22 Years in the Making

Dave 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.

The main reason I am able to even think about being able to retire at age 45 is that I live well within my means. I make significantly more money than I normally spend. Part of this trait is being paid well, the other part is that I don’t really have a lot of stuff that I want to spend money on.

I am, and generally always have been a saver. My parents instilled this characteristic in me starting when I got my first job when I was 11 years old. Part of the deal with me taking a job (farm work) was that I would have to save a significant portion of the money I made. The job paid fairly well, so this was probably a good idea, because I’m not sure what kind of crap I would have bought then. I remember the first thing I ended up being able to buy with my own money was a Sega Genesis (with Sportstalk Baseball – cutting edge technology at the time). I think it probably took me almost a year to save enough money to buy it, and I felt I had really earned it.

When I got my first job, I didn’t really have an ultimate goal, like a Sega Genesis to save for. If there was a small purchase, I could usually pay cash for it. Larger purchases, like my first car (a two-year old Nissan Sentra S-ER) I saved up for it and paid cash. Beyond these shorter-term goals, I was kind of listless.

A large, long-term goal has focussed my finances much more. It forced the “Pay myself first” mentality, which I had been employing, with moderate indifference. My first goal was to pay my house down as quickly as possible, with the second goal accumulating as many cash-creating assets as possible to replace my employment income.

My financial plan mainly works because I stay away from really expensive hobbies. The hobbies I do have (like golf), I do as cheaply as possible and get great enjoyment out of. Obviously, if my annual budget was spending 95% of what I brought home, I would be really unsuccessful in achieving financial independence by age 45.

Besides the ridiculous spending I took part in during University, where I drank and ate too much, and spent more money than I should have, I’ve basically maintained the financial plan that my parents put into place for me when I was very young.

So, I’m not really an original thinker – the financial plan that I’ve been following for 20+ years has been working, so I stick with it. I have refined the plan, and focussed it in the last 5 years, but at the core, it’s stayed the same.

Were you brought up a saver? Did you have to learn how to save money – was it a hard transition?

5 thoughts on “22 Years in the Making”

  1. I was brought up a save but perhaps indirectly because my parents were not the spendy types. Neither was I.

    I had small, part-time jobs most of the time from age 16 through the end of college so it gave me spending money for stuff like books for college and food off the dorm meal plan and fun stuff like Knicks tickets and plane tickets for annual vacations.

    This gave me anough of a boost to be able to afford a security deposit for my first apartment and paying for my first car with cash, barely. Later, after a few years of working full-time, I afforded the down payment on my co-op apartment I still live in, 24 years later.

    And it all paid off nicely when I ERed in late 2008 at 45. 🙂

  2. Since I started earning (around the age of 5) the rule has always been Save 50%, Give away 10%, and Spend 40% (or less). That pattern has stuck, more or less, to this day.

  3. In my 20’s, I was one of those paycheck-to-paycheck creatures. In my 30’s, got married, decided fairly early on kids were not for us – and at some point I stumbled upon the concept of early retirement (I think this site factored heavily into opening my eyes on the subject).

    With dual rising incomes, shrinking debt, we have been able to increase our net worth by about 100k per year for the last 8 years… I am no investing whiz, we have acheived pretty much everything by the good ol’ spend less than you earn. I shudder to think how much further ahead we would be if I had any investing saavy. At last check, we have 360k sitting in cash doing squat. 🙁

  4. Jon Snow: You should look at investing in Second mortgages for interest rates around 12-18% that you could earn. Potential could be $3-4,000 a month in extra income.

    One book I read a few years ago said, “Look at any major city and look at the tallest buildings within that city. Who’s logos are on all of them? The banks, so what does that tell you? Be the bank.”

  5. I was brought up a saver. Learning that if I wanted anything in life, I had to work for it. Decided early on that accounting was for me, as I would never be out of a job, and that I could learn more about the ideas of money.

    The hard transition to learn was that it is easier to borrow money for a downpayment for rental property, than it is to save for it.

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