Freedom 45

A little more than a year and a half ago - so far in the past, in fact, that it predates my launch of this very blog - I was very burned out in my job. I'd come through a stretch where I'd been bored and felt like I wasn't accomplishing anything, and then I transitioned into the whole "let's go Agile" ramp-up and suddenly I was Public Enemy Number One for being behind what many felt was either a misguided or mishandled cultural shift (I can, at least, safely argue against the first of those two criticisms!). So there I was, in the late July 2006 timeframe, ready to either quit outright or take a six-month leave of absence. I'd gotten far enough along in plans to do one or the other, in fact, that I'd broached the subject of a LOA with my boss. Vicki knew how close to snapping I was at that point, and was 100% supportive of my decision, whichever way it went. We were each making enough money that one of us having a dry spell for awhile wouldn't have impacted us financially much at all.

What changed my mind - and plans - was a scheduled visit with our financial planner around that time. He's an agent for the firm that manages our RRSP money, and we meet with him at least once a year to review how things are going. Heading into that meeting, I asked him how far away from retirement he figured Vicki and I were, based on the money that he was managing, if we were to soon stop adding anything to it (just relying on growth). He ran some simulations, based on assumptions that we jointly made, and told us that it seemed reasonable that we should be able to start using our retirement money by (roughly) the beginning of 2015, and expect that it would last us the rest of our lives. Explicitly excluded in that calculation were all of the following:

• any value that we might realize from selling off part or all of the comic collection
• any value from the house that we currently own (mortgage-free)
• any funds we might get via the Canada Pension Plan or Old Age Security programs
• any inheritances or other unexpected windfalls
  

Each of those items listed above was considered an additional "buffer" or safety net, in case anything in our calculations proved to be off (such as a sustained higher-than-expected inflation rate, for example). The calculation also assumed that we were maintaining our current lifestyle, rather than downgrading it to have less spending money, or fewer vacations, etc.

Faced with that information, which was actually better than I'd expected, Vicki and I started talking about how best to get there. The good news, which she and I shared with the financial planner during this meeting, was that we'd been saving up quite a bit of money outside of our RRSPs, for the express purpose of bridging us for a few years between the end of working and the start of living off our RRSP income. Having a date for the latter allowed us to work backward to determine one for the former, looking at the savings that we had at the time and how much we knew that we needed to live on each year. From all of that, we came to the conclusion that we would hit that sweet spot approximately 80 weeks after that meeting. I'd had no idea that we were that near to not needing to work any longer, and yet there it was.

Faced with this new information, and a tantalizingly close date, it no longer made sense to me to quit or go on a LOA. Instead, Vicki and I started tracking our progress toward our new goal by way of a sheet of paper on our fridge. On it, we counted down the 80 weeks that separated us from "financial freedom." At the end of each week, we'd stroke off last week's number and write the new number down, moving ever downward toward the magical zero mark. Every time a new multiple of 10 was reached (70, 60, 50, etc), we'd treat ourselves to a nice dinner out to celebrate another milestone passed.

Around about the point where we got down to 20 weeks remaining, I started talking to Vicki about what we'd do when the counter got to 0. While obviously one option was to just go into work and say, "I quit!" (in her case, just end her current contract early), neither of us really wanted to do that. For one thing, we both enjoy working most of the time, but aren't so crazy about having to work. Put another way, it's easier to go into work knowing that you can quit at any time if it stops being enjoyable, and not have to worry about what to do next. That's what we were counting down to. So what would we do at 0?

What we agreed to was that we'd start using the extra money that would otherwise have continued to go into this bridging fund and give it to ourselves to spend instead. Once the lump sum was big enough, after all, it didn't need to keep growing (beyond interest income), so rather than keep adding to it, we'd split that surplus between us. I figured that we'd be talking about something in the neighbourhood of $500 per week, each, which is clearly not chump change! And the prospect of that was pretty darn exciting to both of us.

As it turns out, this past week was Week 0. Our 80-week countdown has now completed, and in six short days from today, we'll give ourselves our first set of bonuses! Because the downturn of the stock market over the past several months actually kept us from meeting 100% of our target bridging amount (we're about 6% short), we decided to start off at $300/week, and slowly work our way up to $500. The reality of the situation is that, were we both to stop working this week, the money that we do have saved up at this point would almost certainly bridge us beyond the start of 2015, but I still prefer to be safe than sorry. So we'll keep plugging some money into the nest egg until we reach 100%, after which we'll be set.

And of course, the longer either (or both) of us keeps working, the less time that the bridging nest egg theoretically has to cover, anyway. At the moment it's almost seven years, but the clock's still ticking. Maybe by the time we finally stop heading into the office each day it'll be down to six years or less, in which case we'll likely just delay touching our RRSP money even longer. And that's yet another form of buffer that conservative Kimota94 is all for!

March 2008 already had lots going for it, but I can add the preceding to that list now.

For previous posts of mine relating to personal finances, if you care in the least, you could look here or here. I hate debt, I love budgets, and I happen to believe that every person can achieve financial security if they're willing to truly commit themselves to that goal. I also know someone at work who's much younger than I am and yet is about to pay off his first house! So that tells me that I'm not alone in my beliefs.