Reader's Story: "What Do You Really Want?"

A while back I had the following comment by Turney left on my post about Living Below Your Means.

(LBYM)What a quaint idea! All kidding aside, my husband and I have done this all our working and non-working lives and we've been able to do all sorts of things most people only dream of. While we fully retired when we were 50, we're now 55 and we've been semi-retired since we were 40. We are very conservative investors but pay minimal tax due to those dividend paying stocks and limited withdrawals from our RRSp's. Consequently our investments are growing not decreasing. It's too bad more investment advisors don't give you the scoop on actual taxes payable with a conservative portfolio. Forget those mutual funds that have high MER's and trade stocks incessantly.

Another key to LBYM is that as Canada is one of the richest countries in the world, we can live very easily with items that have been discarded by people. Second-hand stores are abound with wonderful almost new items. And you are helping the environment. We have a lot to learn from our parents who never threw anything useful out.

It's all about making choices. What do you really want? You can't have it all but you can have many adventures. Last winter, we took a month and travelled by local bus through Mexico at for the cost of one week for two at an expensive resort. What memories!

In response to this I asked Turney to provide some more details about how they semi-retired at 40. She was kind enough to provide a wonderful story that I hope you will enjoy.

First, we paid off the mortgage on our first $28,000 house in 5 years. This was done by living on one income , mine, even though I only worked as a piano teacher at home. My husband was only taking home $150 a week at the time and the mortgage was $250 a month at 13% interest rate. We then saved for our next home for 3 years and bought a nice 2 bedroom bungalow in a small town. My husband could walk to work , so we only needed one small car and I worked at home. No babysitters for our son, either.

After buying the new house, I went to university and got a 4 year degree in 3 years and then my C.A. designation. Commuted with friends and bought very little. However, we always traveled, usually camping. Since our 40's we have taken extensive trips. I worked part time and my husband was now working part time also.

Our hobbies or interests are very inexpensive, hiking, biking and in the winter cross-country skiing.
We now travel in the winter but our 5th wheel is 30 years old and in very good shape. However, we carry kayaks, bicycles and a small motorcycle. We use solar panels so that we don't need to pay exorbitant camping fees. The total cost of a Dodge truck, 5th wheel and all our equipment is under $25,000. and we will probably be able to sell the 5th wheel for what we paid for it when we decide to sell. My husband is very capable of fixing and maintaining what we own, so we have saved a small fortune over the years. I also love cooking, so we eat out very little.

The C.A. designation has enabled me to keep our taxes low and choose the right investments for our situation. Dividend paying stock and capital gains split between us keep our income very low.
We live very well for under $30,000 a year. But don't think we have really sacrificed everything to reach this goal. We had had a lot of fun too even when we were saving.

It really means that you need to keep your expenses as low as possible. Living close to our work really helped us. Having inexpensive hobbies helped us. Travelling on the cheap helped too. Being self-sufficient was a huge help. No debt was a big factor. Waiting and saving for what we wanted was very important too.

Hope I don't sound too preachy. Good luck to you in your endeavour. I'm sure it will work out if this is what you want.

-Turney

So there you go folks a story of how anyone can really retire early. All it takes is answering one question, As Turney said, “What do you really want?”

Interview with JD Roth of Get Rich Slowly

I recently had the chance to interview J.D.Roth of the incredibly popular personal finance blog, Get Rich Slowly.

CD: Get Rich Slowly is considered one the most successful personal finance blogs out there with a staggering 24,000+ subscribers and 8000+ visitors daily. What do you think makes your blog so popular?

JD: I don't know. I've wondered this myself. I suspect that it's because I mix things up. I post some moderately technical things ("how to open an IRA"), but I also post anecdotes from my daily life. I post about bank interest rates, but I also post tips for hosting a garage sale. It also helps that I post frequently, and that I write well.

Another aspect that probably helps is that I'm willing to engage my readers: I post questions from them, I reply via e-mail, etc. I really do try to make Get Rich Slowly a site that can deal with readers' personal finance issues.

CD: Your blog often includes personal references to your own life and your own struggle with debt. Do you ever have the problem of keeping your personal life separate from your blog because of this?

JD: Interesting question. I'm not a private person. I've always been open and public. Obviously there are certain things that I'm not going to share with anything but my wife, but my personality is such that I don't mind sharing what happens in my life, even when these things are bad. I'm not going to publish my social security number are publicize my bank accounts, but I'm perfectly willing to talk about the sorts of financial choices I make.

CD: You post with an almost inhuman output (for example 10 posts in the last 5 days). Do you find that pace exhausting at times, if so how do you deal with feelings of burnout?

JD: ABSOLUTELY! It is very exhausting. This is probably the top issue I've wrestled with over the past few months. My wife and many other people I respect have suggested I cut my posting rate in half, yet my gut tells me to continue at the present pace. But continuing at the present pace is causing some degree of burnout.

When I experience fatigue, I've found it's best to just get up and do something else for a day or two, something completely unrelated to money or to personal finance. For example, one night when I was feeling burned out, I went roller-skating. It was a cathartic experience. For hours I didn't think of my writing, and when I came back the next day, I was more productive than ever.

CD: On top of the excellent blog you have also started a forum for your readers recently. Why did you start the forum and are you happy with the results so far?

JD: I started the forum for several reasons. First of all, I was sinking beneath a mass of e-mail. As you can tell from how long it took me to reply to this message, I'm buried in the stuff. I'm beginning to dig my way out, and the forum is largely responsible. When people write with questions, I can now shunt them to the forum. It's great.

Second, some of my readers were asking for more information. They wanted to talk about personal finance even more. A forum seemed like an ideal place to do this. Finally, I was hoping that the forum might generate some good story idea. So far it's worked like a charm!

CD:Your posts are always so well written and edited that I have to ask if you are considering writing a Get Rich Slowly book? If so, when would you like to have it out?

JD: Yes, I've considered a Get Rich Slowly book. I don't have any timeline for it. The real problem is deciding what to write about. There are so many personal finance how-to guides that it's difficult to separate oneself from the pack. I do actually have a couple of unique angles in mind, and I'd like to pursue them. Maybe when I cut back to part time at my day job I can begin to focus an hour a day on the book.

CD:What are you long term finance goals? If they include retirement, when do you want to retire?

JD: My single long-term financial goal is to generate enough semi-passive income that I can semi-retire. I know that's vague. What I mean is that I want to be generating enough income outside a traditional job so that I don't have to hold one down. This basically means developing my writing to a point that I'm able to live off the income it generates. When I reach that point, I can quit and stay home to write all day. This isn't the same as retirement, but it's close enough for me -- it's doing something that I love every day.

CD: Personal finance as a topic tends to have an almost unlimited amount of ways to present the same core information. Do you find it difficult to come up with new ways to examine those core principles such as living below your means and index investing?

JD: Excellent question. Yes, some days I find it difficult to find new information to present, or difficult to present the old information in a new way. On other days, though, I think that I'll never run out of things to write about.

CD: Do you have any goals for the Get Rich Slowly blog?

JD: I do. My aim is to have 100,000 subscribers and 1,000,000 monthly visitors by the end of 2009. Those are lofty goals, I know. But they're also really ancillary to my primary aim. Mostly I just want to write about money in a way that helps others. I had a hell of a time with my finances over the past decade, and if there's anything I can do to help others avoid the same sorts of trauma, that pleases me. My real goal is to be of service to others.

Oh yeah -- as I mentioned, I would love to be able to make my living from my blogs, whether just GRS or all of them combined. I'm on my way there, but still have a ways to go.

CD: Well thanks for your time JD. It’s been a pleasure chatting with you.

Million Dollar Journey is Taking Over the Blog World!

Catchy title hey? Canadian Dream gave me, Frugal Trader of Million Dollar Journey, the honor of taking care of his popular blog during the week that he's away. I've been following Mr. Dream's blog ever since it started and I must admit that I'm a big fan. What's not to like? Early retirement is a popular topic as most people in the working world want to leave the rat race well before they are eligible for old age security (65). With Canadian Dream being in his late 20's with a current net worth of around $200,000, there is no doubt that he will reach his goals. Especially if you're as stingy frugal as him (hope he doesn't read this).

We have a great week of articles lined up, among them include interviews with popular personal finance blogs and other personal finance ramblings. If you have any questions, leave them in the comments, or you can contact me directly by visiting my blog.

Frugal Trader
MillionDollarJourney.com

Net Worth - June Update

How the time flies, it seems that I just did my last update. Anyway here we go.

Assets
House $294,400
RRSP $12,800
Old Work Pension $11,700
New Work Pension $1300
Wife's RRSP $5500
Wife's Investment Account $5000
ING Savings Account $6800

Debt
Mortgage $147,500
Line of Credit $0

Therefore my net worth now stands at: $190,000. Overall an increase of +$58,500 or 44.5% from my last check up.

Before anyone gets too excited I do need to remind you my house value has shot up a lot in the last four months which is driving these insane increases. I decided to use my home value as market value -8% to account for closing costs and fees if I cashed it out. That way I've got a set formula I use to determine my house value rather than just taking a conservative guess.

For those of you who may be doubting my local crazy house market I would like to point out that I know someone whom just sold their home for an over $100,000 profit after owing the house for just seven months and trust me when I say they just painted it, added some hardwood and put in a new furnace. That's it, that all they did. Talk about lucky timing that they previously bought an investment condo at the same time as the house and can move into that.

The result of all this is I'm 2.3 times my net worth from Dec 2006, which is almost completely driven my house value. If you strip out the house, I'm only up $3200 or 8% from April's net worth to now.

Overall the number looks good. I have to admit I'm curious to see how far this housing market will shoot up before crashing down. Could I end up living in a $500,000 house by the end of three years? If so it will be interesting, but in the mean time I'll just enjoy the ride.

Upcoming Vacation and Idea

Well folks, sorry for not having your regular wandering reading post this week. I've been very busy lately as I'm trying to clean things up so I can head out on my vacation for the next two weeks starting on this Sat.

The good news is I got someone to look after this blog next week while I'm gone. Frugal Trader from Million Dollar Journey has agreed to look after things. I'm putting together several posts so next week you will have interviews from J.D. Roth of Get Rich Slowly and the Money Diva from A Canadian and Her Money plus what ever else FT wants to use out of my list of draft posts. If you ask nicely he might even write a guest post for you all.

The week after next, I'll be around somewhat. So that week the posts may be a bit erratic as I'm planning on doing some renovations around the house.

Now that you are all informed about my vacation plans, I've got an idea I want to run pass you my loyal readers. I've been approached to be part of a group blog on personal finance, since this is only in the idea stage, I'm not going to name with whom. Yet if I joined the group blog I would likely stop posting here and merge this blog into the group one. The idea would be to provide great posts from several writers on a wide world of personal finance all on one blog. You would still get posts daily, but I would likely drop back to just three posts a week. So what I would like from you is your opinions on the idea. Do you love it, hate it, or don't care as long as I don't stop writing somewhere? Thanks in advance for your feedback.

Communication Before Retirement

If your married you know that some days despite your best intentions you just forget to mention something to your spouse once in a while. Typically in my case, it is a fairly minor issue. My wife found me an interesting article while I was gone along those lines. It was about how well couples communicate about their retirement plans or their lack there of.

In a survey done with over 500 married couples with at least one spouse just about ready to retire they were both asked the same questions and it was found each spouse often had different ideas about some fairly basic issues around retirement (For your reference the average age of those surveyed was 53 to 54 and they on average were married for24 years).

For example, more than 1/3 of those couples did not know when the other wanted to retire. They also found more than 2/5 of couples give different answers on weather one spouse will continue to work in retirement. Also more than 1/3 expected a different standard of living in retirement.

In my mind this is just shameful. If your married you have to discuss your retirement dreams with your spouse. I know I do discuss it with mine, but she is still skeptical if we can retire by my 45th birthday. That's fine. As long as she know what I would like to do in a general sense and understands the standard of living that we are going to have in retirement.

A good example of this communication was my wife let me know not to long ago that she wanted to travel more in retirement. I was fine with this, but I wanted to know how much traveling she wanted to do. So after discussion we came up with the idea of the travel slush fund. She would earn a bit more with her daycare and we would put the money away and it would be our slush fund for travel. Overall it will be enough to give us some great trips, at the same time there is a finite amount set aside, so I know it won't mess up the rest of my retirement calculations.

So if you haven't yet. I suggest you sit down with your spouse and talk about your retirement dreams. You might find out a few surprising facts.

How I Bought a New Laptop for $140

Recently I had to spend some time out east away from my family. I wasn't too happy about the deal, but it did have one interesting fact to it. I got paid a flat rate for my food expenses of $50/day while I was gone.

This provided an interesting opportunity for me. How much could I save from that daily money to make a little extra profit on the deal? So after moving to a hotel room with a little fridge and microwave and finding out the hotel offered a free breakfast. I found a grocery store and bought some items for making lunches and a few frozen dinners for a couple of suppers. I ate very well overall and even got a few beer for my fridge. I even managed to walk a lot and lose a couple of pounds while I was at it.

Just before leaving on this trip I decided to get a new laptop to assume myself with in the evenings. Hence the reason you had blog post for the last three weeks. I bought a floor model which had a tiny damage in the case. So I got a nice system with a wide screen for just $800, which included taxes and a two year extended warranty.

So after saving my butt off for three weeks on food. I managed to save $660 so after that my new laptop cost my just $140 of my money. I still didn't like being away from my family that long, but at least I got a great deal on a new laptop out of it.

Living in a Hot Housing Market

Recently I ran into my real estate agent who sold me my house last July. I like the man because he is honest and to the point. He doesn't pull your chain or embellish the situation into something it isn't. So with all this in mind, he is one of the few people I feel that can honestly tell me what my house is worth. He told me and I had a hard time standing up.

According to him, and assuming I haven't done much to the house. I could list and expect the sell my house for at least $320,000 in the current market. Which would mean if I sold and cash out of this market I could, after all the fees, make $100,000 profit on my house or a 250% gain on my initial investment in just under one year.

I was excited about this information for exactly 30 seconds. I justed wanted to enjoy that feeling, but I know that in reality that information means nothing. I don't want to sell my house and even if I did I would have to buy back into the same market meaning I would not make much if any profit, since the profit on the first house would just go into the second one.

So my suggestion to anyone who lives in a hot market is to ignore it as much as possible unless you are selling and moving to another cheaper market. Yet for those who like to speculate in real estate a hot market does provide an interesting option to flip a house. If your even entertaining this idea, I will warn you. It is not an investment, so don't think of it that way. You are just gambling with a house.

PS: Sorry for no post last Friday. I was tied up with the family.

Wander Reading #5

Recently I had a post about vague retirement studies and I asked for someone to provide a link to a recent one if they find it. Well one reader,Richard Cleaver, was very kind and here is that study. I only got to page three before rolling my eyes. They keep their wording very vague through the report and then don't provide any backup data in an appendix to show how they arrived at the numbers. In my line of work if you presented a report like this you would be fired by the client.

Yet here are a few links around this study from other blogs, in case you missed them.

Canadian Capitalist provides two posts on this study. See #1 and #2.

Canadian Financial Stuff adds his thoughts on it all here.

Last, but not least, Canadian Financial DIY, weighs in with his thoughts.

If I missed anyone else, please leave a link in the comments. Also a reminder that tomorrow's post will be up very late in the day as I'm traveling for most of the day.

Ok I'm Ready to Retire, Now What?

If your one of those people getting very close to your retirement date, you are very lucky and perhaps a bit over whelmed by it all. After all, how does one actually retire? Well before you hand in your notice to your boss. I suggest a few things you need to get in line.


Make use of any health benefits you have currently, because you won't have them in retirement. So see your dentist and get everything that needs to be done. Then your optometrist and also make sure you get a full physical with your family doctor before leaving work. Also talk to your doctor about getting a longer perception if you take something regularly. You basically want to max out every benefit you can before leaving.


Apply for any lines of credit, credit cards or any other type of credit you might need for the next twenty years as your income is going to drop and that doesn't look good when applying for new credit.


If your old enough to get Canada Pension Plan and/or Old Age Security you want to apply about six months or more before you want that first cheque.


Start planning your time in retirement. What hobbies are you going to do? Are you planning on some work in retirement? If so, doing what and where? Ask yourself a lot of questions.


Avoid handing in your retirement notice early. You might be cutting yourself out of a nice early retirement package or other buyout if it comes up before you leave.


Once you have given notice make sure all your company paperwork is up to date, especially understand what you can do with your pension money. Also if you have any stock options, make sure you understand what happens to them before you leave.


Last but not least, make sure you know where all your money is and you might want to consider adjusting your portfolio to a much more conservative setup focused on protecting your capital. After all once your out of work you don't want a stock market correction to wipe out half of your retirement funds.


You might also want to consider getting any expensive home maintenance issues dealt with before you stop working. The last thing you need to start a retirement, is a renovation job that goes way over budget.


Well that's my list. If you have something to add please share.

Extented Leave from Family

During the last few weeks I've recently got my first idea of what an extended leave from my family feels like. I have to admit I'm not crazy about it so far.

To give you all some background I have travelled a lot with my various jobs before this, but never for this long of a period. I'm going to be just shy of three weeks when I get onto a plane later this week (by the way, this is your fair warning that Friday's post will be up very late). Being away has never bothered me that much before until this time. Why? I have to admit I think it has to do with the kid.

Before leaving my wife was difficult, but I knew she could handle it. Now she has been stuck playing single parent for the last few weeks and I feel guilty leaving her to handle all of that. Also I find after being home for a long period of time that the being away is hard for me as well. Overall it just isn't worth the lose of my personal time being away this long.

So in light of all this I've been laying some ground work with the bosses and the IT people about doing remote projects. As of right now almost everything I have done down here that needed to be done in person could have been done in a week. After that they could have saved a small fortune and shipped me home early and worked out of my Regina office. Phone calls, email, internet and scanning documents could have easily covered the rest. I guess the big issue about this is getting people used to the idea of remote working. I'll keep you all posted on how I do with getting them to accept the idea.

Over Insurance on Record Keeping

At what point is keeping a record of something holding you back? Is it really useful to keep your bank statements for the last seven years? If so what for? Are we getting too much insurance for ourselves with our paperwork which will likely never use again. Ever.

I thought of those questions a while ago and I've started a program to reduce the amount of paperwork in my house that requires me to do anything. First most of my bills now come automatically out of my account. Then I signed up for electronic bank account statements and Visa bill statements.

So far I would estimate I have eliminated about 1/3 of the paperwork I used to deal with at home. The more interesting fact is I have yet to need one single piece of paper that I am no longer keeping a hard copy of.

Now I've been thinking of taking it to the next level and stop keeping Visa slips and bank slips for longer than one month. One month should give me enough time to check that the slip in question did show up in the account. After that they will be shredded and tossed out. The only exception to this rule will be any slip that could be used in taxes. Those slips will stay on file regardless until seven years have passed.

I aware I might run into a situation where I would wish I did not get rid of some of this paperwork, but in the end I feel the risk is well worth getting my time back.

Once this phase is done I'm not sure what is left to reduce. Does any one have any ideas on how to further reduce paperwork at home? If so please share.

Retirement Studies Are Smoke and Mirrors

I recently saw this article in The Star and I have to admit it made me laugh. It claims that 2/3 of Canadians who want to retire by 2030 are not saving enough money.

Basically the article is a rewording of the official press release (see here). They mention all this information they went through and all their hard work, yet they don't provide one single number of useful data in the press release other the headline. What do you assume for inflation? What are 'basic household expenses'? Out of this 72 profiles what factors did you take into account? Where did you assume they are living?

In the end this news article is not very useful other that getting people frightened and trying to get them to save more. They just don't provide enough information in a press release to tell if the report is useful or just full of holes in their logic. What really makes me mad is they never include a link to the actual report so I can read it myself and determine if it is useful.

Have a good weekend,
CD

Wander Reading #4

I have to say I've been ignoring the online media a bit lately since I've been busy with other items, so I don't have any fantastic obscure articles for you this week. Yet I did enjoy a few blog posts this last week.

Financial Jungle has an interesting post on if money can buy happiness.


Four Pillars looks at the emerging markets and finds they are not some attractive.


Money Diva looks at seven ways to dummy proof your auto payments (some good ideas).


Canadian Money write a response post to my recent post on the latest market dip.

Regardless if you didn't like The Four Hour Workweek book, Tim Ferris is now teamed up with google Adwords to provide a $25 free trial to any one who has read the book. Heck I'm likely to check it out to just see about some free advertising.

How Not to Go Broke After Having Children

Well my fellow blogger, Middle Class Millionaire recently became a parent. So I thought I would share some things I've learned about raising kids and money so far.

Kids accept anything they grow up with as normal. This is your key to raising a happy child without going broke. For example, my kid mostly wears clothes from Walmart. Why? I don't need high quality when the out grows it before wearing it out. So why spend the money, unless your wife is having a 'It is SO CUTE' moment and the item is on sale at the Please Mum store.

The fancy looking crib is really for yourself and not your kid. Otherwise you would just accept the fact it doesn't have to look good to any but you 95% of the time for only a few years. Try to find one that converts to a toddler bed so you can really get some use out of it.

A cradle is a waste of money for most people. The kid doesn't need to be in there in the first place. A few rolled up towels gives the same effect in the crib. Also the change table is a complete waste of money, because if you were really worried about their safety you would just change them on the floor on mat. You can also skip the baby tub, since a foam mat in the bottom of your regular tub works just as well for under $5.

Cloth diapers are WAY cheaper in the long run, so try to switch when you can. Bottle baby food is useful for the first try at anything, then wash the jars and get a blender and make your own.

If you want a cute custom receiving blanket, go to your fabric shop and buy 1 square meter (1 square yard) of fabric and hem the edges. My wife got a set of these from a friend and loved the extra big size.

One thing to really put some money into is a good chair in the kid’s room for the first while (if your really smart you might be able to just borrow one from elsewhere in the house). You will be in there a lot until the kid is sleeping through the night, so make sure you can get comfortable.

Other than that, buy a digital camera, as then you can take a few hundred pictures and just print what you need rather than everything.

One last thing, remember that your kid is more important than anything in the world to you, so get some life insurance for both of you and make sure you get the kid a SIN number ASAP so you can open a RESP account right away.

The Sky is What?

My wife complains that I’m too sound of a sleeper. I can sleep through any short of a nuclear explosion, with the exception of my kid crying for more than five seconds. Don’t ask why I wake up for my kid, because I don’t know other than perhaps some sort of primitive look after offspring instinct that lay buried in me until I had a kid. Anyways, apparently I can also sleep through a minor market correction. I didn’t realize the TSX had three bad days of trading recently until the Moneygardener mentioned it in his blog which I finally read last night.

My selective ignorance plan is working very well. Case in point. Look at a one month chart for the TSX.

Ok, a fairly big shift, then change to the five year view. Can you even see the correction at this level?

Yes, but looking back there has been a hell of a lot worse. Therefore, it is nothing to worry about.

When the sky is falling burying your head a little under the sand will keep you happily asleep until the big parts start falling in and wake you up so you can truly decide if it is important to deal with.

The Enemy Within

Despite my best intentions I find my mind wondering at times if I should be doing something different with my investments. Perhaps it is the engineer in me that constantly wants to improve things or perhaps it is all the personal finance blogs and books I read that give me ideas.

Regardless of the source one of the single biggest enemies to your portfolio doing well is yourself. If investing was completely a numbers game it would be easy to do, but instead we have a market place where real people react to things with their emotions and that drives all the dips and peaks in the market on the day to day basis. Over the longer term there is a certain reward for companies that do well as value investors deem them worthy of their price.

So how do you keep on track and not fall victim to changing your investment plan constantly? You have two main options for defense: ignorance and keeping yourself busy.

Creating a selective ignorance around the financial market is actually a very good idea. You don't really need to know everything that each company you own is doing every second of every day. So if you can limit yourself to checking out news only once a week you will find yourself with more time to do other things and you will sleep better not knowing every little thing about the market that just happened. Perhaps the only exception to this approach is if you are watching a stock for a specific buying opportunity, otherwise you really don't need to check your portfolio's performance on a daily basis.

The second method of defeating yourself consists of keeping yourself busy with other things. Some people find if they drive that restlessness towards something else it tends to go away. So when your mind if wandering try filing your papers or checking your bank to see if you can lower your fees or even spend some more time with the family.
In the end, you have to be honest with yourself and find what works for you. Each person is a bit different, so if you've got another idea I didn't touch on please share with a comment.

Book Review: The Four Hour Workweek

With a title like The Four Hour Workweek, author Timothy Ferriss has hit an interesting new point for a book. Essentially Tim combined time management with economics and a slash of small business sense and a pitch of retirement to create a very entertaining read.

First Tim shows us his currently lifestyle, he spends less than four hours a week running his business which uses about 200 to 200 people to run with very little input from him. Basically Tim is the owner, but not the manager of his own business. He delegates everything so that he can have the maximum amount of time to chase his own dreams.

Overall this is a hard book to summarize since there is so much different material that he covers, but I'll try to hit the high points for you. Tim is using the 80/20 rule, where 80% of your results come from 20% of your effort. First he applied it to his business and then every other part of his life. Basically he did a huge edit to his life of what was working and starting gutting the rest, he calls this lifestyle design.

For example, Tim suggests that we are all over consuming information. We swim in it everyday and it's eating our time up slowly but surely. He suggests that to really free up your time, you stop reading all that extra material you don't really need in a day. For example, Tim doesn't read a newspaper or online news. Why? It is really important someone will talk to him about so he can get the 20 second summary rather than lose 30 minutes to a news show.

Then Tim outsourced his own life to India and other locations to virtual assistants to ensure he is only working on the stuff that adds the most to his life. Everything else is outsourced from paying bills to booking a hotel room. All for the low price of $5 to $20/hour depending on where you hire your assistant and how skilled they are. Overall it isn't a bad idea. For example I could outsource my editing of this blog to someone else since I know I suck at it and make my reader's more happy.

One other item I particularly liked was the idea of the mini-retirement. If you can manage to outsource most of you life, then you can manage to stop dealing with it for a month fairly easily, this basically allows you then to move to a city of your choice worldwide for a month and rent an apartment for the same cost of a hotel for a week or two. If you can manage to give up or rent your current place during this time you end up actually living on less elsewhere than you would at home, so you end up saving money and having a great time.

Overall this was a fun book, I may not take everything Tim suggested to heart, but it did make me think a bit about my our life and where I want it to be going.

Have a good weekend,
CD

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?

Book Review: Juggling Dynamite

In a sea of personal finance books it is nice to see something a bit different once in a while and I was nicely surprised when I was recently sent a copy of a new one called Juggling Dynamite by Danielle Park.

Danielle first breaks us of our concept of risk. She lays out how many of us are juggling dynamite and we don’t know it. We talk of risk tolerance, but unless you have lived through a major market down turn it is really hard to know how you will react. The plan seems good when the good times are rolling along, but the drop off is very painful and many people can’t follow through with the buy and hold method. Actually the drop off is typically so painful that she suggests a bit of different idea, we should time the market a bit.

Let me first put of the truce flag. She is not suggesting any as silly as day trading, but rather timing the market to the larger cycle that occurs approximately every five years. When the world is hitting record highs everyday and people are getting leveraged in to get even more gains, it is logically good idea to pull back to cash holdings and wait for the drop. Once the drop has occurred, you go in and pickup some of bargains. So how do we know when you hit the top or the bottom? You don’t. You just accept your choice and realize it is always better to sell a bit early and buy in a bit late. You make less, but you still make money. The trick of coarse is having a strong enough conviction to wait years in some cases for the market to drop back down.

To make our choices easier she suggests sticking to Exchange Traded Funds (EFT) and index funds to provide easy access to sectors and geography of the world markets without getting pulled into the game of picking individual stocks which is a losing game for most of us mortals.

Last but not least she provides a rare glimpse into the mind set of someone like myself who realizes true wealth is not your balance sheet, but rather the ability to have the freedom to do what is right for you regardless of what others think.

Overall the book was well written with some interesting insights into how investors think. I would suggest you pick up a copy if nothing else to see her interesting ideas on market timing. For more information check out her blog and the publisher's website.