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Friday, October 24, 2014

The Doorway to Everywhere

Posted by Tim Stobbs on January 4, 2013

If it feels like I’ve been ignoring this blog for a while you are partly correct.  I’ve been mainly doing some relaxing and introspection on my life during my Christmas vacation.  I had to deal with an odd feeling that took me a while to narrow down the reason: I’m suffering from choice overload.

With the mortgage finally dead and combined with me going up to full time work again I’m finding myself literally drowning in cash at the end of every month and free time (since I’m no longer working on the school board).  The problem I’m finding going forward is I can’t seem to just pick a plan and stick with it.  I keep getting new ideas on how to move forward, so I’m finding it really hard to get a specific plan in place for my finances and spare time in 2013.  I’m standing in a doorway which can go everywhere and I can’t focus on a destination.

Perhaps the only two things I’m somewhat nailed down is: 1) I will save $4000/month towards my retirement plan. 2) I will organize myself better around getting some writing projects done this year.  That’s it.  Everyone else for the details is in this huge state of flux.  Even work is in a similar boat which is leaving me feeling a little bit more off balance than normal.

It sort of reminds me of the feeling when you finished high school, you have so many choices in front of you that the world really did feel like anything could happen.  Which is good except, making a choice gets difficult with that much free choice.

So how do you move forward?  Well I’ve decided to start just making some arbitrary decisions to start hacking off some branching of my decision tree.  Will they be correct, likely not entirely, but I can’t stay in this state.  So with that in mind I’ve made the following guidelines for my finances in 2013:

  • Leverage my high 2012 income: My 2012 income will be higher than my 2013 (no school board income), so I’m going to maximize my RRSP contributions for January and February to get a bigger tax refund.
  • Top Up TFSA accounts: My wife and I are both sitting on a fair bit of contribution room for our TFSA accounts in 2013.  Mine, if I recall correctly, is about $17,500, so I will pour the majority of our savings from March onwards into those accounts.
  • Setup Cash Flows to Investment Accounts: Since I know in the future I will be adding a lot of cash to the investment accounts I’m going to start to put put some cash in now.  Likely about $100/month for each of us to start, then I can just increase those amounts later on.

So while that isn’t a definitive plan at this point it at least gets me moving along.  It’s odd, but I already feel better just having those guidelines in place.  So how do you deal with decision paralysis or overload?

Comments

14 Responses to “The Doorway to Everywhere”
  1. deegee says:

    “drowning in cash at the end of every month ….”
    That is what I found after I paid off my mortgage, as I may have mentioned in a comment to a previous entry. I was able to use a good part of each biweekly paycheck to invest in my mutual funds for the next few years until I switched from working full-time to part-time. That was pretty awesome, for sure!

  2. Gene says:

    If you have losses you may want to consider allocating some of your cash to flow through shares. Only buy flow through shares if you can max out your RRSP, TFSA and RESP. If you can, there is a great tax relief that can be applied to your overall tax and investment strategy. Flow through shares are particularly attractive for people with accrued losses with CRA on their notice of assessment. The year one buys a flow through share you reduce your income by the value of the flow through shares and hence only pay taxes on your reduced income at your effective marginal tax rate. The year you sell the flow through share (normally after a 2 year holding period), the proceeds are treated as 100% capital gains. Any historical losses can be used to offset the gains. Also, you can hold the Flow Through Shares indefinitely as the operate like a Class A fund that shelters the growth from any taxation… until you sell.
    Find out more here: http://www.milliondollarjourney.com/how-flow-through-shares-work.htm
    I’m not the guy behind this blog… just someone who uses additional tax strategies as I max out every year on the common tax saving vehicles.
    Enjoy the decision making!

  3. M says:

    Tim, While I don’t share your conundrum right now, I do want to extend a THANK YOU for making the decision in the past to right your book. I read it for the third time over the holidays and I get something new from it each time. I’m charged right now to pick one thing that brings me joy and meaning to my life. I’ve got it nailed and ready to act on it!

  4. Sheryl says:

    I’m being a brat, or playing devils advocate here, but if you are having problems with the amount of free time you have now, what is it going to be like when you don’t have a full time job anymore either?

  5. greg says:

    can I request that you keep posting on this topic periodically? As someone with a reasonable shot of achieving financial independence in 5 years, I’d definitely welcome more exposition as things progress.

    For me, I’m thinking it’d be a new career just to learn it, but it’ll be hard to give up a good salary. Just that decision alone is enough to send me for a loop, never mind all the various things I could do with my time >_<

  6. Tim Stobbs says:

    @Gene – Thanks for the tips. I’ll keep those in mind after I clean up my contribution room to RRSP, TFSA and RESPs.

    @M – Your welcome. I so rarely get to hear that feedback from the book, so good to hear it is helping someone. It was the main point in writing the book.

    @Sheryl – Good point. Actually my problem is I focused a bit too much on the relaxing during the holidays and didn’t plan my spare time that much. It really is my own fault. By the way, I find it easy to spend the time, but I know if I don’t plan in some productivity it drives me nuts over the long term. So that just tells me to be damn sure I have a good plan for my time during my early retirement years. Like my eco house project, that should keep me entertained for about three years or so.

    @Greg – Sure I would be happy to cycle back to this every once in a while. As to your case, I’ve given up good salary a few times now for other reasons…it has always been worth it to me. Yet it is a very personal decision, good luck.

    Tim

  7. Robert says:

    Tim, the luxury of time is something that I think causes most people to flounder a bit. I’m personally really interested in how people find meaning in their lives. That sense of meaning then tends to guide how we use time. The other evening, I heard a story of a retired woman who invented herself as a social network marketing consultant. I asked how that happened, and she said that she’s always loved to write, but she had to take some time off. This was about the time social networking was emerging, and she was updating her website and working on some artful e-books. In the end, she just felt that everything came together and it became clear what she wanted to do with herself. (I’m not saying that you should do become this, but that the process is interesting.)

    A couple relevant books might include The Element by Ken Robinson, The 8th Habit, by Stephen Covey and What Should I Do with my Life, by Po Bronson (although most of the subjects don’t actually figure it out).

    I’ll be interested to hear what you come up, and how you arrive at it.

  8. We have the cash to pay our mortgage in full which we will pay shortly. We keep talking about what we are going to do with the extra money every month. That would leave us an extra $1500 to play with plus the $2000-$2500k we put in savings each month to do something with. If I retire at 67 that leaves me 31 more years to invest although I don’t plan to work that long if I can help it. Like you we have TFSA room and I have plenty of RRSP room so I know we will be looking at maximizing on those areas. I understood exactly what you meant about the doorway and the school analogy was spot on. Mr.CBB

  9. I have decided to focus on the TFSA after I have contributed the amount to my RRSP that will give me the maximum tax return.

    My finances are very different than yours. I have a lot of debt and very little in investments. I got a late start but I am a fast learner.

    This is my first time here. Found a recomendation for your blog at Million Dollar Journey.

  10. Geoff says:

    Just on time on your hands, Shaw said that “a permanent vacation is a working definition of hell.”

  11. Jacq says:

    Tim, I’m curious to know what your Myers Briggs personality type is? Some things tell me that you’re an ISTJ but sometimes you seem like an INTJ.

  12. Tim Stobbs says:

    @Jacq – I would say I was born ISTJ, but learned to be INTJ as I got older. So now I’m a bit of a hybrid model of both. Given the blog topics related to planning it isn’t surprising most people would guess INTJ, but I can live very much in the moment on a task for hours on end (more ISTJ). So I need some structure around my time to keep my from drifting off on a project. It’s interesting to see people change over the years. As a child I was hyper sensitive to emotions and I had to learn to dial it down as I got older. Given the engineer training people always assume I’m making decisions based on logic when in fact 50% of what I decide is instinct based. Logic is good but sort of pointless in a lot of decision making for day to day things like what coffee type do I want this morning.

  13. Jacq says:

    If you were totally ISTJ you’d probably sound like… Trent Hamm! :-) Then you’d have to go into the minutiae of calculating cost differentials of opening the oven door.
    That’s actually a great combination to have – the practicality and doing-ness (and regularity) of the S and the conceptual / utility aspect of the N. I’m like 99.9% N and it can be a PITA.
    I’ve changed as well over the years. Still INTJ, but more F, more E but the T and J don’t change. There has to be a practical component to things, so will never be a P. I figure it’s emotional intelligence that you have to learn to function better in the world and not be so lopsided.
    Having said that, when under stress, I revert to more of a pure type.
    Types are interesting in terms of ER focus. I don’t think most other types can fathom the urge to control their environment and time the way that the INTJ/ISTJ crave control and freedom and their willingness to do almost anything to get there.

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