Canadian Pension Plan

I recently stumbled upon this excellent tool from the Canadian government that you can use to determine your retirement income. A lot of the data you’ll need may require some digging to find but it should give you a pretty clear picture of what your current situation and future situation will look like.

I came upon this will trying to figure out how much CPP I will receive in early retirement and it’s entirely dependent on how many years you have been earning and how much you earned each year. I can’t recall what I was earning before starting my career, so I can only assume I’ve been hitting the top target for 4 years. That means I’ll need to work another 16 years in order to receive 50% of the maximum monthly payment. It’s not a lot, but every dollar counts.

How do Canada’s social programs factor into your retirement?

Advertisements

FIRE: Where is the excitement?!

Okay, so I’m going to humble myself really quick. I don’t know shit about Financial Independence/Early Retirement. I’m new to the idea, and I haven’t even gotten close yet. There is so much passion coming from the people involved in this idea, they study every aspect of how to make the dream the reality. These people are the sensei to my samurai; seriously. These people love the journey and the result.

However, maybe I just don’t see the raw excitement coming from some when they reach financial independence. I guess it’s sort of like winning a race; you’ve reach the end, you feel good but you’re gearing up for the next one. I really hope when I reach FI that I can showcase my passions and really share the experience with anyone who will listen. FI is when you earn true freedom and you really get to own every minute of your life. Yell about it! Tell everyone! Say everything!

I know a lot of the publications I read are tailored to their viewer, but I’d love to hear about how amazing the end result is! Listen to a podcast that makes me want to pickup my keyboard, throw it across the room and go buy motorbike and drive across south america. Maybe finance isn’t emotionally exciting, but it could be, you know?

Maybe I’m just being a dick and ranting. Maybe I’m showing my thrill seeking behaviour. Whatever. Hopefully I can bring some fire to FIRE.

Stay tuned for more heat.

-Mike

FI/RE: Capitalism’s Best Kept Secret

It is my dream to become financially independent and retire early. For better and for worse, the average person does not and this is a huge benefit to myself. If everyone had the same mindset, the economic machine would run a lot slower and thus, reduce speed of retirement across the board.

Others are over spending, under saving, and consuming at record pace which allows my investments in most businesses to thrive. Being frugal and saving money is exciting to me, and the wait to reap the rewards is worth it. What are your goals to speed up your retirement this year? The next 3 years? How can you harness the current financial landscape for your benefit?

Now, as someone who is deeply saddened by the failings of capitalism, it is a hard thing to say that you’re glad people are prey to the system, but it is their choice. I’ll tell anyone who is willing to listen the benefits of FIRE but the majority won’t listen. Part of becoming FIRE, and especially Lean FIRE, may result in your friends thinking your a bit weird. This is a sign of progress, in my opinion. Weird is only something different than normal.

People will dismiss your ideas, but don’t let that dissuade you; keep your eye on the prize.

-Mike

The Story of O.J.

 

So I took the week off to relax and catch up on life. I’m just enjoying life, having a coffee, and listening to some music when suddenly..Jay-Z is rapping about financial independence. Woah.

“Financial freedom my only hope. Fuck livin’ rich and dyin’ broke.” – Jay Z

The Story of O.J. tells a much more heartbreaking story than just that of financial independence, of course. The song has to be one of my favourite Jay songs and probably will go down as one of the best songs of all time (seriously, give it a decade for the rest of the world to catch up). The above lyric really stuck out to me, as hip hop as of late has become an example of excessive consumption and selling consumerism. To have such a prominent artist telling the story of investing rather than spending is a step in a more positive direction for the hip hop industry. Don’t buy chains buy bonds. Buy the Rolex that will gain value, not the one with the most after-market gems. Ball out without financial fallout.

-Mike

What Early Retirement Means to Me

I’m not entirely sure how I came to the path towards early retirement. I still don’t have an entirely clear picture of what the end looks like, but I’m slowly evolving my idea of ER. What I do know is, the things I have learned along my travels have changed the way I’ll look at life forever.

Some things I have learned:

  • Don’t over eat. Why eat more than you should and have to work it off later? You pay money for food, and then you pay money for a personal trainer to burn it off. You’re paying for your lunch twice. When it comes to what you’re eating; eat what you want and the healthier the better. Don’t waste time eating junk filler, get the good stuff (ideally, make it) and enjoy it!
  • Exercise. I’m not going to advise you on what you should do, but find a physical activity that you enjoy. Being active will help you live longer, and healthier! The healthier you are, the less you’ll spend on healthcare and the more money you’ll have in your pocket. Invest now and get your health dividend.
  • Don’t buy your way into lifestyle bloat. Buy a good pot and pan that will last your entire life; you don’t need 5 of each. You actually may have the need for another pan, but live with one until you NEED another. I once bought 40 shot glasses (yeah, really. Yikes.) to serve a tray of 40 tequila shots at a party; now I have too many shot glasses. Do you need what you’re buying?
  • Fill your home with things that mean a lot to you. I like to bring souvenirs home from my travels, however, I make a point not to buy junk. Copper Bosnian coffee set? Good choice. Looks great in the kitchen and makes great coffee. Shipping a rug across the Atlantic from Morocco? Kidding, I’ve been reformed after the tequila incident. I keep skateboard on my wall as art. If I break a board and need one in a pinch; I’m covered and have a rotating cast of wall art.
  • Get Creative. Please don’t buy plastic water bottles. Buy a water bottle for during the day use. I keep flip top glass bottles in my fridge to have ice cold water while at home. I like not sweating during the summer, but cool a whole house is ridiculous. Cooling my bedroom with a small air condition, gets a single room cold in about 10 minutes. Make yourself a clothesline and ditch the dryer when the weather is good.
  • Key tabs on your money. Make a budget. Setup automatic deposits. Buy index funds when you’re carrying too high a balance in your chequing account. Whatever you do, get an investment and saving strategy. Scrutinize your strategy, and constantly evolve it to improve your situation. $ave dat money.

Retiring early, to me, means being more conscious of your spending, more conscious of your earning, and having a clear idea of why you’re saving. Get a raise, save the increase. One day you have the ability to do stop working, you don’t have to, but you can chase another dream if you wish. Freedom is the goal.

-Mike

Eliminating Legacy

Legacy

  1. denoting software or hardware that has been superseded but is difficult to replace because of its wide use.
  2. an amount of money or property left to someone in a will.

Today the universe aligned, and both definitions of legacy entered my life. Normally, they would have passed me by but because I was listening to the Aussie Firebug podcast with the Mad Fientist thinking about FI, I had two realizations.

The first realization was code related. I was building an interpreter to compile a legacy templating language into JavaScript and was failing horribly. I was thinking to myself:

” Why the hell are we supporting this? This is literally 15 versions and 3 years behind, the language itself is super outdated, and our new build system doesn’t support it…wait, wait a minute. The new application will be using React so we can convert these to JavaScript once and wait until they are rebuilt in the new format. Problem solved, the better way.”

When it comes to being minimalist, optimizing your finances, and working towards financial independence; eliminate your legacy baggage. Sell off equipment for old hobbies, sell or give away unused furniture, and collapse investment funds into better funds. Myself, I’m migrating my HISA to EQ Bank to get a better return on my emergency fund. It will lower my TFSA limit for the year, but it will bounce back next year. Additionally, I’ll be getting a new credit card to get better rewards return on my spending. I eliminated legacy to move closer to my goal.

Finally, for the other meaning of legacy, why does someone leave a legacy? The only legacy I’m concerned with leaving is a positive impact on the world. Maybe I’m simple like that, but I think leaving things better than when you started is one of the most valuable things you can do in your life. Don’t get me wrong, if I have children and have money left over, I won’t be upset about it. If I hedge and invest well, and work hard, I don’t mind if I’m net $0 when the end comes. Financial Independence is an asset that provides freedom.

-Mike

Setting Goals & Action Planning

I’m going to learn Spanish. I’m going to learn to be a good swimmer. I’m going to write a book. I’m going to retire early. These are all goals that I have. It’s important to have goals, they give you something to strive for. I believe in improving myself everyday and so should you.

Each of these goals has a different end point, which makes planning difficult. The result of writing a book is a book; simple. How does one quantify being able to read, write, and speak Spanish? It’s a little bit subjective. What is a good swimmer? Early retirement just means you stop working. Seems easy enough? If only it were.

Money makes the world go round. You need it so survive in this day and age even if you farmed all your own food and made your own clothes, you have property tax to pay which requires Canadian Dollars. To retire early you need to figure out how much money you need per year to survive, and figure out how to get that amount as a return from your investments. It’s impossible to know how long you’ll live, so it’s ideal to live off your dividend and your principle investment amount will be a great emergency fund.

I found my goal amount, and setup a number of milestones to hit along the way. In a spreadsheet I have an additional column to make note of when I hit the milestones. Here’s what I have:

  • $15,000 Net Worth
  • $30,000 Net Worth
  • $50,000 Net Worth
  • $75,000 Net Worth
  • $100,000 Net Worth
  • $150,000 Net Worth
  • $200,000 Net Worth
  • $275,000 Net Worth
  • $350,000 Net Worth
  • $450,000 Net Worth
  • $600,000 Net Worth
  • $750,000 Net Worth

Feel free to put in smaller milestones if you really need to see the progress. The idea of reaching financial independence to me is a milestone enough, but these are nice to see, too.

Happy Saving!

-Mike