Posted by Dave on October 18, 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.
A few weeks ago, my work announced that they had rented new space to seat our newly expanded workforce. This sounded like a good idea, until I found out that it would impact me – my office would be moving across the city. I had previously chosen the location of my house based on where my place of work was – I can walk there in under an hour, or ride my bicycle there in about 20 minutes. Additionally, there is a gym directly across the road that I can go to at lunch, as well as many places I can walk to when I don’t feel like throwing weights around during my break.
The new office was not convenient to commute to (further away) and in an industrial area that doesn’t even have sidewalks around it, and was basically not where I wanted to work.
Rather than moving somewhere that I didn’t want to work, I applied for and got a new job, which I started this morning (I really didn’t want to move my place of work). From a personal finance perspective, the move doesn’t really impact me at all – it was an internal job with no change in salary.
Having a solid personal finance plan, especially by limiting my expenses allows for a certain amount of freedom that I would not have if I was swimming in debt, or “had” to work to support my wife’s and my lifestyle. There is a certain level of comfort, knowing that if I felt I needed to I could have quit outright (perhaps a little extreme) and looked for something that I was interested in or in a better location in the city.
At the end of the day I realize that I have to work for at least another decade or so full-time at my current salary. In doing this, I will try to ensure that the 8 hours a day I am at work are as pleasant and rewarding as possible. If I don’t like my boss, or the work I am doing isn’t interesting I have the flexibility that I can do something else completely. How many people do you know that dread Mondays, or hate their job, but feel trapped and overwhelmed by bills? I do not want to be one of these people.
I always get a little grumpy at people who complain continuously about their job or the work they’re doing. I can understand it in the short-term, because nothing is going to be perfect all the time, but to continuously be a disgruntled employee….maybe you’re in the wrong place of work?
Would you change jobs if you’re current position moved? Are you thinking about changing careers because you’re not happy doing what you’re doing right now?
Posted by Robert on October 16, 2011
We invited a family to join us for Saturday brunch last week. After we finished eating and our kids were playing with their kids, we sat down to chat. We were talking about the things that we like to do, and our friend told us that he really enjoys hiking, camping and mountaineering. Then he surprised me by saying, “When I’m independently wealthy, I’m going to go see Mount McKinley.”
I was intrigued, so I asked a few questions. Do you have plans to become independently wealthy? Is that something you’re working toward? He laughed it off as one of those daydreams, something that a person sometimes talks about, but doesn’t really mean. I let it go, seeing that he wasn’t serious about it. But it got me thinking that there’s a step to financial independence that comes well before the widely understood steps of earn, save and invest.
Believe. Most people wouldn’t believe they could retire before age 65. I freely admit that it’s not possible for everyone. But even among people who could achieve financial independence, few of them have seen anyone actually do it before age 60. Who in their 20s or 30s thinks about only working for 20 years or so? Maybe this is why young middle-class families don’t believe that it’s possible to retire young.
Without believing it’s possible, there’s no chance to come up with a plan that would make it work. When there’s no plan, there are no actions to take to make progress. And without moving toward the goal (that doesn’t exist), it’s impossible to achieve. Without having a goal of retiring young, there’s no point stretching to be able to save more. Instead, a family might as well spend money on all the stuff and on every activity that they enjoy.
I personally never had a plan to retire early. I just wanted to have enough money (independently wealthy) to be able to change jobs with no risk whatsoever. I want to be able to pick up and move to Hong Kong to teach in an international school, knowing that if it doesn’t work out, or if my work there ends, I can always come back home, without having to worry about work. I decided to stretch in order to save more, I worked on investing it wisely, and I was lucky with my timing. In the end, I was able to stop working far earlier than I expected. None of this ever would have happened if I didn’t have a reason to try and make it work. Instead, I would have just given in to lifestyle inflation.
When did you get the idea that you could become independently wealthy? Do you know others who support that belief? Are there people around you who doubt it’s possible?
Posted by Canadian Dream on October 12, 2011
In retirement planning perhaps one of the most common issues people come up against is doubt. They doubt that their plan will work, they doubt that they can actually save enough, they doubt their ability to invest or even doubt why they should save at all. If you have ever felt this way about your retirement: congratulations! You are in fact still human.
I would be seriously worried if you have never doubted yourself or your plan when it comes to retirement. You see people really aren’t hardwired to plan that far in advance so a lack of doubt to me would indicate your are either brutally over confident or your plan is seriously missing a few things.
I personally doubt my plan at least once every few months. It could be triggered by poor investment performance, or a few additional expenses that come up that I wasn’t expecting. Regardless of the reason I end up with that empty feeling in my gut and a worried expression on my face. Yet after this happening a few times I’ve learned that doubt is actually a sign to learn more.
Doubt usually exists in a situation where you feel off balance from a lack of information or confidence in the information you already have. So for me I usually treat doubt as a sign to go out there and learn more about what is bothering me at the moment. So if I have unexpected expenses I will ask: why didn’t I see this coming? Do I have enough money in my plan to cover something like this in the future?
I find answering these questions and writing down my issues puts my doubts back into a reasonable context where I can make a valid decision on the risk of the event occurring again. From there I can look at the overall risk management of my plan and decide if I need to adjust anything. For example, in my last run of retirement calculations someone brought up a point that I didn’t have enough in for home maintenance, which after a little research I agreed with them and increased the amount.
Perhaps the only really bad reaction to doubt is to give up on your retirement plan and stop saving for it. This isn’t to say that you can choose to save less if you need to, but giving up entirely is dangerous. Why? Because by stopping that momentum you might never get back onto that track again. So while your foot is just fine today, you might have just blown off one of your future feet ten years down the road. The only wrong choice with your doubt is to give up entirely.
So what do you do with your doubts? Write them down, talk to someone about them, read an inspiring book or what works for you?
