Budgeting - Freedom Thirty Five Blog

Financial Freedom in 10 years

Advice, Budgeting, Controversial, Goals 34 Responses »

Apr 142013

It’s almost been 5 years since I started this journey to financial freedom. How am I doing so far? As shown on the right side bar I’m making about $5,100 of dividend income a year Which is only about 20% of my annual living expenses. So it appears I still have a long way to go but I feel good about the future One thing I could do to reach financial independence sooner is downgrade my lifestyle just a little bit. Right now I live in a large two bedroom apartment, and drive a pretty sweet car. But I realize I don’t need these things to be happy. So I thought to myself what if I lived a more modest lifestyle? Let’s see what this alternative life for me would look like.

Passive Income: $6,500

In order to make life simpler I plan to pay off all my debts. I don’t have enough cash in the bank to do this. Big surprise lol So I’m going to sell my home, car, Saskatchewan farm, gold and silver, and all other financial assets, except my stocks. After fees, commission, and taxes, the total amount resulting from a complete liquidation of these assets should be about $425,000. So after paying off all my $390,000 of debt I will have $35,000 left over If I put this all into a diversified portfolio of dividing growth stocks with an average yield of 4% I’ll be making an additional $1,400 a year. Combined with my existing $5,100 mentioned earlier, my total passive income would be $6,500.

Expense: $12,000

So where am I going to live if I sell my apartment? Thankfully there are many affordable places for rent in the Greater Vancouver area like this cozy little suite for $550, or this one for $580. It’s amazing what you can get for under $600/month. A lot of those listings include amenities I don’t even have today like in-suite laundry, free wi-fi, and cable TV. Wow that would actually be an improvement over my current living conditions haha. I don’t mind living in a smaller place. It’s not like I’m using the entire 800+ sqft space in my current apartment anyway. Since I have no car anymore I’ll be taking public transit to get around. It’s more green anyway Here’s what my new spending would look like.

13_04_modestlifestyle

Conclusion: $6,500 / $12,000 = 54%

And just like that, if I were to do this today I would already be half way to financial freedom. Woot! Big jump from 20% eh. Who knew just changing a couple of things can have such a big impact on expenses. Besides housing and transportation there wouldn’t be any noticeable downgrades compared to what I have today Holy hamburgers, $6,500 of annual dividend income by investing for the last 5 years means in 5 more years I can probably make $13,000 of passive income and actually retire for real. What an exciting thought! 5 more years. Instead of freedom 35, I can probably get there by 30 All I have to do for now is liquidate my assets, pay off all my debt, and downsize a bit. It’s almost hard to believe that people can spend just 10 years of their lives in the rat race and then retire forever by diversifying their investments and living with low expectations, yet the math totally works out. Does that mean I’ll aim for freedom 30 now?

net worth, freedom 35

Of course NOT Although I would certainly enjoy the simple lifestyle of living on a modest income with no debt to worry about, the reality is not so simple. I want to get married some day so a 1 bedroom basement suite probably won’t be enough eventually. There’s also the possibility of having children, and caring for aging parents. I have to look past my selfish desires for freedom and plan for loved ones to be included in my future life beyond financial independence. So selling my apartment, farm, etc right now is probably not the wisest plan to build long term wealth eh?

Nevertheless it’s very reassuring to know that if I became unemployed tomorrow I should have a pretty good financial cushion to fall back on. This sense of security is more important to me than going on extravagant vacations or leasing a new Lexus, and is also why I will continue to invest my savings and use financial leverage to build up even more passive income! I was talking with my realtor last week and he said the farm I bought last year with $20,000 of my own money has appreciated by $10,000 already, which makes for a 50% return on investment so far (゜∀゜) Check back later this month as I’ll update the official numbers on my blog when the FCC publishes their semi-annual farmland value report. This is why investing rules! Luckily the kinds of assets that I’m heavily invested in like stocks, housing, and rural land, have all performed relatively well over the last 5 years especially in North America But how will my luck fair in the next 5 years? We’ll just have to wait and see

Pooled Lunches and a Giveaway

Budgeting 8 Responses »

Mar 042013

I bet some people would like to cut back on the cost of buying lunch. But what if you’re lazy like me and don’t want to prepare meals at home. Well here’s a cheap lunch alternative you can try out that’s healthy, cheap, and saves time (^_-) My first memory of spending money as a child was in elementary school where we had a meal program. For $50 a month you would be provided with lunch 5 days a week. The food varied day to day from sandwiches and hot dogs to mac and cheese but it was a very economical way to feed a large number of students. Because the school could buy ingredients in bulk, we are each getting more value out of our money than if we spent it on individual portions at restaurants. This was a very important lesson I learned. Combine small amounts of money to increase economic efficiency. Strength in numbers as they say.

This simple idea stuck with me until today. At my current work place we have a peer organized lunch club. I didn’t start it though and no one’s officially in charge. But the club generally contains bread, meat, cheese, veggies, and condiments. It’s open to everyone at the office. People can just drop by, pay $3, and make a sandwich for themselves. The money goes into a pool that’s used to buy and replace the ingredients to keep the lunch club going. Last person to make their lunch cleans up though I don’t join the club every day but it’s good to have a sandwich once in awhile, and it’s cheaper than if I had bought the ingredients myself and made it at home. Almost any work place can accommodate some kind of lunch club as long as you find some like minded co-workers. Most companies have fridges and cutlery already, so why not Ever since childhood, I’ve only had good experiences with shared lunch programs :0)

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Speaking of early memories. They say the best way to capture an event is to take a photo of it. Luckily this month I’m co-hosting a Canon Rebel T4i DSLR camera giveaway brought to you by Structured Settlement Quotes, a lump sum settlement company. Anyone worldwide can enter, but shipping costs will only be covered up to $50. You can enter via the Rafflecopter widget below (^_^) and you have until the end of the month. Good luck.

a Rafflecopter giveaway

Excuse to Save Money, the World is Ending

Budgeting 28 Responses »

Dec 182012

There have been a lot of chat lately about how the world is ending this Friday, Dec 21st. If the apocalypse really is near then I’m afraid there’s little we can do about it. But if nothing happens then those ancient Mayans were some of the best trolls ever ☜(ﾟヮﾟ☜)

World ends :0( Mayan Calender predicts doom. Truth or nonsense?

Despite what the outcome may be, can this prediction benefit our financial lives? Yup, you bet If you haven’t done all your holiday shopping yet, just tell your friends and family that there’s no point getting each other Christmas gifts because we’ll never get the chance to celebrate Christmas this year. Tell them you are busy making end of the world “preparations” and if they really respect you then they will understand, hopefully. However, you should now be able to save tons of money on not having to buy presents anymore Which is good in the event that the world doesn’t end. And nobody can fault you for being cautious :0)

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goats pupils are rectangular, world is ending Random Useless Fact: Some animals like goats have rectangular pupils which give them 320-340 degrees vision. This means goats can see pretty much all around them without having to move their eyes. Human vision by comparison only covers 160 -210 degrees (source)

Halloween is Serious Business

Budgeting 18 Responses »

Oct 312012

Some people think Halloween is just a fun time for children to dress up and eat candy. Perhaps that was true at one point in time. But today Halloween is the second most expensive holiday of the year, rivaling only Christmas. Who would’ve thunk it. Halloween is an $8 billion industry in North America and is growing every year. That’s some serious business.

What’s driving all the spending? Simple modern consumerism lead by media, pop culture, and advertisers. People want to dress up as their favorite characters from this year’s hottest movies (Avengers, Hunger games, Spiderman, Batman, etc) You’ll also see zombies influenced by the Walking Dead, and of course, the Gangnam Style guy. It is not surprising why some Halloween specialty stores set up business only in October, sell their products, and then shut down in November. They only pay one month for rent to get a piece of the $2.9 billion pie that consumers spend on costumes each year.

It’s not just costumes for people either. 11% of Canadians are expected to spend up to $59 dressing up their dog. An average family will spend $300 on Halloween this year. That includes an average of $60 per costume, and the rest on decorations and greeting cards. Canadians are also expected to spend about $320 million worth of candy. Another survey anticipates 60% of all consumers will spend over $100 this year on decorations.

With treats, costumes, decorations, and parties, it’s no wonder that Halloween can rival Christmas in terms of consumer spending. This means we have to be careful about how we plan for it. Halloween, Thanksgiving, and Christmas are all within a couple months of each other (in the US anyway) Want to spend more money on Christmas? Consider spending less on Halloween this year :0)

Happy Halloween!

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