By Sheryl Smolkin
With this post, we are kicking off a 2014 series of interviews with personal finance bloggers. Many of the people we will be talking to are known to you already because we’ve linked to their blogs on our weekly edition of “Best from The Blogosphere.”
Our first guest is Tim Stobbs, a thirty-five-year old chemical engineer and father of two who lives in Regina and works for SaskPower. He was also a Regina School Trustee until the end of 2012.
Since 2006 Tim has blogged on Canadian Dream: Free at 45. He has also authored a book called Free at 45: How to Retire Early and Happy. In addition, in his spare time, he wrote a series of articles for the Toronto Star and has been interviewed by virtually every media outlet in the country.
Thanks for joining me today, Tim.
Thanks for inviting me Sheryl.
Q. You’re one busy guy. When do you find time to sleep?
A. I’m almost embarrassed to admit that I regularly get about eight hours of sleep. My young children go to bed early so I still have a couple hours every night to work on personal projects.
Q. So how old were you when you decided to aim for early, early retirement at 45?
A. I first came across the idea of early retirement back in my early 20s about 2001. But I really didn’t do much of anything with it until several years later in about 2005 when I did a series of online calculations and realized that I might actually be able to retired at 45. So I took that idea and started to blog with it.
Q. What response have you had to the blog? How many hits do you get?
A. Each blog post gets maybe about 600 or 700 hits. It works out to about 20,000 page views per month or so, give or take. It’s been an odd experience because I’ve had a lot of interest from various media outlets. I did a bunch of radio interviews.
The Toronto Star contacted me and asked me to write a series for them. One opportunity that was really out-of-this world was when CBC, The National, contacted me for a story on early retirement.
Q. I can understand that would be quite cool. So what blogs have resulted in the highest number of clicks or the greatest interest?
A: I think the highest amount of interest I’ve seen on my blog has been in regards to the early retirement calculation series. About every couple years or so, I’ll dust it off and re-do the calculations just to keep them updated. People question my assumptions and share the basis of their own calculations with me.
Q. So that’s your own calculations, as your projections evolve towards your own retirement?
A. Yes. Realistically everyone can make assumptions, but inevitably life happens and things kind of veer off a little bit. So you’ve got to go back and correct them periodically.
Q. So how much do you and your wife figure you need to pay your bills after taxes?
A. Well, we kind of did an odd thing with our retirement planning. We actually aimed for a very barebones kind of basic spending level of $27,000 a year and then we figured we’d probably, for incidental income and other things, that we would pull in another $5,000 for more fun stuff.
Q. What lump sum savings do you think it will take to support your lifestyle once you retire?
A. A grand total of about 1.1 million net worth, but the majority of that is going to be investments. So about $700,000 in investments, I figured would probably pull that off.
Q. Is the rest the value in your house?
A. Yes, the rest would be the equity in the house.
Q.I see that your mortgage is paid off and you figure you’ll be able to retire at age 42 now. The numbers dropped again?
Q. How did you do it? What did you give up in order to meet this objective?
A. Everyone is always asking that but I’ve never actually sacrificed anything. I could have decided to spend more money or do other things. But instead, I kind of ended up doing a little exercise and went through my life and my spending and went, “What things do I really not care about?”
Like, my power bill, I really, really don’t get excited paying off my power bill every month. So what I decided to do was to see, “How low can I make that?” So I looked at ways to save energy around the house and dropped that bill down and repeated that across all of my various bills.
As a result, what I managed to do was really customize my spending to be heavily tailored toward my particular interests. So I’ll spend money on books or DVDs that I like, but I don’t spend a lot of money on gas or power bills.
Q. I presume your wife is on board with the program?
A. She is, but in a different context than me. I’m more driven by the freedom to do what I’m interested in. She’s more about the whole concept of security. For example, we had a car accident last week and she knows without any doubt that we’ll have the money for the deductible for the car. So, she just loves that as a result of our financial plan that we are financially secure.
Q. Do you still go on vacations, go out to restaurants and upgrade your phone every now and then?
A. Oh yes, we still do all that stuff. Like, for example, this summer, my sister-in-law moved out to Newfoundland. We decided to go out there for a visit. So we took a month long vacation and spent over seven and a half thousand dollars. We drove all the way out and back. Seven provinces with two little boys in the back seat, but we survived.
Q. So what does retirement mean to you? How do you plan to spend your time once you don’t have to go to work?
A. Well, as I talked about earlier, we aimed for bare bones because I really think I’m retiring too early to stop working entirely. It’s just nice to be able to work on what interests me rather than what pays me most. Right now, I’m doing engineering because, well, it’s my degree and I’m quite good at it. As an engineer I also make quite a bit of money. However I enjoy writing a lot. But unfortunately, unless you’re really good at writing, it’s pretty hard to earn as much as I do as an engineer.
Q. Are you saying that might at some stage leave your engineering job and take a chance at working on something else?
A. Yes. I’ll probably switch over to just writing novels or non-fiction projects, stuff where I don’t have to worry about a profit margin, as long as I do it because I’m interested in it.
Q. Your wife currently operates a home daycare. I understand she has some ideas about what she’d like to do when you are more financially secure.
A. She kind of has her hobbies she enjoys and is looking forward to expending those a little bit or even maybe going back to school and learning a bit more about a few other topics that interest her rather than having to go get a degree because it’s something economically viable to do.
Q. If you had one piece of advice for readers who want to manage their finances so they can retire early, what would it be?
A. I think the biggest piece of advice I’d offer people is don’t worry about what everyone else is doing about spending. Look at your own spending habits and kind of customize your budget . It’s really possible to live on a lot less than people think if you’re not so caught up in doing what everyone else is doing.
So if you don’t really care about the newest phone, don’t drop the money every three years to get it. It’s sort of as simple as that in some regards. By minimizing your spending on stuff you don’t care about, you’ll have more spending money for future things like retirement or even just things that interest you more.
You can follow Tim’s progress on his blog and also read interesting posts from several regular guest bloggers.
This is an edited transcript of an interview conducted on November 25th.