Category Archives: Happiness

Windfall

It’s it wonderful when you get money you were not expecting?  A windfall where money almost seems to fall out of the sky into your hand.  It almost doesn’t seem the matter on how much it is or how you get it.  You still get that burst of excitement when you pick up that $5 bill on the ground or get a big bonus from your work.

Yet regardless of how you get the extra money just about everyone seems to have the same thought right after getting it: how do I spend this?  Oh, should I get a coffee with this money or perhaps some donuts (mmm, donuts so sweet and…what was I talking about? Oh right).  Which I do understand the reaction, but I should point out it isn’t a particularly healthy habit to have.

Why? Because you really should set some reasonable limits about investing some of your windfalls in life.  This isn’t to say you should always invest all of your windfalls, but rather consider investing most of them.  While I don’t have any particularly hard and fast rules about mine I do have some general rules of thumb regarding money that fall into my lap.

Rule #1 – If it is less than $20, do what ever you want with it.  This rule then allows me to not bother tracking small amounts of extra money.  Of course I could still invest the money, but I usually don’t for very small amounts.  I generally just put it in my wallet and send it on something that catches my eye later on.  I’m usually not in a rush to spend small amounts of found money.

Rule #2 – Celebrate your big windfalls (greater than $100).  I don’t know about you but I once won a colour contest and got like $75 as a prize and that was a BIG deal to a little kid.  So while I’ve adjusted the amount slightly upwards I still tend to celebrate windfalls.  Now the term celebrate usually means I either buy something small or do something fun to note the occasion.  My most recent one I picked up some beer ($14) on the way home and enjoyed a glass with my wife that evening.  That’s it.  Why? Because this allows me to get the buy something with unexpected money out of system and to note the occasion.

Rule #3 – Invest the vast majority of the money into your priorities in life.  Now your priorities change in life but windfalls can provide a nice boost to what ever you happen to be working for in life.  So if you are focusing on paying off the mortgage, then you make a lump sum payment.  Or if you are going back to school, then you put the money towards your tuition.  Or if you are saving for an early retirement, then you put that extra money in an investing account.  The point here is to move things along a bit faster than you expected and then you really do appreciate the extra help of the windfall.

Rule #4 – Do NOT depend on windfalls.  I used to have a job that I would get huge bonuses (I mean like in the range of $5000 to $12,000) ever quarter (if we met our targets). Yet I never lived off that bonus money.  The mortgage was paid and our groceries bought with our tiny base salary, because I never spent or investment a cent of my quarterly bonus until it was in my bank account.  Why?  Because you can’t depend on variable money…what happens when things beyond your control take that money away?  You end up borrowing money to keep  going and you are breaking one of the core rules of money: don’t spend more than you have.

So those are my guidelines for windfalls, how you handle bonuses, tax refunds or 50/50 draws winnings?

Spending More on the Right Things

I swear some people think my life must be like a monk.  They confuse the fact that I don’t spend a lot with not spending anything at all.  So to clear that up: yes I spend money.  When you think about it, everyone does it so that isn’t so odd.  Yet perhaps the major difference between a lot of my spending and other people’s spending is I’m usually thoughtful on what I spend my money on.

Yet this does not mean I never impulse buy.  In fact, yes I splurge on impulse items once in a while.  Just once every few months rather than twice a week.  For example, my latest one was I was at the bank to deposit a cheque and I recalled that the local HMV location near me was shutting down soon.  So I wandered over there saw a sign stating that it was it’s last week and all the DVDs and Blu-rays were 50 or 60% off.  So I walked around the store and found a few items and bought them (Mr Robot Season 2, Contact and I Robot..if you were wondering).  Did I need them? Nope.  Did I plan for them? Nope.  Did I want them like a two year wants a piece of candy? Hell yes!  Yet prior to that I really can’t really recall a similar impulse spending event for the last six months.  At the very least I usually have a 24 hour cooling off period prior to buying something.

Then on the other hand I sometimes think things out too much.  I recently had decided to seek out a faster internet speed package from my telecom provider since after months of trying to deal with the issue I came to the conclusion: our internet is too slow for what our house uses it for.  Prior to that I had done numerous technical troubleshooting sessions to see if I could squeak more speed out of out internet, but didn’t improve things all that much. Yet in the end I decided I wanted a faster connection it comes down to this…my kids grew up and spend a lot more time online and my wife started to watch Netflix more.  So I was increasingly battling my family for times to download some files or watch Netflix myself.  So I called in and confirmed my options and found out that I could increase my internet speed from a max speed of 1.5 MB/s to 5.0MB/s (yes nearly 3 times faster)  for an additional $3/month.  After that I turned to my wife and said, “I’m a bloody idiot. I should have found that out ages ago and just upgraded.”  Now I can download a large file in a fraction of the time prior and while my wife watches her show on Netflix.  I was just in the habit of making do with what I had that it took me a while to realize the solution would be to pay the extra monthly fee and upgrade.

So in the end there are two sides of spending: the not thinking about it all all for impulse buying and over thinking something for months that costs next to nothing.  Either end isn’t particularly useful so try to stay somewhere in the middle to achieve a happy balance. That is usually where I spend the most of my time but even I screw up. So where do you tend to fall on that scale for your spending?

Exit Stage Left

Conforming is easy. You don’t have to think that much about your choices. In fact the world provides a lovely little template for you to follow. Go to school, graduate high school and then continue into some kind of post secondary education. Then after picking up lots of debt from that post secondary education, get a job to pay that money back. Oh, but don’t forget you also need to find a spouse, buy a house, get into even more debt and then spend the next 40 years paying it all back and saving just enough money to eventually retire. Yet at that point the script stops. No one tells you what to do in retirement except some meaningless advice like playing golf and relaxing.

Odd, you say? Try having your script stop 25 years earlier. That is the plight of the early retiree. We have abandon our script and walk off stage left before the audience is ready. Then everyone, including ourselves, is wondering: what the hell happens next?

Early retirement only offers the terror of being bound by nothing. The conforming part of your life is gone. The structure of your life is blown to bits when you leave work and your forced for the first time in a very long time to actually face some of the hard questions: who am I? What am I here for?

Facing a sea of endless choices it becomes easy to get lost in the options. What time would you like to get up? What does it mean to achieve something when playing a video game was all you did for a day? Is that productive? Does being productive even matter? Then you finally have to face the big question of your day: do I need to take something out of the freezer at noon to make supper?

In some regards I understand why people continue to keep working. It’s easier to keep pushing back that retirement date and just work. You may not like everything about your work, but it does provide some meaning to your life and some structure to most of your week with no effort at all. You know when you have to get up as you have to plan when to arrive at work, you know how long your lunch break is, you have a series of tasks provided to you by your thoughtful workplace which also provides a wonderful metric on your progress so you know if you have been productive or not.

But the early retiree doesn’t have that so what do they do? There are various ways to impose some order to your life and the most obvious solution is to take the nod from work: borrow order imposed by others. In my case, my wife’s plan to continue working provide a nice excuse to get out of bed and get dressed each day. Of course, after that I’m on my own but at least it’s start. The kids will of course also contribute to the structure of my week by having activities that I can get involved with or at the very least take them to.

The other way to insert some meaning into your life is pick a mission. Unlike your job where that is approved by a board of directors, you get to define your own mission statement. It can be to help save the world or be as minor as been the best napper in your house (beating my dog on that could be a serious challenge). The point is you can choose your mission and then change it as you like. You could spend a year learning a new language and pick a new one the year afterward. Or in my case, you can write stories about things that never happened to people that don’t exist in pretend worlds (see isn’t fiction fun).

Then finally there is the last way to assign meaning to your life: choose not to. Instead just let the days roll past and relax. All this talk of life purpose may make your head hurt. So just get up when you want, do what strikes your fancy and sort it all out later on. While this may work very well as an initial strategy while you detox from work and discover the cool thing of actually having a enough time in the day to exercise, get enough sleep, eat right and finally floss everyday. Meaning after all is arbitrary, what we focus on life is our meaning. You can pretend otherwise, but by choosing to watch TV for 20 or more hours a week you have chosen that as your meaning to life. I didn’t say it was a good answer, but it is an answer.

So dear early retiree, chose wisely. What you do is your life.