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Thursday, April 24, 2014

The Fallout

Posted by Tim Stobbs on November 8, 2012

So now that I’m down to a much more reasonable workload I’ve already started feeling better about life.  Yet my election lose does trigger a few changes with regards to our spending and saving habits.  After all you can’t take that much income out of a budget without some kind of fallout.

The first change we made almost immediately was we told our house cleaner her services were no longer required.  That luxury was really a way to deal with our time crunch with me working so much, but now that I have my time back I would rather spend the money elsewhere.  So that puts $240/month back into our pockets.

The next change that I’m going to do is shift back to full time by the start of 2013, so I’ll lose 26 days off a year.  Now when I say full time that sounds like I’m working a lot, but I’m still really going to have a fair bit of time off.  After all my 13 earn days off every year used to almost exclusively go to take time off for school board events, so that is back in my pocket.  I also get four weeks of vacation on top of that. That should bring in about an extra $450/month take home (give or take a bit – estimating taxes is always a bit tricky).

So if you then add that to my old mortgage payment, lump sum payments and pension contributions we should be able to save (then invest) about $4000 per month to my goal of early retirement.  Then that will leave enough leftover cash to cover most of our wants for 2013 including my wife’s new cork floors in the kitchen and our vacation.

My initial investment plan is fairly simple, build up some cash reserves to be able to deploy to investments when I come across a good deal.  Besides I’m thinking about some adjustments to my holdings like dropping our mutual funds in our RRSPs and switching to ETF in self directed accounts.

In order to start simulating how I want to structure our finances when I finally do retire early I’m going to be pulling the cash for our extras in life (the new floors and the vacation) from our business accounts.  That should give us both some motivation to do some work with our business yet at the same time put us in a position if we are earning less it won’t change our day to day lifestyle.

Have you ever had a big shift or fallout happen in your life?  What did you change right away and what did you wait to change?

Comments

4 Responses to “The Fallout”
  1. M says:

    Our big shift happened in 2010 when my husband escaped the deadly clutches of the corporate world at age 46 to semi-retire and work for himself. While I supported and encouraged this all along, I did have a few OMG moments. First, we deposited all his severance in cash in a simple high-interest savings account so we had liquid assets. Then we drilled-down on cash-flow making sure all bills were as efficient as possible. I increased my teaching contract to bring in more money. Slowly, we adjusted to the income reduction (it was big!) and have stabilized our expenses to about $3000/month. Now that our cash-flow is on autopilot, I’m looking to long-term issues, such as minimizing taxes, fully understanding our pensions, and when/how to efficiently access retirements funds in the next 10-15 years.

  2. Mike Holman says:

    Tim, I’m curious about your move to go back to work full time. It doesn’t seem like you are hurting for cash flow. Do you not feel it’s worth the cost to get an extra day off each week?

  3. Tim Stobbs says:

    Mike – Good question. In my case I do feel the exchange of time for money is worth it. I was a fairly complex calculation but in the end the pay off is about $50/hr. So while I don’t need the cash flow I did want it. I am starting to put cash into other projects now so that money is useful. For example I donated $1000 to built a wheelchair accessible spray park in my community.

  4. Hey Tim,

    After reading this line “Besides I’m thinking about some adjustments to my holdings like dropping our mutual funds in our RRSPs” I think you could benefit from my course. Check out my website and drop me a line if you want more info.

    The Baker’s Son

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