Posted by Canadian Dream on July 8, 2010
Perhaps one of the more under estimated decisions related to your retirement is knowing when you should quit working. People often just assume that once you have the money you will just instantly leave work the next day. Often this isn’t the case as money is only one part of your retirement.
Other equally valid factors to consider include:
- Health: Are you in good health when you retire? Or is poor health causing your problems at work? Do you have a condition that makes your work benefits especially useful? Or in the US, do you have affordable health insurance?
- Friends: Do you have any retired friends? Would you be the first to leave work? Are you ready to make new friends if need be?
- Family: Is your spouse ready to retire as well? Do your children or grandchildren really need your help right now?
- Career: Are you ready to leave work? Are you happy with where you will leave things? Or is there a project you want to see get finished?
- Hobbies: Are you starting a new hobby or just doing more of the old ones? Do you have all the equipment for your hobby? Do you want to try a few more hobbies before you have a reduced cash flow?
Yet despite all the factors in the world there will be just one question that will matter most: do you feel ready to retire? Notice I didn’t ask what you think, but rather what you feel. What is your gut telling you about this? If you feel a little nervous but still excited, it likely is a good choice. Yet on the other hand if you feel very nervous about it, you might want to wait a little while longer or perhaps cut back on working a slip into retirement more slowly.
Leaving work is a big decision so cut yourself some slack over worrying a bit about things. You are allowed that as long as you keep it reasonable. For example, worrying about investment returns for the next 20 years is worthless, but worrying about your asset allocation might be worth a second opinion. Focus on what you can control and plan for and let go of the rest.
Then one day you will wake up and realize with a fair amount of certainty: it is time to quit. That is when you know you are making the right choice as the doubt and the guilt vanish and you push into retirement with a big smile on your face.
So how do you think you will know when it is time to quit? Will you just follow the plan or perhaps just make it up as you go?
Posted by Dave on July 6, 2010
I don’t really talk to my friends about money all that much. A couple of them read the blog and know my thoughts on spending and my goals for retirement, but it’s not really a topic that gets discussed when we get together. I have never loaned money to a friend, but probably would if I was asked and there was a good reason why it was needed. In the past there were a couple of situations however where money did come up and I thought I would share how my wife and I dealt with the situations.
The first situation was an investment opportunity for me. One of my high-school friends was starting up a tech company in 2003/2004 whose business was making cell phone games, which at the time was not a big seller in North America, but had sizable growth opportunities in Europe and Asia. I really knew nothing about the company, they had no financial statements and all I was going on was the enthusiasm shown by a friend over his new company. At the time, I was just out of school and had approximately $20,000 in student loan debt to pay off and really no cash in the bank to swing any sort of major investment. I ended up putting $2,000 into the company. I didn’t feel pressured to invest in the company, I saw it as an opportunity to share in the possible success of a friend’s business. I decided on $2,000 because it was the most amount of money (at the time) I was willing to invest that I could lose and have no hard feelings over the loss. Today, given the same opportunity, the amount would probably be considerably more, as I understand my risk tolerance better as well as having more disposable income available for an investment.
Today, the company is very successful – they are building games for the iPhone and for a three or four-week period had one of the top selling games available, and at some point in the future I may make a decent return on my investment. I am glad I invested in the company, but even if it would have gone belly-up in the first three months I don’t think the loss would have impacted negatively on our friendship.
Another situation came up with my wife and one of her friends. This friend was terrible with money, had lost her job and was on welfare. My wife was talking to her on the phone and was asked whether the friend could borrow money to pay for heat in the house (it was December and the bill was significantly past due). My wife “loaned” her the money by paying the bill directly, with her friend promising to pay her back as soon as possible. My wife did not really expect to see the money back, but every time they talk on the phone her friend brings it up and feels bad for not being able to pay it back, for various reasons (needing to buy food, the car that gets her to work broke down etc.) . In that sense, it is something that has come between them, as her friend feels bad every time they talk for not repaying the loan eight months later.
From these experiences I’ve come to two conclusions in dealing with friends and money:
- Depending how close you are to the person, money isn’t worth ending a friendship over.
- Count the money as gone as soon as it’s given away, it will mean the loan/investment will have little to no impact on your friendship and if the loan/investment is returned it’s more of a bonus rather than “counted on” money.
How do you deal with friends and money? Do you talk about it with them? Would you (or have you) loaned a friend money? If you have, has it worked out?
Posted by Canadian Dream on June 11, 2010
Perhaps one of the most difficult things to deal with when you look at personal finance is the habit of judging others. We see a big SUV drive by and assume “Sucker, you got to be hating the car payment, gas and insurance on that monster.” Little do you know isn’t their SUV at all, they are just driving it across town for a friend who drank a bit too much last night. Or perhaps you are in line at the grocery store watching a person get a rather big bill for a small pile of prefab food. Little do you realize that their mother just died and they are being lazy for a week while they deal with their grief.
Like it or not we all judge each other’s spending habits all the time, but often we lack any sense of context about their spending. We don’t know if they are the millionaire next door out at their one annual expensive meal a year that they have for their birthday. We don’t know if people were dealt bad childhood, a disabled sibling or parents who never taught them a thing about money. Yet we assume things about people to help us feel better about our choices (I didn’t buy a coffee today, but I notice Jim’s got his usual) or make up stories to justify our own spending habits (oh, but this is going to be so useful for me).
I would assume this is why personal finance blogs are interesting to people, because if you fellow them for a while you get some context into their lives and why they spend they way they do. For example, if you have been reading this blog for a while you might know I don’t spend a lot of money on food each month. Perhaps about $300 to feed a family of four. You might assume that I’m cheap and eat a lot of beans and rice. When in reality it is partly how I prefer to eat (I don’t like large servings of meat and I do make a meatless meal once a week) and I’m good at shopping for most of our basic food on sale ( I don’t think I’ve paid full price for a can of soup in years now). It also helps when you have a wife who works out of the house and can usually have supper started before I walk in the door each night. With out the context what I spend on food each month can be hard to understand when compared to your life.
Thus people are sort of islands of spending unto themselves. Unless you have a map of it or spend some time there it is hard to understand how they can make things work, especially if their lifestyle is significantly different than your own. We wonder how people can cut their own kids hair (and their own) yet turn around and gladly spend $300 on a new electronic gadget. We wonder how people can buy second hand clothes yet still eat off of good china with crystal glasses every Sunday night.
The reality of it is we will never understand another human being entirely and thus will never get their spending habits either. Each of us is unique. So snap judgements often cuts short your opportunity to learn from others and grow. This is the price of judgement of other people’s spending habits.
Despite knowing this I still do it to others all the time, it’s a hard habit to break. For example, I’ve never really got why people eat out a lot, it seems like such a waste of money to me. Then in the last two weeks just by how things worked out I ate out for just about every other lunch or supper (I didn’t pay for half of them). Now after that I’ve felt more sluggish than normal and I’ve had a stronger craving for sweets than normal. Yet I can understand the illusion of when you are busy eating out seems like it is faster than cooking. So now I actually feel a bit of sympathy towards people who eat out a lot since they don’t likely know what is feels like to have my usual energy or know that cooking from scratch doesn’t have to take much longer than eating out (when you factor in travel time or waiting in line).
In the end I think I might always judge others to some degree. It’s a deeply embedded habit. Yet rather than feel superior to others I’m going to try more to feel sympathy and compassion. It will be hard to do, but I think I will learn more from others this way and perhaps a few things about myself.
So do you judge others? If so, do you remember a time when you got it wrong? If so, please share the story. If you don’t judge others, please share how you manage not to do it.
