How to Retire Early

The point of this blog is how to enjoy your life. That necessitates freeing up your time to be able to do the things you enjoy. Duh.

In my case, that means working less, or not at all. How can one do this?

Answer: Achieve Financial Independence. FI for short.

So, this blog is actually about several things: Retirement, Financial Independence, and Doing Enjoyable Things such as Travelling, Photography, Zen, Hiking, Skiing, Riding Motorcycles, Puttering Around, Beachbumming, and Drinking Wine.

But you’ve got to get yourself in a position, financially, to be able to NOT WORK, and do these fun and worthwhile things instead!

Here’s an excerpt from a blog directed at young people (Millennials), on how to start saving, investing, and stop wasting money. The first step on the journey to FI.

From Millennial Revolution:

It was June 2006. I’d just graduated (and by graduated I mean quietly slipped through the cracks when the Dean wasn’t looking) from Computer Engineering. We had planned a 10-day Caribbean cruise—a breather, before diving back into the working world. Since Waterloo had a co-op program, I had an offer to return to my last placement on a 6-month contract, a place I’d like to call the “The Gulag”. The last time I worked there, I spent my days running around like my hair was on fire, and threw up multiple times from stress. I think I was forming my very own stomach ulcer. So, to put it mildly, the thought of going back was met with…mixed feelings.

“Stop thinking about work! Just enjoy yourself.” TheWanderer said, popping a fat, pink shrimp into his mouth. “Ohh, these are good.”

But I couldn’t. People were laughing, canon-balling into the pool, stuffing their faces with steak and lobster, and all I could think about was how to swan dive off the ship so I wouldn’t have to go back to work.

I look like I'm having fun, but in reality I was thinking "Would they mind if I refused to go back up and live underwater forever?"
I look like I’m having fun, but in reality I was thinking “Would they mind if I refused to go back up and live underwater forever?”

Back on land, “The Gulag” was exactly as bad as I remembered. I was regularly working 14-hour days and weekends, with my hair smelling like soot.

The stress meant I didn’t really have the time to cook very often, so we spent a lot of meals at restaurants. Specifically bars, getting wasted to forget the fact that tomorrow I was going to have to do this all again.

Spending:

Category Cost / month Comments
Rent $1500 Stupidly, we were renting two places and living in only one. We weren’t married yet, so to keep TheWanderer’s parents from condemning us to the 9th circle of Hell, we each had our own apartment, but as soon as their back was turned we would scamper off to his place. So half the rent was a complete waste.
Food/entertainment $2700 That’s shameful $90/day! We ate out a LOT. And went clubbing, and got fancy $12 martinis. One time we went to some fancy lounge for a friend’s birthday party and dropped $200 on NOTHING. When the night was over we were still hungry and had to go get a pizza.
Bus pass/utilities/misc $300
Vacation $833.33 This I don’t regret. Even though I was dreading going back to work the entire time, even though it cost $5000 for the year, this was my FIRST vacation ever. Worth every penny.
Savings $5750

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At the end of the year, this is what our balance sheet looked like.1

Category Amount Comments
Combined income (after tax) $66,500
Total Spend $32,000 Keep in mind that in 2006 we only started working halfway through the year. We left school with basically no money.
Savings $34,500
Savings Rate 52%
Total Net Worth $34,500

nw_2006

So somehow even after all this excess and debauchery, we still managed to save 52% of our combined after tax salary. I know people who regularly spend DOUBLE that! I just don’t get it.

2007

I finally got sick of puking all the time and smelling like a forest fire, so I looked for another job. And within 6 months I found one. A full-time job! With benefits and shit! When I got the call from HR, I squealed loud enough to shatter all eardrums within a 10-mile radius and actually peed a little (Yup. I’m 2 parts FIRE, 1 part puppy).

The second I walked into my new office, I knew I’d hit the jackpot. No one was screaming. No one was panicking. No one was rocking themselves in the corner, crying softly. People were actually SMILING! Holy shit. I was going to love it here. (Spoiler Alert: This would not last)

Wanderer and I were working and finally getting settled, feeling like adults. Time to spend some mad money.

So in March of that year, we took a two-week vacation to Cuba. As soon as we set our bags down, we headed to the pool bar and drank like two greedy, wasteful, alcoholic fish.

Alcohol and swimming. It's a winning combination!
Alcohol and swimming. It’s a winning combination!

Spending:

Category Cost / month Comments
Rent $1500 Still stupidly wasteful.
Food/entertainment $2200 All that eating out was starting to turn my belly button from an innie to an outie. And, since my stress level was no longer in “screaming hair-on-fire” territory, I actually had time to learn to cook. I discovered a thing called the Paleo Diet, which is less of a diet and more of an excuse to stuff more delicious delicious meat into our pie-holes. I lost 15 pounds and our food expenses dropped by about $500 / month. Win-freaking-win.
Bus pass/utilities/misc $300
Vacation $250 $3000 for the whole year
Savings $6167

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At the end of the year…

Category Amount Comments
Combined income (after tax) $125,000
Total Spend $51,000 Was I really spending THAT much?!? :hidesheadinshame:.
Savings $74,000
Savings Rate 59%
Total Net Worth $108,500

nw_2007

Right around here, we had noticed our bank balance cross above 6 figures, 2 years out of school. We shrugged, thinking that’s weird, and moved on.

2008

We were getting comfortable at this whole “being real adults” thing and totally crushing it.

Work is great! We both get promoted for not sucking, and a nice bonus. So we decided to celebrate with a Mediterranean cruise, because why the hell not?

It’s my first time in Europe…and I am IN LOVE. We hit up Rome, Pompei, Florence, Pisa, and Venice.

I probably drove all the locals nuts with my obligatory pictures of us in gondolas, kissing under the Bridge of Sighs (did you guys know that it’s actually not a love bridge, but a bridge to death row? More about this in a future post), and yelling “THIS. IS. SPARTAAAAA!!!” at the top of my lungs in the Colosseum.

Venice. Basically all the romance, stuffed into one city.
Venice. Basically all the romance, stuffed into one city.

 

The Coliseum. Basically the largest Amphitheatre ever built.
The Coliseum. Basically the largest Amphitheatre ever built.

 

Circus Maximus. Basically an empty field. Way to drop the ball, ROME.
Circus Maximus. Basically an empty field. Way to drop the ball, ROME.

So now we’ve caught the travel bug, a disease that continues to plague us to this day!

And then something unexpected happened. The apartment I was pretend-living-in was basically a rooming house with a bunch of other students in it. And one of my housemates was constantly fighting with her boyfriend. Like, yelling, screaming, throwing-pots-and-pans at each other fighting. I never noticed because I was never there.

So one day my parents are visiting my pretend-home, and that housemate got into it once again. Anyway long story short, after a frying pan nearly nailed my mom in the face, our parents all of a sudden became totally okay with the two of us living together.

So I moved in with TheWanderer and our rent halves.

Our cash is now growing to a point that we figured we should probably start learning about investing. And like the naïve silly Millennials we were, we figured, who better to tell us what to do with our money than the people who are holding it for us? So we made an appointment with the investment advisors at our bank, and what we found was…less than impressive.

First of all, most of the bank mutual funds were a joke once you actually read past the first page of their prospectus1. Hmmm, the fund’s called “US Equity Fund,” it’s got a fee of 2%, and yet somehow when I pull up a graph of its price history overlaid on top of the S&P 500, you’re trailing on average by 3%. What in the Hell are you people doing back there?!?

And the bank “Advisors” are even worse. They won’t stop pushing me into these Managed funds. Managed? What does that mean? So I peel back the layer and I find that they’re just buying their own shitty high-fee mutual funds, and then charging me a 1% fee on top of that for the privilege! Ohhhhh, “Managed” means you Managed to find a way to get paid to do a shitty job. Sounds like a great deal, for you. Not so much for me.

My favourite moment was sitting in the office of one these “Advisors” who was trying to sell me on what would happen if I were to buy their shitty fund.

“So let’s say you invest $10,000. And the markets go up 8%. That means in one year you’ll make…uh…hold on…”

I sit there, incredulous. After what seems like way to long, I offer “$800?”

“Right!” he says, obviously surprised by my little-girl-brain’s ability to do simple math. “You’re good with numbers!”

Hoo boy.

He then offered to sign me up for an investment seminar, and then, I kid you not, asked if he could tag along as well, since he “really should learn about this stuff too.”

Thus beginning my long-standing love-hate relationship with banks. Only, you know, without the love.

It’s around here that, searching for an alternative, I learned about index investing. Index investing, meaning the strategy of simply trying to match the index rather than beat it, appealed to me immediately. It’s simple and easy to understand, most active stock pickers can’t beat the index anyway, and by buying the entire index it’s impossible for our portfolio to go down to zero.

So armed with that knowledge, I took our wad of cash and invested it in a dead-simple portfolio using the lowest cost vehicles4 I could find at the time, the TD e-Series Index Funds. My portfolio was 60% equity, 40% bonds, with the equity portion split evenly between Canada, US, and International.

Immediately once I did this, my portfolio started making money. Every week it just went up and up and up, like magic.

I stared out over the horizon, smugly confident in my absolute knowledge that I had figured it all out. I had officially won at life. It’ll be nothing but smoooooth sailing from here on out.

The journey continues. Tune in for more. Coming soon!

Yoho National Park – British Columbia

Yoho, named for a Cree word expressing awe and wonder, is a park of rock walls, waterfalls and glacial lakes. Yoho lies on the western slopes of the Canadian Rocky Mountains. It’ s a stunning Canadian national park with dizzying snow-topped mountain peaks, roaring rivers, silent forests, vertical rock walls,  and cascading waterfalls.  One more perfect setting for a retired dharma bum to tramp around in!Yoho Mtn

Yoho River 2

Yoho’s craggy peaks and steep rock faces posed an enormous challenge for Canada’s early explorers. The mountains that were the curse of railway builders are responsible for the park’s many waterfalls including Laughing Falls, Twin Falls, Wapta Falls and one of Canada’s highest at 254 m (833 ft.), Takakkaw Falls. Silt carried by streams from melting glaciers high on the mountains is responsible for the deep, rich turquoise colour of Emerald Lake and Lake O’Hara.

Takakkaw Falls 6Takakkaw Falls 3

Many of British Columbia’s plants and animals reach their eastern extension in Yoho. The high peaks of the Continental Divide wring out the precipitation remaining in clouds moving eastward from the Pacific Ocean. This creates pockets of wet belt forest where coastal species such as devil’s club, western red cedar and western hemlock thrive.

WildflowerSquirrelTakakkaw Falls can be seen from kilometres away, but its loud roar is the first thing you notice as you approach. It is 384 metres from its base, making it the second highest officially measured waterfall in Western Canada after Della Falls on Vancouver Island. However, its true “free fall” is only 254 metres.

“Takakkaw” translates from Cree as “it is magnificent.”

Takakkaw Falls 4
The falls are fed by the Daly Glacier, which is part of the Waputik Icefield. The meltwater keeps the volume of the falls up during the warm summer months, particularly in late spring after the heavy snow melts, when the falls are at peak condition.Takakkaw Falls 2
Yoho River
 The Yoho River originates at the north end of Yoho National Park and flows generally south to join the Kicking Horse River some distance northeast of Field, BC. The river also picks up the waters of Whiskey-Jack Creek near Takakkaw Falls. From there it flows another 7.8 kilometres to its confluence with the Kicking Horse River. Takakkaw Falls 1
Here in the shadow of the Great Divide are the secrets of ancient ocean life, the power of ice and water, and the stories of plants and animals that continue to evolve today.
Emerald Lake 1

Emerald Lake is the largest of Yoho’s 61 lakes and ponds. The lake is enclosed by mountains of the President Range, as well as Mount Burgess and Wapta Mountain. This basin traps storms, causing frequent rain in summer and heavy snowfalls in winter. 

Emerald Lake 2

Emerald Lake CanoeingSilt carried by streams from melting glaciers is responsible for the deep and rich turquoise colour of Emerald Lake.
Emerald Lake Tourist

Due to its high altitude, the lake is frozen from November until June. The vivid turquoise color of the water, caused by the powdered limestone silt, is most spectacular in July as the snow melts from the surrounding mountains.

Emerald Lake Tourist 2

Emerald Lake 3

There was no better way than to end the day at the exquisite Tschurtschenthaler Lodge! What a great B&B to relax and unwind at. (Located near Golden, BC). We lucked out and got a mountainside view room for our brief stay.
Moosehead

View from B&B 1View from B&B 2

Heritage Softail

 

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Retired Buddah