Category Archives: Spending

Life After FIRE – One Year Review – Part II

Well welcome to part II of my series on my one year of early retirement.  Today, we get into some of the nuts of bolts of how this entire idea of early retirement works: let’s talk about the money.

So in the interest of a proper review let’s look at where I was at during the end of Sept 2017.

  • Investments: $595,030
  • Net Worth:$990,030
  • Spending Previous 12 months (less renovations):$35,305

Meanwhile, my end of August 2018 numbers were:

  • Investments: $619,850 (increase of 4.2%)
  • Net Worth:$1,014,850 (increase of 2.5%)
  • Spending Previous 12 months :$35,814 (increase of 1.4%)

Of course keep in mind I was officially on vacation for my first six weeks of early retirement and getting paid and still saving so the comparison to exactly one year ago is a bit off.  But overall the investments and net worth went up even with the choppy stock market of the last  12 months.  Of course I was sort of hoping to see my spending go down a bit not up during the first year but such is life.

A good part of our family’s income for the year was my wife’s daycare business which she has chosen to keep doing for a few more years (roughly $8000 for the year).  Then the rest came from cash we had pre-saved for the year and dividend income (roughly $10,000).

Now according to my last net worth update I’ve exceeded my goal for the year as our money in from investment gains and income was 108% of our spending. This was even with our spending being a bit higher than predicted and our investment returns did lower than expected. Of course this is somewhat of an illusion because in fact it is only because without my tax refund of just under $4000 this won’t have occurred, with out that I would have been under my target. And of course going forward that large of a tax refund isn’t like to happen again as it was somewhat a left over from my previous job. So am I screwed going forward? Not really.

Why? Well there are two items that come into play. First the low investment returns, had those been closer to my expected long term average of 4.5% we would have still covered our spending without the tax refund. I purposely left some slack in the numbers to cover this very scenario. The second reason I’m not really screw going forward is I’m expecting some additional income in the future.

The two main increasing sources of income will be when I actually like publish a book or two (or take on some other ‘fun’ work which pays) and our Child Tax Benefit is set to swell dramatically in 2019 (estimates have it increasing from around $340/month to closer to $1000/month).  Also we have stopped adding money to our kids’ RESP account as of this summer so know we can actually use our current Child Tax Benefit for our kids day to day expenses.  We stopped adding money to the RESP because we broke our $80,000 target (the actual account balance is closer to $80,500 if you want to know).  Of course a concern would be changing of the Federal government in the 2019 election, which even if they did roll things back to the old program amount we would still get around $730/month.

So going forward we should definitely have more income coming in even if our spending stays at the current level.  Later this year I’ll take some cash from my RRSP account to fill up our high interest savings account which we use to help ‘pay’ ourselves an income twice a month.  I use automatic transfers twice a month to simulate a paycheque.

So short term, I really don’t expect any problems for the next year or two.  But with the long term we do have a potential issue that if our investments continue to perform below our planned long term average for the next five years my wife’s full retirement might get delayed.  Yet even if that did occur we do have options like me doing some part time work to help boost savings and/or downsizing the house or any of my other back up plans.

The point is we will deal with that if it occurs in the future.  Life never goes according the plan.  You just adjust as you go which is honestly how we go to this point in our lives.  We adjust as things happened.

Any questions on the money side of things?  Or any other questions you would like to know about? If so, please ask in the comments.

Picking Up Hobbies & Retirement

Given my nearly year off from work now I can say one of the downsides of having more time to do things is you keep finding new hobbies to try out. (Yes I know, damn retiree problems. 😉 )

For example, the cover image on this post is a set of 14 model trees I built over a week for use in our D&D games.  I really didn’t need the trees but I found a video on how to make them.  They looked interesting and I decided to give them a try.  Of course, I could have just bought some trees from Amazon but instead I got the project materials (which is why I ended up broke for the second half of this month) and built them from nothing more than some dowels, scrubbing pads, a can of expanding foam, paint and flocking (the green stuff on the bases and the trees).

Well guess what, I was right.  I did enjoy making them and I’m very happy on how they turned out.  The downside of course is now I have a list of other projects I want to try and make for additional terrain items to use on our game. Ugh, crap now I have another hobby in retirement.

The problem in retirement so to speak is you have more time than most so spending like ten hours on a new project really isn’t a barrier anymore.  Unlike when I was working and that amount of time would cause me to pause before trying out something new. While trying something new can of course be fun at times.  The downside is you can forget to work on things you really should be working on and lose focus on your other hobbies.

In the short term this isn’t a particular problem.  For example, while working on the tree project I stopped watching movies and TV shows except during the evening while I was basically waiting for stuff to dry.  But it can evolve into an issue for example, if I stopped working on my new book and got sucked into crafting other things.

So a trick I use is setting a weekly ‘to do’ list that includes things that I MUST work on to keep them moving along.  Case in point I set a goal to write at least 250 words a weekday on my new book project regardless of other things.  Of course that goal is flexible I can craft trees for two days and spend three writing the word count target for the rest of week on the book but the end goal is the same: that I don’t lose focus on longer term projects.

The method isn’t perfect but I find it does help a lot to keep things moving along which is main point.  So how do you keep working on a big project while new hobbies are trying to distract you?  Please share what works for you.

When You Are Temporarily Broke

So for most of this month due to a series of circumstances I’m abnormally broke. Well not really broke, I still have all our investments but I have spent most of my spending cash already this month. I’m currently under $2 in cash on my person and I have no further plans to get cash until the start of next month. Which to me isn’t that big of a deal. I’ve been here many times before by choice and I’ll be back here again some time in the future.

The issue is that some people don’t know how to deal with this state of being.  How exactly do you live your life if you don’t have any money to spend on a coffee out, going to a movie with some friends or getting a snack while out during errands?

The solution is actually very simple: focus on what you can do and plan ahead. You see people often get into habits with spending money so being broke for a few weeks is good reminder to myself that I can in fact have a good life without spending any money. It really isn’t that hard but it does take some adjusting.

The first adjustment of focusing on what I can do is the easiest for me to do. So this means I look at my current hobbies and purposely focus on the ones that don’t require any additional money. So for example, I previously had picked up some yeast and have some fruit in the freezer so I can make a batch of wine with what I already own. Or I can use the crafting materials that I recently picked up to make some terrain trees for my D&D game. And I can finish up a few books I’ve got borrowed from the library and also finish watching those two seasons of TV shows I’ve also borrowed from the library on DVD. Then finally I can finish off some research that I’ve been working on and start writing my sequel to Free at 45. So in short, I’m not lacking on things to do.

The second part to dealing with being low on cash is to simply plan ahead. This isn’t difficult to do but does take a moment of thought. For example, if I’m planning on being out of the house for the majority of the afternoon I need to remember to grab a snack prior to leaving the house and make sure I have a full water bottle. That way when I need a drink or get hungry I’m ready to go. Or if I want to have supper with a friend I would make sure to invite them to our house and cook with what I already have in the house. So if I have shrimp in the freezer I’ll plan the meal around that rather than chicken if I’m running low on that.

I really don’t mind being broke for a few weeks as it does help me to recall it is okay to make do with what you already own. We often get so caught up in getting the next thing on our want list we can forget to bask in what is already at hand. It almost creates a sense of gratitude for the life I already have when this happens to me.

Then finally I keep an ace in the hole: I know I can cheat if I really need something. Not want, but need. So if my shoes fall apart and I can’t make do for a few weeks I can always buy a new pair on the credit card and pay that back next month. I really avoid doing this but it does put my mind at ease that the option exists.

In summary, I don’t mind choosing to be broke for a few weeks. It helps me remember that most of life really isn’t about the money. Happiness is possible with very little and I find it good to remind myself of that periodically.

So what tricks to you use when your are short on cash for a week or two?