This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
Over the past few years, I have changed the way I look at money. When I got out of school and got my first “real” job, the money that I made bought me “stuff”: lots of video games, some fancy toys and other things that I don’t remember and really have nothing to show for it. Now, the money I make from my job is used as a tool – the majority of income I make is ear-marked for debt repayment (mortgage) and the rest is either saved for longer-term savings, for purchases such as cars, vacations or other “wants”.
The difference between past years and currently is that I now have a buffer. I don’t necessarily need to work at the job I currently work, in fact I could probably live comfortably on approximately ¼ of what I currently make, it would just mean I could have to work until I was around 60 instead of being able to stop working in my mid 40s (which still seems like a long way away). I have prioritized my spending to reflect things I really like and value rather than spreading my spending around until there is nothing left.
This more focused and thoughtful spending provides a peace of mind that I really didn’t have previously. I know that even though I have to work at something, I’m not necessarily “trapped” at my current job because I could quit and find something else to do if I wanted to. The flexibility, even if not utilized (I like my current job) makes waking up in the morning easier, the difficult days I do have while working are not the end of the world – it’s generally just a less stressful lifestyle.
If I were to live like a lot of people I know and not have savings, if I “needed” 100% of my paycheque to make it through the month I think I would be significantly more stressed on a day-to-day basis. Money, rather than something that my wife and I discuss once a month or so would be something that we’d be battling or worried about constantly. I know many people that live this way and I really don’t know how they do it – if they missed even one paycheque, they are at risk of falling behind on several debt obligations and not really able to make this up anywhere.
So, even though I am not currently financially independent of my job, and will have to continue to work somewhere for the foreseeable future, having a financial plan and prioritizing my spending has lead to a much easier, less stressful lifestyle. The end result of living the way I am will hopefully be retirement at 45, but on the way there, I am enjoying the way I currently live.
What would you change with your current spending? How much less could you earn and still maintain your current lifestyle?