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Sunday, April 23, 2017

A Little Bit at a Time

Posted by Dave on November 15, 2011

My wife and I had a big day last week – we finally reached the top of our piggy-bank (an empty three liter bottle of Canadian Club – a remnant from a party in my past) and were able to count all of our change.  Although it may not be a momentous occasion to most, it’s fun for us because it essentially means we get free money to do something fun for a weekend (we’re thinking Niagara Falls during off-season or Toronto to see a show).  Because we rarely spend cash, this level of change saving (quarters and below) has taken us around three years to accumulate, so we are going to enjoy ourselves on this miniature “windfall”.

Besides our “adult” piggy-bank, I utilize an ING account for my own personal spending – I save $20 per paycheque that I use to save up for golf, video games, and other money-losing purchases.  Because I don’t make withdrawals from this account very often once in a while I’m able to have a balance over $1,000 to finance my expensive hobbies.

None of these savings amounts are working towards my end goal of financial independence.  Slowly but surely, I have built a buffer for my sometimes poor purchasing decisions, a strategy that could be carried into my early retirement years, either because I have stopped making these kind of decisions totally (which would certainly help in reducing the amount of stuff in my house), or because my “fun” savings has built up significantly.

This kind of long-term saving, something that I have done from a young age onward (something my parents both drilled into me) bodes well for an early-retirement goal – expanding the same type of mentality to gradually watch my debt decrease (my mortgage disappearing) and eventually passive income increasing (dividends or interest) is something I have “trained” for over a 20-year period.

If someone has never experienced delayed gratification, they would think I was nuts, waiting until all that loose change reached to top of the bottle before making plans for a relatively cheap weekend away in the grey days of January.  Yes, I could easily afford this purchase but I have already ear-marked a significant portion (around 75% of my paycheque) to paying down my mortgage.  If I chose to spend that money on a weekend away it would be putting me further away from my ultimate goal of exiting the workforce as quickly as possible.

Do you have a “piggy-bank”?  Do you never splurge, or how do you afford the odd amount of overspending?

Bonus content:

  1. This article shows how not to spend a $6 billion fortune (Not a problem I’m concerned with, but I’m not exactly sure what demographic reads this Blog).
  2. I recently taught myself how to bake pies (from scratch).  This discovery has definitely made it much easier to decide what to bring to people’s houses when you’re invited over – everyone loves homemade pie.  I would highly recommend learning how to make this relatively cheap dessert for the holiday period.

 

Wander Reading – Nov 4, 2011

Posted by Tim Stobbs on November 4, 2011

TGIF!  It’s my Friday off today and hence the later post than normal.  Like any other good day off, I try to let myself sleep in a bit.  Have I mentioned lately how much I love not working full time. ;)

Now onto the links:

Speaking of part time work you have to read this post from Mr. Money Mustache: The Joy of Part-Time Work.

JD over at Get Rich Slowly talks about what to buy and stuff.  Given my recently challenge on not buying stuff it was interesting food for thought.

Preet has a good post over at the Globe and Mail on being wary of online financial advice…I hope that wasn’t including me!

Krystal has a good post which is debating are teenagers out of touch with financial reality…good points on both sides.

Boomer Echo has a interesting post on the penny.  I’m personally ok with getting rid of it, if for no other reason that it costs 1.8 cents to make a penny!

Have a great weekend everyone!

Tim

A Shock to the System

Posted by Dave on October 25, 2011

This is a guest post by Dave, who 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 am all about self-experimentation.  I lift weights at the gym and am constantly changing my workout in order to optimize my time (meaning I try to get the most gain with the least amount of work).  On top of that, I tend to gravitate towards the more “fringe” trends in diet and health as I discussed a while ago in a post on intermittent fasting (how I save 20% on my grocery bill) for at least a short period of time, to see if they work for me.

A few weeks ago, I read Tim Ferris’ “The 4-Hour Body” which included a chapter on significantly increasing fat loss, up to 50% faster than diet and exercise alone.  The catch – it involves immersing yourself in a bathtub filled with ice water for 20 minutes 3 times a week.  The premise of doing something like this (which some would term insane) is the ice water forces the body to shiver, forcing it to burn significantly more calories than it would in its normal state.

I have yet to try an ice bath, it just seems too out there, even for me who “starves” myself for two 24 hour periods a day and gets most of my calories from “unhealthy” fatty meats, eating like a caveman.  The premise  of the ice bath is to throw off your normal balance (in this case freezing yourself for a short period of time) – the same thing can be applied to personal finance, especially when your goal is early retirement.

Your “ice-bath” could be challenging yourself like Tim, where he is not going to buy anything until the New Year, it might be an attempt to cut your grocery bill down to $10 per week following Jacob from Early Retirement Extreme’s grocery buying plan, or go car-free for a month to cut down on your expenses.  On the income side, you could pick up a part-time job to add income to invest or pay down debt, or start selling the stuff you have laying around and not being used.

I am all for boring personal finance – paying off debt, investing for retirement and sticking to the plan but I need a jolt once in a while as well.  I generally don’t spend a lot of money, but I am also a gadget junkie.  I have found myself constantly looking at an iPhone and iPad over the past few weeks – neither of which I need.  Because I don’t really spend a lot of money, I have found myself with a significant surplus in “personal” cash that could be used to purchase both of these toys.  I was looking at my mortgage calculation though, and found that if I could come up with an extra 13,000 in the next 2.5 years, I could pay off this debt in under 5 years (which was my initial goal on buying my house).

So, rather than buying toys which I may really enjoy initially I am going to pay off my mortgage, so that I can get to my ultimate goal – financial freedom by the time I’m 45.

Can you think of a challenge that would shock your financial plan?

 

Bonus content: This American Life had an interesting show on last year where an individual intentionally infected himself with hookworm (a parasite) in order to cure his terrible allergies.  If you haven’t heard about it, I would highly recommend reading about the Hygiene Hypothesis and the possible effect that our super-clean hand-sanitizing society is having on us (and also why you should let your kids eat dirt, among other things)…..Definitely on the same page as ice baths.