Saturday, September 27, 2008

Eating Healthy

Food is an important part of my life. It's an important part of yours too, whether you realize it or not. If you don't believe me, try going without food for a few days; I bet you'll change your mind.

Most people will agree that we should eat healthy food. But what does that mean? Different people will tell you different things: organic food is healthy, carbs are unhealthy, grapefruit is healthy, red meat is unhealthy, alcohol is unhealthy, tea is healthy...

My personal opinion is that there is no such thing as a healthy food or an unhealthy food, only a healthy diet or an unhealthy diet. In other words, you shouldn't take any one food and look at it in isolation; you have to look at what you eat over the course of a week or a month. For example, every Thursday evening after work I go to a local tavern, meet a few friends, and enjoy a couple of beers and a dozen chicken wings, deep fried and smothered in a sweet barbeque sauce. Now technically, one could argue that this meal is high in fat and calories and deficient in just about every important nutrient and is therefore very unhealthy. I don't look at it that way. First of all, if you average my caloric intake over any seven day period,it is within the normal range for a man of my size. My fat intake over that same period would probably be lower than most people's. More importantly, this meal meets some of my personal needs that have nothing to do with nutrition but are definitely health related: it is very relaxing and enjoyable. Also, if I didn't indulge once in a while, I could see boredom and cravings creeping into my diet.

It's all well and good to say nothing is unhealthy, but from a practical standpoint, every day we are all confronted with choices between specific food items and you need a way to assess which is the better choice from a health point of view. For me; it's simple: lower fat and/or higher fiber is healthier. This may not be the most rigorous approach; in fact, if you want a list of it's failings:

- it ignores sodium content
- it ignores the different types of fat
- it ignores caloric content
- it ignores vitamin and mineral content

But it works for me. Most foods that pass that test actually usually end up being quite healthy in the areas I ignore. For example, following my simple guideline, I eat a lot of fresh fruit and fresh vegetables that end up taking care of my vitamin needs and also are generally low calorie. When I eat red meat, I eat small portions, lowering my saturated fat intake. And so on.

That's not to say there aren't other systems that can and do work. Vegetarianism is another system that, if used properly, can lead to a healthy diet. Eating local can force you to visit farmers' markets where there are a lot of healthy choices. The idea is to pick a system that you are comfortable with, that engages you, and that leads you to a healthier and happier lifestyle.

Let's end off today with a recipe. Being a bachelor, I like to make things that are easy to make in single servings, or even better, that freezes well. The following recipe makes 4 generous servings, I usually eat one right away, leave another in the fridge for a couple of days later, and freeze the other two for longer term storage.

Southwestern Ham with Black Beans & Rice
fat free italian dressing 4 tbsp
low fat ham, diced 14 oz
onion, chopped 2 medium
canned diced tomatoes 28 oz
canned black beans, rinsed 19 oz
tabasco sauce 0.5 tsp (or to taste)
black pepper 0.5 tsp (or to taste)
minute rice 3 cups

Heat dressing in large skillet on medium-high heat. Add ham and onion; cook 5 minutes or so. Add tomatoes, beans, tabasco and pepper. Reduce heat to low. Simmer 10 minutes or longer.
Serve over hot cooked rice, prepared as per package directions. For storage, I put the rice over the tomato/bean mixture; otherwise the rice absorbs the liquid and the dish becomes less saucy. Alternatively, you could store the rice seperately from the tomato mixture.

Bon appetit!

Thursday, September 25, 2008

Sinking Fund

Most of the personal finnance blogs I read talk about the importance of an emergency fund. Most of them recommend building up as much as you can as quickly as you can, and maintaining some amount ranging from 3 months worth of living expenses up to as much as 3 years worth.

I always used to have trouble with this concept. I would start to save money, but then I would start to think to myself that if I invested this money in my retirement account I would be ahead as long as an emergency didn't crop up. Even if one did, I wouldn't really be further behind, because I could just cash in some of my retirement investments for use to cover the emergency. As far as I can tell, this is a legitimate outlook. The only danger is that because my retirement fund is primarily invested in potentially volatile vehicles (mainly stock based mutual funds) I could theoretically have been forced to 'sell low' and thereby lose some money.

All that changed about 3 years ago when I came up with the concept of the sinking fund. I'm not pulling an Al "I invented the internet" Gore on you; I'm not formally educated in financial matters and only heard the term 'sinking fund' a couple of years after I came up with my idea. The fact that the concept is actually a few hundred years old is, to me, completely irrelevant ;) . I listed all the things that don't normally go into a household budget because they are unpredictable, like reroofing the house, replacing appliances, replacing windows, etc. I then assigned each item a lifespan and a cost; for example, I estimated that a roof was good for 20 years and that it would cost $5000 to do the roof on my 3 bedroom bungalow. I then divided each capital cost by the lifespan in weeks to get the weekly cost to replace that item (I get paid weekly). In my roofing example, the weekly cost would be $5000 / (20 years x 52 weeks) = $4.81 per week. In actual practice, I don't have a seperate account for roofing and one for windows etc., but I rather have them lumped into one item called househoold maintenance.

About a year ago, I ran across the term sinking fund somewhere in my reading. It is commonly used by companies to repurchase outstanding bonds, and often talked about by governments (but seldom well impemented) to save for "rainy days" or large upcoming capital projects.

This has been working out great for me. For the first time ever, I have an actual bank account that has grown to a significant number. Because it is earmarked for something specific, I find it much easier to keep my hands off of it. Even though it's necessity is questionable, it certainly feels good to have cash available if something unexpected crops up. I actually used it twice so far, once to reroof the house, and another time I had to replace my clothes dryer. It's held in a high yield savings account (President's Choice Financial currently paying 3.05%), and actually throws off a few dollars in interest income as it continues to grow.

My next goal is to start to build up a similar fund for my car. This is a lower priority than my house, because my car is relatively new and therefore (hopefully) won't be requiring any major repairs. However, I do plan to keep this vehicle a few more years, so things may crop up, and there is also the possibility of an accident.

So I have a sinking fund instead of an emergency fund. When you get down to the nitty gritty, the difference is more one of semantics than anything else; the fact of the matter is if an emergency not included in my sinking fund plan came up (like unemeployment) I would use it for that purpose. But the way I have labeled it has made it possible for me to let it grow.

Wednesday, September 24, 2008

Envelope Budgeting System

I was reading some personal finance blogs today, and came across this entry from Todd at Harvesting Dollars about using the envelope system to control overspending. For those of you unfamiliar with the envelope system, take a look at this brief explanation by Dave Ramsay. It's a simple and effective budgeting aid.

For some of us, the psychological impact of seeing the dollars as they trickle through our hands is an important part of controllong the flow. For me, and I hope many of you, the abstract notion of money flowing through the debit card or credit card is just as real as seeing all those Canadian Prime Ministers wave bye-bye as I make a purchase. So the physical envelopes of cash aren't a necessity, and in today's electronic world, there is a better way.

I use a virtual envelope budgeting system. I have two bank accounts at President's Choice Financial, a chequing account and a high yield savings account. The two combined are my 'wallet'. I've set up a spreadsheet with seven 'envelopes' represented by column headings such as 'house', 'food and utilities', 'car' and so on. Any transaction is entered into the spreadsheet and the totals in my 'envelopes' updated. Take a look here to see what I'm talking about*. If any 'envelope' goes negative, or is in danger of going negative, I analyze why. Is it a one time unexpected bill or a predictable expense I forgot to allow for? I adjust my budget accordingly and re-allocate my income to cover it.

Of course, for this to work in the long term, you need an accurate budget. The beauty of it is you can start with a rough budget. As time goes by some balances will climb higher and higher, indicating that you're budgeting too much money for this item, or conversely, balances will sink into the red indicating you need to allocate more funds here. So, over time, this tool can help you develop an accurate budget.

This method isn't necessarrily for everyone. Obviously, you need to have a working knowledge of how to use a spreadsheet program, and as mentioned earlier, actually physically seeing the cash in an envelope (or lack thereof) is a huge help in controlling the urge to overspend for some people.

*Some notes about the linked spreadsheet. It's an actual excerpt from my real spreadsheet I use everyday to run my budget. The 'house' heading includes a sinking fund (similar to an emergency fund) for house maintenance. 'Project', with a balance of zero for the time period shown, is an 'envelope' I set up to save up for some house renovations.

Philosophy on Food

I've always been interested in food - more as a gourmand than a gourmet I'm afraid. Up until the spring of 2005, I ate like a typical bachelor; lots of fast food, lots of convenience foods, and once or twice a week I'd cook something that was a break from the junk I usually ate.

But then something happened that changed my life. I got the stomach flu. No, really. I was sick; very, very sick. After a couple of days of vomiting and other bodily expulsions I will not detail here, and no improvement in sight, I called my sister to drive me to the emergency department (I didn't dare drive myself; I had visions of one of my intestinal explosions wracking me while I was at the wheel). I was severely dehydrated and they pumped me up with liquid via IV. I spent another week or two convalesing at my sister's house (God bless her).

Back then, I didn't have a family doctor. The emergency room doctor and my sister both exhorted me to get one, so I did. At my first appointment, he gave me a checkup, including bloodwork. When the results came back, he told me that my cholesterol levels were terrible; my 'bad' cholesterol in particular was sky high while my 'good' cholesterol was almost non-existent. He told me that he would normally try lifestyle modification first to control cholesterol, and then move on to drugs if that didn't work but that I was so bad that he wanted to try both right away. He told me to lose weight, start exercising, eat less fat, eat more fiber, and gave me a prescription for Lipitor.

I filled the prescription and took it faithfully, but made a silent promise to myself to control this condition naturally if at all possible. Less fat and more fiber become my personal mantra. I stopped eating fast food and convenience food and replaced them with a diet of low fat meat, fish, vegetables, fruit, and whole grains. I took a brisk 30 minute walk every day. Within three months there was a significant improvement in my cholesterol levels; in six months they were low enough that my doctor took me off the Lipitor. I eventually lost about 70 pounds and still have healthy cholesterol levels.

I was only able to achieve my goals by careful planning. Prior to this lifestyle change, I would often pick up a burger and fries at Wendy's or make fish sticks and fries at home because it was easy and it was there, and besides, what else could I do?. I got out of this habit by getting rid of unhealthy foods from the house and taking a few minutes on the weekend to plan a menu for the week. I would then commit to the menu, buying items or taking them out of the freezer so they became the convenient thing to do.

Now, I find I no longer need the weekly menu, but I do keep healthy food choices available at all times. Any food I eat has to go through a two stage mental vetting process; first, is it nutritious and good, and if it passes that test, is it reasonable priced and reasonably convenient. If so, I eat it and enjoy it.

For the past three years, I have been enjoying my healthier lifestyle and the advantages it brings. I have more energy, I feel better, I look better, and I enjoy preparing and eating my meals.

Tuesday, September 23, 2008

The Freedom to Choose

I plan to retire at age 48. I'd retire sooner if I could. Why do I want to retire at such an unconventionally young age? I've thought about that a lot, and it took me a long time to realize why. The reason is freedom.

I don't hate my job. As far as jobs go, it's actually pretty good. I don't think that there is a job I could love, because a large part of any job is the commitment of showing up every day and following an agenda that is to some extent (more for some jobs and less for others) out of your control. It is this lack of control over my own life that I resent. I'm looking forward to the day when I can wake up and say to myself "Today I will do what I feel is important to me". On some days, that will mean a leisurely day drinking coffee, reading, and puttering around the house. On other days, it might mean helping a friend or neighbor. Sometimes, it might mean doing conventional work similar to my current job, but on a freelance basis. But what it will always mean is the freedom to decide for myself.

PS: To my boss; if you read this, please note that I said "my job is actually pretty good" and I also implied that I am committed to showing up every day and following your agenda. Any negative tone you noted was completely in your head. I live and die to serve you.

Monday, September 22, 2008

Downsizing Your House

An important part of my retirement plan involves selling my house near Halifax and buying one in a more rural location in Nova Scotia. This will help in a few ways:
  1. I will extract some equity from my house by buying cheaper. I can invest that equity in my retirement fund
  2. As a result of having a smaller place in a more rural area, my property tax will be lower.
  3. A smaller place will theoretically be cheaper to maintain, though this can vary depending on initial condition and construction materials and methods.
If you plan to take advantage of this at some point in your life, it's important to factor in the costs associated with such a move. If you use a real estate agent to sell your house, a large part of the selling price (typically 5%) will go to the agent. This is somewhat negotiable, so don't be afraid to ask for the best deal possible. Or, you can try to sell privately. There will still be some dollar costs (signs, advertising) and there will definitely be some costs of convenience. But, if you're comfortable with the time and effort required, it can save thousands. Also, there can be legal fees, surveying fees, and some jurisdictions have a deed transfer tax. Then there is the actual, physical move of all the crap (oops...fine furnishings and valuable heirlooms) from your old house to your new house, as well as storage if you don't take possession of your new house before selling the old one. Does your new house need work? Painting? New windows? Are you really going to be happy with that ratty old sofa in your new house? Is it time for new appliances?

I hope to sell my house for at least $175,000 (its assessed a few thousand higher than that) and buy a house for about $130,000 (a specific house I know I would like in the area I'm interested in is assessed a few thousand lower than that). So, my selling price less 5% real estate fees less $130,000 is $36,250. Allowing for the other expenses listed above, I hope to net $20,000 out of the deal. I think that's a pretty conservative estimate, but there are too many variables for me to be comfortable depending on a much higher number. I'll also save about $500 per year in property taxes.

What about you? Would you move to save money? Would you downsize in other areas of your life, like cars for example?

Welcome to The Simple Bachelor!

Hi all!

I've been interested in living a simple life and early retirement for several years now. Recently, I've discovered the world of personal finance blogs and found several of them to be quite fascinating. I've decided to try my hand at one.

It's early in the process, and I'm sure this blog will be an organic beast, evolving as it grows, but my current vision sees it concentrating on simplicity and early retirement as the main themes, with frugality, food, and personal finance as frequent topics. Many of my posts will be colored by the lens of confirmed bachelorhood.

I'll start off by telling you a bit about myself. I just turned 44 a few days ago. I grew up in a large family (7 kids) in rural Nova Scotia. My parents were simple and frugal folks and I was obviously influenced by them. I studied engineering in university and have been employed in the construction industry in Halifax Nova Scotia since graduation. Working for small companies, I never had a company retirement plan, so I started saving for my retirement a year or so after beginning my first job. At first my retirement plan was unfocused; but in the past four or five years I realized my mortgage would soon be paid off and I had to decide what to do with the excess cash that would free up. My retirement fund was the obvious answer. As I studied where I was financially and where I could be, I came to the realization that I should be able to retire by age 50. Since then, I've spent a lot of time refining my plan and have adjusted that down to 48.

With that as a starting point, let's dive in. Don't be shy with questions or comments. I'm looking forward to this experience, and hope it's an enriching one for both myself and my readers.