One Bad Weekend….No Big Deal

There are two main goals that I strive for – the first is a healthy body, the second is a healthy bank account.  To me, both can be viewed as planning for a good future.  From a health standpoint, I watch what I eat, I exercise regularly, get enough sleep, and anything else I can do to maintain an excellent level of fitness, as well as to look good with my shirt off (I’ll admit, I’m a little vain).  From a financial standpoint, I watch what I spend, pay my bills, have savings and stick to my long-term plan that I have set out.  It’s interesting though, when a situation arises when I go against both of the goals that I hold so important the vast majority of the time, which is what happened this weekend…

The problem arose because I love ribs, and the city I live in happens to have an annual Ribfest that involves copious amounts of food and beer from the main sponsor of the event.  As I previously mentioned, I love ribs (a lot) – and I ate a lot of food at this event, including something called “butterfly” potatoes, which I had never tried before but would highly recommend (it is basically a mound of super thin-sliced potato that is freshly deep-fried) and other food items that I would put into the same nutritional family.

At the end of this festival, I found myself incredibly full, and significantly poorer.  The ribs were $22 per rack, which I had several, beer was $5 each, which added to my bill, and I ate several other things, which I would not classify as “cheap”.  All were fantastically tasty, but definitely not healthy.

For the weekend, I really didn’t do anything to get me closer to either of my goals.  Did I feel bad though?  Not really – I had a great time.  There was good music, wicked good food, and really good beer :).  At the end of the day, I guess it all comes down to knowing I’m not perfect.

I’d love to live on $6,000 per year like Jacob at Early Retirement Extreme, I would be able to retire significantly sooner than I am track for now.  I would also love to effortlessly sport a 6-pack on the beach, but I also like beer and other “bad” food, which limits my ability to achieve this goal.  I can recognize that spending around $150 in a weekend on beer or food is not getting me any closer to retirement, but at the same time this is an event that I look forward to all year – I don’t regularly spend that kind of money, or eat that much food, and I will be able to make up the losses over the next few weeks.

So, I didn’t really beat myself up over 2010 Ribfest, I’ll just save some money elsewhere in my spending and I’ll just walk an extra few kilometers over the next few days to burn off the extra calories (which probably number in the thousands) that I consumed over the weekend.

Do you have any similar situations where you knew something wasn’t really going to help achieve a goal, but did it anyway?  From my experience these tend to be the most fun (and usually expensive) times.

Two Retirement Mistakes to Avoid

A few weeks ago, a journalist contacted me through this blog, requesting an interview about early retirement. I shared my story and some of my ideas and experiences regarding starting early and enjoying success at a relatively young age. I enjoyed my conversation with Jacqueline Nelson from Canadian Business magazine and looked forward to seeing the article in print. As many people who have been interviewed for an article before can probably guess, the article ended up being very different from what I expected.

The current issue of the magazine contains an article called: Top 10 Retirement Mistakes and How to Avoid Them. The link opens in a new window, so feel free to click on it and read it at your leisure. I contributed to ideas number 8 and 9: plan for a long life and don’t plan to inherit your retirement fund. Those ideas could both be related to early retirement planning, but I know it’s a bit of a stretch.

First, if I were planning to retire at age 45, how would I inherit money? My parents will be in their late 60s, not likely to be leaving an inheritance. And I have many brothers and sisters and cousins. I don’t expect to receive anything from my grandparents, but even if they leave money, it’ll be split many ways.

Second, how many years will I need my investments to provide income for me? As I mentioned to Jacqueline, there’s not much difference between planning to spend down the capital over 35 years (age 65 to age 100) and planning to never touch the capital. Retiring at age 45 leaves 55 years during which investment income will be required. This can only safely be accomplished by never spending capital. As the authors pointed out in the article, a 4% withdrawal rate is likely to achieve this. Coincidentally, 4% income can be produced by dividend paying common and preferred shares, as a way of producing income and protecting capital.

I was lucky to get to share some of my expertise with a wider audience, pointing out two dangerous assumptions people might make when approaching their retirement. Many of us readers of Canadian Dream are already aware of many of the others. We understand the costs associated with our children, if we decided to have kids. We don’t plan to work into old age, but are young and able enough to work if we need to. We are careful with our spending and likely won’t need a million bucks.

What did you think of the article? Is the financial press helpful, or merely distracting? Where have you found the information that has been most helpful to you? fre

Wander Reading #27

Lack of sleep from crying kid? Check.  Out of coffee except for decaf? Check.  Dentist appointment this morning? Check.  I  hope your morning is going better than mine.  Happy Friday!  Now onto the  links.

Larry McDonald provides a interesting read and story on the history of Employee Stock Ownership Plans.

Get Rich Slowly shares why he buys local.  I personally like the debate towards the end of the positive and negative points of buying local.

Early Retirement Extreme talks about slaying the ‘enough’ dragon.  I battle my ‘more is better’ dragon at least a few times a week.  Also I can’t resist this post about what is happening to the middle class and why to teach your kids to avoid debt.

Million Dollar Journey points out the downsides of owning REITs, which made a few good points.  I personally like them because I’m lazy and don’t want to be stuck in a single real estate market.

If you ever had to track the adjusted cost base (ACB) for a stock you know how much of a pain in the ass that can be.  Well to your rescue came the Canadian Capitalist with his spreadsheet.  Go get a copy if you need it.

For those truly geeky people that love following every little change in legislation the official notice of changes to the CPP that will take affect in 2012 and 2014.

An interesting article that looks at the stats behind how much do you need to retire.

Tim Ferriss, author of the Four Hour Workweek, takes about the publishing industry and how authors make money (or lack there of).  This came about after Seth Godin recently announced that he will no longer use traditional publishing.  It’s all rather interesting to see an industry in transition.