As a parent, as you raise your kids you just have to cross your fingers and hope that they got the lessons and will apply the teachings to their lives. You know that not everything will stick and you also know that some things have to be experienced, not just told to you. It’s a lot of work for not knowing the outcome.
Since the eldest has started her first job, we’ve done our best to give her financial advice in a way that isn’t too finger-wagging but that still encourages her to plan for saving and future spending. She luckily was given three permanent guaranteed shifts, three days a week, or 25 hours. It’s a perfect way to start your first job, in my opinion. Since she’s started though, she’s realized that she can also pick up MORE shifts and that MORE shifts means MORE money. So she got out a calculator to figure out how many shifts a week she could reasonably work. Bless her heart!
Also, because the city has had such a hard time hiring and retaining staff, they’ve also changed their NO OVERTIME policy and are allowing the wading pool attendants to get time and a half for every hour worked over 44 hours. So the eldest got her calculator out again and figured out how much she could make in a week.
Off to her first day of work
Of course, I don’t want my 15-year-old to work over 44 hours a week but I think the process is valuable. It makes her calculate – and evaluate – how much time she wants to trade for money. I think she also thought that her friends would be around much more than they have been this summer. Many of them have cottages or have gone on trips so her off time is generally spent playing video games & staying home. I think that is what has prompted her to pick up as many shifts as she can: she really wants to save enough to spend during the school year, when her friends are around and they want to go out and do things.
I would be lying if it didn’t warm my cold, goth heart when she called me into her room to tell me about the financial plan she had worked out based on a theoretical amount of shifts she can pick up over the next 5 weeks. She had stuck to my 50% long term savings, 25% short term savings for the school year and the 25% spend now plan! I was super proud of her even though I only said she had to put X amount into long term savings – she decided on her own to save more!
Of course, I did tell her that she should take her first pay and spend it all, as a treat for getting her first job. She ended up getting paid and taking her sister to the mall with her so she could pick up a few things. Sure, she spent money on things that I thought were useless but we all spend in ways that other people wouldn’t! She also kindly bought her sister a cute sweater.
What I found telling though is that the eldest also decided to buy them both lunch at the food court while they were there. When she got home with her spoils she confided in her dad and I, “I wish I hadn’t bought the fast food. It was $30 – two hours of work – and it wasn’t even that good! Oh well.”
I subsequently read Sean Cooper’s book about his experience …and discovered nothing of note. Basically his plan was simple: be young, single, child free, able-bodied, know how to live frugally, have a high paying career, be able to give up what makes life worth living and have enough energy to work multiple jobs. It’s hardly rocket surgery. Obviously, not everyone is able to tick off all of these boxes on the “pay off house quickly” list. Few of us – if we’re honest – are able to do more than a couple of things that he did, let alone all of them. But outliers make for great copy so he soon found himself clenching onto his 15 minutes of fame in his paid-off house.
An (ex) friend of mine wrote a particularly scathing commentary about the article denouncing him. In fact, many people did including this particularly vitriolic piece in Slate. When I asked my friend why he cared what other people did, his response was that if everyone did this than capitalism would expect us all to do this! I didn’t think that was true but I let it go. What I find hilarious is that in retrospect, when all this was going down we were in one of the largest Bull Markets in history. For most people, life had never been better: interest rates were low, equities high and compared to today real estate was way more affordable. In fact, reading that Slate article as we claw our way out of a global pandemic feels almost quaint.
Here is the rub though: I think that Slate article is bang on. Individual actions not structural inequalities drive our morality when it comes to money and it shouldn’t. Yes, absolutely I would love to see some real change, some real support for people who are struggling. But let’s also be realistic: only people who are like Sean Cooper in every way have the ability to do what Sean Cooper did. But only them. Being angry at Sean Cooper for his accomplishments is like being angry at David Beckham for being better than you at football.
The real issue is that we are extrapolating his very constricted set of circumstances and trying to apply them widely. Clearly, a single parent of two children in an expensive city with a minimum wage job is not going to be able to pull this off and no one is saying that this is what they should aspire to. Similarly, I – as a middle-aged disabled woman – will never be a famous footballer. That’s why it got any press at all: he accomplished something only available to a select few people. Cooper was featured because he deviated from the norm and deviation from the norm gets eyeballs on your news pieces which in turn generates advert dollars. That’s all. But even if we can’t apply every single idea into our lives there is still a lot of value to see people doing things differently. We can extrapolate a few ideas instead. Maybe someone reading that article will realize that they rarely use their car and that they can give it up and instead buy themselves the model railroad they’ve always wanted. Who knows?
A couple of weeks ago, I watched Marie Kondo get raked against the coals for daring to say that she isn’t as tidy anymore now that she has three kids. No duh. Of course, the internet jumped all over this. The same thing happened when her book (and subsequent Netflix show) came out. My facebook lit up like a Christmas tree at the fact that she only had fifteen books. “JUST FIFTEEN!” people lamented, “That’s bullshit! I could never live like that!” But she never claimed that everyone needed to have a maximum of fifteen books. She stated that fifteen books was the right amount of books FOR HER. If rooms full of books “spark joy” for you, then her perspective was: you do you. The catch was that you needed to actually watch the shows and/or read the book to know that she wasn’t insistent on just 15 books. Instead people succumbed to internet outrage and social media soundbites. But her recent decision that tidying was a lower priority for her now that she had three children set the trolls ablaze. “AHA! was the collective response to the news, “clearly it was all bullshit!”. Really though, her choice not to prioritize tidying over time with her small children in no way means her system doesn’t work. It just means that right now spending time with her kids “sparks joy” more than a tidy house does.
Finally, this week I was unsurprised to watch the trolls come out in full force when I read the comments about this Vancouver couple. While some of the comments are cruel, some of them are just nonsense. “Well she isn’t retired now, is she?” Well maybe she doesn’t want to retire yet. “There is no way they can retire on 800k.” Had they used the BTSX strategy, a quick back-of-the-envelope calculation pegs the dividends at over $40000/pa. “They won’t be able to travel on that kind of income.” Geographic Arbitrage is cheaper than living in Vancouver full time, for sure.
Unfortunately, a lot of online interaction leads itself to Crab Bucket mentality: because I can’t have it, I’m going to drag you down. Like the metaphorical crab who sees another crab escaping & stops them, people in similar circumstances who won’t do the work end up in comment sections dragging the people in the article down. Their goal is to shame people who do things differently and hope that other people agree with them. Groupthink is incredibly powerful and the message is, “if I can’t have it, you shouldn’t either!” We love watching successful people get dragged in what the Australians/New Zealanders call Tall Poppy Syndrome.
People are completely missing the point of all three of these examples. They’re just ideas, tools and goals that these individuals used to give themselves options. Maybe their lifestyle isn’t for everyone but SURELY they have to have some insight that we can potentially apply to our own lives? Also, we make the assumption that we are the audience for every article when clearly we are not. These articles have value because there are people out there who don’t know that they can pay off the mortgage early, or that there are better ways of folding t-shirts or that a high savings rate is achievable for mid-income folks with a few short cuts. But smart people realize that there are nuggets of wisdom everywhere so they take what they can from a resource and leave the rest. I see this a lot in popular personal books (PF) that are written for an audience outside of the author’s country. Inevitably there is always a review that says, “ONE STAR: this doesn’t apply to me because I don’t live in that country. You need to write one about my country.” But I’ve read personal finance books from all over the world and inevitably I take some gems out of all them. Most PF books are US-based but I just swap the terms for Canadian versions, IRA to RRSP for example. I don’t need to be spoon fed every single detail about my particular situation, I can just apply the larger idea to my own life by adjusting it.
The reality is that no matter how often you get angry that your house isn’t tidy enough, or it’s not getting paid off as quickly as you’d like, or you feel stuck in your life with your finances awry, no number of negative comments you post will change that. Sure, you may get a little shot of dopamine when someone agrees with you or you can get jacked up on the arguments with the people who don’t agree with you but it adds zero value to your life. You would be better off taking notes or figuring out who else is achieving the goals you’d like to achieve and reading their books or blogs.
I didn’t pay off my house in 3 years, it’s an absolute tidiness disaster with two kids and two dogs and I certainly don’t have close to $700000 in investments. I am still grateful for these people who’ve given us a window into their lives. The value in reading these stories is not making a carbon copy and applying it to your life, its value comes from seeing that maybe you could try and do things differently and that it could be life-changing. When you have applied some of these tips and tricks the value becomes one of seeing that you aren’t alone – other people are doing it to!
So I encourage everyone to get out of the metaphorical crab bucket. Glean the wisdom that may be helpful to your life and focus on how you can make your situation better. It’s much better time spent.
My foray into personal finance started when I was 18 and dirt poor & living on my own. In the 90s buying clubs like Columbia House (hah! Remember them?) and Book of the Month Club were all the rage and like a fool, I was a member of both of them. But as fate would have it, one of the books that I received was The Tightwad Gazette (TWG) II. When I got it I read it cover-to-cover and then I read it again. Despite the fact that these mail order clubs were pretty awful, I probably have benefited more financially from stumbling across that book than from anything else that has happened. It lead me down a road of seeing that there was a different way of living and it gave me the power to understand that I had control over my money. Eventually I bought both TWG I & III as well as Your Money or Your Life (YMOYL), which is the book that had the most impact on me during my 20s and 30s.
Before the FIRE (Financial Independence/Retire Early) movement with its stoicism and side hustles by tech-based workers & other high-income adherents, there was Joe and Vicky. Their vision of the for financial independence (FI) movement was one of simple living and community. Their ideas were about resource management not just for the accumulation of cash but also concerned the environment & leaving the planet a better place. It was a vision for a better world and it spoke to me. Although I have enjoyed some of the FIRE blogs over the past 10 years, I have been embedded into the YMOYL vision of FI and have found that the bootstrapping, solitary goal of accumulating money of most FIRE bloggers has struck me as mostly empty. Of course, there are those who have a larger vision but they don’t seem to be the ones screaming the loudest.
Of course, you may be thinking, “Well Tucker, learning about all of this by 20 certainly didn’t help you to retire early! You worked until 3 years ago!” While that is true, it is also missing the larger picture, which is the one of independence, or having the freedom to make different choices. By learning to be good with my money it has given me the option to make decisions that I may not have been able to make had a lot of debt or lived a large lifestyle. Here are some things that FI knowledge has given me:
– After being laid off from my well-paying corporate job I was able to join a government-sponsored small business training program that lead me to owning an eco-friendly cleaning business in my early 30s.
– After listening to my mother, I bought a condo downtown for $115k when I was 24 years old with a $5000 inheritance I received (full disclosure she co-signed the mortgage). After a couple of years I was able to remortgage & used the money to pay off my student loans (the difference was 6.5% a year!).
– After I became a parent, being frugal allowed me to stay home with my kids until they were 2 & 4 years old.
– I went back to work when it looked like Mr. Tucker’s job situation looked tenuous. But we were still able to live off of one salary.
– When I went back to work I was able to take contracts from September – May and stay home with my kids over the summer (I would have worked but student programs generally filled those jobs during those months).
– Going back to work allowed us to spend a month in Puerto Rico in 2014 & not have debt long-term.
– Saving up a huge down payment for our house allowed us to take on a smaller mortgage than we would have. We are now looking to pay this off by 2023.
– When I was diagnosed with Primary Lateral Sclerosis the waiting period for sickness benefits with Employment Insurance was a month & only lasted 12 weeks. The waiting period for my Disability Insurance to kick in was 13 weeks! Having savings & having an emergency budget for when money got tight helped us not use credit to see us through.
– Being disabled can be expensive: having a doctor fill out my forms just to apply for my benefits was $45 each time. I have great medical insurance but it only pays a portion of my mobility device costs.
– Because we wanted to travel when the kids could be pulled out of school and my mobility was still good, we are frugal in our daily lives but have visited many countries, were able to go to Disney (twice!) and Universal and are able to rent cottages with friends in the summer.
All in all, my FI knowledge, ability to switch into a tight budget, and our savings rate have all contributed to our lifestyle. Between graduating from university & my diagnosis I have worked full-time only about 10 years & the rest were part-time or were the years I was a stay-at-home-parent. We don’t have a basement full of stuff (but if you enjoy that kind of thing, more power to you), we only got a car when the eldest was around 1, we cloth diapered, we reused everything, ate a lot of beans, and didn’t buy a lot of things we didn’t need. But we did want to travel, our kid’s university savings accounts are well-funded and our retirement accounts are doing well. We also have a ton of friends in our community and the kids and the adults all have hobbies that they enjoy doing.
Overall, this is the definition of FI success to me. We don’t live life on autopilot but instead make concentrated decisions of how we want to spend our time & money to live the life we want. It’s part luck, part good choices but also making great friends, having the support of our families, and having fun hobbies to sustain us. We have even loftier goals for the next three years but more on that later!
This is my question of the day: which one of the above should I prioritize, in which order, over the next three years?
Basically we both have contribution room in our RRSPs, and Mr. Tucker is in a tax bracket that is higher than mine, so on the surface it makes sense to prioritize his RRSP for the tax savings. However, I don’t want to use all of his contribution room up in year one and year two and then have him left with not enough to go down a tax bracket in year three.
I think the sensical approach is to a> make the 20% prepayment on the mortgage; b> put enough money into Mr. Tucker’s RRSP to bring him down a tax bracket; and then c> siphon the rest into my RRSP. We can use the tax refund to add to the savings to pay off the house.
I need to make sure I use up all his contribution room over the next 3 years so that he maximizes tax savings. After year 3 he won’t have an income so any savings we can continue to put any savings in our TFSAs and/or my RRSP.
It also means that we will get a larger Canada Child Benefit (CCB) as our gross income will be reduced. I need to make sure that year three his income is really low so that we get a larger CCB in the following year as his income will be zero.
Of course, since we are already living off my income and putting his away, we will already be used to it so it won’t feel any differently (except we won’t be putting a ton of money into savings!).
Anyway – happy Friday! The kids have a PD day so they are off cramming in more device use as they have an extra day in which to do it!