8 Years of Work

I recently got my 2010 pension statement from work, which showed a somewhat dismal balance, although a reasonable cash-flow for when I turn 65 (2045 seems like a very long time from now).  Tim posts his net worth every two months, but I never have, mostly because I really don’t have much in the way of assets.  I’m 31 years old, and I really don’t know what I spent my money on for about the first four or five years of my full-time working life.

If I knew then what I know now, I would (hopefully) have invested a considerable amount of money in income-producing assets, which would have reduced my time at work by a considerable amount of time.

Looking at my balance sheet from the age of 23-28 though, I basically had $0 in the asset column and $0 in the liability column (after paying off my ~$25,000 in student loans), and spent everything in the middle, with very little to show for it.  Over the past 3 years, I have added a large amount to both columns with the purchase of a home (for good or bad depending on your thoughts about home ownership), but at least I seem to be adding more in assets.

At some point (hopefully at or around the age of 45) my goal is to have enough income-producing assets to cash-flow my lifestyle needs.  This was never a goal previously, but has become one of my new considerations before I make a significant purchase, for example – should I be saving money now to purchase the new iPhone, or should I be adding this money to my bi-weekly mortgage payments?  The iPhone will add to my general life-enjoyment (until the next version comes out), while the mortgage payment puts me closer to my end goal of $0 owing on my mortgage and the start of building assets.

I think most people who read this blog would at least weigh the pros and cons of a major purchase and realize there is an opportunity cost to most purchases.  Personally, I learned about this by reading different books and websites and coming to the realization that I would like to be financially free more than I would like to have every new toy that comes out (I still get some, but I will probably wait until the iPhone 6 or 7 comes out to upgrade my phone, if I decide I need one by then).

Looking at what I have now and what I spent money on in the past, even without accumulating debt I basically gave up a year or two (at least) in purchasing “stuff” that I really don’t have much to show for.  Electronics go obsolete quickly, books collect dust, cars die.  Reading Robert’s post from yesterday about the mistakes he’s made investing , I wish I would have made those kind of spending mistakes (where I could have learned a lesson and still had an asset worth something) than buying  “stuff” that I can’t even give away.

How are your assets looking these days?   Do you have any spending regrets or tough financial lessons learned from your past you wish you could fix?

7 thoughts on “8 Years of Work”

  1. Too many mistakes to count – oh well, they provide good blog fodder. 😛
    They probably all had a similar issue or theme behind them though. For some people that’s something like impulsiveness but mine has always been avoidance of reality and lack of a vision. Since fixing that, I’ve had very few spending regrets (not counting a couple of bad stock picks).

  2. I think your general track is a good idea but you shouldn’t be adverse to spending (time and money) on life experiences when you are younger – i.e. those things that you can look back on that have enriched you in a non-material way.

    Stuff (iPhones etc.) usually does not fall into this category, however things like travel and education do.

    From personal experience, I spend 2 years traveling – literally around the world – in my early thirties and several periods since then for extended periods and still managed to be financially free in my early fifties – and no, there was no inheritance to fund it. It came from hard work and prudent money management.

    Those life experiences cannot not be valued in a monetary terms but are the most ‘valuable’ things I possess.

    Had I not traveled the ‘freedom’ may have come a few years early, between actual travel expenses and no income while traveling, but I think the trade off was a good one and is wholly personal.

    Also delaying the ‘experiences’ until you reach the ‘freedom’ is NOT a good idea – again I would not travel and/or tackle the same things now as I did twenty years ago. Don’t know if it’s more experience or lack of knowledge or the chronological factor but my bet is on time – one ages over time (unfortunately 🙂 ) and you look at things differently.

  3. I should have added

    “living is a thing you do now or never – which do you?” – a grook by Piet Hein Danish mathematican and poet

    as good a lietmotiv as any imo

  4. There is a balance.

    I had my last cell phone for six years on a $20/month corporate plan. I waited and waited and waited and then eventually got an iPhone. It has made my whole life more efficient.

    The cost was $300 / year in data (over three years) and another $150 plus taxes for the phone. So for about $1,100 over three years I get to enjoy the benefits of an iPhone. It’s been a couple of months, and it was worth it. I don’t need a GPS, I don’t need an iPod, I don’t need a yearly day planner, I don’t need a compass, a personal recording device, etc. Plus, other than the tangible reasons I get enough enjoyment enough out of it for the $1k.

    I still drive a really old car though, because I think it’s harder to get $20k enjoyment than $1k.

    (Also – I’ve had a tube television for 30 years and only got something better this year on a one day sale. Televisions are less than 10% of what they cost 5 years ago). If you can wait, you should do it.

  5. I’m pretty happy with the assets column in my life but, of course, it could always be better.

    Unlike you, I do find value in the technology that I purchase but I always research my buys very closely and get things for rock bottom prices. Sure, some of it does ended up discarded and unused – but for the most part I look at those purchases as money well spent.

    For example, I am looking at two 22″ IPS monitors right now and they have made all the time I spend in front of the computer much more enjoyable. Sure, I could have kept my old 19″ 4:3 LCD – but I’m sure glad I didn’t!

    It’s all about balance and living within your means. On the other hand, I don’t drink or smoke and almost always order water when eating out. Those choices will have paid for all the electronics I’ve purchased several times over I think!

  6. On paper, things look great for me and my wife… assets of well over a million and only a small mortgage as debt. The problem is that our assets don’t produce INCOME. In order for me to retire by 45 I need to figure out how to change this scenario.

  7. While in the process of a downsize, my husband and I are trying to locate a “home” for a house full of stuff that will not fit into our new, smaller space. I don’t view the stuff and the money spent on it with regret … it just is and represents where we were at the time we bought it (or brought it home from grandma’s for sentimental reasons). We have financial independence despite the money spent on the stuff so that reflects my relaxed view.

    We’ve managed to travel while we were saving for retirement and I don’t regret that either. I am just old enough to know that life is about the journey and the arrival often is of minimal significance.

    Slow motion gets you there faster.
    Hogie Carmichael

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