Posted by Tim Stobbs on November 17, 2011
I was recently attending a leadership event put on by my employer which featured a interesting guest speaker. While I normally don’t find leadership training particularly interesting, I did find this speaker’s one particular point very illuminating on the problem of why people don’t save for retirement or any other long term goal. His advice was merely “people can’t commit to what they can’t see.’ To me this seemed obvious, but I had never articulated it here on the blog.
Basically if people can’t visualize it, the ability to commit to a goal is difficult. Hence this is where long term goals are difficult to save for including retirement. We don’t have a clear picture in our heads of what we are trying to achieve. For example, I have a goal to pay off the rest of my mortgage by the end of 2012. What motivates me to keep working towards this goal isn’t so much the numbers or the logic of the decision, but rather a picture in my head. In my vision of what this will be like I have a party to celebrate where good friends and family come over. We drink wine, eat some appetizers, and I’m in a extremely happy mood while I give a little speech and thank everyone for coming out and they cheer our good fortune (aka the plan). It’s not a complex vision, but I do have one part firmly set in my mind: the feeling of accomplishment.
Yet that vision is what most people can’t even tell you about in all that much detail with regards to retirement plans. What are you working towards? What will your days be like? What will you do to provide a sense of accomplishment? We have no vision of the event so committing to getting there is difficult to do without the vision to provide emotional motivation to keep going when things are tough.
Not surprisingly I do have a little vision in my head of the ‘perfect’ retirement day. While the details shift around a little bit the general gist of the story goes something like this.
I wake about 7:30am and the proceed to do a little yoga, eat some breakfast and drink coffee for a while while I lounge around reading the news. By 9am, I’ve grown restless so I’ve dressed and sit down at my computer to write in the library/den. I split my morning writing into two periods: one for a paid project or more commercial writing and the other for a fun project like my latest novel. Selling the novel is irrelevant since I do it for my enjoyment and not to make any money at it.
By noon, my wife and I sit down for lunch together and discuss our plans for the rest of the day. We typically split our afternoons into personal projects and doing something together. Today our plans include me working on a simple wood bench for our son’s apartment. I’m making it more to have a place to sit and take off my boots than for him. I’m not that good at woodworking so it isn’t a masterpiece, but I enjoy it. Later that afternoon, about 3pm, I meet my wife at the library where we browse the latest books and check out this week’s stack of books to read. Then we go home and cook a simple meal and talk about our day. Then that evening friends stop by and we visit over a pot of tea and perhaps if we are in the mood play a game of cards, a board game or something that doesn’t distract you too much from chatting. Then I read for a while after the guests leave and then head of to bed.
You will notice my vision doesn’t involve me a in another country, have any sports cars or sailboats or giant houses. It’s largely like my life right now, but just more time to do things I like to do. You might have also noticed it did contain a little paid work, but perhaps only an hour and a half. Which was mainly to help pay for the other hobbies, I don’t really need the money.
The point of this little story isn’t to say what you should do, but you should have a daydream in your head to work towards. So go ahead and take some time and dream. What would my day be like if I didn’t have to work?
Posted by Tim Stobbs on November 3, 2011
I find it sort of amusing when people bring up the issue of me failing to retire by the time I turn 45, because even if that did happen I would still win. How? Even in my worst case projection I still think I will retire by the time I turn 50. So even by losing, I can still retie earlier than most people.
Not to mention all the side benefits of trying for financial independence. I don’t worry about money at night and it has never kept me awake. How? I’ve got over $130,000 in investments right now and my house is almost paid off. The words ‘lay off’ or ‘being fired’ are annoyances now and not really serious threats to my family’s well being.
In a sense going after early retirement gives you freedom to choose what others can’t consider. I don’t have any credit card debt, so I don’t ‘have to’ keep working at a job I hate. I don’t have a huge mortgage, so I can look at buying a second property as an investment. The longer I’m on this path the more choices keep opening up.
Perhaps the one choice that mind boggles a lot of people is the ability to earn less. I don’t have to work full time to look after my family. I haven’t had a full time day job in 15 months now and I really don’t see the need to ever go back to full time if I chose to. Actually after the mortgage being paid off next year our income requirements to live are so low that I live with a $10/hour part time job if I want.
Perhaps that is the point of how to win even when things go wrong, my needs are very minor and I know what those cost. So I don’t bitch as much about losing on anything and always try to find the positive about it. Why? I can afford to make that choice.
So how do you win when you lose?
Posted by Tim Stobbs on September 8, 2011
The word ‘cheapskate’ usually isn’t associated with positive images. For example, when you say that to me I picture someone loading up sugar packets from their table in a restaurant to save money at home. Jeff Yeager is on a mission to change that image with his second book The Cheapskate Next Door where he shares the tips of cheapskates across the US on how to live better on less.
While I typically don’t review many money saving tips books I was pleasantly surprised by Jeff’s book as he focus his book on living happily below your means. The point of saving money isn’t about hardship, but rather getting more of what you want in life and that message comes through loud and clear in this book. Also Jeff manages to actually inject a fair bit of humour in the book and also backup some of his findings with a research.
How do you research cheapskates? Simple, you give them a huge survey to fill out and let them share their tips for your next book. So while most books compare back to average people, Jeff’s actually has a lot of data on cheapskates which of course makes it more interesting to know where you fall compared to them. For example a few bits of interesting data include the average cheapskate home is only 1650 square feet well below the US national average of 2300 square feet and 80% of those polled have or plan to pay off their mortgage early. Suddenly my 1600 square foot house seems just about right compared to others of a similar mindset.
Yet I can’t hold a candle to one cheapskate that Jeff interviewed for the book: she literally got her house for free. She manged to find someone who had planned to wreck an older home and had it transported to her property and put in a foundation for it. Total cost $26,500 include remodeling and moving the house. Yikes now even I feel like I’ve paid too much for my house.
So for me it was nice to actually compare myself to similar people for a change of pace and get an idea that even for the frugal minded we don’t agree. For example, coupons tended to split people into even thirds: one third didn’t use them at all, one used them all the time and the last third used them sometimes.
I also really enjoyed the chapter on kids which approached parenting using the oxygen mask method, which simply put means look after yourself first so you can then really look after your kids. You don’t have to give you kids everything in order to love them and raise them right. In fact, showing them they can’t have everything in life all at once is likely good training for later on in life.
So overall if you can manage to get a copy from your library I would suggest reading this book. While most of the tips on saving won’t be new to you, you will likely find a few new ideas on how to save your money and get a few laughs while doing it.
