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Sunday, March 1, 2015

A History of Labour – Part III

Posted by Tim Stobbs on February 20, 2015

Welcome to the Oil Patch – Part 2 (Year 2 AD – After Degree)

So in the the spring of 2002 I left my hellhole of a job and moved to the building next door which housed the training division.  I have previously spent a lot of time here getting my initial training and generally liked the majority of the staff.

I was so happy to be out of my old job I didn’t particularly care that the new one was largely editing old Word document and updating screen shots for training manuals. I had just regular day time hours now and I got to see my wife more than just three days a month.

It literally took months for the horror of the previous job to bleed away.  It’s almost interesting to me how much pain I was in because I didn’t fully process how utter crappy my previously job had been until I managed to leave it behind.  I mean I actually saw colours again in the world around me, I could smile again and I actually had some interest in reading and otherwise the fun stuff of life.  And this is despite the fact I was making WAY less money now.

So I happily edited, wrote and merged files all day long without much care that the work I was doing was going to eventually run out.  Yes, this job had a shelf life.  You see in my nativity of youth I didn’t even consider why I got the job in the first place.  After all I was like three seconds away from quitting the company entirely.  From the companies point of view this work out just perfect.  Before the burnt out employee who happens to know the new computer system leaves out the gate to never come back you give him a transfer to another division and suck out all his knowledge and record it onto the new manuals and then you get rid of him.

Actually my boss at this point in time was a nice guy.  I enjoyed chatting with him and I learned a fair bit about training people and writing manuals during this time frame.  He even introduced me to one of my future hobbies of wine making.  He had used to do it and sold me his old equipment for a fraction of the price of retail.  I literally got everything I needed to start for around $100 when the corker itself was worth more than that used.

But being a nice guy doesn’t mean I could stay forever.  I was blissfully ignorant of the fact they brought in a new guy and I started teaching him some of my job duties that it won’t end well for me.  I had been looking for a new job anyway, but I still caught off guard after six months when I was told I was being let go.  Ah ignorance, it’s dulls the pain of waiting for the axe to fall.  They had the decency to at least term it a layoff so I could collect Unemployment Insurance while I continue to look for a new job.

Next up I was tossed into being unemployed.

Summary

Lessons Learned

  • It’s ok to have a rebound job.  Something to fill in the gaps while you look for something better in life.  After all you still have rent and food to buy.
  • You can learn something useful at just about any job.
  • In hindsight I figured out the warning signs of losing your job: you finish your tasks and aren’t assigned more, you started to train someone else on your work, and people start to avoid you like you have a disease (they can sense the pain coming and don’t want to be near you when the axe falls).

Financial Progress

  • Minimal at best.  After being put on just my base salary with no bonus for doing a specific job my amount of take home pay dropped dramatically.  Then with our regular bills and payments there wasn’t much to save.

What’s It For?

Posted by Tim Stobbs on February 18, 2015

You have likely already been reminded you should be investing some money in your RRSP today.  How do I know that?  It’s the season for it so most people via the 1000s of ads out there are told they really should be investing their money.

Yet I’ll offer you a more basic question than: RRSP or TFSA, stock versus bond, or even index fund or actively managed…..the question is: why?

Pardon?!?

Why are you saving and investing the money at all? What is the purpose of the investment?

*silence*

Need a hand? Perhaps the answer is: to retire.  Which is a good idea, but what does that look like?

*longer silence with confused look*

Far too often we save blindly because we fail to really understand what sort of lifestyle you want in your retirement.  After all, depending on the lifestyle you want that will drastically change how much you should be saving and how early you can retire.

For example, let’s say you have a couple who is in their 50s and they have been really good savers and have $500,000 in investments and a paid off house.  Do they need to work any longer?  Perhaps it depends on the lifestyle they want.

If they choose a modest life of mostly hanging around the house, being involved in the local community helping out with a few organizations, reading a lot of books and playing with the grand kids, they don’t really shop a lot and when they do they tend to buy high quality items that last a long while…well depending on the exact numbers they could retire in a just a year or two.  Yep, if they don’t need much income, perhaps $24,000 a year, they could potentially retire shortly.

But if they want to travel the world for four months of the year, enjoy shopping a lot and are real foodies that enjoy all the finer things in life.  Again it depends on the exact number, but if they spend like $5000/month.  They may very well have to keep working until they turn 65 or later.

It all depends on the why.  Why are you saving?  What sort of life do you want to lead and what is stopping you from doing that at least in part right now before you even consider retiring?

The illusion is that someone one choice is better than the other, when it fact, what matters most is which one appeals most to you.  If you have never really spent on $5000/month when you were working, what on earth do you think you will be doing when you retire?

What do most retirees end up spending? It varies but on average they spend $30,000 to $40,000 a year.  That’s it.  No huge lifestyles of the rich and famous, but rather a modest but happy life having lots of time to do those things you enjoy.

You could do less than that if you want, especially if you consider your mortgage was paid off.  So if you aimed for $30,000/year target you could be retired rather easily on $750,000 in investments.  Yep, that’s it. Forget about the million dollar mark, you don’t need it.

So if someone tells you they need at least $2 million or more to retire…I would ask why?  It won’t change the answer in some people’s cases, but more often than not they don’t understand the why and end up with overly large targets.

Instead, take the quicker way out…think about what you really want from your retirement and then plan around that.  The more detail you can provide the better plan you can make.   It won’t also be easy to do, but in the end you at least know exactly why you are putting money into your RRSP or TFSA.

What are you saving for?

The Impulse Buy

Posted by Tim Stobbs on February 17, 2015

I looked at my hand in confusion and was almost in shock.

“Did I just really do that?”  I asked aloud.

I look at the screen again.  “Yep”

I just bought a ebook on impulse.  Oh my, is the world ending now?  But wait this is the second impulse buy I’ve done in the last two months. I bought a DVD on impulse in January. Will I be struck down by a vengeful god?

Nope.

But in all honesty, both events were highly unusual for me.  I’m so used to doing just about everything via delayed gratification that when I impulse buy I’m a bit rusty at the experience.  It’s much more normal for me to consider a purchase for a while and then after a week or two finally buy it or not.  At least when it come to consumer goods.

Food on the other hand I’m practically an expert in impulse buying.  Most of my lunches out at work are not planned.  In the grocery store I often pickup one extra item that I want, but don’t need and wasn’t on the list.

How do I justify this Jekyll and Hyde on my spending?  It’s simple…I planned it this way. WTF?!?!

I know after many years of trail and error my week point in spending is books and movies.  As such I tend to plan those purchases out a long time in advance.  Typically at a minimum a few weeks, this tends to keep down the amount of both items I buy and forces me more often than not to use the library instead to try out something I’ve never seen or read.  After that if I still like the book or movie a lot and it has a high degree of potential for watching/reading again and again then I will consider buying it.  Even then I still tend to think about it for a while.

Yet exercising that degree of self control over everything I buy can be exhausting, so rather than try to control everything.  I focus instead on my main weak spots and big purchases.  Then I allow myself more slack when it comes to food purchases that I make with my spending cash.  Buying a cookie because I want one isn’t a major issue so I’m not going to turn into one.

In the end, the impulse purchases above were notable since they were from my typical weak points of spending.  To me it was a clue to watch myself a bit more in the weeks ahead to ensure I don’t slide into my old patterns of buying too many books and movies.  Yet both purchases did point out something interesting to me.

The movies purchase was in fact season one of a TV show I had borrowed from the library and enjoyed a LOT.  So when I came across it for about half price I decided on impulse to buy it.  Do I regret it after the fact? Nope, not really.  This brings up an interesting point for me. Should I consider the occasional impulse buy being okay if the item in question I would have purchases anyway and it is on for a deep discount? While this has the potential to be a slippery slope, I think I will allow myself a bit more latitude on these items in the future.

The second purchase of the ebook also brought up an interesting point.  We had two older gift cards (like months old) in the house with only a few dollars left on them.  My wife had just finished buying some ebooks and used up one of them.  So I took a look around and bought an ebook on impulse to use up the other gift card.  I found one that looked interesting and was rated fairly good on Goodreads.  What this showed me was I tend to have a disconnect around gift cards compared to actual cash, since I don’t think I would have bought the book if I had been paying with my credit card.

That particular effect is rather well known in academic circles as the pain of paying (see here for a description from Dan Ariely).  The more disconnected we are from cash the less careful we are with the money.  In the world of pure reason, a $1 on a gift card is exactly the same as a $1 cash but in real life we treat them differently.  We are more willing to spend a gift card than cash.

I had thought since I knew about this issue that I had made so progress on overcoming it…while the ebook purchase proved me wrong on that front.  Ugh.  Anyway, lesson learned I need to keep up the controls about spending especially with gift cards since I tend to be a bit more lose with spending them.

In the end, an impulse buy is only bad if you treat it that way.  You don’t have to control yourself at all times, but I do recommend some rules of engagement that you create for yourself to help you out with your problem areas of spending.  It won’t be perfect, but it should help cut down on the junk purchases in the long run.  Just don’t freak out when you break your own rules…use them instead as a means to learn why you did and if any changes are required.

How do you manage your impulse buying?  Do you use any rules for it or not?