulse items; keeping a running tally of the cost also helped. He also found that it’s possible to buy almost everything on sale; if it’s not on sale, it can wait until the next trip. In this way, they spent just under $65 on food for two people for two weeks. I would add that food is one category where quality counts, so I buy the most fresh, least processed food I can, the prepare it myself (which I enjoy doing). I am still able to feed my family of five for around $500 per month. We very rarely eat out, but when we do, it’s generally hamburgers (which the kids love) at a place like Dairy Queen or Macdonald’s.
Jeremy also found that conversations about money became a part of their daily routine. It wasn’t necessarily comfortable, but it was necessary. He heard that most couples never discuss money until it becomes a problem. Personally, I don’t understand why money is a taboo subject, but it’s true that people seem uncomfortable talking about it. When it comes to the success that my wife and I have experienced, talking about money and deciding together what we’re willing to use money for has been a necessary component. Jeremy and his girlfriend gave themselves an allowance, about $40 each, which allowed them to spend on something they enjoyed without having to debate the cost with each other. This is something I highly recommend.
In the end, Jeremy was amazed that he and his girlfriend had managed to save $3000 over the course of the month (since they actually earn more than minimum wage). That’s the payoff. And that’s how I achieved financial independence. I didn’t live on minimum wage, but I lived on what I was already comfortable with, and didn’t allow my spending to increase in proportion with my income. When my income was very healthy, I still lived on a similar monthly spending amount as early in my career. This left lots of money to be used to pay down my mortgage (which was completed in seven years) and save toward my future.
Jeremy said that it was bearable, knowing that there was a definite end in sight. However, if he could keep it up for 15 years, he would have $1 million, by my estimate. What do you think of Jeremy’s experiment? Have you ever done this? Could you stick with it for 15 years in order to have $1 million?
