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Tuesday, December 6, 2016

Enduring

Posted by Tim Stobbs on November 2, 2016

Perhaps this is odd, but I’ve always had a sense of pride on my ability to use my willpower to finish difficult tasks.  For example, I’ve completed writing 50,000 words in a month twice (National Novel Writing Month) and signed up for third time, I will read 100 books in a year (2016), and we have improved our net worth from $66,000 to ~$900,000 in ten years.  None of those are easy, but I got them done.  I feel good when I get a hard goal completed and do feel a bit of pride at my ability to endure.

But perhaps more interesting is asking myself: why did you endure it at all?  Because when I ask that question I am forced to admit I likely have a lot more alternatives than I’m prepared to really examine.  My current one is why am I enduring work at all?  I could just leave tomorrow and be fine for like years and sort things out after the fact.

I think the honest answer is the fact that I’ve turn enduring almost a habit.  Just a bit more to the next goal, just a bit further to the one after that.  I’ve trained myself to a master level of making progress on some things in my life.  I’ve tricked myself into an endless cycle of improvement that I’m not ever sure what the end of it lies sometimes or take the time to appreciate what I’ve accomplished.

This becomes apparent to me when I look at my ability to get things done.  I’m very good at writing out a to do list for home or work and getting most of it done in a set period of time (week or weekend are the most common).  Yet what I’m not good at is relaxing enough some days.  I get so busy in the cycle of life I fail to step back and enjoy the view periodically.  I’m too absorbed in getting the next item done on the to do list that I forgot the point of the list was just to remember things.  Just because it is written down does not mean I need to do it right now.

So a deep concern I have going into retirement is: how will I adjust to all that free time?  As I previous mentioned I could keep very busy if I wanted to, but the broader question is then why did I bother doing all of this if I’m just working as hard as having a full time job.  Where is the payoff for enduring all these years towards a goal to merely replace it with some other goal?

Maybe I need to learn to do nothing.  Sit alone with my thoughts and bask in the moment.  Enjoy now and not look towards tomorrow to be happy.  To exist in the sunny afternoon with not much to achieve but enjoying the sun.  It isn’t that hard to just take a second and realize that you can have a happy moment just about any time of the day.  To do lists don’t have to be complete, it’s okay to disappoint others at times or even yourself after you sign on to a overly hard goals.  There is tomorrow and your to do list will never be done.

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).

non-linear-withdrawal

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?