Posted by Dave on July 5, 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.
Last Thursday at about 11 a.m., I started trying to talk myself out of going to the gym. This is about a bi-weekly event and there are times that I actually just don’t bother going due to my persuasive arguments (It’s not fun; I’ll feel sore after; I already worked out twice this week, is a third time really going to do anything? And more). I ended up going and getting it done, but I was thinking that this kind of thinking could easily be applied to my personal finance plans.
It would be so easy to stop using around 75% of my paycheque to pay off my mortgage and ensure a healthy level of savings. It would be easy to have a more conventional financial plan where I would retire when I’m “supposed” to, which if you listen to the news is somewhere around age 70-75 these days (the experts are very worried people will outlive their investments) rather than carrying on with my current plan.
I see a couple of problems with this for me:
1) I would have to work an extra 20 or 30 years
I don’t want to work any longer than I have to, giving up more than one-third of my day to earn money for “stuff”. I was reading the book “Beatrice and Virgil” by Yann Martel a little while ago and the quote “Your days on this earth are counted, you might as well make the best of it” really hit home. For some people, making the best of their days includes working 40-60 hours a week at a job. For me, I have other things I would rather be doing, which do not include waking up 5 days a week to give up most of my waking hours.
2) I don’t know what I would spend the extra money on
I know a few people who make significantly more money than my wife and I and they seem to find a way to spend it, either on big houses, expensive hobbies, vacations or any number of things. For me, I don’t really get a lot of enjoyment out of spending most of my paycheque on items that don’t make more money (or at least the possibility of it) or reduce the money that I owe. I try to ensure that, for the most part, the money I make from work is spent as efficiently as possible, hopefully meaning I work as short a period as I can.
The bottom line is however, I’m sure I would find a way to spend the money (somehow) – I did it for a few years before I put together a financial plan and most people continue to essentially break even (or go into debt) month after month.
I think that once I realized that there is a better way to do things financially and that I could be doing exactly what I wanted all the time (retiring), rather than working at the office during the best hours of the day my goals changed significantly.
How do you keep yourself from “falling off the wagon”, or staying the course of your goals?
Posted by Canadian Dream on June 3, 2011
I have an interesting email earlier this week which I won’t post the entire email, but in summary Rochelle asked:
My question is about how you manage to keep your “eye on the prize”? How do you keep strong during your end-game? Have you had to deal with any of these major temptation delays? Do you fear being debt free and potential let down you might feel once you have attained that goal?
I have literally asked myself almost the exact some questions several times in the last couple of years. Perhaps not all at once, but almost the exact same wording.
The answer depends heavily on your motivation for becoming debt free in the first place. My personal motivation for becoming debt free has largely for the desire to have that added flexibility once we hit that state. At that point I can either continue to work at my current job or switch careers to something else that pays less if I want. Since I’m personally still not sure about if I will fully go for full financial independence or just a semi-retired state I personally put a greater value of paying off my mortgage that people with other plans.
Yet the one issue that seems to keep coming up is should I accept some debt for investment purposes. In this case I have been faced some major temptations over the last year as I’ve looked around at some investments which potentially could earn me more than paying off the mortgage. While I keep considering stopping the additional payments to do this, I keep reminding myself of my motivation of getting rid of the debt in the first place.
In Rochelle’s case the motivation might be different, so an investment might make sense if being debt free isn’t essential to her plans. If being debt free is desired, then here is how I’ve dealt with the issue: keep busy with other things.
Honestly, that is the best idea in the world when you have a problem you aren’t sure how to solve. By working on the other areas of your life, you make progress on things that are important to you but also free up your mind from the treadmill of your current thought to realize how you feel about it. Problems like this are often best solved when you come at them sideways, the emotional part of the decision is actual the major issue. On the money side it is usually more clear cut: will you make more money going into debt than staying out of it? The emotional side is where the problem lies thus logic here won’t be particularity useful.
So while at times the decision seem obvious that I should push off paying down the mortgage to invest instead, I’ve chosen a different path because it feels right to me. It took me a while to realize that the issue was not in my logic, but rather how I felt. I hope that helps.
Anyone else got some ideas on what Rochelle should do?
Posted by Canadian Dream on May 11, 2011
As you might have guessed from the title of this post, I’m a little frustrated at the moment. I can’t go into all of the details at this time, but you know what the details don’t really matter. The point is I almost had something wrapped up and then it went back into limbo mode for a few more weeks through no fault of my own.
I hate limbo. I can handle my retirement savings plan taking years to execute, but with some things I still get impatient to have it over with. This is one of those things and frankly I have tried distracting myself and I have tried keeping busy, but I still end up thinking about the issue when I have any free time at all. Perhaps it is because I can’t do anything myself to move things forward (unlike my retirement plan which I do control a bit). I’m stuck waiting for other people.
In the end, I’m in the perfect state of being to be useless on a lot of different things because I’m emotional. Big decisions and investing should be avoided by me for the next week as I have previously learned from a course I took that when you get too emotional you literally get dumber. In a nut shell what happens is if your flight or fight relax kicks in your blood drains away from your brain towards your body as ready to move and while that happens your higher brain functions slow down. Thus when your emotional you do stupid things, because you are really dumber. I tend to keep that fact in mind when I’m working with others and cut them some slack when they get emotional.
How about you? What do you do when your stuck in limbo waiting for others to move something forward? Frankly I could use the help with some ideas.
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