Chapter 7: Equity Baby

Hello from the British Virgin Islands! We have spent the past seven days crossing the Atlantic Ocean and are closing in on the end of the vacation of a lifetime. This trip has accomplished all the things we had hoped for, and now it is time to get home and start the next chapter. Quite honestly, I’ve thought very little about this while we’ve been away. The subject that has been top of mind for the last year has taken a backseat lately and I’m glad about this. It had become all consuming, and my brain needed a rest. I feel like I’ve had the reset needed and am ready to refocus.  

Back to the journey and our best investment decision ever. When we purchased our home all those years ago, mindsets were different. Renting your home meant you were pouring money out the window. Well, that was one side of the argument. The other opinion was owning a home meant you would be responsible for maintenance and repairs, and that was expensive. We believed in the first theory and were anxious to put our money into something that we knew we could sell if we chose and get our money back. So, we bought as soon as we were able. In today’s world, you more often hear that buying a home is an investment. Property has value. If the property is maintained and the housing market stays strong, your house value, or your investment, will grow. Of course, over almost forty years, our property value grew with inflation. What has happened since COVID, with the explosion of the housing market, was an anomaly. Although our home value went up during this period, this did not have an impact on our story, at least not yet.

We were in our very early twenties when we moved into our home and purchased it just a few years later. We had accomplished our goal; we were no longer pouring money out the window. It was some time after that when I came to understand and appreciate the word equity. Essentially, I discovered that the more I paid on my mortgage, the more of my house I owned! Because mortgages are front loaded, the first few years we were paying primarily interest, so we could lay claim to door handles, the kitchen sink, you get the picture. As our equity grew, so did our credit and our ability to borrow from the bank. This is not always a good thing because we, like many, probably borrowed more money than we should have. It also gave us the ability to obtain the biggest evil of them all, credit cards. When you are relatively young and have access to money by simply passing over that dangerous piece of plastic, it makes you feel very powerful. Besides, all you have to pay is that monthly minimum, right? The bottom line is we made all those mistakes. We lived above our means.

When we made the switch to TD Bank, we were able to consolidate all our short term and long-term debt into the mortgage. Instead of having multiple monthly payments and varying interest rates, we now had one payment at a very pleasant interest rate. Yes, our mortgage principal amount had grown significantly but, because of the low interest rate, we were paying more on the principal and less on interest every month. I’ve always been a spreadsheet guy, so when I started plugging numbers in to an Excel document and seeing how fast we could pay down our consolidated mortgage compared to our former situation, I was amazed! This was a huge lesson for a couple of inexperienced kids. I would like to say this put me on the straight and narrow and that I was financially astute from that day forward, but something else was going on in the background that I was not consciously aware of. Life was in full swing and living costs money.

I’m off to enjoy our last couple of days in the sun before heading back to reality. More next week. I hope you can join me.

 

 

Chapter 6: Best Investment Ever

I am so happy we adopted the plan of my former work colleague Gerry and booked a retirement trip. We have just wrapped up the first leg of this cruise experience, twelve nights sailing the Mediterranean Sea and visiting beautiful cities along the way. We are back on the ship now for part two, ten nights sailing across the Atlantic Ocean, on our way to Puerto Rico. No, we did not win the lottery. The initial plan was to do an eight-night river cruise somewhere in Europe. Early one morning about seven months ago, I hauled my tired body out of bed and stumbled to the kitchen for my wake-up coffee. My partner in crime is an early riser, so her day has been underway for an hour or two. I will never forget the words she said to me that morning, “Get your coffee and sit down. We have to talk”. I came to life very quickly. What did I do? I quickly scour my brain for any recent missteps that may have come to light. I poured my coffee and took my stool at the counter. This time, out loud, I repeated those words. What did I do? Her response allowed air to enter my lungs again. “Oh, nothing. I need to show you something.” She passes me her laptop, and I see a quote for back-to-back cruises with more discounts than Kellog’s has cornflakes. Factoring in all costs, this back-to-back twenty-two-night cruise package was cheaper than the river cruise! The plan had changed.

This story really has nothing to do with our best investment ever, but it is an example of how we have lived our lives. We know we can’t have it all, so we focus on what is important to us. Travel is something we very much enjoy so we have made it a priority. Patience and taking the time to seek out the best deal has served us well.

Our best investment ever was purchasing our home. We have lived in the same house for almost forty years. When we bought, interest rates were extremely high, compared to today. Our first mortgage rate was a whopping 14.75 percent! A decade before, some people were renewing their terms at twenty percent or higher. There was a huge financial crisis in the late seventies/early eighties and many people suffered greatly because of it. When we bought, the rates were on the decline. It was slow, but they were coming down. Before I get in to how buying our home helped us financially throughout our lives, it is important that I start from the beginning to give some context.

At that time, we banked exclusively with the Bank of Nova Scotia. As we watched mortgage rates drop, our bank did nothing for us. For convenience, I would often stop on payday at a branch managed by my friend Bill, to cash my pay cheque. This was long before the days of direct deposit and online banking. One day, Bill called out to me and asked if my bank branch had talked to me about blending our mortgage rate, taking our existing rate and the rate of the day and blending them to reduce the rate we were paying. There was a one-hundred-dollar administration fee, but still in all it was a good deal. We ended up blending our rate about three times over the next year, always initiated by us. We were not at all happy with our personal banker at our branch. Push came to shove when I received the renewal notice for a car loan we had. Although interest rates had been continuously falling, our car payment was going up! I called Barb, my banker, and asked what was happening. She said that it had something to do with insurance. I responded that I didn’t understand. Interest rates were falling so my loan payment should be going down, not up. Again, I was told it had something to do with insurance. I said to her, Barb, you don’t understand. Interest rates are down; my payment should be down. No response. That was the straw that broke the camel’s back. We started the hunt for a new financial institution. We made appointments with all the major banks. We built a file with our entire financial history, current accounts and loans, etc. Some wouldn’t take us; some wouldn’t even meet with us. A wonderful young representative at TD Bank met with us. She listened to our story and reviewed our documentation. She said she would take it to her manager and get back to us. A few days later, Jill called. She said her manager agreed to take us on, on one condition. They wanted everything. Mortgage, car loan, all of it. We met again and she showed us the numbers. We were coming in at better interest rates than we had ever seen. The numbers were almost unbelievable. We were ecstatic! I asked what next steps would be. She said we would need to reach out to Scotiabank and ask for all the buyouts. We would most likely have to pay a penalty to get out of our mortgage early, but it would be worth it. I will never forget my final conversation with our banker Barb. I said Barb, I would like the payouts for our mortgage, our car loan and our personal loan, on a specific date. She said to me, Brian, is there a problem? I said, with a big smile, not anymore!

We went through the process of switching banks and started fresh with our new institution. One day my wife called me. There was a problem with our bank account. What was the problem I asked. We had too much money in the account. Payments should have come out. Something is wrong. It turned out that there was such a significant difference in what we had to pay monthly, she thought there had been a huge error. Finding not just the right bank, but the right people made a tremendous difference in our lives. We are grateful every day for all they have done for us, and we have never looked back. Making this decision to find a better financial partner meant we were finally in a position where our best investment to date, our house and mortgage, could finally be an asset instead of a constant worry. More on this next time.

Chapter 5: Finding Our Way

Picture it. Sicily, 2025. If you are a fan of the TV show Golden Girls, you will get the joke. As I write this post, I am sitting on the balcony of our cabin, on a cruise ship, entering the port of Siracusa (Sicily), Italy. This is our retirement trip. It has been a month since I last worked, although I’ve only been officially retired for a total of seven days. The objective of the trip, along with it being a celebration, is to break the habit of the daily work routine. I think it is starting to work. I’ve been monitoring the health app on my watch and phone. Stress levels are down, blood pressure is good, and sleep numbers are better than I have ever seen them.

Last week, I shared the story of our first attempt at financial planning. Although this was a valuable lesson, it did not contribute to our early retirement. However, the lessons learned did get us to where we are today. I attribute any success we’ve had to this early education and the following five things. First, our parents, who showed us by their examples what being financially responsible meant. Second, being a very young family with very limited resources taught us how to live modestly. Third, an old friend who, when I asked him for financial advice a long time ago, simply said pay off your debts, short term first, then long term. Fourth, the book The Wealthy Barber and author David Chilton, who explained, among other things, the magic of compound interest. Fifth, two of the most incredible women we have ever had the pleasure to know. These ladies were/are our personal bankers at TD Bank. When we were ready, both personally and financially, to build our plan, they took us by the hand and started walking us through the process, step by step. We are forever grateful to both. More on them later.

After the Investors Group fiasco, we became very tainted by the whole financial planning industry. Over time, as we got older and gained more life experience, the sting dissipated. Well, it did for me. Fortunately, to keep me grounded, I had a secret weapon, my wife. She has inherited a long-standing family tradition. She doesn’t forget. As a couple, we complement each other. In my younger years, I was the sucker. If it sounded like a good idea, I would be first in line to take the bait. Her extreme sense of caution would be the virtual slap upside the head I needed to snap me out of the dream. I am thankful for the red flags she has raised and, looking back, I wish I had paid attention to a few more than I did.

Securing your financial future is important and it is not my intention to devalue all planners. In fact, I know a lot of people who have had great success working with some very astute professionals. We understand now that the money we were investing was not enough to get an invitation to the group of highflyers Fred was attracting, so he handed us off. From a business perspective (that I did not have forty years ago), I get it. But it still stings. Truth is, we did not have the disposable income at that point of our lives to be in this game anyway, so I guess the outcome was a blessing in disguise.

Nex time, I’m going to write about the best investment we ever made and how it contributed to the life we have lived. Hope you can join me.

Chapter 4: Lesson #1

It has been busy this past week. Preparing for the retirement trip was quite a bit of work. Along with packing, we had to make sure everything was in place to have the house and, more importantly, the cats looked after. Cats are funny animals. They seem to have an innate sense to know when something is changing. The suitcases come out, and the cats get suspicious. Their personalities take a dramatic swing, from being the rulers of the kingdom to little furry balls of love, who want for nothing more than snuggles, neck scratches and belly rubs. The jig is up. The cats know we are going to be leaving. Fortunately, we have family who are as concerned about our feline children as we are and who will visit daily to ensure dishes are full, treats are doled out, and litter boxes are cleaned. We are extremely fortunate.

In my last post, I mentioned that we were introduced to “financial planning” many years ago. Our first attempt to set ourselves up for financial success happened when we were young parents trying to figure out life in general. Some folks we knew had a financial planner from the Investors Group, who were a growing player in the market, visit them. Wanting nothing but the best for us and our future, they referred us as potential clients. Following the script, Fred called and asked if he could visit us in our home. He dropped the names of our mutual acquaintances, and I got very excited and convinced my wife that we should meet. He came to the house and spent a couple of hours showing us charts and using words we really didn’t understand to explain how we could invest our money and build a nest egg that would guarantee our financial future. It really did sound great! For a small monthly contribution, we would be setting ourselves up for life. Obviously, against my wife’s better judgement, I said yes. We signed the paperwork, gave him the cancelled cheque for direct withdrawal and we were all on our way. Him, to collect his commission and us to securing a future for our family. 

Over the next year or so, we might have heard from our “personal financial planner” a couple of times. Then, one evening we received a call from his associate. He introduced himself and said Fred gave him our names and said he should follow up with us. He asked to come to the house for a visit. We found out that Dave had recently left his job in construction to become a financial planner with Investors Group and Fred would be his mentor. We were young. We still did not understand how the world worked. If Fred said it was okay, it must be okay. Dave also said that our growth fund that Fred had initially set up would better serve us if it were an RRSP. But Fred said our money would be available to us if an emergency happened. No problem, Dave said. It is your money, and you can have it anytime you need it. 

Long story short, several months later I had to replace the transmission in our vehicle. We didn’t have a separate emergency fund, but we had our RRSP! I called Dave, our new financial planner, and said I needed the money. He asked if there was any other way to get it. Could I borrow the money from family? I said I’m not borrowing the money from anyone. I have the money in my RRSP, and I need it now. He did everything he could, using his construction background, to convince me not to withdraw from the account. He explained that this was a registered plan, and we would have to pay a withholding tax. I told him to do what he had to do and to close our account and send me a cheque. 

Attempt #1 was a definite fail but very educational. More on our adventure next time. 

Chapter 3: Back to the Beginning

 Another week of retirement and the adjustment continues. I filled our municipality provided garbage bin this week, from the accumulation of  junk collected over almost forty years. If I can do this every garbage day, the basement should be cleaned out in about ten years. Our supper club met on the weekend and we toasted my retirement. My wife is now the only member still employed. These folks are role models for me. Some are newly retired in the last couple of years and have paved the path for me. The daily exercise routine is probably the most important activity I’m trying to emulate. I do admit I am feeling better and my energy levels are ramping up. 

A few more items have come off the to do list this week. One of those was removing a pile of brush from the yard. This was a very educational experience.  I learned just how out of shape I am. That is what sitting in front of a screen as a remote worker for almost fourteen years does to you. Up in the morning,  coffee, open the laptop and off we go! At the end of the day, especially during the winter months, I would close up shop, eat supper and binge watch TV until it was time to turn in. I may be exaggerating a bit, but this is really not that far from reality.  I lived a very unhealthy lifestyle. One of my retirement goals is to fix this.

The true adventure to early retirement started with a ten-year plan, although the dream really began many years before. As the dreamer in the family, I am the idea man. The initial plan was to get out of high school,  get a job with the government road crew and collect my pension in 30 years. Turns out I had a bit more ambition than I gave myself credit for. The years went by and a few not so great jobs got me to thinking that I might be able to make something of myself after all. A job with a government crown corporation in the early years was very enlightening. It was the first time I worked in an environment where the primary objective was to do as little work as possible. Sorry, but I was not raised that way. I was a casual worker, which meant I could be called in any day of the work week to fill in at any position. Management and I worked out a pretty good system. They would call and I would come, no questions asked. It didn’t matter what the job was, or the pay grade. I showed up and went to work. This work ethic paid off in the end. The plant was going through a major refit and they hired me on to work on the renovation project. As I reflect back, that was a definite turning point. Before long, I was on to bigger and better things.

Our first attempt at building our “financial future” came long before we were ready for it. As a young family in the eighties, we lived like most, paycheck to paycheck and, trust me, there was not much left after the necessities were looked after. More on this next time. I hope you can join me.

Chapter 2: The Journey Begins

Okay, eight days in. I don’t think it has hit me yet that I don’t have to go back to work. Truth is my last day of work was the Thursday before Thanksgiving, which effectively gave me an extended long weekend. When I think about it like that, I’ve been retired for a grand total of four days. It might take some more time.

 I've started to adapt to a daily routine. Up at 6:30 every morning (6:55 this morning because the Blue Jays playoff game was on late), coffee, screen time, etc. Then I head to the basement for thirty minutes on the treadmill and another ten stretching. I hope I have the willpower to keep this up. My body hurts, but everything costs something. At some point during the day my wife and I meet her Mum at a local walking track and walk for another half hour. I’ve got the exercise covered. Check box is ticked. I have a to do list that grows daily. Most days a couple of tasks get crossed off. Oh, and the naps. Very important,  those naps. They bring a certain balance to my day. Bottom line is my days seem to be comfortably full.

I’ve been planning this retirement thing for a while. Some might say there was some personal motivation involved. You see, I had a front row seat to my father-in-law’s battle with cancer and subsequent death. He was my age, a ripe old sixty-one. Four years later, my Dad succumbed to emphysema.  He made it all the way to sixty-eight. Neither of these gentlemen had the opportunity to enjoy their golden years. Call me selfish,  but this guy has no intension of checking out before experiencing the next phase. So, let’s say I’m hedging my bets. If my number comes up earlier than expected, my wife and I will have had the opportunity to make some great memories. Tomorrow is not guaranteed.

One of our first adventures will be what my wife has dubbed my retirement trip. This concept goes back a few years to a conversation with a former colleague who was about to begin his own retirement. I asked him about his plans and he shared that he and his wife, both avid golfers, had planned a month on the road in warmer climates. They would spend their days golfing, relaxing and site seeing. At the end of the month, they would return home and the cycle of the daily grind would be broken. I thought this was a fantastic idea and that evening I shared it with my wife. More conversations ensued over time until this concept became our goal as well. My wife won’t be wrapping up her career for a few more months, but we do have another trip booked for then.

Obviously, this whole concept of walking away from a guaranteed paycheck took some financial planning. I’m a spreadsheet guy. Actually, a very anal spreadsheet guy. That means I have literally spent hours upon hours of time over the last twenty odd years staring at a screen while calculating every possible scenario that might lead me down the path to no stress, warm temperatures and absolute freedom. Or, as most people call it, daydreaming. As I continue this self-analysis of how got here, I hope to document this part of the journey as well. You are welcome to join me.

Chapter 1: I'm Retiring!

Retirement! Wow! Almost here. In three days, I will close my work laptop for the last time. I will hand it in on day four. Then, for the next twenty days, I will be taking some saved up vacation. On day twenty-one, I will be officially retired. That is a lot to take in. My forty-three-year journey is coming to an end and the next phase will begin.

A lot of thought has gone in to what my next adventure will look like. Purging my basement, tending to lots of neglected yard work and travel have been on the list for quite some time. I think these are most likely on everyone’s list. I will have lots of time and I am going to be productive damn it! Well, truth is, I question if I will attack the basement and yard with as much vim and vigor as I see in my mind’s eye.

Lately, I’ve been trying to think with more of a hint of realism. Work is not necessarily what I want to replace work with. Deep down, what are the things I’ve put off from my “want to do” list? I must say, the list grows each day as this new reality becomes more than a light at the end of the tunnel. Obviously, family comes first and will always be my priority. But now is my time. How am I going to fill my days?

Early in my career, I had a job that required me to do a fair amount of writing. Surprisingly, I became very passionate about it. Over the years, I’ve tried to find opportunities to practice this hobby but, like with most things, life got in the way. Now I have no more excuses. Let’s just say my calendar has opened up.

All that to say I’ve decided to commit to myself to follow my passion and write. I’ve thought about what type of medium to utilize to express my thoughts, and what the focus of those thoughts might be. I’ve had a bit of experience with blogging, and it is a relatively easy process, so this is where I’ve chosen to share my words. A while back, I took time to think about topics that are important and interesting to me. Given my new “career”, I’ve decided to use this forum to document my retirement! Am I too young to retire? Do I have enough money? Will I be happy without a structured day? So many questions that will only be answered with time.

I don’t know that anybody will find my writing interesting, or if it will bring any value to anyone. Hell, I don’t even know if it will ever be read. If it is, great! If somebody is intrigued and comes back for more, fantastic! If not, that is okay too. After decades spending my days playing to the beat of somebody else’s drum, this song is for me. I invite you to come along for the ride.