Posted by Canadian Dream on December 14, 2011
Well it’s been a good year so far and now that I’m on vacation I’m actually starting to get caught up on my backlog of things to do around the blog. One of those items was a final report on my 2011 goals.
For your memory the goals were fairly damn straightforward:
Goal #2 was the publish my book, Free at 45. This was completed back in March of this year. Sales were relatively modest, but I didn’t go broke doing it, which was the main idea.
Goal #1 was to pay off $39,000 of my mortgage. While it isn’t the official year end yet, I can project that the final mortgage balance will be about $43,000. That means I would have paid off $40,500 over the year. Yep, I exceeded my goal by $1500!
This now sets me up nicely to go after my 2012 goal of paying off the mortgage completely. So that will be a bit of stretch for us given what we paid off in 2011, but as the balance keeps dropping so does the interest portion of our payments which should assist us in bridging that gap.
So how have you done on your goals for 2011? Pass, fail, or did you have to switch them along the way?
Posted by Dave on November 1, 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.
I read a funny “tweet” (funny to me, my wife tells me I’m a dork) from @BradPilon a couple of weeks ago “How boring would the Biggest Loser be if I was one of the coaches? Today we’re gonna do something super fun…not eat and go for a walk…” For those of you who have never seen an episode of the Biggest Loser, essentially what happens is a group of morbidly obese people are put together in a house and are tortured for a few weeks until they get kicked off the show because they aren’t losing weight fast enough (which seems cruel to me) or win a bunch of cash for losing the most weight.
Realistically, rather than killing themselves the people on the show would probably lose about the same amount of weight by watching what they eat. I realize that it just isn’t compelling television when people aren’t crying or puking or screaming at a personal trainer, but as this video shows you can’t outwork a bad diet. In addition, I’m thinking that the workouts being done are just not sustainable in the “real world” or the contestants would not be having the weight issues they were having.
When I graduated University 7 years ago, I was about 65 pounds heavier than I am now. I was super enthusiastic and planned on going to the gym for about 2 hours a day until I got down to the weight I was comfortable at. About 4 months later, when I hadn’t lifted a weight in 6 weeks, I realized I had to change my plan of attack. Since then, I have cut down my time exercising to about 20-30 minutes 2 or 3 days a week and make sure I go for a walk once in a while. I’m 5’11 and weight about 170 lbs, where I have maintained since I initially lost.
I know that if I made my workouts any longer or complex I wouldn’t do them. In the same way, my finances are super-simple. If my plans were too elaborate or difficult to stick to, I probably wouldn’t follow the financial plan at all. I have an end-goal in place (to be financially independent by age 45) and have essentially automated my finances otherwise in order to achieve this goal.
I think, to a certain extent that most people in poor financial shape are just overwhelmed initially by the seemingly daunting task of getting out of debt and into the “black”. Instead of creating an elaborate budget plan, it may be better to simplify as much as possible – keep 1 goal in mind and work towards that. In the end, the best plan might be to not “eat” (spend) and go for a walk.
Have you been overwhelmed by your personal finances? How did you resolve the problem?
Posted by Dave on October 4, 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.
I have financial tunnel vision. My main goal right now is to pay off my mortgage as quickly as possible. I’m not sure if this is the wisest way (I’m sure Nelson at Canadian Finance Blog would agree it isn’t wise) to run my finances, but to me, becoming debt free is important to my “core” financial plan. That “core” plan is to be financially free as quickly as possible, owing money on my house is not helping me become financially free.
There are several reasons I am focusing solely on paying off my house:
I don’t like debt: I understand that I could leverage the record low interest rates and jump start my stock portfolio by attaining higher than the 3.59% in interest I am paying right now. I just hate seeing the amount owing, and paying banks interest. I have never been comfortable owing money, and having tens of thousands of dollars left on my mortgage balance does not let me sleep well at night.
Compounding over time doesn’t really make a difference to my financial plan: My investment plan is based on making all my retirement investments over a 10-year period (after my house is paid off). The added 5 years would allow for some compounding, but if I left my house unpaid with an end-date 13 years from now (when I turn 45), I would need to use a considerable amount of my portfolio to pay that off. To me, this seems like a trade-off. I would rather have the entire debt paid off and just be done working when my investments have created enough cash-flow to live off of.
It seems like a safer bet to have my house paid off: If my wife and I have no mortgage payment, our approximately $25,000 per year budget could easily be supported by either one of us at a full-time job, or alternatively 2 part-time jobs (at basically minimum wage). From a financial security standpoint the lower monthly costs also provide for significantly more flexibility. The ability to change careers to basically anything I wanted to do without having to worry about money is very freeing. A mortgage and higher monthly bills reduce this ability, and force me to continue working (which is not something I’m terribly interested in doing).
As a result of these reasons, I have one goal in mind. When this goal is achieved (which should be in under 3 years from now), I will focus on saving and investing for retirement. Having paid for my house, I would hope that I will never have to pay for a roof over my head (wherever I decide to live), I would just sell my current house and find one the same price or cheaper somewhere else.
Do you have tunnel-vision with your finances, or do you have a different method to get to your goal?
