Reverse Retirement revisited

Since returning to Canada six years ago, I’ve often joked that I have done my retirement in reverse.

For most of my 20’s and 30’s I traveled, lived overseas, and moved whenever I got itchy feet. I have surfed in Hawaii, raced in triathlons in New Zealand, been to the Melbourne races and lazed on the bank of a river in Switzerland. It was awesome.

When I arrived back in Canada, I had this overwhelming feeling of needing to ‘catch-up’. My old high school friends were married, had homes, jobs and kids. I had exactly none of those things.

In essence, I felt like I had to pay for all the fun I had been having. Financially I was all too aware that I needed to build some wealth and equity fast if I was ever going to retire and have fun again.

So I bought a house in  a great neighbourhood…that was steeped in cigarette smoke and smelled like cat pee. Yes,  I got a great deal.

It took 3 months to get rid of all the cat pee, smoke and kitchen grease. I moved in with a bed sheet as a bathroom door and make-shift plywood kitchen countertops.

When I moved out late last year, the final coat of paint in the basement was almost dry. 5 years of tears, sweat and a lot of hard work later my ‘home’ was ready to be a rental. I Obviously, flipping properties is not my game. I’m ok with that.

On the surface, I’m doing all the right things to satisfy the 2010 Liz – the one who badly needed to feel like she had some roots and could build a life that would allow her to retire in time for some undetermined future date. I got the job, house, car, pension payments etc.

2016 Liz is a little feisty and wants more, faster. She does not want to work another 25 years at 50+ hours per week commuting 15 hours per week. Nope. She wants to be outside, walking the dog, running in races, playing in the lake and generally loving the people she loves.

The two are at odds. Or ARE they? Can we have both?

Can I pay off debt AND build a financial future ahead of the curve?

Can I create an income AND have more time for family?

Others have done it, I think. And if they can do it, so can I. Right?

(Can it be done post 40? I hope so, I need to find those people!).

I feel a little stuck on building the an for the next 6 months – how did you build yours?

Pay Day!(ep 4)

Alrighty, let’s get on to this stupid line of credit:

Total applied to LOC:        $750

Current LOC Balance:       $12,926.43 (Down under $13k!! Woot WOOT!)

Progress on LOC to date:  $1506

Car Loan:                                $16,424.01 -no change, and I haven’t checked the balance again. I’m thinking I will at the end of June for a mid-year check up.

I’m preparing myself for what may feel like some slow progress over the next few months – there’s no ‘small’ debt obliterate or credit card to cut up. Progress might feel slow, but as long as it’s steady the goal will be met.

I can do that. I WILL do that.

Back in February, I set myself quarterly goals. When I was doing my taxes last week (oh, the excitement of adulting!), I had a look at my Q1 goals:

1.Pay off $3000 of Visa debt and leave balance at $0  DONE

2.Move automated payments from credit card to debit card ALSO DONE

3.$1000 in emergency fund THREE FOR THREE BABY! DONE!

Goal setting, it’s what gets this girl moving.

When the Quarter 2 goals were set, I still had the Mastercard debt and hadn’t consolidate it to the LOC yet:

1. Pay off $5803 in master card debt – let’s just consider that amount the LOC reduction goal

2. Get my house rented out – DONE!

3. Figure out how much my overseas pension has it it (more than I thought!) and how much I need to put into it to stay up to date.

Some progress already, what’s not to love about that?

Do you set goals? How often? And how do you keep yourself accountable?

 

Net worth

I’ll be honest, I’ve been putting off calculating my net worth for some time. I kept seeing others doing it, took a look at this amazing list of net worth’s [UPDATE – I’m now on the list!], but worried that because of my debt, my age (I’m no millennial!), and financial re-start in 2010 that my net worth was going to be depressing. I don’t need depressing in my life.

I did know, logically, that I had to get to grips with my numbers. Moving around the world has meant that I’ve left a sprinkle of investments and accounts that, individually, really don’t amount to much. Tracking all of that is a pain-in-the-butt, but I have kept all the mail I receive about each one.

I had all the excuses for not looking at the balances: ‘it’s not going to be enough”, “I’m stupid for not paying more attention”, “I’m embarrassed about where I am in life”. In my head, the nagging voice of adulthood kept telling me to look, understand, and just start.

“You don’t have to be great to start, but you do have to start to be great”

So, I did it. I looked up the numbers, did the exchange rate, pulled the last assessment done on my rental property, looked up my car value, dug out my work pension statement and added it all up.

Hey, that number didn’t look too bad.

And, of course, I had my debt numbers to hand. In fact, I can recall those better than my best friends phone number.

I used the most basic of assumptions: What I own-What I owe = Net Worth. There are arguments about what you should and should not include – should include bank balances, should not include personal residence – but I’m putting those asides and doing it this way for simplicity.

So, how did it look?

Net worth = $94,788.60.

Listen, I’m not going to lie. I should be WAY farther ahead given my age and income earned in the last 20 years. If I was bendy enough, I’d kick my own ass for only getting to the detail now.  I should have double and more to my name.

Did I spend a few minutes wallowing in my disappointment? Yep, sure did.

Then it dawned on me:

I’m in the BLACK!

I knew I would be, but I suspected that it was just tipping over into the black. I am surprised, elated, and over the moon that I’m this close to $100k!

AND here’s the deal – just a few more months of debt repayment and I’ll be moving to $100k-ville.

I’m not promising that I’ll share my net worth regularly, but I’m pretty sure I’ll be celebrating (frugally, of course) when I get to $100k.

 

Productivity and Planning

I keep reading posts about slowing down, being more purposeful, living with meaning while working incrementally towards your life goals. The A-type personality I possess immediately launches into anxiety mode because I’m not slow enough, in most moments feel I have little purpose, am trying to multi-task several life goals, and am taking baby steps towards multiple goals.

However, my personality also lends well to looking for solutions and implementing them. I thought I’d share a few I’m working on , and ask you to do the same.

Getting up at 5:45am – Ok there’s not fancy link to a fancy program for this one. I once read some where (it might have been on www.blondeonabudget.com) that getting up and doing one thing you love before you start your day will help you feel and be successful. My love is running, and so I’ve pushed myself to be on the treadmill 4/5 mornings by 6:00am (ish). While this has certainly helped in my actual running (evidence in actual PB – personal bests- during races), I can’t tell you how much calmer and focused I am at work because of it. I’m not worried about whether my run will get side-tracked because of a work emergency; I can comfortably take time to have a conversation with a colleague without looking at my watch all the time, trying to readjust my daily schedule; I can cook meals at home in the evening. Which brings us to…

Meal Planning – I’m new to having more than just me to worry about for meals, have moved into a home where red meat and potatoes are king and queen, and have control issues. I took to planning the meals, but found that we were still eating out 2-3 times as week. Apart from the cost (hundreds!!) it wasn’t helping my running and digestion. 2 weeks ago I made a goal of going a week without restaurants, posted a menu for review (Kids and pasta – what’s the obsession?!)  and grocery shopped accordingly. 7 days, no complaints, no restaurant bill, and more balanced meals. The meal plan is posted on a white board in the kitchen , which leads to impromptu ‘changes’ according to the kids,….and now neighbours who think we have ice cream for dinner. We’re going for week 3 🙂

The Self Journal  – I’ve been using this daily planner for about 8 weeks. It’s undated and set for 13 weeks of planning, allowing for a shorter time frame on specific goals I do love the daily scheduling it pushes you to do in advance – nightly 5 minute planning sessions is all it takes to identify how my day is going to flow, what top 3 things I need to get done in order to move forward on my goals, and a daily reminder of the overall goal I’ve identified for myself. Along with morning and evening prompts to identify what you are grateful for (coffee shows up an awful lot on mine!).

I’m slow to the ‘wins and lessons’ section, and know that I’m not using the planner to its fullest yet, so I suspect I’ll be buying another one and will be able to use it to greater effectiveness the second time around.

Mint – I’ve connected all of my bank accounts, credit cards and loans to Mint. Mint allows you to set monthly budgets for yourself and then tracks your spending according to those budgets. While that’s been helpful, I’ve found it more useful in two key areas:

  1. Tracking unexpected bank fees, including credit card interest charged. This one feature alone led to the move of my PC Master Card amount to my line of credit, saving a whopping $XXXX per month in interest payments
  2. Provides reports on spending trends and habits. Coffee is the downfall, and when I first connected all of my accounts threw a $345 expense over 3 months at Tim Horton’s in my face. That ended my auto-reload account with Tim’s.

Mint allows me to stop logging into each account (although there are just two, really) and doing a detailed search and analysis for items I need to correct and adjust. The app takes just a few seconds to update all my accounts, and then it takes me no more than 2 minutes to check if I’m on target or if there is something I need to fix.

I moved my phone from the bedroom– My phone has so much capability and functionality, the least of which is the alarm function. I was using it as my bedside alarm, but this led to late night Facebookery, Twitter watching and email gazing. Doesn’t take much to agree that this is not the desired sleeping environment, and let’s not go into other bedroom activities. So, I dug out the old-fashioned bed side alarm from the basement, dusted it off, and moved the phone downstairs at night. I’m sleeping better and feel less anxiety and urge to read emails first thing in the morning. It’s been a good move!

 

I’m always looking for more ways to get my time back – efficiency and productivity allow me to relax where I should, take in the sunshine now that spring has finally arrived, and enjoy the time I have with family and friends.

Tell me, what are you doing to make the most of your day? What’s the best tip you have for productivity and efficiency?

Divorced but not broke(n)

I can’t hide it anymore, I’m coming clean.

I’m divorced.

Yep, the big D. I went through it, survived it, and continue to thrive.

There’s no getting around the ugly of divorce, and sadly money is a big part of that. If you spend any period of time in a marriage it takes time, energy and emotional work to untangle the finances at the end of the day.

When we split, I was on the other side of the world with no family in the country. I had just been made redundant from my job, our house was up for sale (it went for auction…on valentines day. yep, that happened) and I had a looming tax bill as a result of being a contractor.

I knew that I wasn’t going to stay in New Zealand, but I also knew I had to stay to tie things up in order to start all over again back  home.

It sucked, I didn’t want to be where I was, and there is only one person who could get me out of that situation.

During the following 6 months, I hustled hard. I picked up small contracts through contacts I made through my previous job, starting working at a local recruitment office on a temporary basis and even signed up for acting work through a local agency . Dig hard enough, you’ll find my photo on a now-ancient banking flyer. True story!

If there’s one thing I have taken pride over during my lifetime, it’s been my ability to stand on my own two feet regardless where I am in the world and where I am in my career. I’ve never been above taking an hourly call-centre job as a temporary worker in order to make ends meet, regardless of the fact that my previous role was as General Manager and my next role was Senior Consultant. Those are titles that came with salary that allowed me to do more, but the hourly jobs kept a roof over my head and food on my plate and as a result, I would argue, are more indicative of my character.

My retirement has always been a  focus of my personal plan, no matter which country I’ve been living in and who I’ve been living with. I’ve always made sure to keep putting something aside for my later days. Sometimes it’s a government pension, sometimes it’s been private, sometimes it’s both (finally, I’m there! Although, I’m only counting on my contribution. The government has  a dodgy history of money handling).

I recently watched someone turn to their EX partner for financial advice. As in, the person they had decided no longer to be with, did not want in their life, preferred to be single etc. etc. Why on earth would you do that?!

Struggling to understand your taxes? Find a local tax guy person! Google the answer! Ask a friend! Do NOT ask your ex!

Don’t know how to budget? Ask your mom how she did it! Get a book from the library! Ask a colleague! Do NOT ask your ex!

If you can’t stand on  your own two feet, solve your own problems, what kind of success are you feeling? What kind of picture are you painting for the next generation watching you?

I went through a summer a few years ago asking all of my girlfriends two questions:

  1. What are you doing to prepare  retirement?
  2. Are you saving for your kids college? If so, how?

What was alarming was the response to question one was so…so…unclear. Very few, if any, had any clear plan to their personal retirement. They could speak to what their husbands or partners were contributing to at work, or what they thought was being done, or identified that they should probably ask. But they didn’t KNOW.

Kids education? All over it! For the most part, they knew how much was in their plan already, how often they put money into the  plan, and how much would be available for their kids when (and a big IF in some cases) their kids were ready for school.

Ugh! Why do women do this?! If you don’t know how you’re going to retire, figure it out now! I don’t wish you ill, but if you end up on your own (hello! been there, done that!) you need you own plan. Can it be connected with your partners? Sure! But KNOW the DETAIL.

You can’t complain when either a) there’s not enough money in the pot to retire when you want to or b) there’s no money in YOUR pot if you end up alone.

My own strategy has 4 components, 2 of which are in action, 1 will be shortly, and the final still needs some research:

  1. Company Pension – the biggest part of the plan so far, if only because they match my 6% (of gross salary) contribution
  2. Rental Property Investment – I got a great buy 6 years ago, and with some sweat equity made some serious $ equity. Couple that with a positive cash flow (tiny, but growing), and this one feels good.
  3. TFSA (Tax Free Savings Account)- once the debt is paid off, I’ll max this to the $5500 limit annual
  4. RRSP (Registered Retirement Savings Plan)- maybe? I don’t know yet. Income from this is taxable when you get to that point, although you get a tax rebate during your working years and are paying in. If my retirement income is higher than my working income (hey, it could happen!), then I’ll get dinged at the high rate.

Take control, understand the plan (or make one!), and let compound interest carry you into a world where weekdays and weekends blend together (so say my parents).

What I’m saying here is that no matter where you start, you have to START to make anything happen. The only person who is in control of that is YOU, not your partner, not your employer, not the government.

My journey is far from over, but after 6 years I can say that I’m amazed and proud of how far I have come. I’ve asked and received help from family and friends who have poured their love and support my way. I didn’t get here on my own, but I am solely responsible for the path I’ve chosen.

 

Pay Day (ep 3)

Hallelujah , after a long week of being on the road for work, pay day is more welcomed than ever. I can’t remember the last time I got to the end of the week and felt so relieved to sit down for just a few minutes. I’ve been planning for days (again) on where my dollars need to head for the next 2 weeks.

Here’s the summary:

Total applied to LOC debt:          $857

Current LOC debt balance:         $13,613.62

Progress on LOC to date:                   $756 – if you’re wondering why progress isn’t more than the $857 applied, welcome to the dark, dark world of interest. Blech.

Car Loan:                                          $16,424.01 -no change, but I haven’t checked the balance in the last 2 weeks since I’m paying the standard regular payments until the line of credit is dead

I’m so happy that I’m below $14k on the line of credit, let’s have a little happy dance. I was really hoping to be able stretch my pennies a little further and get below the $13k mark, but sometimes a girl just needs to get rid of the grey and a car needs an oil change. It is what it is.

The car loan progress will remain slow as I pay just the agreed amount for the loan until I kill  line of credit.

I’ll admit that I cheated a little bit to make the extra payment – in that I worked hard over the last 5 years and just got a nice little raise for a move to a new role last year. I haven’t increased my spending in the last 6 months so the additional income gets added to debt repayment.

Wondering where I have penny pinched in order to make an additional $857 towards my debt?

  • Called my insurance agent to review both my home and car insurance
  • Stopped my magazine subscriptions – I didn’t really have time to read them in full anyway
  • I haven’t purchased any clothing since January – no new running gear, work clothes, or (gasp!) shoes. Something switched in me in January, and new clothes just became extra clutter around the house.
  • I cancelled my auto-reload Tim’s card – this alone saved me $340 over 3 months!!

This doesn’t add up to $857, but it sure helps.

The big change is  in my own home, which is now a rental property. April is my first month with tenants, and by May I’ll have my first profit cheque. It’s not much, but it’s a positive return. Last pay cheque saw me paying the last of most of the utility bills, which were higher than average given some of the ‘closing costs’. I budget for utility bills every 2 weeks, whether they are due or not, so without those there was a little more cash in the bank this week.

I’m already counting down to next pay day, and writing the list of things I need to do before then. I need a side-hustle, running doesn’t pay squat when your’ as slow as I am!

Relationships and Money

Ugh. I know, you don’t want to talk about it. It’s not as good as a first date kiss, or a talk-all-night date, or a goofy smile you can’t wipe off your face. It’s not….sexy. You know what’s less sexy? Paying for a dinner neither of you can afford, and then arguing about it later. Mood. Killer.

I have a less than ideal history when it comes to relationships and money. Part of this may be due to my incessant need for control, some latent self-esteem issues, and people who have taken advantage of both.

Don’t feel sorry for me, I’m over the self-esteem issues (yay for age, experience and resulting wisdom…just wish it didn’t also come with grey hairs). And those people who thought they could take advantage? BUH-BYE, kicked to the curb years ago.

The need for control is a beast I’m trying to tame.

Money is a leading cause for relationship problems. Every individual has their own way of viewing money, of using money, and their own money goals. Put two individuals together, and you’re bound to get some disagreements along the way. I know this first hand, and the result can be damaging to the relationship and the finances. In my case, both failed (again, don’t feel sorry for me, I’m super happy now!)

Looking down the road, I’d want to get it right the next time around. Money shouldn’t be the reason a relationship fails, and really it isn’t. It’s the communication about the money that leads to the failure.

I can’t say it enough: “Communication is the problem 99% of the time, and the solution 99.9% of the time.”

If you’re starting out, I think there are three key approaches you could take.

  1. Keep totally separate accounts

You have yours, they have theirs. When it comes to bills, you each pay 50% of whatever is owed. Rent, internet, heat. Whatever it is , 50%

2. Keep separate accounts and have a joint ‘house’ account

You have yours, they have theirs. And you both have a join account where you deposit an agreed amount monthly to pay for typical house expenses.

The best example I have of this exists in my own family. They each put half of their paycheque into the joint account, and from that they manage their household. It means that the ‘half’ isn’t the same, but the commitment is the same from both parties. And as a result, they are both living in their means, and get to retain some ownership of the ‘fun’ money to do what they want with. Invest, buy shoes, pay for vacations, whatever.

3. Keep one account held by both parties

This is the ‘if we’re in it together, we might as well be in it together’ approach. Should be simple: one chequing, one savings, one investment approach. We know where we’re at, and where we want to head.

Note: not one of the options above talks about ‘hidden’ accounts. DON’T DO IT. Just because accounts are separate, doesn’t mean you shouldn’t be talking about the balance with your partner. If they love you when you fart, they’ll love you when your bank balance takes a hit. Fact.

How do you start the conversation? Make the space and time to have the conversation when there is nothing urgent going on. Do it earlier in the relationship than later, even better if you have the conversation before you’re living together.

Already loved up AND shacked up? Pay the baby sitter, call the restaurant, and make it happen. Put the time aside so that you are not paying bills, picking up kids and doing laundry all while talking about your money plan.

If it sounds a little like a date night,  it should be. If you’re doing it right, by the end of the conversation you’ll feel closer, have a better understanding of your partners view of money, and the start of a joint plan on how you’re going to use your money to build the life you want together. Who knows, maybe you’ll even end up with a bit of pash-rash by the end of the night.

Sure, you’ll need to put pen to paper and share your numbers eventually, but start with the WHY of your plan and the rest should be easier. I’ll let you know 😉