MoneySense is Making Sense

I was very happy to get my latest issue of MoneySense magazine (Feb/March 2008) yesterday because of one article in the back which showed what retires were really replacing from their working income while in retirement in Canada. It was found the number was around 45 to 55% (they published a wonderful table of %’s which are broken down by pre-retirement income).

So perhaps we can finally kill this stupid idea you need somewhere around 70% of your pre-retirement income to leave work. Yet if you keep reading the article it gets better.  Did you know the saving rate of most retirees are just behind that of those working people in their 50’s at the peak of their savings?  So why are retirees are saving? Basically most people are over saving for retirement.  They can’t spend it all so they save it.

Therefore the article suggested people retire with two different chucks of money.  The first to cover from their retirement date till their 70’s where you will have your most active lifestyle and do those once in a lifetime trips and then lower amount to cover their more relaxing years closer to home.

Overall not a bad idea.  Yet I would like to suggest we push a good idea further.  Why don’t we suggest more people retire earlier?  After all if most people can’t spend it all perhaps we just need more time to start spending our retirement money.  Of course I’m bias and I’m planning on a number closer to 40% myself.
So what’s your % number?

The Wonderful World of Cloth Diapers

Well I’m surprised by the amount of debate that came up yesterday about which diapers to use.  It has got so bad it’s leaked over to MoneyGardener’s blog.  Yet I noticed expect for Lise, no one wanted to know about why we are leaving cloth diapers at all when it is a more environmentally friendly choice.  So I present a little summary of life with cloth diapers and some costs.

  1. Realize at that cloth diapers now are not what your parents used.  See Kushies Ultra Cloth diaper (which is what we have used).  It’s got layers of cotton for absorption and a built in water proof outer shell with Velcro tabs.  Generally speaking it is just as easy to use to put on and take off as a disposable.  There is a large up front cost around $50/5 diapers.  We typically had at least 15 diapers, so cost to start is about $150 plus tax or more if you want to do laundry loads less frequently.
  2. I don’t suggest getting the newborn size as you child will out grow them too quickly to save you much money.
  3. When actually using the cloth diaper we also bought the Kushies diaper liners (you can pick them up at Walmart).  There are strong when wet and allow you to remove solid wastes to the trash.  Yet if there are some leaks over the liner so we just put the entire diaper in the toilet to soak.
  4. Wet diapers or ones which have been soaked and then shake to get off solids then get transfered to a pail of water with baking soda mixed in to absorber odours.  Do not use bleach as it wrecks the cotton fibers and shortens the life of the diaper.
  5. After the all the diapers are used we put the kid in a disposable and take the pail down the washing machine.  With a top load washer this part is easy.  You just pour it all in and do a spin cycle to remove the water and other bits.  Then you may need to use a stain remover on some of the diapers which held solids and then add detergent and wash it all with an extra rinse to ensure it’s all clean.  (For a front load you have to manually load it with wet diapers and to spin out and manually pour the left over waste into the toilet and flush.  Now do we understand why my wife wants to stop doing this with our front load?)
  6. Then you move the diapers to the dryer and don’t use fabric softener.  It coats the cotton fibers.  Then take the pail to your tub and wash out with hot water and vinegar.  Refill the pail with water and baking soda.
  7. After that you are ready to start the process all over again.  Note we always used disposables for overnight because they can hold a lot more liquid in them when your child is sleeping for most of the night.

So as you can see using cloth diapers are labour intensive and you do a lot more laundry because of them.  Yet after you initial cost you are only spending money on the water for the washing machine and power for the washer and dryer.  As long as you have energy star appliances it won’t cost you much.  The diaper liners again are fairly cheap and vinegar and baking soda in large sizes is dirt cheap as well.  I can’t give you an exact cost because I don’t have any data of our before using cloth diapers on my power and water bills.  I would guess we spend around $10/month on everything for the cloth diapers, but I’ll ask my wife if that sounds about right, she has a better feel for the costs around the diapers.

I hope that helps everyone about how it all works.  Let me know if you have questions for me or my wife and we will try to answer them.

When Does Quality of Life Matter More than Being Frugal?

My wife and I have been having an interesting discussion in the last few days. You see we have been using cloth diapers for our son most of the time for the last three years. Now we have started toilet training him we have noticed his old cloth diapers are falling apart which has resulted in some leaks. So we are just moving him over to disposal diapers rather than investing in another set of cloth (which would set us back around $150) until he is trained.

Yet what was really interesting is our discussion about our next kid. My wife wants to stop using the cloth diapers in the beginning for this one. At first I wasn’t sure, but she did lay out her case very well and she even gathered data on the cost of diapers at different sizes and the approximate number of chances per day. Overall it will cost more on a monthly basis, but there is a significant quality of life to be gained (mainly for my wife, since she is the one home with the kids). So I was convinced to spend the extra cash.

This got me thinking that perhaps being frugal requires a dip curve to people’s spending. At first we go down be eliminating all unnecessary spending and our wasteful habits. After a time we get used to our new spending level and then start to critically look at our spending and where we can spend more to boost our happiness/quality of life. So then the curve moves up slightly, but your spending if targeted to those things that matter most to you.

So has anyone else experienced this curve? What do you target as must have spending for happiness?