The Money Shuffle

So it only took until May for me to do some things I should have done back in January…yikes?!? But I finally dealt with our TFSA contributions for 2019.

I think perhaps my mental block on doing this is the fact I just don’t take the money out of main chequing bank account like I used to while I was working.  Instead there is a series of steps to moving the money that sort of reminds me of a dance or shuffle and it now takes a bit longer to get everything sorted.

First up was the fact that with our withdrawals from our TFSAs in 2018 (reminder you regain contribution room on any withdrawals on your TFSA but you need to wait until the next calendar year to use them) we had increased contribution room to just under $10,000 for each my wife and I.  So I have to wait until Jan 1, 2019 for that contribution room to reset which is why I should have done this back in January.

But after realizing I was close to getting my tax refund I decided to sit on my hands until May to start this.  So after the tax refund arrived I pulled the rest of the money out of our high interest savings and we then made our contributions.  We also had some cash in the TFSA accounts so we rolled those into our investments as we picked up some Preferred Shares ETF and ISV stock.

Also I forgot to mention that when I moved my unlocked pension to my RRSP I rebalanced the RSP account.  Which sounds impressive but all it involved was buying ETF to get me back to my original percent target amounts (40% bonds, 20% US stock index, 20% TSX index, and 20% international index).  It really just is some basic math and doing four trades and takes perhaps 20 minutes at most of my time.

And while we were cleaning up things, my wife decided to sell off some of her taxable investments and trigger some capital gains which she will owe tax on next year.  We have previously discussed that we didn’t want to keep the taxable account for the long haul so she sells some investments off periodically (she did this last year as well) and pay the tax on the capital gains.   That way we don’t see the tax hit all at once in a given year.  The cash from that just ends up back in the high interest savings account making this entire thing feel like a waltz.

So long story short you will see various numbers shift in our next net worth post to reflect all this dancing.  I rather like to get all of this done at once just so I don’t forget any of the shifting money around,  but how do you prefer to manage your money?  All at once or several times a year?

The Long Road to FIRE

I’ll be honest after getting to FIRE myself I’ve backed away from reading most blogs on the topic.  My interest has shifted from ‘getting to FIRE’ to ‘living in FIRE’ which changes what I read.  But the other day I decided to skim some blogs and Reddit forums on getting there again and I fully admit I was a bit shocked by some of the ideas out there on FIRE.

Some people are like obsessed with the concept and saving as much as humanly possible, which from a old timer like me (I’ve been writing about this since 2006) is bloody stupid!

Saving a small fortune and then managing your investments is not a sprint which you can see how much you can save for as long as possible.  It is in fact a VERY long journey.  I had higher than average income, little debt and it still took my a decade to pull off.  So the only sane way to really survive the long road to FIRE is enjoy the ride.

What?!?! That’s your advice?  I know not very dramatic but I should perhaps tell a story of my own path getting to FIRE.  At one point I was like those obsessed people,  I had cut everywhere I could and was saving as much as possible but then something went wrong and all my plans blew up in my face. I couldn’t maintain that level of savings for very long because there was next to no slack.  Then it occurred to me to really do this well on the long haul I had to back off on my savings rate.  So we added spending back into the plan which gave us a bit more cushion and add some things back into our lives that we enjoyed.  And honestly the amount of spending we put back in was less than 5% of our savings rate…it didn’t really change that plan all the much (I can’t recall the exact change but it was under a year more of working).

But you know what? It was a world of difference to my life.  I enjoyed the world again.  I mean I was literally a more happy person by just spending a little bit more.  I had found that mythic thing called enough.  Then as a added bonus when something went wrong I didn’t freak out because we had some cushion for those weird things that come up like a car accident.  And then the irony started to kick in…I was beating my new lower goals anyway.  I had aimed to leave work prior to my 45 birthday and I exceed that goal by leaving before my 40th birthday because I didn’t depend on getting a raise for my plan to work.  So every raise at my job over those ten years accelerated the plan.

But the most important thing of all those long years of savings was this: I could literally ignore my savings for months at a time and just live my life.  My life was not only about FIRE…I had a much more healthy and interesting life because I firmly put FIRE on the back burner.  It could just simmer away with a few good habits and so when I was not interested in FIRE I could just forget about it and still make progress.  Thus I never had a full burn out and never entirely gave up on the idea.  I, of course, had moments of thinking: why bother? But I kept saving until I got interested in it again because I was spending enough that I didn’t feel deprived or left out.  I still took vacations, we still ate out and I still made my own wine and beer but yes I also bought some as well.  My kids never felt like we were poor but at the same time I never gave them everything they asked for either.  They grew up loved and with enough things that they didn’t feel left out at school.

In short, I lived the middle life.  Not saving too much and not saving too little but rather saving enough for us.  And here is the fine print: that level of enough spending is different for everyone.  So yes, try to cut back your spending until it hurts, but then back up 5% or so to find your ‘enough spending’ level.  And realize that amount will shift over time.  You won’t always be there but it is worth the effort to try and find your way back because getting to FIRE is a long road.  It is totally worth it but only if you don’t give up your life to get there.  You should be a fully developed person with lots of interests and hobbies otherwise you can find yourself bored in FIRE because you gave up too much of you life and now don’t have anything to do.

So the irony is this: the most successful people at FIRE isn’t those with the highest savings rate but rather those with the most happy lives.  So live life, spend some of your money and stop being a cheap bastard.

Okay, your turn.  How do you keep savings for the long haul?

Adjusting Your Time

Most people have a bit of a routine.  We do things in a certain way and often at a certain time.  The routine can vary but generally over the long term can be stable for months or years depending on your life.  And the majority of people like having a routine and are upset when it gets broken or shifted.

Now I had finally hit a nice routine in my retirement where I got to work on things I cared about like writing or crafting terrain until suddenly I lost like 18 hours of my week to choosing to get a job which tossed a wrench in my routine.  The first week I will fully admit was rough.  I have previous commitments to finish up and I suddenly had a lot less free time to finish them in.  I actually felt stress again which was a bit of a foreign feeling.  But then again I didn’t have to get the job I choose this complete with knowing the consequences…it still didn’t make that first week any less rough to adjust to.

And I know, you can almost hear the crocodile tears from all the working people reading this thinking ‘what on earth are you complaining about?‘  I’m not complaining but rather pointing out adding anything to your life that is that much of a time commitment to your week has a noticeable thud sound when it hits.  So the question becomes: how do you adjust your routine to a sudden shift in your time commitment?

Now this is largely a matter of preference.  Some people just feel stressed and deal with it all and adjust slowly over the long haul.  Others tend to embrace poor habits about dealing with stress by binge watching TV, eating too much or drinking/smoking too much trying to avoid the problem.    While I tend to channel my engineer tendencies and just get more organized and feel less out of control.

During my working life I was hyper organized.  My calendar had all my meetings in it (and my calendar was colour coded to which projects I was working on), I put in ‘meetings’ with myself to keep blocks of time  to finish tasks and I had multiple to do lists going to track it all.  So when I left work I went far to the other side of spectrum and ditch all of those things.  Actually in fact I went a bit too far the other way to just living in the moment and a bit of disorder.  Now with the new job I have a shift back just slightly to a bit more organized.  So my shifts are loaded into my calendar and I use a to do list on things I need to get done this week.  I tend to think of this as more ‘organized lite version.’

The point is to make me feel better about this change and make sure I’m getting things I want to accomplish done.  Eventually I know this will just end up being the new routine until the next big change happens (what ever that ends up being).

So how do you adjust to a shift in your time commitments?  What works for you?

A blog about early retirement and happiness