We have made a number of changes in our household finances. The change was driven by our stage of life. I started saving in my 30s, increased the level of savings in my 40s and now, in my 50s, we have to make a final push to be ready to live from our savings as opposed to living from employment income.
Progress has been excellent until the recent mess in the banking industry. I hold a lot of stock in banks. Quite the meltdown in the value of the portfolio however I expect that to pass in a few years.
This video describes what has been happening in the market quite well. Worth a view.
What I have noticed though is how little impact the change in consumption has had on our lives. Because I do well, I never really worried about consumption. Which resulted in a remarkable pattern of impulse consumption: books, DVDs, CDs, magazines, electronics, gear, clothes. Last December, Lorraine and I took a real hard look at the expense line to see if there were any potential savings.
Duh. Eliminating impulse consumption made a huge difference in our expenses. After three months of living this way ”“ some people might describe the lifestyle as frugal ”“ I have noticed absolutely no impact on my life. Other than freeing up money for getting ourselves ready for the retirement years.
For example, we headed out to Chapters a couple of days back. In the past, I would have wandered around the following racks: magazines, computers, business, photography, non-fiction and fiction. And I would just buy stuff. Two or three magazines, two or three books. Very easy to spend a couple of hundred dollars without even thinking about it. I had a sense that I was spending a bit too much money at Chapters when Heather Reisman, CEO of the company, sent me a personal card and gift over Christmas. Now I just sample the content or take a few magazines of interest and read through them in the nearby sitting area. And what I have noticed is that I can get most of the actual content online at home.
Being frugal is not a hardship. It is actually fun to find ways to avoid unnecessary consumption.