Four years ago, we were uninspired by our future, especially during bi-annual meetings with our former financial planner. We executed tasks, such as investing in real estate and putting money into a registered retirement savings plan, but we knew we would have to work at least another 15 years before even considering retirement. We had this dream we could afford to travel more often, but it seemed impossible
2013 then proved to be a tough, yet transition year for both of us. I had lost my job at the end of 2012,Troy was facing a lot of uncertainty in his career as the television industry in Toronto was downsizing significantly.
I switched careers to gain new experience, which meant taking a $45,000-pay cut. This proved to be the best lesson for Troy and I in paving the way to a future financial plan.
We clarified our goals, and aligned them with our values. Questions in our minds, like, “What’s next?” evolved to thoughts of, “What if?”
First, we changed our relationship with money, making it an enabler to achieve instead of a reason to stress. We thought differently about how we saved, spent, and budgeted.
Travel gave us the biggest source of happiness, and we felt we owed it to ourselves to investigate how we could afford to travel longer.
We both dreamed of living in a foreign country someday, staying for longer periods of time on a beach, in the mountains, or exploring a new city. We didn’t know exactly what our dream looked like; we just knew we wanted the opportunity to live outside Canada in our lifetime.
Earlier in 2013, Troy had started subscribing to International Living, an online magazine that focuses on expat living and retiring abroad. These monthly publications are full of information on the cost of living per country. Each month, different countries are featured with their the cost and quality of life. We researched countries such as Thailand, Ecuador, Guatemala, and Panama. We discovered that in most of these countries, the cost of living is less than half the cost in Canada. In fact, in many places, we could live comfortably on $30,000 to $40,000 USD per year for the two of us, if we managed our money appropriately.
We never thought a life of traveling and living abroad was possible. Our dreary conversations with our previous financial planner explored only as far as the status quo would allow—living in the same place, with the same lifestyle, and retiring in Toronto. Now we were looking at different options more suited to our values and goals to live, work, and travel.
This quest for freedom led us to sell our home and all of our stuff. We added up our assets, created a new money management plan with Matthew Lekushoff, our current financial advisor, and realized our dream of traveling longer term was within reach.
We discovered that if we sold our home, paid off the mortgage, and the rest of our debt (line of credit and home renovations in preparation for the sale), we would still have a handsome sum of money to add to our savings, current investments, and registered retirement funds. We no longer had debt, but instead a clean slate to start over and rebuild our life.
However, we still needed a plan to manage our money. With Matthew’s help, we created some practical, easy-to-understand, yet unconventional budget scenarios to find out if our financial position could sustain this new lifestyle.
Matthew and his team ran three scenarios based on our discussions about our values and goals and desire to live simply. These scenarios included earning lower incomes, living in lower cost countries, and starting online business careers. We looked at earning some income for the next 20 years (we are in our 40s and we don’t plan to retire yet, nor do we need to earn or work for the big incomes from our past).
Each case assumed we would be pooling all our resources (savings, retirement funds, home proceeds, and our current investments). Matthew looked at an estimated 4% return on our invested funds at 1.5% inflation, with us spending $40,000 USD per year to live. (These figures were based on Matthew’s experience and we researched this dollar figure as very feasible in many other countries.)
Answer: 26 years. Learning this information was a key moment that gave us the permission to leap towards our dream. This timeframe would take us into our 70s. Although we wouldn’t have enough money for retirement, this news gave us the confidence and the breathing room to start new businesses without worrying about earning high incomes immediately.
Answer: 37 years. Wow! This timeframe would take us into our early 80s. Assuming we are going to live well into our 80s and perhaps into our 90s, we still needed to earn more to carry ourselves for the rest of our lives.
Answer: 55 years. This information was the magic number for us—what we’d have to earn if we wanted our money to last until Troy’s 100th birthday. (Hey, you never know how long you’re going to live, right?) This was music to our ears! The pressure to earn high incomes was no longer necessary or important for us in this new lifestyle we created.
When Matthew walked us through these three scenarios, we felt energized by the possibility of creating a new lifestyle, with both the ambition and the means to do it!
Simple doesn’t mean deprived from things we enjoy our love, we have everything we need. It means living intentionally and having things based on our goals.
If you’re not familiar with compound interest, it is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Compound interest can be thought of as “interest on interest,” and will make a deposit or loan grow at a faster rate than simple interest, which is interest calculated only on the principal amount.
Once we added the sale of our home and assets to our current investment profile, we doubled our money! Imagine putting a larger sum of money into investing instead of spending. Here is a compound interest calculator that can show you how the previous investment scenarios can benefit you.
We all have different needs and dreams and, of course, cost of living is higher in some countries than others. Nonetheless, it’s important to start dreaming and planning now. Approaching a financial challenge differently may result in your dream being closer than you think.
During our first year, we focused on enjoying traveling and figuring out our new lifestyle and planned to live off our savings.
Now that we are into our second year, we’ve planned our work and travel to come from multiple revenue streams.
First, we work with clients around the world, remotely using our current skill sets—Troy’s experience in television and video editing, and mine in business and marketing. For Travel Life Experiences, we are earning income from working with the tourism industry on video development and marketing work, freelance writing, affiliate marketing, and brand sponsorships on our website.
Reach out to Matthew, he will be happy to help you out.
If you have missed our earlier posts on Understanding Money, you can find them here:
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Dorene is a marketing consultant and freelance writer. She quit her 20-year career in marketing to redesign her career and lifestyle on her own terms by living location independent. Now with her husband Troy, she helps people who want to redefine their midlife and make conscious changes at TravelLifeX. She also trains & coaches travel and hospitality clients to improve their marketing at TravelLifeMedia.com