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Wednesday, April 16, 2014

The Carless Report

Posted by Tim Stobbs on January 31, 2014

So after going a week without a car I thought it would be appropriate to give you all a report on how that went.  Overall I have to admit I didn’t actually mind most of the experience.

Ok, I won’t lie.  The one day it was a -44C windchill during my walk to the bus sucked…there is utter no way to sugar coat that.  Yet if you dress properly for it (like minimum of two or three layers just about everywhere) and only have a small area to allow you to see you can endure it.  I had no frostbite during any of my trips.

I think what I noticed the most about going careless was having to plan more about my trips.  For example, taking the bus to work was fairly easy, but when I headed out one night to a meeting I had to look up which bus to take to get there.  Not a big deal, but a different mind set.  Also I noticed a loss of convenience, I just couldn’t stay later at work to finish something up for 10 minutes…I would miss my bus, so I had to consider if I was willing to wait for the next one in 30 minutes.

The experience also made me grateful for the friends who offered me the occasional ride.  Often it wasn’t a big deal for them to help me out (in one case it was literally a one block detour), but it often could save me a half an hour or more on my day.  I also enjoyed walking more to get some of my local errands done like picking up some books from the library.  I did notice I had to watch how much I was carrying around since anything heavy could be a problem to walk around with for too long.  I noticed the backpack helped a bit, but doing our major grocery run would require a cab ride home as there is just too much to haul.

So could I go careless on a permanent basis?  In theory, yes, but given our transit system I would likely avoid doing that in Regina.  It would be too big of a lose of convenience for us, given a lot of places we go on a regular basis aren’t well served by the transit system.  Yet the experience did make me consider how much I am driving and make me appreciate what I do have.  That old line from Big Yellow Taxi  by Joni Mitchell seems to cover it “Don’t it always seem to go. That you don’t know what you‘ve got. Till it’s gone.”

So what have you went without?  Did you ever go back or did it change your you?

The Balance Point

Posted by Tim Stobbs on January 29, 2014

I started to reply to a comment from Paul N and quickly realized I needed an entire post to answer it.  Here is part of Paul’s comment and question.

I read a few lines on another blog, ” Depriving yourself of everything you enjoy is not a formula for long-term success”. It leads to “Frugal fatigue”. How does one find that balance between?

This reminds me of my early experiences on spending less and saving more.  Way back when I started this mad journey to retire early I was entirely focused on cutting back on our expenses.  Then after my first son was born 10 weeks early and our house needed its main structural beam replaced (in the same month) we ended up with pile of debt.  So in response I cut to the bone for spending and we poured everything into paying off those debts.

I can assure you that hacking expenses to the bone is an effective short term measure but I agree entirely with the quote from the other blog that it is a recipe for disaster in the long run.  Why?  In summary, you learn to dislike your own life and begin to resent your plan regardless of how attractive the outcome is.  I experienced it first hand and so after some of the initial debt repayment I eased off the other savings and looked at our spending carefully then expanded the spending again, but only in certain key areas.

We personally focused on expanding spending on what matter most to us and what we enjoyed about life. For example, my wife likes eating out so we earmarked some cash each month to allow that to happen. Then for a while I can honestly say we found our balance point…well at least for a while.  Then over the years I haven’t paid as much attention to the spending and it crept up a bit higher.  Not huge amounts, but it moved up, some of that was just having a growing family (we now have two kids and a dog).  Yet now I can honestly say I think perhaps we went a bit too far the other way.  I don’t agree that all our spending was a good idea from a balance point of view (I won’t say we are hugely over spending, just a bit).  So I struggle with asking myself where is the balance point again, because to be honest is shifts all the time.

The shift in some regards is normal, you change over the years and so does what matters most to you.  So your spending should evolve with you to keep that balance, but often it doesn’t.  We tend to form habits and keep them even when their outcomes no longer really serve us.

So my plan to try to head back to balance again is to go over our spending data with a detailed eye and get some input from my family on what they like the most.  Then examine the things we don’t use that much or like and see if we can’t reduce our spending on them.  This may free up some cash for savings or it may just end up boosting up  others areas of spending, it all depends on the net results of the exercise.

In the end, balance is a temporary state, you have it and then it leaves, so you have to cycle back around to it.  Frustrating, I agree, but it is the truth.  How do you find your balance point between saving and spending?

“Poverty”?

Posted by Dave on January 28, 2014

The last couple of weeks, I have written about my past and present financial plans, today I thought I would write about one possible path that my wife and I have looked at.

My plan in retirement is to continue with my frugal lifestyle, spending as little as possible and living off of the investments I’ve made during my working years. One of the benefits of living on very little money, is that we may be able to live essentially tax-free in our retirement years.

In 2013, according to CRA, the basic personal amount Federally is $11,038, Ontario has an amount of $9,574 – both of which are inflation adjusted. Given our current level of spending, we would be fairly close to these minimum amounts, resulting in very little taxes payable to the government. My preference would be to pay zero taxes, because (like most people), I don’t like to pay these at all.

Most major “capital” expenses will be taken care of going into our retirement years. The two major items (our house and car) will be paid off and hopefully well-maintained, and I can’t foresee much in the way of major expenses (outside of normal emergencies like a furnace breaking down or a car accident) taking place, which can hopefully be taken care of out of an emergency fund.

Right now, we don’t spend a lot of money. Like most people, our spending priorities probably wouldn’t make sense to anyone but ourselves. When I look at variable expenses in my monthly spending, the vast majority of it is on gas for the car to visit family and friends, food, and drinks. Other than this spending, we spend almost nothing on “stuff” – we would kind of look like we were living in poverty (compared to a normal North American family).

Our low expenses in comparison to the income we bring in is the main reason we are even able to contemplate an Early Retirement path. I think the vast percentage of people would balk at our lifestyle, but at least for now are more than enjoying the current way we live. What would maybe look like poverty to an outsider, is comfortable and stress free to us. We have savings, we have more than enough food to eat, we have a car to get around with and we can support our various hobbies and interests that we enjoy doing in our free time. Our goal is to increase the free time portion of our life to have more time to enjoy these hobbies and interests.

Do you feel you’re missing out on anything by taking part in an Early Retirement path?