Dealing with Early Retirement Obsession

There will come a point, no doubt, in every early retirement preppers journey where he/she will become extremely obsessed. (At least i hope that its not just me.)

You will start counting every day and dollar you have to retirement. You will search for every book and blog for every single detail which increases your chance of early retirement. And if you are like me, you will tweak and tweak your early retirement spreadsheet several times a day before you feel at ease. Don't judge me, you will get to this point if you want early retirement bad enough.

The key point is to realize that this is merely a stage that you have to go through and that these are just the means and not the ends of your goal. I have to admit that i am still at this stage, although i feel that I'm exiting it for the next soon.

For those of you who are beginning this stage or are stuck chest deep in this obsession, here are a few pointers to hopefully help you out.

ps if you say you are not obsessed and immediately have to check your spreadsheet or  think of new methods straight after you read my blog...sorry bro.. you are.

To the therapy room ~

• First of all, like all problems like alcohol or gambling addiction, the most important step is to realize and admit that you are obsessed with early retirement. Only then can you see the full picture. Having this obsession for a short while is okay as it drives you to save more in the early stage. Dragging it out for too long is where this obsession gets unhealthy, not unlike any other obsession.

• Next, you will have to realize that after the initial stage of planning and savings, the small little obsessive tweaks here and there will at most shave a few days off your retirement. The time spent will not be worth it. You should instead be spending your time with your family. All you have to do is stick to your decided path and only tweak or tinker when you hit a major milestone or feel that your are drifting off your path.

•  Lastly, pick up as many new skills and hobbies as you can - inexpensive ones of course. There are 2 reasons for this pointer. The first would be that it takes your mind off constantly obsessing about early retirement. The second would be that these skills and hobbies are the things that will keep you occupied and your mind alert when you are finally into retirement.

There it is, my humble advice to you. I really hope it helps, however much or little.

My last parting advice would be to always share your plans, your feelings and even your obsessions with your family or spouse. I know its hard...as a guy to share his feelings..(Gals have no issue in this department..at least my wife doesn't - sometimes i think i should invent pills for verbal diarrhea).

Anyway, sharing will really bond you and take some burden off your shoulders. Remember that you are never truly alone. Family is forever.

As always, save more, spend less and invest wisely.
P.

My Arch-Nemesis... The Evil Sale Sign

Yeah you read it right, my biggest enemy are the brightly colored sales signs that are frekin everywhere. I myself am immune to them, but like all evil villains, they tend to attack those who are closest to you for they know that it is there that you can be hurt the most.

In my case, it's my wife, C. Sale signs really know how to do a number on her without her even realizing it..just like moths to flames. I wonder what this mad incessant need to hover to any sale sign is. It's a typical case of having to spend to save. I can understand if she has only a few pieces of clothing in her possession .. but as you can guess...she has a truckload full of clothes..not the small trucks you often see in Singapore but those large 18 wheeler kinds. I often joke that if i sell all her clothes, shoes and bags, I'll be a multi-millonaire.

I know you are waiting for the part where i give you advice on how to stop this zombie like madness...however, i am sorry to report that as of now, i do not have any remedy or cure.. we can only put up with the groaning and moaning of "Brainssssss..." oh wait, I meant "Saleeeeeee...." Only advice I can offer is not to allow them to gather into hordes.. for example, sisters, mothers and girlfriends. When this happens, bless your soul, there is no stopping the stampede of sale maddened zombie girls.

I hope that upon further research and psychological retraining on my test subject  evil dead   wife, i would be able to report back with a cure. Till then, stay alert and avert their eyes from the signs. I wish you all the best in your endeavor.

Over and Out.
P.

Book Review of the Coffee House Investor by Bill Schuultheis

 Sometime during the beginning of April, I was at Times bookstore scouring over the finance and self help section for yet another book to read. ( Feel my wife's eyes rolling behind my back). After about half an hour or so, i decided on a book called the Coffee House Investor.

The book is written very simply yet holds very powerful messages. Its tagline being "How to build wealth, ignore Wall Street and get on with your life." I guess the term ignore Wall Street caught my eye. In MY opinion Wall Street can be contextualized into things such as market noise, analyst reports and random idle talks and speculations.

The author constantly reminds of 3 lifelong and important principles that we all know to be true. 

They are:

1. Don't put all your eggs in one basket. 
2. There is no such thing as a free lunch.
3. Save for a rainy day.

The book is filled with many examples and careful explanations thus making the authors concepts very easy to understand. Basically, the essence of the book is very similar to that of The Millionaire Teacher by Andrew Hallam. It preaches heavily on the benefits of Investing in Index funds. Some of which are low cost, diversity, ease of re-balancing and the ability to beat Mutual funds or Unit trusts in the long run.

The part of the book that left an impression the most was a poem by Robert Service the author posted titled "The Spell of the Yukon" It goes something like this...

I wanted the gold, and I sought it;

I scrabbled and mucked like a slave;

Was it famine or scurvy, I fought it;

I hurled my youth into a grave.

I wanted the gold, and i got it-

Came out with a fortune last fall,-

Yet somehow life's not what i thought it,

and somehow the gold isn't all.

The poem struck a chord within me as it kinda assured me that my goal of early retirement to do things that i want to do and spend time with people i want to spend time with is right. What the point of working your youth away earning that massive sum of money only to lose the only thing which can never be gotten back...time.

Time is the most important thing that you can possess. Don't waste too much of it attaining wealth, only to find at a later age, you would have given any wealth to get that time back. Think upon it and i hope what i have written will open another option in life for you.

As always, save more, spend less and invest wisely.. and also.. make the most of your youth.

P.

Are you commited to your cause? Hear no Evil, See no Evil.

Good morning everyone, its finally Saturday. What a relief after such a long week at work.. Thankfully there are only 4 of those next week.

So...What is everyone planning to do later? What??? Window shopping at the mall? (HisssSsSsS!!!)... Just kidding. Anyway, have you ever wondered how committed you are to your cause? How much temptation or peer pressure can you resist to in order to get to where you want to be faster?

To me, I have never felt the need on spend on most, i repeat MOST consumer goods. My only kryptonites being the latest gadgets and drinking. I kind of understand the obsession my wife, C has over shoes and bags and clothes and jewelry and wallets and macaroons and... did i mention shoes(100 pairs...OMG..WTH... FML..feel free to add any other abbreviations.)

On second thoughts i realize that i don't. How can someone be obsessed with so many different things..erm.. ok, enough of my rants.. back to the topic.

I'm very sure that many of us who have made the decision to retire early would have set a goal or goals as to how much they must save a week, a month or a year. In order to attain that early retirement, we would have to strictly adhere to this goal and not waiver as every waiver would cause that much awaited retirement date to be pushed further and further.

We must not give in to the temptation of buying these wants, and if we really do, we must not impulse buy only to realize 2 weeks after that we don't really want that item at all. What i normally do is procrastinate ( naturally gifted in the art of procrastination). This is one of the only few scenarios is life whereby procrastination serves a good purpose. I would start by reading reviews, scouring Cnet for bad review(while secretly hoping to find none). Then i would talk to my wife about it, weighing the reasons as to whether i really do need the items or not. and finally going to a few thousand shops to view the item multiple times - I Kid.....you...not.

The outcome usually turns out the same, i realize that i don't really want the item. ( Mainly because i procrastinate so long that the next version comes along..and my wandering eyes...wander..) On the other hand, when after all the procrastination and pondering and I still want the item..I would then purchase it. With money on hand and not on credit.

That said, as i grow older, I feel that my priorities are changing. I do not feel the need to buy so often anymore. I now shift my focus more towards experiences rather than on consumer products. I would want to learn and experience new things. Learn a new language, a new skill, go hiking and so on. I am beginning to feel less need of material things. I kinda like this change and hope that one day, my other half - that shopaholic, with her morbid obsession to buy - will share my views in life.

Any suggestions as to help her see things my way without counseling will be welcomed! I'll buy you an 8 course meal at a top restaurant if it works.. yes..I'm pretty desperate. =)

ps. you are only as strong as your weakest link.

As always, save more, spend less and invest wisely.
P.

My Portfolio Allocation 26 April 2013

Here is my portfolio allocation:

• Cash...................36%
• Stocks................44%
• Bonds.................9%
• Gold...................3%
• Unit Trust............7%

In the past year, I have drastically reduced the amount of stock i hold for 2 reasons, one which many would find stupid, was fear. Fear that the market would collapse for reasons such as the European crisis. I have to admit that this fear was borne out of watching too much news and reading too much into analysts reports. Instead of trusting my judgement and holding on to the good companies that i have bought, i sold them. That said, i have to admit that i slept better at night after selling.

The other reason, was because i was going to buy a house and start a family and therefore preferred not to carry too much risk. I currently hold many individual stocks consisting of blue chips, reits and low cap stocks which I will discuss further in another post.

I am currently trying to move my investments towards one that is more heavy on index funds and less of individual stocks ( Influenced by the books The coffeehouse Investor by Bill Schultheis and The Millionaire Teacher by Andrew Hallam - Will do a review on these books soon). I would still have to carry some individual stocks as i would like to keep my annual yield at a minimum of 5%.

The gold segment of my portfolio was only added recently when the price of gold dropped to a price i was comfortable with. I do not really believe in gold and therefore would only hold a small amount of it. However, if the price should drop a lot more, i would consider buying physical gold.( Not as an investment but more of a personal vanity thing.)

As for unit trust, the only reason why i got it is because i want to be consistently investing in something every month(sounds stupid i know) and DBS does provide no sales charge on the regular savings plan for up to $500. I do not put a lot into unit trusts due to the high annual maintenance and management fees which i know will slowly but surely eat into my returns in the long run.

As for the cash portion of my portfolio, i am currently waiting for a market correction so that i can invest it. I have already set aside money for my house and therefore the whole sum of cash is investable. 

Well, that's it for my portfolio allocation! What's yours like? Please do share so that we can learn more from each other.

As always, Save more, Spend Less and Invest wisely
P.

Are you saving enough?

As per the title, do you think that you are stashing away enough money? Are you saving 30%, 20% or nothing at all? Well, it's never too late to start but be warned that the later you start, the longer you have to work and the later you retire.

The amount of your salary that you save per month is directly co related to when you can retire. Let's say you save 25% of your income per month for a year. That would mean that you have a year or retirement saved up ready to be invested after every 4 years.(Presuming you have the same level of expenses after retirement) And if you save 50% of your income, you would have a years worth after 2 years.

An example would better illustrate this. Here are 2 friends, Jon and Mike, both 25 and are commanding the same income of $5000. Jon saves 25% and Mike saves 50%. They both invest their money at a rate of 8% and require $3,500 a month to cover their expenses when they retire.( Higher expenses due to dream of traveling and fulfilling other things they always wanted but did not have time to do)

With the power of higher percentage of savings and the magic of compounding, Mike would achieve retirement at the very young age of 35. Jon on the other hand would have to slog for another 6 years of this life to reach the same level as Mike and retire at the age of 41.

Are you ready to save more now to attain an earlier retirement? Or will you rather enjoy that little bit more now and have to retire later. I choose to save more now and retire earlier. For those with partners who differ in your views of saving versus spending, you can always apply the bad mood fund and adjust slowly to an amount you are both comfortable with. I mean, there is no point in starting your journey with an argument or fight with your special someone when one of the key reasons for early retirement would be to get to spend more time with them.

With this, I leave you to ponder your priorities as you yourself know which path to take best. I wish you wealth and happiness in whichever path you choose.

As always, save more, spend less and invest wisely.
P.

29,200...29,199...29,198................RIP

Hi all, how has your day been so far? Or should i ask, how has your life been so far? Do you know what the title represents? Do you know what the numbers mean? Well, it's the total number of days that a person who lives till the age of 80 has to live.

Do you not feel that when you look how much time you have in terms of the number of days, it looks really short? Lets say you are 25 this year, you would have approximately 20,000 days left to live and if you are 35, about 16,500 days left to live.

Consider this example, Mike, who is 35 this year working at a mid level job with working hours from 9 to 6.
He takes an hour to travel to work and another hour back. That is a total of 11 hours of his day sacrificed in exchange for an income. Say he works till the retirement age of 65. For the sake of simplicity of calculation, a year would consist of 260 work days( 52 weeks*5 ). That would be 2,860 hours per year or 119 days and by the age of 65, would be 3,570 days.

The situation only gets more disastrous. Do not forget that out of these 16,500 days, about 1/3 of it or 8 hours a days will be spent sleeping. According to my calculations, you would be left with only a miserable 11,000 days left to live(16,500*0.66666), and that's considering you live to 80 and don't work over time and weekends.

How does it sound now that you have only got 11,000 days left to live? Scary right? Everyone has different choices in life. Mine is to try to save as much as i can, cut my spending to a minimum and invest wisely so i can stop wasting my life working and worrying about money. The precious number of days i have left would be better spent on my loved ones and myself.

What are your thoughts on this? Are you of a similar thought? Are you going to live to work or are u going to work to live? Share your thoughts, i would really appreciate views from different people.

As always, save more, spend less and invest wisely.
P.

My Checklist for Retirement

Since i have decided to document my journey, i feel that it is only right to roughly state where i am on it. Honestly, i am only at the beginning, i would say that I am at about the 10% to 15% point ( I will show my portfolio allocation in a later post). The requirement for me in order to declare myself retired would be that i would have to have completed the following tasks.

1. Clear my mortgage.
2. Have an income from different streams equal to a min of all my expenses.
3. Have $0 debt.
4. Have an emergency fund of at least 1 year worth of expenses.
5. Have the min sum in my CPF

Sounds easy when generalized into these 5 point but in reality, not so. I have to continuously work hard at achieving these 5 targets should i want to retire before the age of 45. Why 45 you might ask? I chose this number because based on my calculations, which I will show in a later post, 45 would be the age whereby i can achieve these goals without compromising my current lifestyle too much. ( Wife is a spender, new house, new renovation.. etc etc)

45 is also an age whereby I am not too old to do the things i want to do such as travel, hiking and other such stuff. I would still be physically able to backpack Europe at that point, i dream i can only dream of now.

Clear my mortgage

Not clearing the mortgage during retirement would mean that 2 things, i have an added expenditure that is not within my control( cannot choose not to pay ) and my income would be reduced due to the fact that i will not longer be contributing to CPF thus I will have to pay cash for my mortgage. Not a wise choice.

Have different income streams that equals a minimum of my expenses

I would prefer not to draw down on my investment portfolio as i would like to leave it as a form of inheritance to my children. I would therefore try to create as many streams of income as possible to live on comfortably. Currently, my wife and I are working on several projects which should reap fruit in the near future. If not, we are still young and will learn from our failures and try again.

Have $0 debt

Unlike many who believes in good debt and bad debt, i am one who thinks otherwise. To me, all debt are bad debts as it only means that you are owned by someone either directly or indirectly. At the point of retirement, i do not want the chains of debt binding me. No car debts, no housing debts and definitely no credit card debts.( I always pay my credit card bills on time.)

Have an emergency fund of at least 1 year worth of expenses.

In life, nothing is ever certain, you never know when you will need extra money. I hate to think that i would have to borrow from someone to support my family in times of need. Instead, i will have an emergency fund containing at least one years worth of expenses. This would also be a safety net so i will, hopefully never have to sell my businesses or investments at a downturn to fund my living expenses.

Have the min sum in my CPF

 The reason for this option is purely personal. I feel that having an additional income coming in at the age of 65 would be something to look forward to. This extra stream of income would be gotten by putting the minimum sum from both my wife and I into CPF Life which should provide a nice extra monthly income  for several years. An extra benefit would be that after my wife and I leave this place for a better one, our kids would get whatever is left.( Since the earlier we travel to a better place the more our kids get, i seriously hope they will love us enough not to wish us an early voyage.)

These are my requirements i set for myself before considering myself retired. What are yours? I would love to hear about them so please leave comments.

As always, save more, spend less and invest wisely
P.

Compromising on differing financial and retirement goals in a relationship

Being married has taught me several things in life. To be patient, go give and seek nothing in return, to always try to find a compromise and most importantly, to always have to work and put in effort into something or someone that means everything to you.

Firstly, i would like to say that like many other couples out there, my relationship consists of a spender (A.K.A the wife) and a saver, me. More often than not, especially after reading books and blogs on being frugal, i would start preaching about the importance of being frugal to my wife, C. Which almost always leads to 3 different scenarios. A hardly convincing agreement, a roll of her eyes plus sneer combo and the worst... the I don't agree to this, we should spend what we earn as a reward conversation.

Through the years i have known her, i have learned to compromise and come up with tweaks to my obsessive saving habits so as to integrate her obsessive spending habits ( 100 Pairs of shoes and counting.."'Retail Therapy" she calls it... ) into my life. One of the very effective methods was the use of the bad mood fund or the B.M.F in short. I can't remember where i read this from but thank you whoever blogged about this.

What is this bad mood fund you might ask? Well, its a simple concept whereby we set aside a sum of money every month and deposit it into a separate savings account. It is left there to accumulate till THAT WOMAN my loving wife feels like spending it -  bad mood or not. This way, she does not feel that she is being restricted or bounded.

I feel that it is extremely important to communicate with your other half to get a feel of their views on both your financial and daily lives. Find out what they think of your views of financial planning and retirement while in turn finding out theirs.

The key is to be comfortable talking to each other about money as it can be an extremely touchy subject. Once you have laid out everything on the table, you can then decide how best to work things out and compromise so that everyone is happy.

I wish you all the best in your financial and daily lives with your loved one/s.

As Always.. Save more, spend less and invest wisely
P.

Life & Money - Change is the only constant

Everyone should have a plan in life. It's like a lantern that will guide your path and lead you to the destination you have chosen.

Having said that, i also have to say that a plan should not be extremely concrete as throughout the many stages in life, circumstances will change. When this happens, you should be flexible enough to alter your plan and do what is necessary to still arrive at your selected destination. You might have to take a longer time, save more money or take on more risk in order to do so.

What i have said leads to what this post is really about. It's about finding that investment method or strategy that you are comfortable with which will finally lead you to financial freedom or even better yet, an early retirement.

Throughout my short investment journey, I have tried and tested quite a number of investment strategies such as trading constantly, permanent portfolio, lazy portfolio and a few others. I have to admit that part of the reason to this is because i have been heavily influenced by the books and blogs that i have read. I do not know how others view this constant change but i feel that it is a good way for me to pluck a little knowledge from each source and eventually form an investment strategy of my own to carry me to my destination.

There are still many years ahead and I am sure that there will still be many crossroads and forks in my path to an early retirement. Changes that i can control like having a kid, owning a home and increasing my insurance coverage or changes that i have totally no control of like interest rate fluctuations, the economy and natural disasters.

No matter the change, we as humans have to adapt, survive and get out of any good or bad changes stronger.

What investment strategies have you tried so far and how have you tweaked them to achieve your goals and reach your destination? Feel free to share them here.

As always, save more, spend less and invest wisely.
P.

About me and my goals

Where do i start? So many things to say but so little time.. I guess it's the same with life. So many things to do and goals to achieve but with such a limited time to do them. What if i could give myself more time to do the things i want to do? No, not by extending my life, ( although that would be nice in the distant future) but by retiring earlier than what most Singaporeans would call the norm. In order to do this, sacrifices will have to be made and rules will have to be strictly adhered to.

Through this blog, i will try to record my thoughts and methods i will use to achieve this early retirement. I am currently in my late twenties working in the engineering sector and I plan to retire no later than the age of 45. I am currently married and am waiting for my home. (Mortgage payments are a killer to my early retirement planning). As for kids, i am definitely planning for at least 1, hoping for 2. I am pretty sure that if i plan my finances well enough, my wife and I, together with our future kids would be able to live pretty comfortably when we retire.

I hope that through this blog, more Singaporeans would be encouraged to save more, spend less and invest more in order to be able to spend more time with their loved ones instead of sitting alone in a cubicle wherever they are in Singapore.

I'm kind of running out of time and would have to sign off here. Loads of work to do and daylight is running out. I'll be trying to post as often as i can with a minimum of 1 post a week. Till then, see you and live well.