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Sunday, October 23, 2016

Not Alone

Posted by Tim Stobbs on October 12, 2016

“You are crazy!”

“You can’t do that!”

“But you are too young!”

Those are just a small sample of some of the reactions I’ve seen to my early retirement plans, as you may have noticed they are not particularly encouraging.  Actually I would save the majority of comments I see on websites that have a story on early retirement are negative.  You can argue the why of that until you run out of air, but in my case I’ve actually cease to care about the negative comments directed at myself.

What I don’t like about those negative comments is I wonder how many early retirement dreams were cut short before they ever began because that sort of feedback.  You have to keep in mind that those of us who are discussing our plans publicly are a tiny faction of the overall who just did it and didn’t tell anyone.  After all if you are willing to insert a little lie like “I work in private wealth management,” no one will ever know.

The major problem in the beginning for most people is the isolation.  With the typical person being negative towards the idea of early retirement, it is rather hard to meet someone who will talk to you as if it could happen. Or even provide some useful feedback on the crazy ideas running around your head.  Oddly, I think that is why I got interested in blogging myself: I wanted to share and discuss my ideas.  What I didn’t consider was how helpful it was to have someone read a post, leave a comment (good or bad) and indirectly tell me: you are not alone.

The journey to early retirement is a long one.  In fact, decades is the normal time frame.  So having doubts and being a bit lonely in the journey is entirely a normal feeling at some point.  It can be hard at the start to be so excited by the concept, but have no one around you to talk to.  So thank the heavens for the internet and personal finance bloggers!  Here at last is a group of people who you can talk to in forums, on blogs and now with conferences in person.  We can learn from each other and finally have someone tell you: you aren’t crazy, but have you considered this?  Again it will be rarely spoken or written, but it is still there: you are not alone.

So the next time you run into someone who is new to the idea of early retirement, try to be patient with them.  Not all blogs are the same, they will find one geared to their particular level eventually, just be nice to start with and remember to imply if not tell them: you are not alone.  We understand and welcome to the club.

Non-Linear Spending Models

Posted by Tim Stobbs on September 28, 2016

‘I’m wrong.’ I thought to myself the other day as I was building out a more detailed model of our spending for the next five or so years.

The reason was for a very long time I had always done my spending models based on a linear spending plan and ran the calculations on an annual basis.  Basically I just assumed I would spend $30,000/year regardless of the year. The year 2020 was the same as 2021 or 2022. It was a conscious choice to simplify things when I started but now that I’m looking at modelling my spending but as I looked closer I realize that assumption really doesn’t hold up.

Spending is actually a non-linear function.  Some months are higher and others are lower, that I’ve always know from my previous net worth posts where I track our spending. Yet what I didn’t consider is how that applies to years of spending as well.  This became particularly obvious when I ran a test case where I assumed I started my early retirement in 2018 and after adjusting for other income sources (like my wife’s business and government benefits) I ended up the the following planned investment withdrawals by month (assuming I don’t bring in any income from a job).


So you can see it, while I still averaged our monthly spending over the calendar year the requirements to take money from our investments isn’t a constant stream on a year to year basis.  This is partly why I started down the idea of semi-retirement since because of our non-linaer spending our investments should actually continue to grow even after I’m not at my day job. In fact we will be pulling out less than $1000/month for a period of about two years. This becomes a bit of neat trick as it allows us to keep saving towards full retirement even when we are only semi-retired. Of course any additional money I earn other than investments will further drive down those numbers and allow us to shift to full retirement sooner if we wanted.

Overall I estimate that because of this fact we only need to be semi-retired for about five years or so and then we have the option of shifting to full retirement.  Or alternatively we could keep working beyond that time and put the money into a slush fund for travel or other fun things.  The point would be we really don’t need the money for day to day spending.

In the end, it was nice to know that my idea of semi-retirment looked more than reasonable and put my mind at ease with the entire plan, all because I stopped thinking about things in a linear fashion.  Have you ever had an ‘ah’ moment with your retirement planning?  If so, what was it?

Hanging On

Posted by Tim Stobbs on September 8, 2016

I can always tell now when I have had a particularly bad week when I start running calculations on what would happen if I just quit now?  Previously when I would look at the results I would end up being disgusted and give up the idea, but recently as I get closer to my long term savings goal the result come back in the realm of reasonable.  Ugh, now what?  How do I hand on when leaving is starting to look good.

So I have had to change tactics with the fantasy of just quitting tomorrow and take a step back and consider the big picture.  Right now I’m in my peak earning and compounding phase, which basically means for terms of saving and investing money that is doesn’t get any better than this.  So then I start to play a little game with myself that goes like this:

Could you last another month?  Yes, no big deal.

How about three months until after [insert life event or holiday]? Mmm, yah, I guess.

So what’s the big deal about a few more months after that? If there is little difference between 1 and 3, or 3 and five, why is there any more or less between 10 and 13 months? Ugh, damn you logical mind.

The debate really isn’t about logic, but rather emotions.  When you are tried, stressed or feeling a bit down, it becomes easy to image all the worlds problems melting away just because you no longer have to go to work.  Yet of course that really doesn’t happen, some problems will remain regardless of your job.  Early retirement is NOT a cure all.  It won’t make you sexier, happier and achieve enlightenment.  Rather it may give you time to get into working out more, do more things you enjoy and meditate, but the fact of the matter is you still need to do something other than quit your job to achieve those.  Which of course if you worked on them now you may actually be sexier, happier and achieve enlightenment even with your job.

People who go after early retirement like to demonize work and blame it for lots of things, but often it isn’t all to blame.  It may not help things or compound other issues going on in your life, but work itself isn’t a bad thing or a good thing.  Rather it is a means of making money.  We attach a lot of other things to it, but in its pure form we do it because we get paid.  Full stop that is it.  There are other good things about work satisfaction from solving problems, working with good people and expanding your knowledge base but those are side issues, not the main point.

In the end, these those about ‘leaving tomorrow’ to me are an alarm bell.  I’ve been pushing myself too hard and I need to slow down a bit and enjoy life.  It really isn’t the fault of my work, but rather myself.  After all, the point of early retirement is to have more time for life so how does not having a life help you out?  Simple, it doesn’t help.  So don’t mind me while I go for a walk to clear my head and perhaps read a book.  I’ll feel better tomorrow.

How do you deal with hanging on when you are close to the end of a goal?