Posted by Robert on September 19, 2011
This is a guest post by Robert, who lives in Calgary and works as a financial adviser retired at 34. He is married, has three kids. Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.
My sons each have a birthday in the month of September. Their grandmother sent them each a card with a $10 bill in it. They were super excited. It was interesting to see what the money, a relatively large amount for them, meant to each of them. Michael, the 7 year old, thought about what he could buy with it. He seems unable to be happy with money until it is spent. Jeremy, the 5 year old, put his carefully in his wallet. He has now saved up over $20 and he seems to be happy just to have the money.
What Michael understands, that Jeremy doesn’t, is that the sole purpose of money is to exchange it for the things we want and need. When Jeremy saves his money, he isn’t able to buy candy to eat or buy toys to play with or buy a ticket to the amusement park for fun. His money just sits in his wallet, not benefiting him.
What Jeremy understands, that Michael doesn’t, is the value of money. Jeremy will sometimes find something to buy with his money, and he’ll only spend the money if he wants it badly enough. Michael will spend his money on anything he sees, even if I would consider it a waste, for example carnival games or cheap trinkets. It annoys my wife and I that he spends too much money on things that have too little value, but I expect that he will develop a sense of value-for-money over time, through trial and error. In the meantime, it’s his own money he’s “making mistakes” with.
This all reminds me of Aristotle’s teaching about the businessman. Aristotle explains that the business of life, or maintaining a household, requires money. Money, he continues, is a tool to be used, much like a craftsman or artist uses tools to create products. In the business of life, the product is comfort or enjoyment, and the tools (money) that are used to create the product are not unlimited. A sculptor or carpenter doesn’t use an unlimited number of tools, but is able to produce an unlimited amount of variety with the small number of tools he or she uses.
In a similar way, a person who is creating a comfortable or even luxurious life does not need more than a certain amount of money. In fact, they could determine when they have enough money to provide sufficient food, clothing, shelter and other wants. On the other hand, if the goal is to get wealth, there is no limit. However, money in itself provides no particular usefulness or enjoyment.
In my own life, I set a goal for the amount of money I wanted to accumulate. I see money as a means to providing for the needs and wants of my family, and beyond that having declining usefulness. If I were to spend more time earning money, I would have less time to enjoy my family and the things that our money provides: food, travel and fun. But money doesn’t give meaning to my life; it’s the things that make my life meaningful that dictate how I choose to spend my money.
Have you determined a set amount of money that will allow you to achieve your goals? If not, how will you know when you have enough?
Posted by Canadian Dream on September 15, 2011
I really do try to sympathize with others, but if I read just one more comment on a financial website about someone complaining that ‘they just can’t do it, it isn’t realistic‘ I just might have to scream.
Come on people, let’s call a spade a spade and realize you screwed up. Perhaps you picked a crappy career with limited income prospects or perhaps you bought way more house than you could realistically afford. Or maybe you had some crappy investment choices with 2.5%+ mutual fund fees. I don’t really care what the reason is, but stop bitching about it and start saving already.
You know all that time you spend bitching you could be making your life better easily. How you may ask? Well here are just a few ideas.
1) Work Harder (or Smarter) – If you really want to earn more than work for it. Go beyond your job description and be valuable to your business. Then you stand a chance of getting noticed and promoted. Or if that won’t work, look to start your own business.
2) Turn Off the TV - According to a 2008 survey the average Canadian watched 1497 hours of TV that year. That is 28 hours a week! Even if you cut that in half you could easily pick up second part time job and earn more with almost no loss to the rest of your life. Your TV ‘friends’ in the screen won’t even notice: I promise.
3) Don’t Go for Sainthood with Your Kids – I love my kids, but I don’t give them everything or try to turn them into super kids. Thus they cost a fraction of what most people spend on their kids. A reminder: an iPod Touch or iPad is not a NEED! Basic clothes, food, water, a place and love are NEEDS. When in doubt less toys and more time together at the park rather than the mall.
4) Get Educated – No one on the planet cares more about your money than you. If you leave that to your bank they will approve a higher than required mortgage and sell you over priced mutual funds. This makes you poor and me as bank shareholder richer. If you want to change that you have to learn about money and that doesn’t cost you a cent. See the library (click on the book review category to find some titles) or read some blogs (see the blogroll sidebar on the right).
5) Spend Less Money on Crap – People often say to me “I would like to retire early, but I just don’t have the money.” What they should be saying is: I would like to retire early, but I already spent the money on crap. If you don’t use it daily, you should think about for at least a week before buying it. Better yet, just go shopping less often. Get some exercise instead and take a cooking/writing/….insert your hobby here…class instead. Buy experience over stuff the majority of the time and you will be able to save more and be happy doing it.
All of the above is easy to do and also easy to determine if you are doing it well. Are you happy with your life? Are you meeting your long term goals? If you answered yes to both then you are likely on the right track. If not, stop bitching and start saving already.
Posted by Dave on September 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.
I have previously written of my desire to live in a Tiny House, something which my wife was not in favour of at all (I believe she mentioned I could live there by myself, but she had no interest in living in a little wooden box). In the past little while, we have again discussed alternative living situations that could work when we reach retirement age. Two living situations that she found suitable were somewhat surprising, since I think size-wise, they are smaller than the Tiny House that was previously kyboshed.
The first option came from reading the blog To Simplify– where the author, Glenn writes as he tours around the US in his camper-van with his cat. I love this guy’s stories, and became totally enamoured with the van-living lifestyle. The benefit of living in a van (from what I can see) is the ability to move around, and move someplace warm in the winter. My wife and I are not terribly attached to snow, and the ability to get away from it is a huge sell. Additionally, the ability to move around for part of the year is a huge sell – we would be able to have many different views to wake up to, different people to meet, and as an added bonus (for me, not so much my wife) year-round golf to be played.
For the rest of the year, my wife has agreed to (mainly on aesthetics and the “cool” factor) live in what boils down to a Hobbit-Hole (A nice example of this can be found here. This type of house would be fairly comfortable to live in for 8 or 9 months of the year. This type of house is cheap to build (depending on the type of house, they can be built between $10 and $25 per square foot). Besides being fairly (or ridiculously) cheap to build – they are low impact environmentally speaking (made mainly of dirt and wood) and easy to repair. Because of the small size of the house and increasingly better technology, I’m hoping that living off the grid will be easier and cheaper to do by the time I reach retirement age, making location of the land much less of a factor.
I was surprised that my wife has agreed (for now, our projected retirement age is around 14 years away) to these “alternative” types of living, as both are either smaller or the same size as the Tiny House that was previously rejected. With less space, we’ll have to get rid of most of our stuff (the square footage of the van is smaller than the king-sized bed we sleep in right now) which I am all for.
Cost-wise, I’m not sure how much different owning a touring van and a plot of land somewhere compares to my current situation, but I figure that if I sold my home, land can be had cheap depending on where it is, and a touring van can be found for a very reasonable price (and converted to a cheaper source of fuel if necessary)
What’s your idea of alternative housing? Would you live in a dirt house, or a van?
