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Thursday, July 24, 2014

Want More Time, Then Give It Away?

Posted by Tim Stobbs on April 12, 2013

So I’m currently taking an online course at Coursera.org on behavioral economics and last night I watched a lecture that has stuck in my head.  It was a guest lecture by Mike Norton from Harvard on money, time and happiness (a wee bit of an obvious hint on why I’m taking the class, eh?).

Now what struck me about his work was he first confirmed what I’ve know for a while.  Making more money doesn’t make people much happier (each additional amount has a declining increase to your happiness). That first job earning less than $10,000 feels really good, you feel a bit better when you get your first career job after university, but after a decade of work the next $10,000 is sort of what ever.  Yet he also commented that making more money tends to make people more selfish, which had not occured to me.  He argues when you win money what is the first thing you think about: what you can spend the money on, not giving it away or spending it on other people. Yet to combat this, they also ran some experiments that if you give money away or spend it on others you feel happier than if you spent it on yourself.

Interesting results, but what really blew my mind was the idea that exact same results apply to time as well. What the #@$?! How could spending your time on others make you more happy?  Won’t that cause you to feel ever more stressed about your time?  Apparently, what happens is if you spend either resource on others it causes you to feel a sense of abundance, so you feel better about your time even if you actually have less of it.

So while this sounds good, I want to actually try this out.  So here is my plan, from April 15 to May 15 I will spend more of my time and money on others.  To be exact I’ll put half of my spending cash or $100 towards spending on others and I will spend at least five hours a week on others.  I will then track my happiness daily on a five point scale and then sum of the results and present it back to you guys.  I’ll spend the next few days before that constructing a baseline of my current happiness.

Insane? Perhaps, but let’s field test this idea prior to writing off the idea either.  Anyone want to join me?

Feeling Poor, Feeling Rich

Posted by Sheryl on November 7, 2012

This is a guest post from Sheryl in Ontario, who is 40 years old with a grown daughter, and is trying to rebuild her retirement dream just 20 years too late for early retirement.

A little while ago, as I was getting dressed, I pulled on one of the belt loops on my jeans to pull them the rest of the way up and heard that awful sound of fabric coming apart.  Upon examining the damage, I found the denim was tearing along where the pocket was sewn, just under where the belt loop is.  This was also my only pair of casual pants/jeans (Clothes shopping has never been a love of mine.  I am 5’10″ and finding pants long enough has always been a problem).

Okay, I figured, it’s just a small tear, most of my shirts are long, I can get away with still wearing these jeans.  I will usually repair my clothes, but this was in a spot that I would have had to pulled too much fabric to the area, which would have not have worked.  I wore those jeans for a few weeks like that, with a long shirt, no problem.  Then the other side tore in the same spot.  Still I wore them, but was a little more conscious of making sure my shirt covered the holes.

I didn’t want to spend money on clothes.  I want to concentrate on reducing my debt.  As the holes got bigger, I liked wearing my jeans less and less. Making sure my shirt was covering the holes distracted me to the point of almost being an obsession. I was more tempted to make impulse purchases to make myself feel better while wearing these jeans.  I was allowing my dis-comfort to affect how I felt about life in general.  My optimism was becoming pessimistic.   I started to feel poor wearing these jeans. Fortunately, I realized what was happening and why.

During this realization, I started thinking about what makes me feel poor, and what makes me feel rich.

These are the things that make me feel poor:  Wearing ripped, stained or worn out clothes (unless I’m doing dirty work or staying in the house), eating poor quality food, going to an event party (birthday, anniversary) with no gift to give, not going to an event because I didn’t have a gift to give, trying to make do with something that has broken, being around people that have all the material things I want, not doing anything during time off work because I couldn’t afford it, having my body ache every morning because my mattress is old

Conversely, these are the things that make me feel rich don’t really cost very much at all.  Most things I either already have had for a long time (and were careful purchases at the time) or are more intangible.  Most are a state of mind.  The richness in my life would include quality home cooked food, knowing my bills are paid, having money left over after the bills are paid, seeing how happy the people and animals in my life are when I see them, using a good toilet paper and not running out of it, having a good health plan at work that covers massages,  feeling warm and secure in my home, and being able to afford new jeans when I find them on sale at 2 for $20.

There seems to be a vitality in me when I’m not feeling poor.  I’m more efficient, more energy, better decision making as well as a general happiness.  I’ve learned from this awareness how easy it is to stop being grateful for the rich things in my life, just by concentrating on one negative one.   I’ve also learned how easy it is to become cheap as opposed to frugal.  What makes you feel poor or rich?  How do you balance it?

Mortgage Free at 34

Posted by Tim Stobbs on November 1, 2012

You know those days, when everything goes right.  You wake up just before your alarm, your coffee is perfect, your drive to work is easy and the day is productive and challenging.  Well take the feeling, multiply by 100 and add a good deal of excitement and satisfaction: today I’m mortgage free and I really do OWN my house. Oh, by the way, I’m only 34.

I had originally wanted to do this by Oct 31, but that didn’t happen.  You know the phrase: a day late and a $1 short? That is exactly what happened.  I went to pay my last lump sum payment over the weekend and I ran into a problem.  My lump sum payment privilege for the year had $1978 left, meanwhile my mortgage balance was $1979.  Yes I was exactly a $1 short.  So rather than trigger penalties I sucked it up and waited for my regular payment on Nov 1, 2012 to kick in and pay off that last dollar.

So how on earth do you become mortgage free this young?  Simple, you really hate having a mortgage payment.  While that is the easy answer, but in fact the basis of how we did it in just over 6 years.

We initially bought our home in Regina for $190,000 with a $40,000 down payment, so we took out a mortgage for the remaining $150,000 back in July of 2006. The key here was we bought a reasonable amount of house for us.  I could afford a lot more, but I didn’t want to be tied down to house payments for it. Then for the first few years I didn’t do much at all to pay it back.  Really, I was likely just like most people on I made my payments and I believe I did manage at least one extra lump sum payment of $1000.

Then we started to having a long conversation with my wife on where we wanted to go in life and I realize being mortgage free would add a lot of flexibility to our lives.  I could down shift to part time work if the mortgage was gone, my wife could change careers or we continue to save and leave work early.  Regardless of the exact scenario,  the idea of never having a mortgage payment again was highly appealing to us.  Besides, with such low interest rates right now it is easy to pay off debt and I won’t be punished for saving cash in crappy low interest paying saving accounts or bonds.

So I scaled back on all other discretionary savings and poured everything we could at the mortgage for the next three years.  Oh boy did that every work, for a change of pace I was actually looking up my limits of lump sum payments on the mortgage because for two years in a row I maxed those out (15% of the original mortgage balance).  We also took advantage of the option to increase our regular payments by 15% a year, so ever time I got a raise I poured that money back into paying off the mortgage even faster.

The end result of this change to our lives won’t be know in full for a few months.  After all when you pay off the mortgage you still go to work the next day.  In the meanwhile, our monthly spending just fell off a cliff since our largest bill (after tax) will now be our monthly spending cash at $400 a month.  On the other side my regular mortgage payment of $1940/month is now available for saving.

To celebrate we have having a party this weekend with family and friends.  In addition, both my wife and I bought ourselves little gifts.  My wife bought 2013 Grey Cup tickets and I bought a Nexus 7 tablet.  Now I just have to start saving up for my wife’s cork floors in the kitchen…after all when your promise is put on national TV there is a bit of pressure to do it.

Any questions?