Posted by Tim Stobbs on May 2, 2012
The following is a update on Tim’s plan to retire early. The current metric to tracking this goal is my net worth. This will be the last year for these posts, since once the mortgage is paid off it will cease to be useful. At that point future updates will shift to investment net worth only in 2013.
Assets
House $368,000
RRSP $28,700
LIRA $11,400
TFSA $16,600
Pension $48,600
Wife’s RRSP $29,100
Wife’s Investment Account $12,900
Wife’s TFSA $11,200
My Investment Account $6,100
High Interest Savings Account $2,200
Total Assets $ 534,800
Debt
Mortgage $24,800
HELOC $700
Total Debt $25,500
Net Worth $509,300 (+$12,200 or +2.5%) [+ 7.6% YTD ]
Investment Net Worth $166,100 (+$2,500 or +1.5%) [+11.2% YTD]
As per usual this net worth has some good news and not so good news. The good news was I broke the half a million net worth before my 34th birthday! I also maxed out the lump sum prepayment option last month on the mortgage for the previous year which means I paid off in lump sums $22,750 in the last 12 months (which is in addition to my regular payments). The only problem was I actually had more cash than that to put on the mortgage than prepayment without penalty, so the line of credit got paid down instead. The not so good news was the markets were down and so even with my contributions my assets barely moved upwards.
Any questions?
(Click image to see larger version)
Posted by Dave on May 1, 2012
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.
A week or so ago, Nelson from Financial Uproar wrote a post titled “In Defense of Normalcy“. In it, he noted that people on early retirement blogs “cannot wait to throw off the shackles of (gasp!) having a normal job” – he goes on with a quite graphic description of what these type of blogs describe retirement as. I’m not sure if he was specifically targeting this blog, but I left a somewhat lengthy response on the post. I really enjoy Nelson’s writing and would recommend his blog to anyone who enjoys penis jokes and intelligent personal finance discussion, including some excellent stock-purchasing insights which I find particularly informative. My response to this post is essentially – what else will I spend my money on?
I don’t live a lavish life. I don’t have very expensive tastes, and besides my wife’s love of essentially disposable clothing (which thankfully is also relatively inexpensive) she doesn’t really spend that much money either. We like a nice dinner out sometimes, but “nice” to us is sometimes Swiss Chalet (which I’m sure would not qualify as nice to other people) or a relatively inexpensive dinner at a local diner. Our vacations are generally inexpensive – with the main goal being to head someplace warm, rather than fancy, and other than that we don’t really spend that much money. If I wasn’t saving for retirement I don’t know what else I would spend my money on:
I could work less hours: This isn’t really an option with my current job, but given my low expenses, I could probably live on about 1/3 of what I currently make and not have that much of a change in my lifestyle, if my house was paid off. This wage would allow me to save for retirement over the next 30+ years with about a 10% savings rate.
I could spend more: Generally, people’s comments around high savings rates are something like “I want to live right now, not be poor forever”. I don’t really equate my consumer purchases with a lot of happiness. I could repeatedly by the newest Apple products like some people, get a fancy car, a bigger house, see more of the world or find some other way to spend the extra money.
I could stockpile it: If I didn’t save for an early retirement, and instead went for a more “normal” life, working until I’m 65 and having a massive war-chest of savings to ensure there are no money problems in my late years.
The problem with all 3 of these options is that I would essentially be working for nothing, just for the sake of working. This outcome doesn’t seem all that exciting to me. I have no end goal of being wealthy, of owning fancy things, nor of working to age 65 so I carry on with my current financial plan. Nelson states that blogs like this are selling a “dream”. Other than the blog’s name I don’t think this is the case. I don’t think that the writers on this blog really try to sell the dream, we simply state what our particular choices are in some instances with regards to spending, as well as attempting to provide some guidance to individuals who are interested in following a similar financial plan.
Is your financial goal early retirement? If not, where do you spend your money? Are you choosing to live “in the now”, or feel you just can’t afford an early retirement?
Posted by Robert on April 30, 2012
This is a guest post by Robert, who lives in Calgary and works as a financial advisor retired at 34. He is married, has three kids. Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.
I’ve been working a couple odd jobs lately. One example is the civic census. For about three weeks, I went out almost every evening for two hours and knocked on doors. The weather was pretty good, people are mostly helpful and I enjoyed doing it. I’m not sure exactly how much it will pay, but I’m guessing around $1,000. That will work out close to $20 per hour. I used to earn more as a stockbroker, and I could likely earn more if I returned to work, but I feel like I’m helping my community and there’s the added benefit that I get paid to exercise.
I also decided to work a polling station for the provincial election that took place in Alberta on April 23. It was long, but not very demanding. We worked from 8:00am setting up our polling station (there were six “stations” or tables in a school gym), doors opened at 9:00am for voting and it was pretty quiet until about 4:00pm. Then it was busy until doors closed at 8:00pm. (The good news for democracy is that voter turnout was around 57%, far higher than 41% in our last election.) Counting the ballots took from 8:00pm to 11:00pm.
Besides the attraction of serving my community, I chose to work the election in order to better understand the democratic process. Since learning about democracy and government in grade 6, I’m haven’t been taught about how our democratic system works. As it is, I barely remember anything I learned in grade 6. Volunteering on a couple of campaigns and helping with the vote was a great experience to see first hand how our citizens choose the politicians that represent us.
The pay isn’t too bad, either. Because there was a senate selection, there was some extra pay beyond the regular rate. In fact, I earned $375 over a 15 hour day, which works out to $25 an hour. It may not feel like much money, but it seems fair for the work we did. When the returning officer phoned me to ask if I would help with the official count, I agreed. I had the idea that I would enjoy seeing the rest of the process: what happens to the ballots after they’re counted on election day.
When I showed up to the election office the day after, I was a little surprised by the work they had to do. All the materials that came back from the polls had to be sorted into three groups: trash, recycling (maps, forms and papers that were written on, directional signs) and unused materials. We spent about three hours just clearing the office of the items that we didn’t need. I was working with two retired people and we spent three hours. In fairness, the returning officer (who was probably as new at this as I was) warned me that the work was going to be manual and the pay rate would be lower.
At the end of the afternoon, she asked me to sign my pay claim form. It said: 3 hours x $12.00 = $36.00 total. I feel ungrateful for just how underwhelmed I was. $36? I made more than that in an hour as a stockbroker (whether working or just catching up on economic news). I had to pinch myself and remember that I was working to serve my community and learn about democracy, not to earn income. And a good thing, too, because my wife just laughed at me when I told her I had earned $36 that afternoon.
Have you done a job for a reason other than money? Is it better to volunteer outright, or to earn something, even if it undervalues your abilities?
