Trying for Freedom 55 ... in 10 years

[Jon_Snow]

I will be following your thread with interest... I am looking to retire in 5 years at 45 years of age. Alas, we still have a pesky mortgage... we are trying to decide whether to pay it off completely in April, or take advantage of the low rates everyone else (except us) is enjoying these days. We have the cash saving to pay it off completely, but I find much comfort in keeping a heavy cash component to my assets.

Looking at your numbers, you seem to be on track... on one income no less!!! We defnitely need both our incomes to get to our savings goal 5 years from now.

[mind_business]

Jon,

Two incomes definitely makes it easier, not only to reach your financial goals, but also makes life less stressful knowing you have a second income to back you up in case one is lost.

We're pretty happy about our progress. While my wife does not have a 'normal' type of job, she does teach the occasional dance course which adds a bit to our overall income. One of the reasons we made the progress we did over the last two months was because she brought in $1700 for a class she's teaching. I don't consider this as part of our income calculations because it's really hit-or-miss whether she is teaching or not.

You and your SO have obviously done very well if you'll be in a position to retire at 45. Must be exciting at that age to have the freedom to pursue your passions, whether that be income-generating or not.

[mind_business]

Previous Update - Nov 19, 2011. Going to try to update every couple of weeks, but at least once at the beginning of the month.

Assets:
- $ 280,000 House [will update once every 6 months]
- $ 38,913 RRSP(s) [was $ 34,830]
- $ 5,052 TSFA (mine) [was $ 3,957]
- $ 5,052 TSFA (Wife’s) [was $ 3,957]
- $ 4,419 Investments Non-RRSP [was $ 2,302]
- $ 6,077 Cash [was $ 7,166]

- $ 212,220 DB Pension Value [will update once every 6 months]
$ 551,733 Total [was $ 544,432]

Liabilities:
- $ 3,425 Credit Card [was $ 3,744]

[mind_business]

Previous Update - Dec 2, 2011.

Assets:
- $ 280,000 House [will update once every 6 months]
- $ 39,545 RRSP(s) [was $ 38,913]
- $ 4,937 TSFA (mine) [was $ 5,052]
- $ 4,937 TSFA (Wife’s) [was $ 5,052]
- $ 4,764 Investments Non-RRSP [was $ 4,419]
- $ 8,190 Cash [was $ 6,077]

- $ 212,220 DB Pension Value [will update once every 6 months]
$ 554,594 Total [was $ 551,733]

Liabilities:
- $ 3,425 Credit Card [was $ 3,425]

[mind_business]

Just a few thoughts going through my head this morning ...

Considering my wife and I have been saving very little for the last 20 years, being dragged down by various expenses including the mortgage and past car loans, buying 'stuff' that we don't need, we're finally getting around to putting some real savings away for retirement.

My wife asked me this morning how much we're saving annually. She was shocked to hear it was $39,336 Up till just recently we were maybe adding a couple thousand to our investments per year.

I guess we're a lot more focused on savings now that we're getting closer to retirement. My plan isn't to retire at 55, only to be financially ready to if we were forced to retire early. If I'm still enjoying my work, I definitely want to continue working.

I don't know about the rest of you, but it's amazing how often in the day I'm now thinking about finances, budgets, investments, etc. Today my goal is to cancel one of our cell phone accounts (the 3 year agreement has finally ended), which means we'll be down to just one cell for my wife to use Looking for all ways to shrink our budget without affecting our quality of life.

[mind_business]

Today I'm giving myself a raise

I just got off the phone with Bell and cancelled my cell phone with them, saving me $35 per month ... or looking at it from a slightly different perspective ... giving myself a $35 per month raise.

This represents $420 per year that I'll be contributing towards our savings / retirement

I also changed our Phone land line service a while back to one that wasn't a long distance plan (never use it since we have Skype). That reduced our monthly bill from $50 (average) to $32. Saving us $18 per month, or $216 per year (also going directly to savings).

Is there anything else that you guys can suggest for budget reductions? I'll post my 2011 Year-end budget review in my next post.

[mind_business]

OK, here's my 2011 review of our Household Budget. Comments welcome. I'm looking for further savings suggestions:

2011 Monthly Budget:

Home Expenses:
$ 240 Property Taxes
$ 70 House Insurance
$ 60 Utilities - Hydro
$ 45 Utilities - Water / Sewer
$ 57 Utilities - Heating Gas
$ 16 Utilities - Water Heater rental
$ 100 Home Repairs
$ 400 Home Reno / Improvements
$ 40 Gardening / Yard supplies

$1028 Total Home Expenses (11.87% Monthly Gross Income)

Food:
$ 550 Groceries (includes toiletries and cleaning supplies)
$ 150 Dining

$ 700 Total Food Expenses (8.08% Monthly Gross Income)

Automobile:
$ 200 Gas / Fuel
$ 120 Auto Insurance
$ 150 Repairs

$ 470 Total Auto Expenses (5.43% Monthly Gross Income)

Vacation:
$ 300 Travel (based on 1 trip per year)

$ 300 Total Vacation Expenses (3.46% Monthly Gross Income)

Communications:
$ 40 Internet Provider
$ 10 Web Host (wife's website)
$ 32 Home Land Line (was $50)
$ 35 Wife's Cell phone (was $70 before I cancelled my plan)
$ 75 Cable TV (Ughhhh!!!)

$ 192 Total Communications Expenses (2.22% Monthly Gross Income)

Clothing:
$ 150 Casual + Work

$ 150 Total Clothing Expenses (1.73% Montly Gross Income)

Pets:
$ 80 Veterinarians / medicines
$ 25 Dog Food
$ 10 Dog Treats

$ 115 Total Pet Expenses (1.33% Monthly Gross Income)

Entertainment:
$ 50 DVD Movie Rentals
$ 25 Theatre Plays / Movies
$ 30 Books / Music

$ 105 Total Entertainment Expenses (1.21% Monthly Gross Income)

Gifts / Charity:
$ 20 Gifts
$ 30 Charity Donations

$ 50 Total Gifts / Charity Expenses (0.58% Monthly Gross Income)

Fees:
$ 14 Bank Fee (0.16% Monthly Gross Income)


Summary:

$8660 Gross Income (Monthly)
$3124 Expenses (Monthly) (36.07% Monthly Gross Income)

Leaving $5536 (63.93% Monthly Gross Income) for savings and the following automatic deductions from pay:

- Income Tax
- CPP Contribution
- EI Premiums
- Optional Life Insurance
- RRSP contribution
- Following taxable benefits:
- Awards
- Company matching contributions (50% match of my RRSP contributions)
- Life Insurance (portion Company contributes)

Note: Company DB Pension Plan and Employee Incentive Plan (yearly bonus) not included in above info. Yearly bonus amount goes directly into savings.

[Plugging Along]

I don't know how 'frugal' or tight you want to be, so I'll kind of go mid way with my thoughts.

OK, here's my 2011 review of our Household Budget.

2011 Monthly Budget:

Home Expenses:
$ 60 Utilities - Hydro - Do you have low flow showers and toilets. We cut our water bill by almost half by just replaceing 3 really old toilets. We really also looked at our water consumption by reusing water much more wisely. There were tonnes of little things we did such as reusing bath and shower water for toilets, dish water for plants, etc. It was a small savings the other things, but it was more about conservation

Potential Savings - $15

Food:
$ 550 Groceries (includes toiletries and cleaning supplies) - Is this for 2 people? I think with some really smart shopping and if you wanted , you could reduce this to about $400. The guideline I read is about $50/person/week including toiletries. I know I was able to do it on $500 a month for 5 people, but that was being almost couponing extreme, and it took a lot of time.

Potential Savings - $150

$ 150 Dining - this is always discretionary, but it's fun.

Potential Savings - $150

Clothing:
$ 150 Casual + Work - You can always cut this down if you have good basics, like the coats, boots, and shoes that last. If you don't have to do those, you can spend very little in this area.

Potential Savings - $50

Entertainment:
$ 50 DVD Movie Rentals - Find this really high. I don't think I've paid for a DVD rental in ages. You can get library movies for free. Also, if you have a PVR recorder, I have found this to be a great savings. I record movies all the time, and then watch them at my leisure.

Potential Savings - $50

$ 25 Theatre Plays / Movies - again discretionary, but fun, I do use coupons for movies for discounts, and I also see if there is a promo code for theatre. I just google it just prior to me buying tickets.



$ 30 Books / Music I love books, and magazines, this is where I used to spend the most. Still love books for my kids, and will buy them. I did find the library a great resource. Also, I have found that you can get many free books on the IPAD (assuming you have one)

Potential Savings - $15

Fees:
$ 14 Bank Fee (0.16% Monthly Gross Income) - I never pay bank fees. EVER!

Potential Savings - $14

Summary:

Potential Savings -
~$300 - 600 /month depending on how much you really want to cut out.

[kcowan]

We also never pay for DVD rentals. We wait until they are free to watch them. I mean good movies age well! Also we PVR everything to skip past commercials. this makes regular commercial TV tolerable, especially with a $75 bill each month!

My paygo Android is a great little book reader (for $67) and I have 2500 free books to work through. Plus we have found paygo to be the most cost-effective plan for us. DW has a Kobo.

We spend a bunch more a gifts/charity because we are in the give-back phase.

[Financial Cents]

Just a few thoughts going through my head this morning ...

My wife asked me this morning how much we're saving annually. She was shocked to hear it was $39,336 Up till just recently we were maybe adding a couple thousand to our investments per year.

I guess we're a lot more focused on savings now that we're getting closer to retirement. My plan isn't to retire at 55, only to be financially ready to if we were forced to retire early. If I'm still enjoying my work, I definitely want to continue working.

VERY well done. If you're saving close to $40 K per year, enjoy spending the rest. You only live once