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Wednesday, April 16, 2014

Financial Procrastination

Posted by Dave on April 15, 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 will be the first person to admit that when it comes to spending money – even if it’s a small amount, I hesitate. I drive my wife nuts over the amount of research I’ll do over a $20 widget that she knows I’ll like, or the fact that there have been times when we’ve gone somewhere to buy something only for me to pick it up in my hand, hold it and put it back on the shelf. She is much more of a spender than I am and enjoys new things. I on the other hand hate to waste money, and would rather do without that widget most times rather than part with money in my account.

Where I run into trouble at times are when deadlines become involved with the spending decisions I need to make. Recently, we just accepted the house and car insurance package given to us, instead of shopping around a bit (a serious personal finance no-no). My upcoming mortgage term is approaching (I need to finance the last 10% of our house) and I really haven’t even looked into my options at all.

I know I’m procrastinating, but like most things of this nature, it’s hard to talk myself out of. I think that I get paralyzed by the many choices available and don’t want to make the wrong choice. I experienced the same thing when I was doing Accounting courses – if I left the assignment until the last minute, anything I put together was better than the alternative (a mark of zero) and I was able to get working and get it done (usually resulting in a lack of sleep for the evening).

With school, at a certain point I had enough of the late nights, which was affecting my ability to concentrate at work and also putting unrequired stress on me during the final late-night burst. I started getting the assignments done days before they were due so that I could at least have an opportunity to read them over and check the math on them (not that I ever did, but the option was there). I think I need to make the same type of effort when it comes to personal finances, as a significant change is going to happen. I am going to have to make many different transaction, when I have to buy income producing assets.

The multitude of purchases (in relation to what I am used to) will need to be thoroughly researched and thought about before making the investment. A significant amount of money is going to be spent on the stocks or bonds that are going to make up my retirement portfolio, and these decisions shouldn’t be made hastily or at the last minute, making my current method of procrastinating ineffective.

So, much like I did when I was in school I have to change the way I’m doing things to become more pro-active in the financial decisions I make.

Have you ever found yourself procrastinating on a financial decision?

Constant Vigilence

Posted by Dave on April 8, 2014

I like the phrase “Constant Vigilance”. I think I picked it up reading Harry Potter – one of the teachers named Alastor “Mad-Eye” Moody says it all the time, and is essentially paranoid of everything that happens in the world. Well I’m not paranoid, I have to constantly look out for someone who is out to get me and foil most of my long-term plans when it comes to things about my personal finance plan, my health, or other goals…Me.

I was reading an article titled “The 12 cognitive biases that prevent you from being rational” which clarified the necessity of Constant Vigilance to me, specifically, the section around “Current Moment Bias”. Current Moment Bias is my nemesis. This way of thinking puts the onus of all problems onto the shoulders of “Future Dave”, to the benefit of current Dave. Current Moment Bias is the level of thinking that talks me into eating Ben and Jerry’s ice cream (Chocolate Chip Cookie Dough), because “Future Dave” will be able to easily lose the added weight associated with the 560 calorie snack (yes, I looked it up after the fact).

Rationally, I know that I would prefer to not have eaten the ice cream a couple of days later when I step on the scale. The ice cream (or whatever other unhealthy food I ram into my face) is something that makes me feel like crap, and takes me further away from achieving the level of fitness I would prefer to have, and closer to not having the ability to leave the couch.

When it comes to my plan to retire early, Current Moment Bias could really inhibit my ability to meet the goals I’ve set out. I generally limit my impulse buys to minor things such as books or meals out – say 10 or 15 dollars a purchase, maybe once a week or so. These kind of things aren’t really going to matter too much in the long run. Spending erratically too often though, could add months or years to length of time I would have to work, which in the long-run isn’t what I want at all.

So, I attempt to stay “Constantly Vigilant”, while still having some fun. I don’t fret over the minor dalliances I have with bad food, or bad spending. I just try to have my current self pull its own weight in my long-term plans – it removes a level of unnecessary stress from my life. I don’t like checking my bank balance and being $100 poorer than I thought I was with no real enjoyment to show for it, the same way I don’t like to have to work to lose 5 pounds gained eating three times as much ice-cream or pizza or Chinese food as I actually needed to have.

I’m all for solving my own problems when it comes to money or health, but I would rather they didn’t arise because of decisions that my rational self wouldn’t have made.

I Guess I’ll Never Know

Posted by Dave on April 1, 2014

Last week I (along with a bunch of other employees) received a very nice plaque and a heavy-duty mug to acknowledge 10 years of working for the same company. The gifts were nice, in a frugal nod to all people who had either not quit, or not been fired over the past decade. Until I received an e-mail letting me know I would be receiving my plaque, I had no idea how long it had been since I accepted my first contract all that time before.

10 years ago, I had been out of school for about a year, and had no idea what I wanted to do with my life. I took the job initially because it seemed interesting and challenging, and have moved around to several different jobs since my tenure began. I’ve gotta say, I still really have no idea what I want to end up doing. The work I do is challenging, and I enjoy going into the office everyday, along with the camaraderie I have with my co-workers.

The thing is, I have about a decade left of working until my “preferred” retirement date, and I really don’t think any kind of career-goal inspiration is going to come my way (I’m pretty stuck in my ways). There are skills that I would like to learn, both work-related and otherwise (wood-working, and some arts to name a couple) but I don’t really see myself making a significant job change in the near-future, unless I’m involved in some sort of significant lay-offs.

I’m okay with doing what I do for the next decade. The job I have gives me over a month per year off, which coupled with stat holidays, only “forces” me to work for about 45 weeks per year (at 36.25 hours per week). While I appreciate people who are able to follow their “passion” in a workplace environment, I would rather make pretty good money at work and do things that I’m super-interested in when I have free time. I change hobbies and things I’m interested in so often that it’s almost nice to have a grounded job that focuses me during the weekdays.

I look forward to the day that I will be able to have more time to spend on the weird stuff I get interested in from time to time (much to my wife’s chagrin), but I’m fine muddling away with my current company as long as they’ll let me work there.

Are you a job jumper, or do you stay long-term with employers?