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How much do you know about financial independence?

Dec. 7, 2014, 4:56 p.m.
Posts: 90
Joined: March 2, 2011

This is one thing I was always curious about - a lot of people here sees to be upgrading bikes every year to always have the latest [HTML_REMOVED] greatest bike (carbon, 650b, etc.) - how the heck does everyone afford to do this? Is everyone just rich or are they making bad financial decisions by spending a disproportionate amount of their income on a $6k bike every year that is only marginally better than their previous bike?

Sometimes I get comments "wow nice bike, must be expensive" while they're riding their older frame. Which is totally fine, no judgement from me. It just gets me when they show up in a $30,000+ vehicle.

I spend more time on my bike than in my car, so I choose to put the money there. I used to drive a $1500 car with a $7000 bike strapped to the back. Now the car is worth about as much as the bike (neither with any debt on them).

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Dec. 7, 2014, 5:01 p.m.
Posts: 15768
Joined: May 29, 2004

Up in the Kispiox they call them "Hipnecks"

Down here in town they don't call us anything but "Sir".

Pastor of Muppets

Dec. 7, 2014, 5:51 p.m.
Posts: 26382
Joined: Aug. 14, 2005

Sometimes I get comments "wow nice bike, must be expensive" while they're riding their older frame. Which is totally fine, no judgement from me. It just gets me when they show up in a $30,000+ vehicle.

I spend more time on my bike than in my car, so I choose to put the money there. I used to drive a $1500 car with a $7000 bike strapped to the back. Now the car is worth about as much as the bike (neither with any debt on them).

When I think back to growing up with my parents and vehicles. They only bought one car new from a dealer back in 72 or 74. After that they always bought used. Only thing they did was took care of them and did stuff like preventive maintenance.

www.thisiswhy.co.uk

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Dec. 7, 2014, 9:28 p.m.
Posts: 18940
Joined: Oct. 28, 2003

I won't requote him, but nice work trail worker. Living the dream.

Cool to hear the carbon frames are on the cheap cars too. I really regret falling into the two new cars trap 8 years ago. Well, at least we still have two 8 year old cars.

So I know income and net worth talk is a little taboo in most circles but what about savings rate? What percentage of income are you saving for a rainy day? We are currently at ~30% when two years ago it was less than 8%. It hasn't really seemed like too much of a change in lifestyle.

Just ride bikes from home instead of in Kamloops. Make coffee at home instead of Timmys and I killed my Mcdonalds lunch habit.

It took me creating a spreadsheet to track this kind of thing before I could make massive gains. I had no idea the amount of money I was burning for nothing.

Dec. 7, 2014, 9:40 p.m.
Posts: 16084
Joined: Nov. 20, 2002

IME I didn't really miss the 10% I invested on a PAC for RRSP and in the long run monthly is suposed to be [HTML_REMOVED] lump sum investing

Dec. 8, 2014, 7:19 a.m.
Posts: 7707
Joined: Sept. 11, 2003

It took me creating a spreadsheet to track this kind of thing before I could make massive gains. I had no idea the amount of money I was burning for nothing.

This is one of those little things that end up costing people big in the longterm. I bring a home-made lunch to work every day. (90% of the time its leftovers - we don't throw away food - I was conditioned by my parents who both grew up in WWII enemy occupation and rationing and would go ballistic at the very notion of throwing food away). Make my own coffee at work, works out to like 50 cents a cup. I don't understand the appeal of Starbucks, Timmy's etc. I hate the coffee, plus virtually everything on their menu is really bad for your health.

My biggest single expense is 2 teenagers.

Dec. 8, 2014, 9 a.m.
Posts: 26382
Joined: Aug. 14, 2005

This is one of those little things that end up costing people big in the longterm. I bring a home-made lunch to work every day. (90% of the time its leftovers - we don't throw away food - I was conditioned by my parents who both grew up in WWII enemy occupation and rationing and would go ballistic at the very notion of throwing food away). Make my own coffee at work, works out to like 50 cents a cup. I don't understand the appeal of Starbucks, Timmy's etc. I hate the coffee, plus virtually everything on their menu is really bad for your health.

.

Not much difference then this of us who had parents born during that time in Canada and the UK. Everyone had the rationing and don't waste mentality. Though it did relax at least in Canada between May 1945 and my Grandad moving the family here in 1952 was shocked how much food wasted was then. Keep in mind the UK was still need heavy rationing due to the war then.

In regards to the kids….yep.

www.thisiswhy.co.uk

www.teamnfi.blogspot.com/

Dec. 8, 2014, 9:44 a.m.
Posts: 26382
Joined: Aug. 14, 2005

When I think about my parents spending habits these days. It is definitely different compared to even 1999. Back then they where definitely still following the Trail Worker post than they currently are.

Though I do admit I am not looking forward to the conversation I need to have with them next week when I see them. Not me but the future as they are 70+ now.

www.thisiswhy.co.uk

www.teamnfi.blogspot.com/

Dec. 8, 2014, 9:47 a.m.
Posts: 1647
Joined: Jan. 12, 2010

For me it is about enjoying life and spending a bit less than I make, being content, having a mortgage I can pay off, and having savings.

Looking forward, often the house ends up paid off as activities trail off, right when you will make the most in you life (last 10 years of work). As a result, it is surprising how much principal builds up over that decade compared to trickling in a return every year on a small principal.

If you're not paying rent and still managing to save a little each month worrying about 5% on $10k just isn't worth the day to day sacrifice in my opinion.

Dec. 8, 2014, 11:04 a.m.
Posts: 14967
Joined: Feb. 19, 2003

If you're not paying rent and still managing to save a little each month worrying about 5% on $10k just isn't worth the day to day sacrifice in my opinion.

Not trying to pick on you, but I used to think like that. Now I think of how many additional years of working I've committed myself to because of it. I've been meticulous about budgeting and tracking expenses for 10+ years, so I have a ton of actual data to back this up.

I checked back and in 2008 (my older docs are on another computer), my wife and I had a savings rate of about 23%. A couple of years ago I was doing a lot of thinking about working/retirement etc… someone here had linked off to MMM and I found it very interesting reading.

I ran an experiment that year (2012) for our annual budgeting discussion and built an excel sheet that tied our mortgage paydown back to our budget. Concept was simple, as we would allocate money to a budget item, the amount of money we could use to pay off our mortgage early would be removed. As we'd be planning how we'd spend money we'd literally watch months added to the tail end of the mortgage. We moved to a 45% savings rate that year because of that conversation.

It's absolutely amazing how things add up. I don't see any sacrifice in the hour or so I spend a week in tracking and categorizing our expenses (CC data download, excel).

Dec. 8, 2014, 11:53 a.m.
Posts: 1647
Joined: Jan. 12, 2010

I assume you're talking 45% of your after tax income as savings? Regardless, that is an impressive amount.

At that savings rate you're kind of making my point for me. i.e. at 45% you're presumably not talking $5k-$10k. Rather, you're talking about the larger principal amounts that really add up. With large values, and time for the interest to build you'll be in a sweet retirement situation.

Dec. 8, 2014, 12:21 p.m.
Posts: 9747
Joined: Nov. 20, 2002

its all about balance. if you saved all your pennies doing a job you hate your not winning. same goes if you piss away all you money living in the now without putting some away

you only get some much time on the planet, you better enjoy it

Dec. 8, 2014, 12:29 p.m.
Posts: 7306
Joined: Nov. 20, 2002

its all about balance. if you saved all your pennies doing a job you hate your not winning. same goes if you piss away all you money living in the now without putting some away

you only get some much time on the planet, you better enjoy it

This.

I'm pretty lucky to have a job that gives me an incredible amount of time off and requires me to be an electrician, plumber, machinist, welder, mechanic, fabricator to some limited extent……all while getting paid a decent wage.

I'd hate to see how much I would have to spend to fix odd things around the house and keep the toys running.

Dec. 8, 2014, 1:01 p.m.
Posts: 14967
Joined: Feb. 19, 2003

At that savings rate you're kind of making my point for me. i.e. at 45% you're presumably not talking $5k-$10k. Rather, you're talking about the larger principal amounts that really add up. With large values, and time for the interest to build you'll be in a sweet retirement situation.

I hear what you're saying, and we have a similar outlook. My point was more about knowing where those percentage points are going to and making conscious decisions. Most people just inflate their lifestyles to match (or surpass) their incomes.

For example, for years we had a bi-weekly housecleaning service. Wasn't much money, but when we looked at it in aggregate it meant adding over 18 months to the mortgage. When I think about how many years we had the service without calculating the true cost, I shake my head. Compound interest is a bitch when it's working against you.

Dec. 8, 2014, 1:18 p.m.
Posts: 1647
Joined: Jan. 12, 2010

I hear what you're saying, and we have a similar outlook. My point was more about knowing where those percentage points are going to and making conscious decisions. Most people just inflate their lifestyles to match (or surpass) their incomes.

For example, for years we had a bi-weekly housecleaning service. Wasn't much money, but when we looked at it in aggregate it meant adding over 18 months to the mortgage. When I think about how many years we had the service without calculating the true cost, I shake my head. Compound interest is a bitch when it's working against you.

I couldn't agree more. Making a concious choice about the spend/save trade off is really important and something a lot of people could probably stand to do a little more of.

However, I still feel my bi-weekly house cleaner is some of the best money I spend every month.

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