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Thursday, September 18, 2014

A Perspective From the Wilderness

Posted by Dave on September 9, 2014

I spend a lot of my life dealing with really small details. My entire work life is spent analyzing and reviewing numbers and coming to conclusions which I report on and defend to my employer. I enjoy this kind of detailed work, which I feel achieves something at the end of the day, solving number puzzles and coming to conclusions based on the evidence I reviewed. My financial plan is much less detailed, but still entails (at least the planning level) quite a bit of minor details.

This past week, I spent 4 days in the bush with 8 other guys. Over these 4 days, I was up to 40 kilometers away from civilization, only reachable by canoes and leg power. I love these trips, which I’ve taken almost every year for the last decade. I seem to always come back to “the world” completely exhausted, but with a much different view on life.

In the bush, everything the 9 of us need for the period we’re in the wilderness, we need to carry on our backs, whether it’s water filtration systems, food, first-aid supplies, or shelter. We hauled seven 70 pound backpacks and 4 canoes on treks between lakes, around waterfalls, and over beaver dams to ensure we could survive in a comfortable manner. This kind of trip forces a focus on the daily event ahead, rather than planning too far into the future, which is the reason I think I love the trip so much. There’s no way I can be overly worried about work, or house stuff, or whether what I’m doing with my money is the best thing I could be doing. All that really matters at the moment, is pulling water with the paddle, or moving the pack with my feet.

I’m sure everyone would benefit from some level of rough living, to provide a bit of change of perspective from their everyday life. I live fairly sparsely, when compared to most people in my North American demographic. There is a realization when you have none of that “stuff” around you, or even any use for the vast majority of your worldly possessions that these things you’ve purchased are nothing more than “for fun”. This kind of realization allows for more appreciation of what I do have, and makes me think more about the “Wants” on my list.

It’s trips like these and the realizations that come from them that allow me to maintain my current path towards early retirement. The realization that I don’t need more stuff, I just need to be able to afford the stuff and activities that are most important to me, along with (more importantly) the time to enjoy them.

Is there anything you do that keeps your financial plan in-line?

Aug 2014 – Investment Update

Posted by Tim Stobbs on September 8, 2014

[Sorry for the lack of posts lately, been insanely busy at work and home plus me being sick (or the kids being sick) = no writing.]

The following is an update of Tim’s plan to retire early.  Please note we are mortgage free, and the house equity isn’t part of the retirement plan.

To track my progress I’ve decided to track both my expenses and my investment gains.  So once the investments gains are consistently beating my expenses I’m financially independent and can stop working.  I use a trailing 12 month average on spending (but excluding vacations) and a trailing 12 month average on investment results.


Account (Contribution), [+/- Gain or Loss less contributions]

RRSP $38,336 ($100), [+$20]
LIRA $14,660 ($0), [+$280]
TFSA $46,800 ($0), [+$1510]
Pension $103,020 ($1000), [+$1320]
Wife’s RRSP $66,490($2000), [+$20]
Wife’s TFSA $42,330 ($0), [+$1090]
High Interest Savings Account $1560 (+$600),[+$10]

Investment Net Worth $313,200 ($3700), [+$4250 or +1.4%]

(YTD Contribution: $36,661), [YTD Gain: $20,069 or +6.9%]

Average Monthly Gain (12 month rolling) $2872


Last Month $3466

We bought about $1900 in cork flooring, take that out and it was a great month.  By the way, my wife is thrilled to have her new kitchen floor finally in and I finally kept my word after promising on national TV (no pressure, right?).

Trailing Last 12 Month Average $2585


Number of months trailing average spending covered by trailing investment gains: 1.1 {Target 1.0 or higher}

PF Score: 23.0 {Target 32}

Net Worth ~$713,200


So for basically ignoring our money for the month it did fine just on its own.  I so wish other things in life could be so easy at points.  Sigh.  Anyway the RRSP accounts are switched over, but I have yet to have time to buy EFTs so they are just in cash for the moment, which is fine as I need to do a bit of research on which ones we want to buy.  That will be a project for Sept.

Our spending will likely average a bit higher here for a few years as we start to work on our house maintenance and reno list.  For example, the roof singles needs doing next year.  We plan to also redo the kitchen in phases.  Next year will be new sink, taps, counter top and back splash.  So the PF score will likely take a slight hit as that higher spending gets rolled in.

Any questions?

(click to make bigger)

Aug 2014 Investment Net Worth

Diving In

Posted by Dave on September 3, 2014

I tend to over-think things and second-guess most decisions I make, especially when they’re money related. Most of the money-decisions my wife and I have made to-date about our plan to retire early were automatic – spend a lot less than we make and put all of the spare money we have against the outstanding mortgage.

Now, I actually have to do stuff – making lots and lots of investing decisions over the next (hopefully) 60 years. This month will mark the beginning of having funds available to start investing – which will be quite a change in my money-spending lifestyle.

I read a lot of stuff – a good chunk of it is money-related. Like most things on the Internet, a lot of the information available is contradictory. Some sources say that the market is at a peak right now and it would be ridiculous to buy anything. Other sources say that there’s never been a better time to invest in “Stock X”, or “REIT Y”. As an almost total rookie investor, and someone who is a constant second-guesser, this is the point where I get intimidated.

My whole investing plan centers around buying income-producing assets, which slowly (but hopefully surely) replace my wife’s and my salary, until we have enough money to be able to not work anymore. At a 5% return, every $1,000 we invest is going to increase our annual income by $50. I really try to keep these kind of numbers in mind when I go to spend money on something that is unreasonably dumb, because all of those decisions are doing nothing but adding to the time it will take us to achieve our goal.

In order to achieve my goal, I will probably start investing sooner rather than later, increasing our current annual income now. I will hopefully pick assets that will not result in me flushing money down the drain. I guess the good thing about having what could be called a somewhat stable job, is that if 100% of my decisions are wrong, I’ll still be able to eat. In some way of thinking, I think I’ll treat my retirement investing career the same way I’ve treated sports betting. With gambling, I assume that everything I put in is probably going to be gone. For someone who will hesitate to buy some random $5 item, explaining to my wife that this is within the realm of possibilities does give me a bit of a cushion when making these kind of decisions.

While I would prefer to not shovel money out the door, this pessimistic level of thinking does allow me to overcome my decision-making paralysis and continue down my path to financial independence.

How did you decide when to start investing? Do you try to time the market, or just find investments that fit your set criteria?