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Andy Chilton
Entries for label: retiring
Found 8 entries.
The Real Goal
I stumbled across a post over on Mighty Bargain Hunter – What is Financial Retirement? and I couldn’t help but agree with it.
Especially the following quote:
Retirement is about Money, not Age
I just wanted to write a quick post on this, since this says in a few words what I’ve been saying my plan was for a while.
I have variously described my plan as “Retiring at 40 but not actually stopping work“. That sounds ok but it’s a little confusing. Then I changed to something more like “Well, not actually retiring, but just not working for someone else.” It turns out all of these things are true.
The Real Goal (as SMART)
Watching the hundreds of blog posts about New Year Resolution’s (which I don’t do), I have come to think of these things as “Goals for this Year“. I think that describes best what most people actually do.
Instead, I will make a goal now for six years time. I just turned 34 so in 6 years from now (I’ll give myself plus or minus 6 months) I plan to retire :)
But to do that I need goals. This is a brave decision of mine but I am now planning on setting out the goals now for what I need to have achieved in six years time. The added bonus with these goals is so that I can set other smaller goals along the way.
To make sure my goals are SMART, here’s what they are defined as (along with numerous other variations):
- S = Specific
- M = Measurable
- A = Attainable
- R = Realistic
- T = Timely
By the way, I also plan on reviewing these goals every year since otherwise they may be horrendously out of date in a few years time (either due to health, money, technology advances or aliens).
So let’s start.
The Goals
- be able to live in/move to a house in which I pay less than $1000/mth to live in
- be working for myself, whether that is contracting, earning money from sales, adverts or referrals
- have no other debts (apart from my rental house which will be self-sufficient by this year’s end)
Some clarifications necessary.
- This includes mortgage, insurance, tax/rates, some maintenance, all bills (electricity, gas, telephone, internet, misc)
- ie. have no immediate bosses who say “you must do this“
- Apart from my rental house which will be self-sufficient by the end of 2010.
Ok, that’s a first stab. I’m not sure I have covered everything but I think those things are SMART.
What do you think? Are they realistic? Specific? Measurable? Any other suggestions for other goals I may need to consider?
Labels: retiring
Inserted: 2010-01-02 22:34 (6 months, 4 weeks ago)
Guest Post on Lazy Man and Money
.
Firstly, welcome to all the Lazy Man and Money readers wandering over here to take a look round. Remember to subscribe to my RSS feed so you can keep coming back. And to all my readers, go and take a look at Lazy's blog (yes, he doesn't mind being called that) - it's a great read.
Short Term Sacrifices for Long Term Gain
My post over at Lazy's blog was originally called Short Term Sacrifices for Long Term Gain but in conjunction with Lazy we changed it to Sacrificing the Little Things for Early Retirement so his readers could get more of a taste of my background, why I started all this and where I'm headed.
I wrote the post in response to a comment I had on a previous blog post of mine, called Seeing the Old Me. Concetta put the idea in my head when she commented that by doing a four day work week, I was actually treating myself, all the time! I hadn't realised this at the time (though it makes perfect sense now).
I'd mentioned that I had been buying take-away coffees and treats for myself in reward for working too hard which brought back memories of the old me again. Working hard, playing hard but spending all of my money whilst doing it. Then I mentioned that I had to sacrifice things if I wanted to do a four day work week (oh, and retire early, mustn't forget that) - and by not spending my money on those 'extras' I could also afford to drop down a day at work. It turns out though that she was right and that having the extra day off is a huge treat, week in, week out.
If other people think that by not going to the movies that often or not having the flashiest car is a sacrifice, then that's fine with me. Neither of these things are that important to me and instead I'll make some fresh pasta, go out cycling or enjoy a bit of gardening instead. Better health and less outgoings.
Therefore a few small sacrifices gets me a much bigger reward - as always, judgement is in the eye of the beholder.
And funnily enough, these are also the same people who say "...and you can afford that?" when they hear you're working a 4 day week. Pretty funny, isn't it?
Thanks
So thanks again to Lazy Man for hosting my guest post and I hope you enjoy my article over there if you haven't read it yet.
Labels: saving, retiring, working
Inserted: 2009-02-28 08:40 (1 year, 5 months ago)
Welcome to Visitors from Get Rich Slowly
Firstly, I'd like to thank JD for linking to my site. It's an awesome thing to be able to say I got a link off GetRichSlowly in my first three months on this journey of mine towards financial independence and early retirement.
Retire at 40 â This personal-finance blog from Andrew Chilton is based in New Zealand, and features some excellent discussions of topics like budgeting, lifestyle inflation, and financial independence.
- JD Roth
But Things "They Are a Changing"
Soon I will be switching from Blogger to my own domain so if you guys want to keep up to date with all of my posts and not miss a beat, then please 
Subscribe to RSS
. That way, you'll get full continuity with my posts and for which, I will be truly grateful!
Inserted: 2008-11-28 14:05 (1 year, 8 months ago)
Prioritising so You Can Have Your Chosen Way of Life
.Life is all about compromise. In almost everyday situation we come across, we have to trade one item off for another. For example, when I buy cream cheese, I usually go for the lower priced version rather than the much more well known Philadelphia. Why? Because I think the taste is identical and I get to save money at the same time too.
However, if I'm buying that delicious yeast spread for my toast, I always, always, always get the real Marmite. All of the others I've tried, especially in this part of the world, aren't quite the same.
I'm trading off the price of the goods for the taste. Usually I'll go for the cheaper option but in this case, there is no comparison, it has to be the original. I consider this to be a trade-off I am willing to take.
It's a Trade Off
Every single day, we're forced to trade something off against something else. Yes, you can go out for lunch with your co-workers every day but then you wouldn't be saving as much as if you'd brown-bagged your sandwiches before you left in the morning. Of course, you don't want to cut it out completely either since there wouldn't be any fun in that at all. It's a compromise.
It's the same with anything. You can take that expensive holiday abroad and enjoy it for 10-14 days, or you can choose to invest that money and spend 3-6 months there in 20 years time. By that stage in your life, you're probably more financially sound and more importantly you also have more time too (you're not still working in 20 years are you?).
Of course, you never know if you'll still be able to do that in 20 years time but that's not a big worry since you've already decided in your own mind what is important to you now. What is important to me now is my future lifestyle in 7 years time when I can semi-retire. If by then I want to go travelling, eat out every day or buy those large squidgy Marmite jars, then I'll do that - I'll do whatever is important to me then.
Choose Your Way of Life
Your future therefore is determined by the choices you make now. By deciding that your future is the most important thing for you, you should do everything you possibly can to make that turn out for the best.
If you have children, you might decide that they're the most important things to you, so again you should do everything you possibly can to make that turn out for the best too. You may decide the environment is your thing, in which case, give it a high priority in your life.
No matter what you decide, by channeling a lot of your energy into that area of your life, you'll be handsomely rewarded further down the line.
Prioritising for Retirement
As you all know, I have recently decided that my retirement is something which is very important to me and I am channeling a lot of effort into making it happen. Almost everything I do these days is somewhat influenced by my recent decision to both pay off my mortgage and retire from the daily grind by the time I reach my forties.
When I get up in the morning, I have my breakfast at home and wait until I'm in work for my coffee. I head home for lunch and I don't snack in the mornings or afternoons. My tea is usually planned - except when it's not - but I have reserves in the freezer for those times. I exercise plenty and am now biking. My car is about to be put on sale (just two more things to do) and my house is the smallest place I have lived in for almost 10 years.
The interesting point to note is this. Even though I have recently changed almost every aspect of my life - sometimes radically so - nothing seems overbearing. In fact, almost every decision I make now is influenced by my ultimate dream and in a lot of cases makes these decisions easier (it's almost obvious which of the choices I should take).
A Happy Life
And this brings me back to my chosen way of life. Even though my ultimate decision is to retire at 40, it has actually made the rest of my life, as it is now, a much happier and meaningful one. I prioritise time over TV, I choose exercise over going to the pub and I choose the great outdoors on a bike instead of a supermarket car-park in a car.
It just so happens that not only do these decisions make me happier, healthier and fitter, they're also making me wealthier and therefore one step closer to my ultimate goal.
What are you prioritising to get you closer to your goal?
Labels: planning, living, retiring
Inserted: 2008-11-13 22:08 (1 year, 8 months ago)
Who do you Consider Rich?
.When you were a child, who did you think was rich? Was it those movie or pop stars who had earned millions and had their own private planes? Was it those people who'd inherited their wealth, owned a mansion and had their own swimming pools? Or was it those people who could afford to go abroad for their holidays every year?
For me, it was all of the above. I used to look at a lot of people and figure that they were rich. And for some reason, I wanted to be rich too. At that stage of my life, it all equated to material wealth, personal possessions and the ability to spend money on whatever I pleased.
Nowadays though, my view of people who are rich is not exclusively based on money. I view people as rich if they are financially independent, keeping as busy as they like (maybe even working for themselves of course) and are happy in their lives. I also rate very highly those people who can spend time doing the things they love, whether it's volunteer work, a hobby or two, being with their families or even making a little money doing something of their own choosing.
The funny thing is most of the people I now consider rich, defined by the categories above, are either semi-retired or fully retired.
Who are these People?
It is mainly understood, but mistaken, that the people who retire early are wealthy. However, there are a number of factors which goes against this viewpoint. For a start, to be retired doesn't mean you have to have a whole heap of money in your account. Nor does it mean you have earned millions and millions over a long and prosperous career.
All it means is that you can live on the amount of money you passively earn.
Or put it another way, you have reached that crossover point whereby your expenses are lower than your passive income. This means that, without lifting a finger and being careful with your expenditure, you no longer have to work.
Of course if you are only semi-retired and you still work a little, that income also adds up to offset your expenses so you can probably reach this point earlier than complete retirement. Yes, you might have quit working for someone else but at least you get to work on your own terms.
Getting There Faster
When you look at what I said earlier - live on the amount of money you passively earn - you can see that it is an easy equation.
Passive Income > Expenses
Whilst it is fairly simple to understand it is a lot harder to put into practice. Writing this blog, for example, helps me to put more things into place so that it becomes easier and easier and hopefully, I can reach that crossover point sooner rather than later.
As you can see, you can attain this point by increasing your passive income. But you can also attain this point earlier if you reduce your expenses. You'll start to realise that this is also exactly what you should be doing now and not just in retirement. You life should be organised so that your lifestyle in retirement is similar to your lifestyle now. There's no point scrimping and saving now to then splurge in retirement.
Similarly, there's no point spending like crazy now hoping that you'll be more frugal in your retirement.
By actively setting out your stand, how much you earn, how much you spend, you'll also be setting up what you need to get past that crossover point and into retirement. In fact, you might even be able to plan it years in advance, like me!
Everyday People
You mightn't have realised, that many people who are already retired, look exactly the same as you. They never had a hit record, they didn't inherit large amounts of money nor did they win the lottery. Instead, they seem to go for the bargains, don't buy designer clothes and clip coupons when they can.
They don't buy new cars, they don't need a huge house nor do they try and keep up with the Jones. In fact, they look just like regular people next door. You might even think that they don't have a whole lot of money at all, after all, their car isn't as big nor shiny as all the others in the local driveways.
But the truth of the matter is that they are richer than many of the people living in the same street. Probably richer in monetary value yes, but even more importantly, they are also richer in time too.
The reason?
Because they are retired.
They have been through the cost-cutting exercises, paid off their debts, own their houses outright, saved up an emergency fund, invested in the stock market or property and increased their income. Because they've done all of this previously, they now have the time to do whatever it is they please.
It is these people I now consider rich. They have the time to enjoy a great many things in life. After all, time is the one thing we can't earn more of.
Let me know who you consider to be rich?
Labels: planning, living, retiring
Inserted: 2008-10-24 22:18 (1 year, 9 months ago)
New Meme: Paying Yourself Last
.There has been a bit of a flurry in the PF blogosphere about a new phrase: Paying Yourself Last.
Recently, I described how Paying Yourself First was a good thing to do and that I had started practicing this to make sure I can get ahead on my retirement plan. The funny thing is though I had been Paying Myself Last for a number of years though I guess it never really had a name back then.
"Pay Yourself Last" and What It Means
As stated in the earlier article, paying yourself first is a fully automated process. You get paid, you siphon off some money, maybe a percentage of your salary, and you forget about it. Nice and simple, easy to do and low levels of mental investment needed.
Paying yourself last however requires a bit more effort. It also relies of having a few things in place so that you can actually keep a track of how much you should pay yourself at the end of the month.
Tutorial for Mars Colonists
You get your pay on the 1st of every earth month. Let's say for the sake of argument, you get 1,000 Klicks (imaginary space money) take-home. Your split scheme kicks in and those automatic transfers you've set up take action. You send 100 Klicks to your Emergency Fund sitting in a high interest savings account on Earth, 50 Klicks to your Freedom Fund on Mars and you have to pay rent of $450 Klicks for your bedsit on the space station above the Red Planet's surface. Luckily for you, all your bills are included in your rent (solar power is extraordinarily cheap here anyway).
Budget Required Before you Can Pay Yourself
You have 400 Klicks left for which you need to budget. You've budgeted for food, clothes, TV (or the high-tech equivalent) and you also have some 'fun' money to play with. Unfortunately for you, that's your 400 Klicks accounted for for this month, as it is every month.
You know this since you've been keeping a budget for an Earth year or so and you know about how much you spend on each of these categories. Very rarely do you go over.
But sometimes you come under. Unfortunately, in the past you decided to spend what was left on the last day of the month - mainly because it would make you feel happy - but also just because you could.
Change Your Ways - Pay Yourself Last
This month however, you decide to give yourself a break from that end of month splurge. You've come in about 75 Kicks under budget this month, mainly because you didn't buy any clothes but also because you got some bargains at the Light-Speed grocery store and didn't go out as much as other months (the Inter-Galactic Olympics were on so you sat in and watched a lot of TV).
You decide that, instead of heading to the shops to spend it and make yourself feel good, you Pay Yourself Last and make yourself feel even better. You duly transfer your 75 Klicks into your retirement/savings fund. After all, a Klick saved is a Klick-and-a-half earned before tax. Also, a Klick saved now is worth quite a few Klicks in your retirement fund by the time you want to head to Europa and settle down 20 Earth Years from now.
The Present and Not the Future
Yes, I know, that story is set a little in the future but the funny thing is, that's where you need to be looking when you decide what you're going to do with that left-over money at the end of the month.
If you only take one sentence away from this post, let this be it. "... a Klick saved now is worth quite a few Klicks in your retirement fund ...". Substitute Klicks for your own currency and away you go to a more prosperous future, whatever planet you decide to retire on.
Please comment and let us know some of your other tactics for saving more before each month is out.
Inserted: 2008-10-18 09:51 (1 year, 9 months ago)
Employer Contributions to Retirement - Like Free Money
Would you throw away free money? Would you decline if someone said "Here, have this" and shoved a whole wad of cash into your hand? Would you say no if your employer decided "to hell with it, we're giving extra money to all our employees"?
Of course you wouldn't. Saying no to free money isn't something many of us would do.
But that's what a lot of people are doing if they are not using Employer Contributions in one of their retirement plans.
Tossing Away Free Money
MighyBargainHunter says it better than I could: these people are Tossing Away Free Money. Granted, it's not money you will see for a long time but that's probably why people don't think of it as real. I'll tell you what though, when I reach retirement age, it'll definitely feel real in comparison to people who did say no.
After all, you're working anyway so why wouldn't you want to make the most of it.
Should I Join?
As always, that depends, and as always, you need to look into it yourself. You need to figure out (along with your financial planner) what kind of money you need for retirement, what age you want to retire and what standard of living you want to have. All of these choices must be factored in. Of course, you don't know what the future brings but you can only plan on what you know rather than what you think might happen.
One thing you do know is that if you're saving 4% of your salary and your employer is giving you 4% of your salary on top of that, you're basically doubling your chances of coming out on top in the long run, if not more.
Regarding KiwiSaver
Note: New Zealand specific section.
I have heard a number of detractors of KiwiSaver and I'm sure they are all valid concerns. Yes, I know it's not guaranteed by the Government but then what is? Your house? No. Your shares? No. Your savings? No. How is this any different? (Yes I know that certain bank accounts in the States are insured by FDIC but that doesn't affect us in New Zealand.) 2008-10-07 Interesting Update: There are now calls for a bank insurance.
Call me simple if you like but the way I see it is:
- you give 4% or 8%
- your employer gives (currently) 1%, rising to 4% by 2011
- you get an initial $1,000 from the Government
- you get tax-breaks paid in as well
That's a lot of free money any way you look at it.
Of course, if your KiwiSaver plan invests in stocks and property, you may end up losing a lot of money. However even before you've chosen your plan, you've more than doubled-your-money so hopefully the plan won't go down as much as that.
Looking at it like that, you're still ahead and you also have the option of more conservative funds which also takes out a lot of the risks (though for a possibly lower return). Overall, the fact that your employer takes out your contributions before your salary has hit your bank account, makes it the easiest and simplest ways to save for retirement in New Zealand.
Let me put it another way. I joined KiwiSaver a year ago and already I have a few thousand dollars more than I would otherwise have. All I did was fill in the form and that took about 10 minutes. Not a bad return already.
Have you started a retirement plan yet? Are you getting free contributions from your employer? Do you get any tax breaks from your Government (please state your country)? Or are you doing none of these things and why? Let us know.
Inserted: 2008-10-05 18:44 (1 year, 9 months ago)
Introduction
As stated in the description to this blog:
My plan is to retire at 40. That doesn't mean to stop working, it means to stop working for other people. I want to financially secure so I can do whatever it is that interests me ... which of course may still be to try and earn a decent amount of money at the same time! At least I'll be enjoying whatever it is I choose to do :-) This blog is about my journey towards that goal. Wish me luck!
I wanted to the above description this in the first item since I expect it will change over time and this helps remember what this blog is all about. Not only that but it will keep reminding me why I'm doing what I'm doing ... saving money, being frugal though still enjoying myself ... since in the future I hope to be doing a lot more of that.
This blog also lets other people know what I'm doing, not because they're interested in me but because they're interested in doing the same thing themselves. I mean, who wouldn't want to retire at 40?
Finally, let me just define what I mean by retire since it's probably not what a lot of people think. My plan is to be able to quit my day job by the time I'm 40 and go and do my own thing. I won't be able to live on my savings since it won't be enough but I want to be in a good finacial position whereby I don't need as much income. Whatever I do (future postings to define some possibilites) it'll be a hobby of some sort and something that I entirely enjoy. Also I'll be my own boss which will make a big difference.
I hope you enjoy taking this journey with me and maybe you can let me know how you're getting on too.
Labels: retiring
Inserted: 2008-09-11 23:40 (1 year, 10 months ago)