Tag Archives: Financial Independence

Dear Generation X: Here’s how to fix your Finances

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The number of financial responsibilities facing Generation X – those ages 37 to 52 today – seems overwhelming. Getting married, having kids, and raising a family can be expensive enough. Now factor in building an emergency fund, paying down the mortgage, setting aside money for retirement, saving for your child’s education, and everything else that comes along with improving your finances. It’s a tall order – I’ve been there! In fact, I’m living it.

But let’s skip the scaremongering and over-generalizations and get to some common sense advice.

How do you balance paying off debt, saving, and investing with the everyday costs of supporting a family? Let’s start by setting up a simple plan for each of these categories to ensure that you are on the right financial path. Here’s how to fix Generation X finances:

Treat consumer debt like a financial sin

You can’t move the needle forward financially if you’re constantly spending more than you earn. But when your mortgage payment, car payment(s), daycare costs, groceries, and gas take up your entire available budget then you have no wiggle room to plan for unexpected costs.

Not only that, when the “I deserve this” moments come up and you want to treat yourself or your family to dinner, a movie night, or a vacation you end up going into debt (just this one time) to make ends meet.

Start with a list of everything you currently spend over a period of three months. Where does all your money go? Find a way to slash expenses so that you’re no longer going into debt just to get through the month.

Make it a rule: No new debt this year

Now it’s time to tackle your current debt, whether that’s in the form of a lingering line of credit or (gasp!) a high-interest credit card. If it’s the latter, put all savings and extra spending on hold and throw every extra dollar at that debt until it’s paid off.
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What the first week of Retirement is really like

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By Fritz Gilbert, RetirementManifesto.com

Special to the Financial Independence Hub

I have no idea why I’m fascinated by the “First Week Of Retirement,” and I’m curious if others also wonder about it? I suspect many do and dedicate this post to those of you who wonder what the first week of retirement is really like.

Now that I’m living the first week of retirement, how would I describe it? Is it what I thought it’d be, or is it different? Is it a big deal, or just another week? Is it weird, or normal? Is it scary, or exciting?

Yes to all of that. And no to all of that.

What does Retirement taste like?

Have you ever tried to explain what something tastes like? Let’s go with chocolate, as an example. How would you describe it? What words would you use? Describing the first week of retirement is like describing the taste of chocolate. It’s really good, but it’s hard to describe.

Yeah, the first week of retirement is alot like that.

It’s good, but I can’t think of the right words to describe it. Regardless, today we’re going to try.

What the first week of Retirement is really like

Is It Like Taking A Vacation?

A Vacation In Norway. Is it like that?

As I write these words, I’m 5 days into my retirement (a true rookie). Is the first week of retirement like being on vacation? On one hand, kinda sorta, but that falls far short of describing the reality. It’s similar in that you’re off work for a few days, but it’s very, very different in the knowledge that You’re Never Going Back To Work.is

 

A Vacation that never ends will always feel different than a two-week vacation. Full Stop. So, imagine the first half of your vacation, where you’re all pumped up and excited. But you know it lasts for the rest of your life. Yeah, it’s more like that.

Only different.

I love swimming in my local mountain lake.

Is it like Saturday every day?

With less than a week of retirement under my belt, the “Saturday” analogy seems to be a better description of what the first week of retirement is really like. Like the Saturday’s you’ve experienced for decades, you’re free to do what you want to do. You’re ok letting your email go unchecked for a day or two. You can stay up later, you can sleep in.

You’ve got time to head up to the lake for that swim.

But it’s different because you know that there’s no Monday looming on the horizon.

What’s chocolate taste like?

Yeah, it’s hard to describe.

Is it scary, or exciting?

I had a friend ask me if I was “scared.” I answered that I was 98% excited and 2% scared. Sure, there’s some apprehension, but it’s a really small piece of my mindset in Week 1. At this stage of the game, I’m just learning my way around this thing called retirement, and enjoying the sensation of the very first Tastes Of Freedom I’ve worked so hard to earn. It’s only scary if you make it scary.

I know we’ll travel through many phases during our retirement journey, and I’m sure some will be more “scary” than others. We’re planning to take it all in stride. One day at a time, with some thoughts on where we want this thing to lead while leaving some freedom to enjoy the Serendipity of the thing.
You can choose what you want your retirement to be. Don’t choose scary. Life’s too short.

Choose the attitude with which you’ll live your life.

I’m choosing excited (and yeah, just a wee bit scared). Continue Reading…

Why Sean Cooper quit his full-time job after 8 years

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What a thoughtful goodbye email. Gosh, it’s hard to keep a secret! I guess everyone knows about my mortgage burning story, even my colleagues at work!

 

By Sean Cooper

Special to the Financial Independence Hub

If you follow me on Instagram, you may have already heard the big news. After 8 years, I’m quitting my full-time job at the pension consulting firm. I gave my employer plenty of notice. I handed in my resignation 2 months ahead of time. June 1st will be my last day in the office. To celebrate this big career milestone, I’ve booked a weeklong trip to New York City and Boston.

I always planned to quit my full-time job. I just didn’t think it would happen so soon. I’m at a crossroads in my life. I’m 33 years old and not getting any younger. It’s time to make some tough “adult” decisions. I can either take the easy road and keep working for a company where I’m comfortable, or take the hard road and become a full-time entrepreneur. I chose the latter.

Keeping a promise to myself

A promise I made to myself after I burned my mortgage in September 2015 is that I’d slow down and get a better work-life balance. Unfortunately, that just wasn’t happening.

I’m someone who’s super ambitious. So, 6 weeks after burning my mortgage papers, I started writing a book. With the success of my book and speaking career, I’m finding myself busier than ever. I’m probably working harder now than when I was paying down my mortgage (no joke).

I’m still putting in the 80+ hour workweeks, waking up at 6:30AM and working until midnight or 1AM most days – and for what? I’m mortgage-free. I don’t have to work this many hours, but the problem is I love what I do. I enjoy my side hustle as a personal finance journalist, money coach and speaker more than my full-time job. I couldn’t keep working at this insane pace forever. I was tired all the time. Something had to give.

So with mixed emotions, in early April I made the difficult decision of choosing my budding career as a personal finance expert over my full-time career. It wasn’t an easy choice, but I was ready to make the jump.

Taking a risk

This was probably the most difficult decision I’ve ever had to make. It wasn’t easy to walk away from a steady, full-time job with benefits and a defined benefit pension plan. It was especially difficult for someone as risk adverse as me (I did after all pay off my mortgage in record timing in 3 years).

When I shared the big news with those closest to me – friends, family and coworkers – I didn’t know what to expect. Thankfully everyone has been supportive of my decision. Saying goodbye to my coworkers will be especially tough. My coworkers are like family to me. They were there when I burned my mortgage and launched my book.

It’s going to take me a while to get up and running. Luckily I have time and money. My house is paid off. I also (still) rent out the main floor of my house. The rental income alone can support me. I also have savings to last me for the years to come.

From a personal standpoint, it helps that things are less complicated. I’m single (I’m half joking when I say I’m still looking for a frugal girlfriend). I don’t have a spouse or children to look after. (Although this is a double-edged sword since I don’t have a spouse’s income to rely on either.) I’d probably hesitate to do the same thing if my circumstances were different and I was married with children.

You’ll never get rich working for someone else

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FP: How tax-efficient ETFs can help dividend and fixed-income investors

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My latest Financial Post column (on page FP8 of Friday’s paper) looks at how certain tax-efficient ETFs can provide investors with a measure of tax relief in their non-registered portfolios. You can find the full column online by clicking on the highlighted headline here: Friends with Benefits: How ETFS can help keep the taxman at bay.

By definition, investing in taxable (non-registered) accounts is inherently tax inefficient. Outside registered plans, fixed income is the most harshly taxed asset while deferred capital gains is most favorably taxed.

In between are dividends. As anyone who receives T-5 or T-3 slips at tax time knows, dividends create a yearly tax liability, although as Markham-based fee-for-service financial planner Ed Rempel observes, those with annual taxable income under $47,000 will pay little or not tax on Canadian dividends.

Foreign dividends are highly taxed like Canadian interest, but qualifying Canadian dividends generate the dividend tax credit. This eases the pain but retirees are often irked by the dividend “gross-up” rules, which can bump them into higher tax brackets and result in clawback of government benefits like Old Age Security. Continue Reading…

How to develop a Financial Independence mindset if your parents were reckless spenders

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By Alex Lawson

Special to the Financial Independence Hub

Our parents are our first teachers. We learn our values, our habits, life skills, relationship skills, and many other things from our parents, long before we venture out on our own.

One of the things that people pick up on is financial habits, good or bad. If your parents were reckless spenders, chances are you’re already headed down the same path. The good news is that it’s possible to change your mindset and learn to manage your finances so that you don’t make the same mistakes they did.

Separate yourself from them

The first thing you need to do is realize that you are your own person capable of making your own choices. Don’t tell yourself you’re irresponsible with money just because that’s how you grew up. Make the decision to be different and start telling yourself the opposite. Reinforce the idea that you can be financially responsible and independent regardless of how you grew up, and you’ll be able to start making better choices.

Decide on your goals

Many people that had financially irresponsible parents have never been taught to think about the future. Planning for retirement should begin as soon as you leave college. Do you think you’ll want to retire with enough money to live comfortably as you have been, or are you planning on securing complete financial independence by the time you’re 30? The process for saving and investing will be completely different based on your goals. Begin saving aggressively when you’re young so that your money will have more time to grow.

Make saving a priority

If your parents were reckless spenders, they probably didn’t teach you anything about saving. One of the biggest keys to financial independence is learning how to save properly, so that you can be prepared for both unexpected problems and for your future. Build savings into your budget before you even look at what type of housing you can afford. A good rule is to start saving 10% of every paycheck and live off what is left over until you reach the goal of three times your monthly income. Then, when your car breaks down or if you lose your job, you will have an emergency fund to rely on without having to go into debt. Continue Reading…