Posted by Sheryl on February 29, 2012
This is a guest post from Sheryl (a.k.a Cdn Gwen) in Ontario, who is 40 years old with a grown daughter, and is trying to rebuild her retirement dream just 20 years too late for early retirement.
I had to take a short hiatus because my father was having some health issues, and it was and still is more important to me to be there for him and my mother than to spend my time and energy writing (although I had a few ideas about money, health, happiness and what really matters during this time). That being said, he is feeling better and my parents can go back to their self sufficient lives, and I can go back to what I consider normal.
Looking back over the last (almost) two months, I did manage to stay on track with my spending plan, as well as experimenting with some new things.
One big thing for me was an agreement between my boyfriend and I that while we are cleaning up our respective finances, we are not exchanging gifts. Christmas was the first hard one, I have been scaling back on present buying over the past several years, but this was the first time I didn’t buy for my significant other, and he did not buy for me in return. I will admit, it felt like something was missing.
The next gift buying time was Valentine’s Day, and we agreed not to exchange anything (even greeting cards seem so overpriced for what they are). We did plan to be together. Luckily, a local grocery store has our one of our favorite foods (sushi) on sale every Tuesday, so we planned an evening in, enjoyed a dinner we didn’t have to cook (I dislike going out for dinner on Valentines Day as everywhere is too busy that night), watched a movie we borrowed from my daughter, and didn’t miss the trading of material goods at all. Dessert (chocolate covered strawberries) included, the day cost us less than $20, but had full satisfaction. In retrospect, I’m thinking that planning these times and making them special by creating other traditions to replace the gifting (which we didn’t do at Christmas), is key to getting away from purchasing stuff that is not needed without feeling deprived. I’ll see what happens on the next occasion (his birthday).
Another “new” thing, I have never been one to get involved in teams or sports, and I have recently discovered that I do have a strong competitive streak in me. We are having contest at work (just like the weight loss reality show on TV) to see who can lose the highest % of body weight in three months. It cost me $50 to enter, winner take all. Up until this week, I’ve been winning, but being knocked into 2nd place has motivated me more than I ever thought it would. I’m finding that if I can apply the “challenge” mentality to other aspects in my life, I’m getting much better results as well.
Also new, is writing knowing that my identity is out there due to the recent CBC show. When I started guest writing, I wasn’t sure how much personal information I was going to disclose, and I felt by using a pen name I could openly reveal information that I might not otherwise. As I have become more experienced in posting, I realize I don’t have to expose details about my finances in order to make my point, I can write within my comfort zone and share only what I want to.
Final new thing? I’ve been using budgeting software to track income and expenditures in a way that I had only hoped was possible, but the details on that will have to be in another post.
Posted by Dave on February 28, 2012
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.
For better or for worse, I have signed up and paid for the Tough Mudder race taking place north of Toronto on Saturday, August the 18th. At the time of this post, that gives me 172 days until this run, 18 kilometers up and down Mount St. Louis Moonstone, which includes some pretty interesting and tough obstacles, such as scaling a series of 12 foot walls, running through fire, slogging through mud and running through a “minefield” of live wires – possibly getting shocked with 10,000 volts of electricity. I’m not really expecting the run to be fun to do, I’m expecting it to be exhausting but also exhilarating to finish.
I chose this run because it provides me some significant incentive to get into and stay in shape over the summer – traditionally the time of year that I work out less, eat more and have probably too many drinks on some of those 30 degree days after a round of golf. The way I see it, I need to be in the best shape of my life, or I may collapse halfway through this race – which would be both embarrassing, as well as a waste of registration money, neither of which is entirely desirable.
Similarly, setting strict guidelines with money, along with a goal date has helped me significantly in the past. The car that my wife and I purchased last year was the end result of this type of planning. It was a relatively short-term goal (we needed $10,000) and a set time that we needed to get it in (my wife was starting a new job and needed a non-manual transmission car to get there). The result was essentially a date that we continued to look towards. That date added incentive to us to ensure that the monthly savings were adequate to achieve our goal.
Our retirement goal of 45 works in the same way. There are times when this goal seems both daunting and maybe a little scary. By having set this date though, it “forces” us to make the kind of spending decisions that are important to us. If our goal was instead to be financially independent by “sometime in my 40’s”, we may not be as conscious of our spending choices.
I have gotten better over the last few years at not procrastinating. For things such as retirement and fitness there is no way to procrastinate. These kind of goals need time, either to ensure adequate time for compounding and saving for money or for gaining strength or endurance for an 18 kilometer fitness challenge.
How do you make sure you achieve your goals? Is there a method that has worked (or failed) in the past?
Posted by Robert on February 27, 2012
This is a guest post by Robert, who lives in Calgary and
works as a financial advisor 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.
The future is uncertain. You could read that as a platitude, if you like, but I think that it’s common to forget that we don’t really know what’s coming. We make plans and we talk about the future as if we know what will happen. I plan for a vacation, expecting that none of my family will get sick, that the airplane will be safe and that no one will go on strike. I expect the weather to be good and I plan to have a fun and relaxing vacation. But I know that none of those things are certain.
A better example is the stock market. I’m pretty sure nobody invests in the stock market, planning for it to drop in value. As a financial planner, we had to make assumptions about investment returns when we wrote a financial plan. (If you’re interested, we used 5% after inflation for a stock market investment.) We assume that over the long term (10 years or more), the stock market will rise.
There are many risks in life, and especially in investing. A lot could go wrong with my vacation, but I’ll take some insurance and extra cash and worry about it only if it happens. But in the stock market, the risk seems scarier. The market will fall, at some point. Companies will go bankrupt. Market leaders will lose their dominance (think: RIM). Companies occasionally have a negative quarter, which impacts the stock performance. There are a number of things that could go wrong.
But here’s why optimism is a choice. There are a number of things that could go right. Everything could go according to plan. My vacation could be idyllic. The stock market could get a boost from a positive economic outlook or a support monetary stance. A company I own could benefit from a larger-than-expected order, or a helpful government program or a stroke of genius by managers.
So instead of trying to predict what might happen, I choose to be optimistic. I realize there are risks, and I try to minimize them. But once I do, I expect the best. So far, so good. My investments haven’t been without disappointment, but I’ve profited far more than I’ve lost. I’ve taken opportunities, in the markets and also in life (like my vacation), that fear might have caused me to avoid, but that I look back on as both a benefit and a learning experience. And so I am optimistic that 2012 is going to be a great year. I have no proof, nothing concrete I can point to showing that it’s a likely outcome, but I choose to focus on the good things and minimize the bad.
Are you optimistic for this coming year? Do you expect things to turn out well, or do you worry about the things that could go wrong?