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Thursday, July 24, 2014

Combating Constant Second-Guessing

Posted by Dave on July 22, 2014

Dave 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 a hard time pulling the trigger when it comes to major purchases. I drove my wife nuts a few years ago when we were shopping around for a used car because it took me weeks of reviewing prices, makes, and models before spending the $10,000 the 2008 Nissan Versa eventually ended up costing us (going on 4 years and around 60,000 kilometers).

Most times, I think it’s more I’m worried about buyer’s remorse than I am about the actual purchase and dollars out of the bank. With our car purchase, what finally swayed my decision was we found the model of Versa we wanted at about the cheapest price we could find over the weeks of reviewing different cars of that size. I was basically ensuring that I would not feel ripped off a few weeks or months later.

Sometime in the next month or so, I’ll be starting the “Investment Phase” of my retirement plan. I’m hoping to accumulate enough capital over the next decade or so to retire at or around age 45. For me, one of the major traits I’m going to have to overcome is the feeling of buyer’s remorse after making a stock purchase. It is more than probable that I will make some terrible stock purchases over my investing “career”. I’m hoping that some of these terrible purchases will be balanced by stocks that follow whatever hypothesis I have when I decide to buy.

As with all major purchases, I’ll be discussing it at length with my wife (whether she wants to hear it or not). So far, she hasn’t shown any real interest in much of our financial journey, beyond asking “are we done yet?” I will essentially be teaching my wife what I’m doing while I go, whether she wants to learn or not (I read her this paragraph and she rolled her eyes at me). I hope that we will both learn a lot in this process. I find this kind of new stuff really interesting, and although I’m doubtful it will happen, hope she will gain some level of enthusiasm for it as well.

To a certain point, cautiousness while investing will hopefully help me avoid most large errors I could make that would stop my wife and I from achieving our financial goals, but I need to have some level of confidence in the investment decisions.

How do you overcome second-guessing in your investing? How do you stop the hesitation before pushing the “buy” or “sell” button?

Vacation Plans (Thwarted)

Posted by Dave on July 15, 2014

A couple of weeks ago, I got a text, followed up with several links titled “Cottage Please” from my wife. She had a few days off and thought it would be nice to rent a cottage for a week for the two of us to hang out at.

I like vacation days as much as anyone – I get 23 days a year (over a month’s worth, for those wondering why I have stayed with the same company for over 10 years). Most years, I use these days to golf, see family and friends, canoe or just relax at home – a rented cottage is something completely different for us. The cottage would cost about $1,000 for a week, which I agreed with my wife was reasonable – for a cottage rental in the first week of July.

Where I kind of questioned the whole thing was why we would be going to a cottage. Neither of us are what you could call “water people” – we don’t spend our days seeking out new and exciting places to float on pool noodles or anything. We also aren’t touristy, seeking out picture-taking opportunities or other day-events in the areas we travel to. Our main interests are sitting around, reading, with some sort of cool beverage in our hand and then eating good food.

At the time of the “Cottage Plan”, my wife was on a heavily restricted diet, in her attempt to rid herself of severe food allergies – she couldn’t really eat anything you would call convenience food. We would have essentially been moving all of our food and stuff from our cupboards and freezer to a different place to cook it.

So, I was generally just not keen on the whole idea. What I did like about it was taking a few days off together to relax, which is what we did. We hung out on our newly renovated patio  (we are no longer “those guys with the bad backyard” in our condo complex), read our books and had a nice extra-long weekend, which saved a considerable amount of driving time, rental on a cottage and was probably equally as relaxing.

On one hand, I’m kind of a grinch for just not agreeing to do what my wife wanted me to do – it wasn’t super expensive (we do have money set aside for vacations and other fun stuff) and probably would have been a good time. I’m not sure how to measure “$1,000 of fun”, but I don’t think that on the margin, we had a significantly less relaxing weekend at home (well, there was one trip to our favourite bar to watch a world cup game), than there would have been somewhere by a lake or river. I would like to think that I simply asked – what would we be doing there (in this case), that we couldn’t do for almost free at home?

Optimization

Posted by Dave on July 8, 2014

In the last few months, we have been consistently receiving a new real estate paper in our mailbox. I enjoy the paper in the summer, because they’re good firestarter for my charcoal barbecue, otherwise I have to buy a print newspaper every few weeks. Last weekend while we were on a road-trip, my wife grabbed the paper out of the mailbox and was reading it to me while I was driving to a friend’s place.

Beyond having an idea of what our own townhouse is worth by looking up listings when we notice new “For Sale” signs in our condo complex, we’ve tried to avoid shopping around for houses. The main thing that would make us avoid even thinking about buying a new place is the hassle of moving. We try our hardest to reduce the amount of crap we have in our house, but somehow we just keep accumulating it. Rather than move, in the last couple of months, we’ve attempted to optimize the house we do own (at a whopping 1,050 square feet + a basement).

Last month, I completed a backyard “renovation”, which mainly meant giving away a bunch of heaving patio stones (incorrectly installed), building a big cedar planter box over a weekend and laying some new sod and cedar mulch. We now have an outdoor space that we hadn’t really used in the 5 years that we’d lived here because it was kind of gross to sit around. Total cost was under $150.

Our next project (which we hope to complete by next spring) is to convert our basement from a catch-all storage area, into a place we can actually use if we have people over. For the cost of a couch, some paint and trim, as well as a few trips to the Salvation Army and city dump, we’ll gain about 400 square feet to (maybe) use.

I can’t see us needing more space, and it always amazes me when I hear people talking about “upgrading” their house – moving from their current 1,200 square feet to 2,000 square feet, something that usually more than doubles their debt levels. When we were house shopping 5 years ago, something as simple as a garage added on to a similar townhouse was going to cost us an average of $25,000. Adding a single bedroom in our townhouse complex (still no garage) of identically built houses was going to add around $35,000. The marginal cost for this extra space seems excessive, and this is on about as low as “low-end” gets on housing in the city I live in.

We don’t really need two separate areas to sit in (a “new” basement and current living room), but we have the space available and it would be nice to sit in the much cooler basement in the summer. For very little work it might allow us to use more of our house – optimizing available space rather than even contemplating a costly upgrade.

Would you consider “upgrading” your house? What would make you do it? How would this impact your financial plans?