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?