The CPP/EI Max Out Raise

Recently while looking at my pay stub. I realized I'm closing in on maxing out my Canada Pension Plan (CPP) and Employment Insurance (EI) contributions in the next few months. So the question becomes what I'm going to do with my increased take home pay for the last few months of the year?

I thought about saving it towards my early retirement plan, but instead I think I'm going to bank up the money for something else. I haven't decided what exactly, but it will be something for my family or myself. Perhaps some extra money for a vacation or a renovation to the home.

So why am I planning on spending this little pool of extra cash? Well first off I didn't plan for it anywhere so it is just an unexpected bonus. I was already a good little saver early this summer when I got a small bonus from work and put it directly on my RRSP account. So I think it is time to get some balance and take this little 'raise' and spend it.

After all we can't be good little savers all the time. It drives you a little crazy after a while if all you do is save. So don't ever feel bad about the occasional complete selfish moments in your life. We all have them at some point.

Work to Live, Not Live to Work

Perhaps it is just me or have you noticed the vast majority of people have appeared to lost their minds around their jobs and their personal lives. We book every second of every day with things to do and people seem to forget how to sit down and relax.

Currently I’m out east and I was discussing some of my co-workers with one of local people in the office. I heard the story of the older gentleman with a nice office on the top floor. Basically he lives to work, he works on the weekend and late during the week. When he isn’t at the office he is constantly on his crackberry checking email. If you asked what he did outside of work he would give you a blank stare. My co-worker just commented how we would likely find the man dead at his desk one day. That is a sad life. Would anyone even mourn him longer than a second or two? Would his tombstone say, "Here lies X, he was a good worker"?

I prefer things a bit different. I don’t do overtime unless it is a make or break project that has to be done and then I only do the minimum required. I believe that being a dad is the greatest gift and challenge in my life and I won’t let anyone do that job for me. I believe the dishes can wait and the bed can be unmade if I get more time to play with my wife and kid. I believe the happiness moments in my life didn’t involve any money. I believe to truly make a difference in the worls I need to do more than write a cheque to a charity. I believe that people should stop talking and start listening to each other. I believe that people are more important that things. I believe that everyone should spend at least five minutes of each day in complete silence doing nothing. I believe in living over working.

What do you believe?

Long Weekend Plans

Today finally marks the start of the long weekend here in Canada. More importantly it marks the beginning of gardening season. So this weekend I'll start planting the garden in hopes of getting lots of nearly free organic food starting in a month or so. Afterward I intend to sit down and do a lot of nothing for at least one day this long weekend (with the exception of turning on the BBQ and finding a cold beer).

So regardless of what you have planned I highly recommend you put down that calculator and make sure you get outside and enjoy yourself. After all we spend so much time here discussing money that at times I think we forget about making sure we have some fun too.

A quick reminder that I will not be posting on Monday due to the holiday. Have a great long weekend.

CD

Don't Retire Early?

During my usual tour of blog posts last night I came across a post by Saving Journey entitled "Don't retire early!" Of coarse the title got me so I had to read on. Here is a taste of the post:

Personally, I find that my work is enthralling and rewarding. I am very passionate about what I do and I keep very abreast in my industry. I participate in conferences, and I basically look forward to the work that I do nearly each and every day. I've always enjoyed my work for the 10 or so years that I've been doing it. So why the heck would I want to retire early? Consider this:

• Early retirement is a risk to your future earnings - what if you retire at 45 then decide 5 years into your retirement hiatus that you want to work? Will you be happy with that Wal-Mart greeter job? ;) You greatly risk your future earnings potential
• Early retirement likely means a decrease in your disposable income both in retirement and today

Overall it is not a bad argument. If you love what you do why stop working. My counter argument is simple. Most people don't love their jobs. If you want to find out if you love your job here is a simple test: If you were not paid to do you job, would you still go to work tomorrow? If you can truly answer yes, congratulations you do love your job and you are part of the 5% of the population that does love their job. For the rest of us, it's a bit different.

Don't get me wrong I do like my job. Some days I would even say I love it, but I find my life so limiting being stuck in that job for 40 hours a week. Also I don't buy into the idea I will want to go back to 'work' after I retire, because who said anything about me not doing something that earns money in retirement. I just don't have to be worried about working a set schedule and I do the jobs I want to rather than needing to.

So I do find happiness in most of my life, most of the time. I don't expect early retirement to be a silver bullet, but rather the freedom to purse anything I want for as long as I want without being tied to the wage that goes with it. That is what I'm buying in my mind with that 'decrease of disposable income.'

How I Feel About Money

It occurs to me that despite me writing about personal finance and retirement every week day for almost six months I have yet to give you an idea of how I think about money. So in the interest of getting to know the inside of my head here we go.

Money to me isn't a status symbol or a motivation to do much of anything. Rather I think of money as a tool to exchange my time for something I want/need. I also manage to keep myself very grounded by firmly separating my wants from my needs. Needs are only food, water, shelter, safety and love. The rest of the world could blow up and vanish and as long as I had those things I could still be happy.

Wants are a bit more tricky in the regards they come in two main forms: the 'I want it now' and 'I still want it later.' The most dangerous want is the 'I want it now' since it comes up in the middle of the mall when you looking at an item. I find this want is just a temporary reaction to the item in question. I really don't even want the item beyond the moment when I think I want it. So most of the time, unless its a great deal, I walk away from the want and see if in a week it has turned into 'I still want it later.' Then I will often go buy the item.

The other weird thing I noticed about wants after I started to take better control of my finances is that some of them are just a habit rather than a real want. For example, I used to always stop and buy a drink when I bought gas for a road trip. Why? I don't know, but I used to do it even if I really didn't want the drink. I would buy one just because of the habit. Now I solve that issue by taking along a container of water and sometimes a coffee from home on a road trip.

The other thing I've learned about getting your finances into shape is after a while you start to have to let go of things. I used to check my bank balance/investments on a daily basis. Now I find it a waste of time. I already know roughly want is going to be in my bank account on any given day, so why check it? Then the investments, since changing over to index funds, I know that the markets swing up/down so I don't care as much how I'm doing on any given day, but rather the longer term trend. I'll learning to let go and just live the rest of my life.

The strangest thing I've learned about money is how yes it touches most of your life, but in the end it doesn't produce any long lasting happiness. I remember the effort I put into something far better than the money I spent on it. I remember the company of great meal more than the food I bought. It's never really about the money I spend in the end, but rather what I'm doing and if I'm enjoying myself that matters.

So that's my little rambling tour of how I think about money. What are your thoughts?

A Short Vacation

As with any well balanced life, everyone needs to take a vacation once in a while. So with this in mind I will not be posting over the long weekend. I'll be back with a post on Tuesday next week.

Take care of yourself and try to spend one day this weekend not thinking about money. I know that's a weird suggestion from a PF blogger, but we have to remember the other half of the money equation: happiness.

CD

Reader's Question #4

Nancy left a great comment on Retire Happy - Part III, which I thought really should have a post to reply to the questions.

Q: I enjoyed your ideas. Kinda made me think: what if we all did way more of that? How would it affect our spending? -ie., if we regularly really absorbed, drank in the moment. Would we feel less compulsion to spend?

A: Speaking from experience, working on being happy has been wonderful to my quality of life overall. I've also noticed that my spending naturally dropped off a bit as I stopped buying things that really didn't generate much enjoyment for me and started spending more time with my family.

Perhaps the most useful thing that has come out of my work on being more happy is I don't obsess about savings and retirement planning as much. Retirement is no longer this thing in which my life will instantly be better, but rather now just the next phase in my life after my current one. You have to remember retirement is not a magic pill that will solve all your current problems in life. All retirement allows is the freedom to choose what you do with you time without needing to worry about the monetary compensation. Concentrate on being happy in your current life and you will make your retirement the next phase of your life rather than an escape from your current life.

Also I've come to realize that retirement itself is just a title and can mean many different things to different people. For some people retirement is just a scale back of their current work load, others a change in career and for some a complete absence of work. There is no one answer.

PS: The site over haul is basically done. I've moved some things around and added a new section to the left sidebar near the bottom called 'Tools.' Here I'll be placing some links to useful retirement information and calculators. If you have an idea of something I should add please let me know with a comment or email. Thanks everyone for your patience during this over haul to the site.

Retire Happy - Part III

In Part I we covered making a dream list, while in Part II we looked at how your spending your leisure time. Today we are going to take a lesson from young kids. Yes that's right, kids. Why? Watch a young kid at a park or anywhere for that matter and you will notice they seem happy most of the time. So how do they do it? Simple the just live in the now.

They don't worry about what's happening tomorrow, next week or even the next 10 minutes. They simply just enjoy what they are doing right now. So how can do the same thing? Concentrate on your what your doing during your leisure time and shut out those thoughts about everything else such as: "What should I make for dinner tonight? Did I pay that bill? I should look at the tire on the car. Did I forward that email to my boss about that project I'm working on?"

I know this sounds a bit strange, but it really does work. Think back about the last time you were really enjoying something. Chances are you were thinking about much of anything else at the time. You might also notice that when you are really enjoying an activity how quickly the time passes, which is also a good indicator that you were concentrating.

So how do you improve your concentration? That is a entire book on itself, so I'm not going to get into too many details here. I'll describe a method that works well for me. When I'm doing something that I want to concentrate and I get a stray thought. I merely note that it happened and then gently push the thought to the side. Keep doing that for every stray thought and after a while you will notice the number of stray thoughts will keep dropping when you doing things. This does take a while, but it is worth it in the end.

PS: You might have noticed the site is a little bit messed up at the moment. I'm trying some modifications to my template which has had a few unexpected changes which I'm trying to resolve this week. Don't worry I have a back up of the original template so is I can't get this one working right I will switch back by next week. - CD

Retire Happy - Part II

Alright, you've started your dream list from Part I. Good job. Now it's time to look at your present life and see how your spending your non-work time. Think back about the last twenty four hours. What did you do when you were not at your job?

In this exercise you are trying to isolate your leisure time, so make broad categories for everything else and try to track everything to the nearest half an hour. With you leisure time, stop and replay that time in your mind. Did you enjoy it? How much: a little, some what or for not being sex that was really good? Next try to define if it was passive or active. Passive leisure time takes no input from you (for example, TV or a movie). Active requires you to do something like reading, writing, talking to someone, or building something. Basically most activities outside of TV or a movie are active.

In the end you will have a list like this:

5:00pm to 5:30 Go for a walk with family (really good, active)
5:30 to 5:45 Prepare dinner
5:45 to 6:00 Eat dinner
6:00 to 6:45 Watch news (some what good, passive)
6:45 to 7:30 Read Blogs (some what good, active)
7:30 to 8:00 Put kid into bed
8:00 to 9:00 Play computer game (a little, active)

Now isolate out how much time you spent on passive activities. How much did you enjoy it? If it only ranked 'a little', this is good area to look at. Otherwise, some passive leisure time is good for you, but just make sure your actually enjoying what your watching. If you only like it 'a little', you might want to consider cutting back on the passive and dropping in more time on some you did enjoy a lot. Then you do the same analysis of your active leisure time and start to drop out those items you didn't enjoy that much. Depending how much time you free up you might be able to start working on your dream list.

The above exercise is just to show you where your time goes. We have time management training for our work, but why don't we use that to improve our happiness with our leisure time?

Retire Happy - Part I

In retirement planning there seems to be an abnormal amount of time being spent on figuring out how much you need to retire and not nearly enough on a much more important question: why do you want to retire?

For everyone the answer varies: I want more time to spend with the kids, or more time to travel, or write a book or even just to do nothing. In the end all the answers come down to the same thing: we are looking for more to our lives than just our jobs. We are basically looking to have a happier life.

Yet I keep hearing stories about people who work hard and get the gold plated pension only to find one year into retirement that they hate it! So what happened? They planned their money to no end and complete ignored the question of what are you doing one month after you have retired. If you don't know the answer to that question you better go back and rework that retire plan of yours to include some happiness.

But how do you generate happiness? Ah, that is a good question. Perhaps a better question to ask right now is how can I generate more happiness right now. Why should I even wait until I'm retired to be more happy?

The first step to happiness is rather simple. You have to remember how to dream. Not your typically night time dream, but rather day dream. It's playing that 'what if' game. What if I didn't have to got to work today? What would I do? Let your mind wander, trend down memory lane and recall your childhood dreams. What if you had unlimited time and money? What would you do? Then start to write it down. Your goal is to have a list going of things you want to do: travel, learn a language, learn a new skill or hobby. You don't have to be able to do them right away, the list is only to help you plot your dreams.

Although this seems like a simple exercise some people find it hard to do. A soul crushing job and other responsibilities can suck the life out of you and leave you empty of dreams. It's time to remember how to day dream again. I'll see you tomorrow as we keep looking for happiness.