Now five years later, I barely recognize the blog anymore.  I’ve switched blogging platforms, tried out more themes than I would like to admit and now I don’t even write half the content anymore thanks to Robert, Dave and Gwen.

On the financial front I went from a net worth of $76,000 to $459,000, which works out to an annual increase of $76,600 per year.  Granted that was partly fueled by a crazy hot housing market in Regina, so even if you strip that out it still works out to an increase of $41,200 per year.  Ah, the joys of having a plan and compound interest.  Not to mention my plan for early retirement has gone from a dream to a something so certain that only thing up for debate is the final age I’m at when I pull the plug.

Then of course I’ve also learned a lot about happiness from this blog including the following key points:

• Wants are unlimited, instead focus on your needs.  Which by the way are a lot more than food, water and shelter, you also need affection, a sense of belonging, the ability to create something and the freedom to choose.
• More spending does not equal more happiness.  Actually depending how much you are already spending it will make you less happy.
• Quality over quantity and more experience, but less stuff will take you further to being happy than you realize.
• Forget what your suppose to do in life and do what works for you.  Following what every else does will just land you in an over sized house filled with too much stuff , fat, in debt to your eyeballs and noticeably less happy than I am.  Skip average and go straight to being different and be proud of it.

Now of course to celebrate any good event, you need a party, but that is fairly hard to do well online.  So instead let’s have a good old fashion blog contest with the following prizes:

The grand prize will be a Vox tablet (worth ~$200) or I will donate an equal amount of money to a charity of your choice.

Ten secondary prizes of the following books:

• Wise Investing Made Simple by Larry Swedroe
• Juggling Dynamite by Danielle Park
• The New Investment Frontier III by Howard J. Atkinson
• What Investors Really Want by Meir Statman
• Understanding Wall Street (5th Edition) by Jeffrey B. Little
• Uncontrolled Risk by Mark T Williams
• The Wealth Cure by Hill Harper
• The Wealthy Barber Returns by David Chilton
• Findependence Day by Jonathan Chevreau (signed)
• Free at 45 by Timothy Stobbs (signed)

To enter the contest you have several methods:

• 1 entry for leaving a comment on this post
• 2 entries if you tweet about this post on Twitter and include my user id @canadiandream
• 5 entries if you link to this post from your blog and email me a link to candian.dream.free.at.45[at]gmail.com

Contest closes at Nov 16, 2011 at 7pm CST. Multiple entries from a single method are not allowed.  Winners must have their prizes shipped to an address in Canada or the US.  Please note secondary prizes won’t ship until the end of Nov.

Stage 1: Clueless

We all have to start somewhere and by far most people start here at clueless.  You don’t have a budget, because you don’t know what you spend.  Your investments were chosen at random or with off hand comments from other people.  You likely either have consumer debt or will have it shortly since most people at this stage overspend.  Basically you are a baby in the woods and the credit card wolves are circling for a good meal.

Stage 2: Awakening

One day something snaps inside of you.  You are sick of this debt and you start to realize you can’t live like this forever.  So you start to do a little reading on the topic of personal finance and perhaps stumble across some debt repayment or frugal blogs.  The ideas you realize aren’t that complicated and easy to follow.  So you start cutting back on your over spending and really focus on paying down that damn debt.   Yet the most amazing thing of all is your start to realize how the less you spend means the more you have to pay back debt.

Stage 3: The Wall

After a few months or years depending on how stubborn you are the ‘new debt paying you’ is starting to get old.  You are tired of cutting coupons and taking a lunch all the time.   You miss going out for supper and damn it it is taking so long to pay back that debt.  What is the point  of continuing?  Maybe you should give up this whole cheapskate existence.  At this point people take one of two paths, they either: a) give up entirely and cycle back down to stage 1 again (and likely repeat the process at some other point) or  the break through and move on to stage 4.

Stage 4: Strategic Spending

At this stage you hit the wall in stage 3 and managed not to give up entirely, instead you woke up to the fact you have been a cheapskate when in fact what you want to be is frugal.  So you start to spend more on some areas of your life that you really missed.  At the same time you realize you don’t miss some of your old spending habits.   So you entered the strategic spending stage where you cut back in some areas to save some money, but also are ok with spending more on other areas because they are important to you.  This stage is why this blog focuses a lot on being happy, since that is a good guide on where to spend your money and where to cut back.

Stage 5: Earning More Money

This is a particularly weird stage as it can technically occur anywhere after stage 1.  The appearance of it depends on numerous external and internal factors such as do you know anyone who owns a business, do you like to take risks and do you have the capacity to earn more in your current job?  Regardless of when it occurs you realize that you can work the other side of the money equation and just earn more.  Getting a promotion, asking for a raise, starting a small business, taking a second job…you get the idea.  I personally list this stage here because the majority of people that I’ve talked to tend do this stage about here.

Stage 6: Earning  More Time

This stage is interesting as it represents the final evolution for most people in personal finance.  You realize you can ‘buy time’ by having your investments make money instead of you.  This often lead people to write blogs about early retirement (yes, I’m guilty). Also if they stay here long enough they might also realize that even if you can earn more money doesn’t mean you have to.  You can also choose to work less and have more time starting right now.  Or the alternative is to earn more per hour, yet work less.  In either case, the focus now shifts to finding and keeping that elusive thing called: balance.  That sweet spot where you have enough money for today and your future as well as balancing your time for today and in the future.  While it is possible to hit that balance it never lasts since your life continues to change.  So balance becomes your white stag which we endless chase yet never hold onto for long.

Conclusion:

So a lot of disagreements on personal finance seem to flow out of people who are in different stages.  If you aren’t at stage six the idea of choosing to earn less (either with your job or your investments) can be a little mind boggling.  The same thing occurs for those that have lots of friends at stage 1 while you have moved onto stage 2, ironically that very conflict is what often triggers stage 3 where some people really do just out grow apart over money.  So regardless of what stage your at try not to attack others, but rather struggle to understand their point of view.  It might be alien to you now, but in the future it might make sense.

Which stage are you in?  Do you have conflict with others in a different stage?  If so, what about?

As such we tend to not think with in terms of all the hats we have to wear when you run a blog including:

• Editor: Guess what folks, editors at major newspapers don’t spend their time fixing a lot of other peoples crappy writing.  They fix the obvious, cut the any word that isn’t required and send it back for a re-write if certain parts don’t make sense or it wasn’t what you were looking for.  The writer is SUPPOSE to fix it and then send it back.  Unfortunately, I suspect many bloggers are way too nice about rejecting crappy guest posts and end up doing too much re-writing themselves.  That isn’t your job as an editor so stop doing it and hit the reply button instead.
• Marketer: You can have the greatest blog in the world and no traffic.  You have to get out there and strike up some interest in your blog.  Submit to carnivals, comment on other blogs, do guest posts for other blogs and be helpful to others in forums.  All of those can help to drive traffic to your blog without paying a cent in ads.
• Sales: Want some income on your blog?  Then don’t just stop with Adsense you need to consider affiliate programs, paid link ads and perhaps launching your own product like an ebook/book, software or something else that people will buy.  Income from a blog to be useful has to come from many sources.
• IT: I recently had my hosting company’s tech support try to tell me that they weren’t hosting my blog and that some other company was doing it.  Needless to say I freaked out and then dug into it.  Guess what? They were wrong and I had to figure that out what the hell was up.  Like it or not you need to know a few basic items on how websites work and then have a phone number or two of friends you can call in when you get in over your head.  You are the Help Desk like it or not.
• Accountant: Do you need a GST/PST/HST vendor account?  Can you write off your hosting costs if you don’t keep a separate account for your blog income?  When did you get your last Adsense cheque?  If you don’t know the answers to those questions, then you need to find out.
• Writer: Then last, but not least, all bloggers are writers.  We often start off doing just that role and forget we need to expand out into the other ones.  Great blogs at their heart have good writers, but what makes a blog really great is how well you wear those other hats.

Now if you aren’t good at a particular role it’s ok to get help.  Pick other people’s brains or even hire out sections of work.  I know my weak points are IT and marketer.  I’ve have to beg for help once and while from others with IT and I know I don’t do enough marketing work.  I’m just starting to get better at the editor role with Robert and Dave doing regular guest posts.

So if you blog, what hats do you need to get better at wearing? If you don’t blog, which of these hats do you wear in your job? Any tips for the novices out there?

So how did I recharge my batteries? Well that was easy while on a recent trip I made sure of one thing above all else.  I would do absolutely nothing related to work for one full week.  No day job work, no trustee job, no writing … absolutely nothing other than minor things like washing the car.  It was like heaven for the first few days but by the end I knew my batteries were starting to get charged as I was getting creative bursts where I was itching to start writing again.

Now that I’m back at the house I’ve been digging into my ‘fun’ work with a vengeance during this last week of my vacation.  I’m actually looking forward to writing again and managing to get some work done and some much needed planning on how to get to finish off several outstanding projects that I’ve been working on.  It’s sort of refreshing to be able to sit down at a computer with a smile on my face and look forward to writing something like this post.

I think also my family can tell I’m back so to speak.  I’m smiling more and much easier to be around and much less likely to get angry over silly things like spilling a drink at the table.  I’ve also just enjoying the simple things like having time to read a book strictly for entertainment rather than a book review or research.

This is exactly why I wanted to ‘retire early’ and now I’m getting it now rather than waiting 13 years or so for it to happen.  Time is not refundable and so I’ve taken to watching were mine is going a bit more carefully lately to ensure I’m enjoying life and still working towards my dreams as well.

So how are you charging up your batteries this summer?  Vacation away from home?  Resting around the house?

The issue of course is life isn’t so simple.  Let’s examine a few things.  Is buying a new TV selfish? Yes, I think we could argue no one would die without a TV so it isn’t a need.  So if that is true then buying a big house is selfish, and so is buying a new car every five years.  Yet when you choose not to buy the new TV, the big house or the new cars is that selfish by choosing to save the money instead? On the one hand is you are just keeping some savings for emergencies or regular retirement I think people would consider it more prudent planning than being selfish.  Yet if that is the case, where is the line between prudent planning and being selfish?  If you retire one year early are you selfish? Likely not, so why is doing it five, ten or even twenty years any different?  In reality there is no difference other than the difference you build in your mind.  So why do you feel there is a difference?  I’ll take a stab at this, you feel guilty about retiring early.

Which brings us back to the concept of a productive member of society.  I think for some reason people assume that early retirement means doing nothing and thus you are not productive.  Yet that is a false assumption.  People are never doing nothing.  Kids who are five and under don’t attend school and don’t have a job, so in some people’s definitions of productive would be seen to be doing nothing.  Yet in reality we know small kids are learning machines who are figuring out balance and gross motor control, fine motor control, language skills, defining their environment, learning object permanence and literally thousands of other little things that you take for granted every day of your life.  There are definitely not doing nothing.  The same applies to early retirees, they might appear on the surface to be doing much but the reality is they are learning gardening or a new language, helping others, starting small business, driving up your property value by picking up trash on their morning walk…you get the idea.  If you try to call early retirees unproductive members of society you might as well extend that to small kids or even artists since they don’t produce things that people need or pay enough tax.  The label of unproductive is really, again, just in your head.

So after deconstructing those two concepts it easy to see early retirement is only selfish (in a bad way) and unproductive if you want it to be.  Yes early retirement will always be partly motivated by selfish goals, but that doesn’t mean it is a bad goal.  Early retirees do have the difficultly of adjusting to find more meaning in their life than just their career.  Most working people don’t have to think of how they contribute to the world, they just assume it is their job.  Which is sort of silly when you consider how many useless paper pushing jobs there are out in the workplace.  It’s entirely possible by retiring early you will contribute more to society than you ever did as a working stiff.

So in the end you need to find your own answer to: why do you want to retire early?  I won’t judge the answer, but you will in our own mind.  If you get it wrong, then you will feel guilty.  So be honest with yourself and really think about the question.

So why do you want to retire early?  In my case, I want more time to learn and write.  How about you?

When I first graduated from University, seven years ago I had very little knowledge about money and what I should do with money.  I had a bunch of student debt a decent paying job and really no plan.  Enter The Wealthy Barber – for someone who had no plans or aspirations, the easy to read and understand story told gave me money goals and aspirations to strive for.  I gained a basic level of personal finance knowledge that I followed over the next five years, where I paid off my student loans (approximately $25,000 worth), bought a car with cash (for which I got a lot of comments like “it must be nice to have that kind of money laying around”) and religiously saved 10% of my pay for the future.  I will forever be grateful to David Chilton (the author) for writing this book.  I own it, I bought my 21 year old sister a copy of it when she graduated from college (hoping she might have the same type of reaction as I did) and would tell anyone who needs a plan to read this book.

I followed the advice for several years, basically planning on leaving the workforce at around 55 or 60 like most people.  About two or three years ago, I picked up a copy of Derek Foster’s “Stop Working, Here’s How You Can”.  Although I don’t necessarily agree with the author essentially bailing on his iron-clad investment tactic in what seems a fit of panic during the economic downturn (when I believe his book states to look for these opportunities to boost your portfolio) in general his book changed my whole thinking on retirement.  He offered a plan that would that would allow me to retire in around 12 years.  For someone with around 40 years of work ahead of them, cutting that down by 75% is very attractive.  I understand the riskiness of living on just the dividends from stocks promoted by his book, but there is a certain level of hopefulness offered by this book that gave me hope.

The final author, which eventually lead me to this site (it’s listed in his blogroll) is Jacob from Early Retirement Extreme. This author offers a method of leaving the workforce in around five years.  I read every post he had on his site over a two or three day period – eating up what he was saying as it made sense to me.  Although I don’t know if my spouse and I could live on $10,000 to $15,000 per year, he provides a method of doing so and has proven that it is not only doable (he did it himself) but enjoyable to be retired in your early 30s.  Although I have gravitated more towards Tim’s site and his more “moderate” stance on early retirement, striving to copy Jacob’s method and discipline may shave a couple of years off of my retirement date.

So, these are the people that have lead me on my current financial path.  Do you have any writers that have inspired you financially (or otherwise)?

I keep a small black moleskin notebook with me most of the time to write down random ideas for blog posts. Everything from noting an interesting survey on TFSA’s where 92% of people didn’t get all five questions correct to wondering if the decay of the financial standing of the US will lead civilization’s downfall.  Perhaps at best half of the ideas get used.  The other half are often too short of a post or get lost in the idea bank.  I consider writing for the blog more habit than difficult and generating ideas take no effort at all. Yet I will go out of my way and invent things to do avoid writing other things, but I will always write for the blog (unless I’m sick).    Somehow I find the other writing more stressful than blog (even including the book based on the blog, ironic eh?).

To warm up some days for some writing I’ll open a file and just type what ever happens to come into my head for ten minutes.  I often have a candle lit near me because I find the smell and the motion of the flame soothing.  I prefer to write early in the morning because I enjoy the quiet of the house.  Yet I can also write with the kids less than 10 feet away and playing.

I’m terrified at times at having success with my writing, like some how having a huge blog or a decent selling book would create expectations that I couldn’t live up to.  I often wonder if I’m a fraud for having the readership I currently do on this blog.  It’s like the feeling that you, the readers, can’t possibly be interesting my opinion of personal finance.  I’m just some guy from the prairies with a wife, two kids and a crazy dream.  I have often doubted that anything I’ve ever written was even good, despite the assurances of many others that at least parts of it are good.

I get downright bitchy if I don’t have some time to myself each week and it will even show up in my writing if I fail to get away for an hour.  The post/page will lose a certain readability that occurs with my better writing.  Interestingly enough I can handle negative feedback fine at work on my writing, but are more sensitive about my other writing.

So that’s a snap shot of my neurotic head.  So if you have any doubts, yes all writers, including bloggers have their habits and odd beliefs around their work.  It just comes with the job.  So if you do any writing, what are your habits around it?  Do you have a chair you love or an item near by when it do it?  Or can you write on post it notes in the bathroom?

In mine I’m going to suggest a few ideas on educating people in general, but I do want to point out a few major themes such as:

• Money is an emotional thing.  Lots of plans to educate people about money fail for one simple reason: money is an emotional thing.  If it were not an emotional thing educating people would be easy since most basic personal finance concepts are fairly damn easy to learn: live below your means, compound interest, or don’t try to time the market.
• Avoid too many ‘rules of thumb’.  Since money is emotional we tend to do all sorts of things that make no sense on a math basis, but do make sense on a personal basis.  So a ‘rule of thumb’ tends to become useless very quickly since decisions always have an emotional part to them.
• You can’t force education.  I haven’t been part of the education system for long, but I can tell you a common problem is how to engage kids to learn.  That is with them being required to be at school, now image the problem across all ages groups and not being in a school setting.  You get the idea how difficult a task this will be to get people interested in their money.  You will need some plans to engage people.
• Don’t go to extremes.  Often many personal finance books are geared towards those with higher incomes since they do tend to be the most interested in personal finance.  What people need to see is example for lower incomes as well.  Saving 10% of your income sounds easy, but try doing it with a $40,000 family income with two kids living in Toronto.  Aim examples at many different levels of income for the best results.

That’s just a few themes that I’m planning on discussing.  What would you put in to a submission?

So for those that are curious the stats stand as follows:

• 2 writers as of this month
• 765 posts (including today)
• 4209 comments
• 178,942 site visits
• 344,426 page views (including 49,311 from the old blogger site)

If you estimate a modest word count of 300 words per post that would mean I’ve written about 229,500 words which would translate to a 918 page book.  Damn that’s a lot of writing, but really it’s only a fraction of what you have done in the comments.  Collectively if we assume 100 words per comment all of you have written about a 1683 page book. Yikes!

What’s really mind blowing is if you track my net worth posts to the beginning.  I started off this blog with a net worth of about $66,000 in Nov 2006 by Oct 2009 it was $281,400, which works out to a compound increase of about 62% a year.  Obviously that includes the house value going up so I can’t take credit for all of it, but I’m still blown away it is that high.

So a big thank you to each and every one of you.  For every idea, debate and laugh that you have given me over the last three years.  You really are the reason that I do this.  And to thank you all I’m giving away a $75 gift card ($ CDN) to a store of your choice to one lucky reader (provided I can order the gift card online or pick one up where I live).  To enter just leave a comment on this post before Nov 19, 2009 (8pm CST).  Limit one entry per person and please use a valid email so I can contact you if you win.  Winner will be selected by a random number generator.

Best of luck and thanks again for reading.

Also what was exciting was the volume of comments on the posts of the last two days.  You have might have noticed I was staying out of it and not commenting on either post.  That was on purpose I didn’t want to hint to anyone what I was thinking about when reading the posts or the comments.

In the end picking one of the two of them was very difficult.  On one hand I’ll be honest I had no idea that Candidate #1′s post would cause that much of an uproar.  Granted I thought the tone of the post needed work, but I won’t have guessed at the response overall. On a purely publishing viewpoint controversy isn’t a bad thing, so I won’t hold that against him.  He also was honest and put some emotion into his response to the comments while remaining composed while under fire.  Keeping your cool in a debate like that is difficult so I was impressed.

On the other hand Candidate #2 was obviously the better writer overall.  He had a easy to read style and obviously did some good research into the post.  Yet something in his writing was bothering me and when I was talking to my wife I hit on finally what it was.  It was like reading a newspaper paper article, which is fine for reporting the news but this is a personal finance blog.  I want something that reads closer to an editorial.  I want the majority of the post to be the writer’s viewpoint and thoughts not just quotes from what other people think.  Personal finance should be personal and I didn’t have much of that feeling with Candidate #2.

So in the end I didn’t make the decision on logic.  I went with emotion and picked Candidate #1 for the job.  I thought over the long run he would fit in the best overall.  So I’m proud to introduce, Dave as the new second blogger on Canadian Dream: Free at 45.  Dave is a CGA from Ontario who also dreams of retiring by age 45 at the latest.  Dave’s younger than I am so we will see how early he can pull it off.    I’ll be setting Dave up on the blog over the next week and you will start seeing his posts in November.

For those of you who liked Candidate’s #2 writing I’ll give you some good news.  He’s the regular commenter, The Rat, who already has his own blog Ending the Rat Race.  So you can continue to enjoy his writing by subscribing to his feed.

Thanks to everyone who applied to the position .  It was an interesting process to go through and I appreciate the work that everyone did on their sample posts and cover emails.  I also want to thank everyone who commented in the last two days.  Those comments really helped me look at both candidates in more  ways than I would have come up with on my own.