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With no hidden fees and a 100% purchase guarantee, you can feel confident when you book your premium LA tickets with Sweet Hop. Visit suitehop.com today. Welcome to the Radical Personal Finance Podcast. My name is Joshua Sheets. I'm your host. Today is Friday, January 2, 2014. The first show of the new year and I think it's appropriate that we kick off the new year with the discussion of financial independence and early retirement, one of my favorite themes.

Today, I'm going to share with you an interview with Tim Stobbs who is the author of a blog entitled Canadian Dream Free at 45 and then also a book with a similar name, Free at 45, of how to achieve financial independence at an early age. If you are planning on enhancing your financial life here in this new year in 2015, then perhaps this is a great place for you to start by listening to someone else's comments and someone else's experiences.

This show is from a Canadian perspective but it's not intensely Canadian. It's a little bit of discussion on the advantages and disadvantages of pursuing financial independence within the Canadian context versus other cultural contexts. But the principles and ideas are indeed universally applicable. So I hope you enjoy today's show.

Tim is a regular guy working on his goals. Very interesting story. It's a really great interview. I will be back with you on Monday, the 5th of January, back from the holidays and I'm excited about a brand new year with all of you. Been a lot of work over the last six months to build up the show to the point where it's been now but we're only just getting started.

I have an intense focus and commitment to transforming this show into a world-class financial education platform where I will, in conjunction with other great teachers, teach you everything you need to know to go from nothing to financial independence within a reasonable amount of time. Here's the interview. Tim, welcome to the Radical Personal Finance Podcast.

I appreciate you being with us today. No problem. Thanks for having me. I'd love to start with your story. So you write a blog about the Canadian dream to be free at 45. How did you get into thinking about early retirement and planning for your own early retirement? Erotically, that happened at just a low point at work.

What happened is I was working at a job that I actually loved. I realized one day before going back to work and I was nearly physically ill thinking about having to go back to work. I went, "Well, obviously this is a very crappy way to live your life so I've got to do something better than this." I stumbled across the idea of financial independence around that time frame of early retirement and went, "Oh, never having to work ever for anyone else." I did really good at that point in my life.

That's where I found this whole addiction into investing in personal finance and learning more. I really started off not owning much of anything and just picked Freedom 45 as a wild ass guess. A few years ago, Canada had a series of very popular commercials called Freedom 55 by London Life.

I just went, "Oh, I'll take a decade off that. I'll do it earlier." Did you consider just getting a different job as maybe an easier way to get out of the job that you hated? It's kind of funny. I still ended up going on to a different job and actually enjoying that.

It's just more than anything, I learned from that first job what I loathed about working for certain companies. I've made the conscious decision never ever to get in that situation again. But it seemed well still going on with the idea of financial independence anyway. It's kind of funny to say, but in my mind it actually is an important step.

I love the early retirement financial independence community, but in my mind it makes a lot more sense to not start with saying, "How can I accumulate a million dollars so that I can be fully financially independent?" But rather to say, "How can I just start by getting there quicker by building a job or business or lifestyle that I think I would be happier with?" And then use that to fund my financial independence so that then I have the choice and I can find out, "Was I deluding myself or did I actually enjoy this job?" Yeah, you kind of hit on one of my things that commonly gets out of lost in the early retirement community.

We tend to focus exclusively on the numbers and almost forget about the incidental thing of, "You should actually be happy while doing all this, otherwise what the hell is the point?" Right, right. So it's kind of funny that that's why I subbed out of my blog was about the early retirement and happiness, because I'm like, "There's no point in getting there in a rapid amount of time and then being miserable on the process to it." So I very much kind of delved into the psychology of happiness as well, and simultaneously I was getting financial independence and looking at that and going, "Well, okay, really let's build life to be better across the board now and going towards." What are some ways that you have done that in your life?

In particular, one of the ones I think are probably the most underutilized, just because the corporate world doesn't seem to allow it that much, is going to work part-time. Like right now I'm working 90% of my day job. I don't work full-time anymore. I haven't for... I've dabbled in and out of that lower percentages of 80 or 90% for a couple of years now, and I find it makes a huge difference to quality of life and satisfaction.

My joke with some people is I don't hate work, so to speak, which is kind of funny for an early retirement blogger, but I just hate working full-time. Right, right. Is that an official, legislated thing in Canada where you can choose, "Oh, I just want to work 90% time"?

It sounds fairly official. It's not really official. It's actually relatively hard to get your hands on it. In my company, I found out that one of the first guys ever to do this, other than for maternity kind of type of benefits for the policy used, was only maybe five years ago when that first happened.

So, generally speaking, it's a relatively new development for a lot of corporations to allow it. Our company's had a policy in the books for eight years or so to allow it in theory, but very, very few people get it approved. Interesting. You are right. Even in the US, what is more common, if you're working for a large company, as many large companies, will allow you to work a four-day-per-week, ten-hour-per-day schedule instead of the five-day-per-week, eight-hour schedule.

In my mind, if I were in a job or business that permitted that, I would do that in a heartbeat just to compress the amount of time working. I've actually seen multiple people do that here, too. In Saskatchewan, where I live here, it's relatively recently been written into labor law to allow that to happen before it was off the books for a lot of people doing it.

It's cropping up here and there. It just depends on the business somewhat, whether it aligns to letting that work or not. I've had a few friends over the years who've done that kind of compressed work week thing and wouldn't trade it for one world. They love it. Very similarly speaking, for my case, my reduced hours works out to every other Friday off.

So what happens is I work one full week and the next week I take that Friday off. I mean, there's multiple advantages to it. First, you have entire days cleared of your normal day-to-day commitments, but not necessarily planned to be fun days. So if every Saturday is a fun day with your family and you have every other Friday off, that gives you a whole day when most of the world is in that work week schedule.

So you can easily use that day as a focus. But then it also perhaps allows you to avoid the rush and crush. Every two weeks I have to go out during rush hour to go to a meeting that's down south of where I live, down in Boca Raton. I have to drive during rush hour.

I sit there in traffic on I-95 saying, "Why does anybody do this? Why on earth do you sit in traffic at this horrific time of day with everybody else? Why don't you go into work at 5 a.m. or at 11 a.m. and work on some kind of off-peak hours just to avoid this?" It's funny, actually, that's coming up more and more as people are starting to realize, or at least some workplaces are letting you tweak things a little bit.

Another thing they've let us do at our workplace, I actually start work half an hour early for the express reason. I live in a smaller city where there's really not much traffic. Honestly, I can get anywhere in town in about 15 minutes. I still hate traffic. For me, it's the most wasteless, pointless thing in the entire cosmos.

I purposely start work a little bit earlier and get out of work a little bit earlier for the express reason to avoid our mini-traffic jam we have here. How did you come across the idea of being financially independent? Was it something you read online, a family member who was doing it?

How did you first come up with the idea? I think I just came across a blog or something. I can't even remember what. This is over six years ago, so it's going to be fuzzy in my memory a little bit of what happened exactly. Just came across a reference to it and went, "Wow, that sounded pretty good," and then looked into it and realized that, shockingly enough, that I was an engineer making fairly good money that you just run the math and go, "Oh, I'm not that far off of a relatively early retirement.

A little bit of planning here." I started iteratively getting into realizing how the numbers work and learning a bit more about that as it went along. When you picked the date of being free at 45, how many years from 45 were you? About 15 at the time. Okay. Are you on track for that?

Actually, it's been steadily reducing since then. My last iteration, I'm just writing a series of posts now where I'm going to try to make a run for it at 40. Good for you. I'm 36 right now, so another four years, give or take. Good for you. What are you going to do with your time?

Big one is I love writing. Actually, it's funny. I wrote a post on this a number of years ago about selling out your dreams and then buying them back afterwards. I always loved writing, but I was acutely aware in Canada that most writers make next to no income, so it's a good way to slowly starve to death.

So I went, "No, I'm not really interested in that." So I went with my father, who was an engineer at the time, and talking to the idea of, "Well, I'm good at math and science. Why don't I do engineering instead?" So I went, "Okay, great." So I went and did engineering and got a degree, got a good job, made some good money, and still kept my hobby of writing.

But I've just decided that, you know what? I like writing more than I like engineering by a long shot, so I'm just working towards flipping careers, basically, in the long run here. It's to be able to quit my job, not necessarily to make anything a side job in the long run, and just enjoy writing because I actually enjoy writing.

Have you made any money from your writing? A little bit over the years. It's kind of funny. I wasn't really planning on it. It's one of those hobbies you just sort of start because you're interested in doing it. The blog was kind of almost a pointed thing I started just to have a conversation with people about, "I'm thinking this on my way off base," or helping other people out and learning a little bit about it as it went.

And that led to several other opportunities. I did some freelance articles for the Toronto Star, and then I self-published my own book, which all in all actually did make me a lot of money, but it made me a little extra money, which is kind of a nice little bonus for a hobby that I do it because I enjoy it.

How else has the blog served you? I've recommended to many people that they keep a blog, but I'm interested in hearing how it has helped you or hurt you over the years. I think most of all it's helped me with regards of my own accountability. When I write something down or think things through, I'm very much one of those people that think better with talking it through with people.

So I tend to find the blog is an excellent way to throw random ideas out and have people give me some feedback on what worked for them or not worked, and help iteratively learn better how to do my own plans. For example, I've done my retirement calculation series a number of times over the years, and iteratively it gets a little bit better every time I do the calculation set.

Just basically feedback from people, "Well, have you thought about this? Or have you included that?" And I went, "Oh, that's a good point," or "Maybe we should include a factor for this." And so it's gotten a little bit more complicated, which is a bit of a downside, but I think it's a more accurate projection as I've gotten along.

Do you not feel a little bit strange about telling everyone how much money you have? Not really. I've got this real bizarre thing of... I work for a crown corporation up here in Canada. So the reality is what I make every year is actually published in an annual report because I make over the $50,000 threshold.

So I've been known... Like, publicly, you can research how much I make down to the last dime. Wow. For years. So it's one of those bizarre... I've already had public disclosure on that. So I'm like, "Really? Your net worth after your income is already posted online is really not much more of a step forward." What kind of corporation did you say that was?

A crown corporation. What does that mean? It's a corporation run by the government for the benefit of the people of the province. For example, Saskatchewan is a relatively small jurisdiction, so it doesn't really pay to have multiple power companies trying to produce power in the same jurisdiction. So what they did is just created a power company that runs it for them.

Got it. Understood. What is your strategy with regard to how you are planning to fund retirement? Are you investing in stocks? Are you buying real estate? Are you building up businesses? What's your plan? Mine predominantly is more on the investment side of the house. While I like real estate, we're currently in a bit of an acid bubble here in Canada with most of our real estate.

So I'm kind of avoiding that in the short term. Actually, it was very shocking the other day. The Bank of Canada governor came out here and said that overall they estimate the market's overvalued anywhere from 10 to 30 percent, depending where you live, which is kind of they've been silent on the issue for a number of years.

So I kind of avoided that in the short term here. I might get into it a little bit later. But more realistically, I'm going with investments. And there's a combination of various things. I mean, exchange-traded funds are tax-sheltered accounts. Just a simple couch potato portfolio, as per Dan. Which I believe you interviewed just a couple of weeks ago.

I did. He was my first Canadian financial advisor I ever talked to. Yes, I did. Yeah, I kind of like Dan's portfolio approach quite a bit. So I kind of mirrored my savings off that. Then my work has a relatively good pension plan that's got really low fees in it.

So I invest in that. And then finally, we have our tax-free savings accounts, where I put in our individual stock picks into those. Interesting. So the tax-free savings accounts, explain again how those work. How do they work within the context of early retirement planning? Well, tax-free savings accounts kind of are similar to your guys' Roth IRA accounts in broad terms.

I think the biggest difference is the fact that everyone's familiar with the concept. You can put the money in, it grows tax-free, and then you can take it out tax-free in the tail end. In Canada, though, when they actually created these accounts, they did it a step further, so to speak, than your guys.

There is no retirement thing attached to it. It's basically you can use it as much as you want at any point in your life to save for anything, theoretically. So a lot of people have been using it for house down payments or saving for vacations or absolutely anything and everything is possible with it.

But a lot of times, because of the tax-free savings account, which I think is the biggest misnomer the government ever did on this thing, people use it as just a plain savings account. So their tax savings is very peonically small because they're not really saving much money on it.

It's a shocking thing to me. I talk to people here and they don't really realize you can hold stocks in these accounts and the growth on that is significantly better than what you get with just sheltering your measly 1% savings. Steve Kerr (00:10:00): People don't use it. I mean, buying stocks is not common in an account like that?

David Gardner (00:10:04): Not up here. They haven't wrapped their heads around it for whatever reason. I just don't get it. Like I said, I think it's almost the naming convention thing where people don't realize that, yeah, it could be a savings account, but it can be a lot more than that.

And so me and my wife have both done that. In our case, our account performance has been substantially better than the average person. Now you can put around $25,000 in per person. It's a set amount you're allowed a contribution from every year, about 5,500 is the current uptick every year.

So combined, we should have only about $50,000 in contributions, but combined value of our accounts is pushing almost 95,000. Steve Kerr (00:10:42): And you can take it out, including the interest and the gain, you can take it out at any time. There are no age restrictions. David Gardner (00:10:48): None whatsoever.

So that's kind of the ultimate early retirement savings vehicle. Canadians are sitting on, but we don't utilize as much as we should. It's really, really ironic. Steve Kerr (00:10:56): That is insane. David Gardner (00:10:58): I know. Steve Kerr (00:11:01): I mean, you guys have such what I consider to be an exorbitant tax rate.

Why would anybody ever invest outside of an account like that? If you can shelter all your capital gains, you can shelter all your income taxes. It sounds like I'm speechless. David Gardner (00:11:19): No, I agree with you. It's one of those things. What's interesting though is the competing one is that people are used to their registered savings plans, their RSPs here, which are more like your guys' 401ks.

So what they do is they contribute to those and get a tax refund back. So because as you've mentioned, our taxes are quite high, that's a pretty good chunk of change when you put money into those. So people are kind of used to that as being, "Oh, look, I put money in here and I get a good tax refund back." But then ignore the fact in the longer term, those accounts, you eventually get taxed when you take the money out on the tail end.

It's tax deferment. It's not tax avoidance. Steve Morrison (00:11:56): But can't you do both? David Gardner (00:12:00): Well, yeah, you can do both. And the one's based on your percentage of income, your RSPs. So what happens is that one scales up. And so you'll probably, the average person that's allowed 18% of last year's income goes into your RSP accounts at your limit, while the TFSA accounts are flat rate, regardless of how much income you make.

So your TFSA, while longer term, younger people can use that to finance their whole retirement. The reality is if you're towards the tail end of your working career, you will not be able to shelter enough money in there to make a huge dent in your retirement savings. So it's a bit of a generational problem.

What the older folks aren't used to using it and the younger folks don't really realize what it can do in the long run. Steve Morrison (00:12:37): Wow. Can you own alternative investments? Could you purchase real estate within the account? Can you purchase some various types of alternative investments? Do you have any idea?

David Tenenbaum (00:12:50): There is a degree of latitude with that. I mean, you wouldn't be able to buy real estate directly. You wouldn't be able to theoretically hold a mortgage in your RSP. And I believe that would be technically possible in TFSA. But of course, the average person right now doesn't have enough money to do that in those accounts yet.

Steve Morrison (00:13:02): Interesting. Do you teach people in your book? Is your book focused on just telling your story or are you trying to teach people how to become financially independent within a Canadian context? David Tenenbaum (00:13:16): I was more about teaching people how to be financially independent. I do touch a little bit on some of the motivation, like my story there of hitting my job is really the start of the book and kind of touch on that.

But I don't get into too much on the investment side of the house. I kind of touch on those relatively lightly other than some broad contextual pieces people need to understand about their account types and what they can do in broad strokes. But it's more about the whole process of how do you plan and then how you would run through a series of calculations of estimating whether you're close or not, and then simultaneously weaving that through with how the heck do you get yourself more happy while doing all this?

I find it very shocking the average person who blows their job as much as they do in North America and doesn't do anything about it. It just blows my mind the number of unhappy people I meet in the office. I'm like, "Why are you even working here if you're this unhappy?

Seriously, folks." (Laughter) Dave: When you talk about happiness and as you studied happiness, what ideas and techniques do you teach people to build a happier life? Matthew: I think the biggest one is we've got to get off this consumer train wreck that we all decided is this constant upgrade or buy or better or next thing and realize we are sitting in the top tier of world standard of living.

Look around people. Everything around you is awesome, so why the hell are you not enjoying it a little bit? Stop asking for the next iPhone. Instead, maybe go, "Oh, you know what? Realistically speaking, the iPhone 4 to iPhone 6 has almost no feature differences." (Laughter) It's okay to have your old phone.

It will not kill you. Dave: Right. Do you have any idea why that happened? Do you have a perspective as far as a society-wide perspective? Matthew: I think what ends up happening is a very easy thing to do is we don't give ourselves permission to actually explore what our spending means for us.

We tend to follow the crowd or default think. When everyone else is doing it, it's so easy to follow along with the concept. Regardless of the fact that everyone else really isn't happy anyway doing it, it's one of those terribly erotic things. We almost don't give ourselves permission to just think outside of the box and customize our spending to what we personally need, not rather than what we think we need based on our soul.

Actually, that's one of the core stones of my happiness side of the house is to reduce your spending is really just look at what your spending is and then optimize it towards your personal preferences. For example, one of my classic things is I say, "I don't like my power bill.

I get really no joy in paying it off every month, so I've lowered my consumption of power and free up cash flow to do other things like, 'Oh, I like to go out with my family and do things, so I'm going to spend less money on my power bill and free up more money to go swimming with my family or go ice skating with them or whatever else that feels interesting or will help us out being a more happy family together." What are the most frequently asked questions that you've gotten from your readers?

Beyond the disbelief of it's even possible to retire that early in Canada. That tends to be the most common one. After that, it's a bit of a hit and miss spread of questions. It always surprises me the intelligence of the average reader out there in blogs in general because I get all sorts of questions that just astound me once in a while for the level of detail and realizing that I tend to write at a probably middle range viewpoint of not overly technical, but I wrote this while I was the odd person commenting something that's extremely detail-oriented.

The other day, I was talking about the 4% withdrawal rule and one fellow sent me a question on that asking a little more in-depth detail about the fees involved in your investing and how that drastically changed the results of whether you could use that rule or not. I thought, "Well, good for you.

You've actually read that study to realize that point." Right. When you say disbelief, I want to go back to that. Is that the most frequently asked question that you get? People say, "How is this even possible?" I think that tends to happen a lot because a lot of people don't understand that it's entirely possible to restructure your spending and be very happy with it.

For example, we spend probably about a little less than $30,000 a year on everything, but the thing is I have a paid-off house. Reality is it's pretty cheap to live if your basic happiness is reading books from the library and going to the odd movie now and again. Right.

I have certainly seen that myself. What's interesting is if you can—I don't know how to teach this. I personally think that we are conditioned into group think where we don't look to understand who we are and we don't necessarily look to understand what's important to us. There are many effects of that.

One of those effects it makes for an easily governed population. One of those effects it makes for an easily marketed to population. You got to find the little niches for your product, but it seems much easier to market to a homogenous group than to not. But it's so easy to simply just step out and—well, maybe it's not easy.

It's relatively simple. If you can step out just to simply actually look at your needs and recognize, as you said, we live—everyone listening to my voice—we live in some of the most prosperous nations in the world where in a world where the average person lives on, what, a few dollars a day and most of us have hundreds and thousands of dollars available every day, every week, every month, it seems absurd that we can't build a beautiful life that's run a little bit more efficiently.

But in order to do that, you have to get free of the cycle of essentially impressing others and have to get free of the cycle of fitting in. That's not easy to do for many people. - Well, the reality is, too, what tends to happen, I think, is a little bit of your personality makeup.

There's been a broad theme of—you read some of the early retirement forums here and there on various things, and you come to the broad conclusion that there's almost a personality type that tends to go with it, that people who are going after their retirement tend to be the ones that value their independence over everything else.

And so we tend to structure our lives, be willing to be different because we value that independence, and some other people aren't prepared to do that in broad strokes. So, for example, my wife and me have completely different viewpoints on this whole idea of early retirement. I'm going after it from an independence of determining my own faith point of view.

She loves the idea from a completely different point of view. She loves the security aspect. For her, there's nothing better than knowing the fridge breaks, that she can tomorrow go buy a new one, slap it on the credit card, and pay it off at the end of the month, and no problem.

So it's finding those different motivations for everybody and then realizing that that's how you start things. And I agree with you, we tend to do a lot of groupthink, and that's almost a byproduct of an earlier age where you tended to have very homogenous media coverage of things. Nowadays, with niche blogs and podcasts and such things like that, it's very easy to get a more alternative point of view out there on stuff.

The issue is, it's realizing a lot of people are still not mentally prepared to make that leap in their heads of going, "It's okay not to be like everyone else. We spend our early childhood trying to conform in school, and then trying to break out of it. It's really kind of ironic." I joke with some people here that our education system keeps saying its objective is to create critical thinkers, but then they quash that in their little formality of how they process them through their grades.

So it's one of those terrible ironies. We have this desire to be critical thinkers, which we mean actually talking back to the teacher now and again. Right. The audience is expecting me to jump on that theme and talk for about 15 minutes because that's a huge, huge deal for me, but I'm actually going to step right past it and go on.

Good for you. Go on from it because I've preached far too much on that theme. I'm interested in your developing thought process and then your wife's developing thought process. Did you come across the idea of early retirement and then present it to her? Did she come across it concurrently?

How did you learn to work together toward the same goal? And I guess the pre-question to that was, do you share the same goal of early retirement? If so, how did you work together to get there? Actually, it's kind of funny. My wife and me started off in totally different tangents here.

I explained my hobby and stuff, and she went, "Well, okay, is this affecting how we're doing our current life?" No. "Okay, don't care. Go ahead. Have fun, dear." She ignored it really for the first several years entirely. It's only after a while she actually started reading my own blog and going, "Oh, I just really want to figure out what's going through your head a little bit more on some of this stuff because they talk about odd things here and there and she'd be confused," or something like that.

So she started reading the blog purely to understand where my headspace was at to save on time on conversations later on. Then she kind of stumbled across the idea that from her point of view, she really doesn't care about your whole early retirement plan. She wanted it from a different angle of wanting that security aspect.

After she realized that, she also realized something else too, that she has a different viewpoint of me. Like, I don't mind some work. I actually enjoy writing, so I plan to do some of that when I'm, so to speak, retired from my day job. She's got a different viewpoint if she doesn't want to do that.

She's in a very much enviable spot. She runs her own daycare business in the house right now and basically hires and fires clients that she wants and does it because she enjoys the job, not because she needs the money. So she's pretty much in an ideal headspace already. So on the career front, she's ahead of me and by virtue of that fact, she has no desire to necessarily stop working at the same time I do.

She'll probably keep working for several years after the fact and just slowly scale out. One of the ideas she's batting around in her head is to just switch to doing school age children only. So she'd do a little bit of care and mourning, have most of the day free, a little bit of care in the late afternoon, evening and then be done for the day.

And from that point of view, she's willing to work quite a bit longer than me and then come back through later on and then stop entirely. Do you guys have kids? Yeah, two boys. How old are your kids? The oldest one is almost 10, the youngest one is 6.

So with regard to your, I guess, financial independence date, you said you're, how many years do you anticipate longer until you are financially independent currently? About four more years. Okay, so at that point in time, then I guess your boys will be 14 and 10, if all goes as planned.

Have you thought, do you worry about being financially independent at a time when they're essentially setting up their own independence? Have you thought about doing something different so that you can spend more time with them at a younger age? Well, actually, this is one of those things of it, there's never a right answer, I think.

And you always torture yourself with having better scenarios that I could have done more time with them younger or something else. I very much enjoy my 90% time right now because what I do is I load up those days where I'm off with stuff and errands I need to do.

And so our weekends are largely free to spend with the children then. So I've kind of done, structured that to help on that front. But my more concerning thing with my kids is a little bit of educating them a little bit about preparing them for when daddy stops going to work every day.

And it's going to be an interesting shift to have them wrap their heads around the fact of explaining, no, you're, we're not rich, daddy and mommy are, you're not. And ramming that home in their heads. Because one of the things me and my wife wanted to do is we both didn't get much financial support through our education.

Like my parents paid for about a year and a half of my university, then switched me over to a line of credit. And she took student loans out for the entire time she was in school. And we both decided we wanted to help with our kids' education, but we weren't willing to sacrifice everything, everything, everything for it.

So for example, I have no delusions that my children are going to Harvard. If they do decide to go that route, that's fine. I've got some money saved for you, but I have no intention of paying for a ludicrously elite school because you decided you want to go for it.

Right. So we've been keeping some money taxed aside for them for educational purposes, and they're kind of aiming about $80,000 in total. So about $40,000 per kid to be sort of their setup money in their lives to help them get started. Primarily for education, but realistically speaking, if they don't decide to pursue higher education, that will take it out and use it for other things.

What's the college environment in Canada like? Is it, is it important? Is it societally important to have a college degree in the job market? There's probably more acceptance of alternative kind of things nowadays. We've gone through a lot of changes in the last few years. It used to be almost assumed for a lot of people that you should go get a university degree, and that was important.

But what's happened nowadays is realizing that with oil and gas development in Alberta and other areas of the country, that trades can do very, very well as well. So there's been a lot more push to diversify education, even down to the high school level now, of accepting the fact that trades are a very viable option for a career for kids going forward.

So I wouldn't hesitate for either one of my kids if they decided to go that route, because if your talents lie more in your hands, why shouldn't you do something you enjoy and you still get paid relatively well to do? How are you planning to teach your children about setting up their financial plans?

What percentage of your income you're going to train them to save, things like that? What are your plans for teaching and training them to handle money? Well, we're very much keeping it in a sort of a staged approach. I'm not going to really teach them the more advanced stuff until a little bit later on.

Right now, what we've done is started them both on an allowance system early and teach them the whole concept of delay gratification. I was really happy with them the other day of last year or so. They started saving because they owned this big Lego police station. It was expensive, like over $100, and they were really pumped and wanted to do it.

And we kind of suggested, well, if you guys buy it together, you could get it for sooner. But oh, that's a great idea. So they figured they could share it. And then they started talking to some other people and various grandparents and stuff and telling them they were saving money for it.

And they saved their gift cards from Christmas for it and a bunch of other stuff. And then, lo and behold, they actually built up enough money to actually buy the thing themselves. So I was really, really impressed with them that they literally saved for like four or five months straight to buy this police station.

That's really great. That's totally-- I mean, all the studies always go back to the famous marshmallow experiment. It's been done in various permutations. But if there's any one habit or character trait that seems to underpin those who are either financially successful or successful as measured in other metrics, be that career advancement, other metrics, it seems to be the ability to delay gratification and to do the work now and enjoy the benefit down the road.

Oh, no. And that's one of the key things. And so realistically, that's what the whole allowance system was about, is giving them enough money to buy or do certain things, learn from their own mistakes, do silly things with their money. Let's get it out and get it over with.

I'd rather you flop in your face when you're eight years old than trying to do it when you're 25 and starting out in life. So it's kind of a safer learning environment to do it this way. I laughed. My youngest son actually was enamored with the vending machine swimming pool the longest time.

We explained, well, if you really want a pop, bring your allowance money. You can buy your own pop. It's your allowance. You can do what you want with it. So he did that, and he was very proud of it and everything else. And then he realized, he's like, well, we have pop at home.

So why don't I just pay all my money for pop? I've got a pop of what? It was really funny to see the lights go off in his head and go, this didn't turn out that well. Kyle: Isn't it interesting how you have to set up opportunities and permit failure?

And hopefully you can do it at times when failure is not catastrophic. But what a valuable way to spend a couple bucks on a pop at a vending machine so that you can learn the lesson associated with it later on down the road. Matt: Well, that's an interesting thing.

I think as much as people give video games a bad habit, I think it teaches one kid something very, very important that I didn't really have a lot growing up, is that it's okay to fail. Like, honestly, we get so worked up making sure it succeeds in everything that we kind of step back and don't realize it's okay to screw up.

It's bloody well useful. I have made so many errors in my life over the years on various things that it's just amazing to me to realize that, you know what, we don't give enough credit for failure. It's okay for you to go through life and go, "Hmm, I got out of university and thought I was entitled to a car," because this is what you do when you're a graduate.

"So I bought my first new car out of university. Did I need to buy a new car? No. Was it probably the best decision of my life? Not really, because I signed up for lease and large payments and everything else." And it was like, "But I had a career and I thought I deserved it." So it's like, well, I learned that in my early 20s.

If they can learn that a little closer to 15, they're light years ahead of me. One of the most frustrating pieces of advice that I used to read is when people would say, "Get busy failing." If you read business leaders, they'll often say, "The more you fail, the better it is." And that's always been frustrating to me because nobody wants to fail.

But I'm starting as I grow and as I mature as a person, I'm starting to see the value of failure and starting to see it for myself as I watch, especially in my work in the past as a financial planner, that has given me a unique insight into situations.

And many times I've had a client that will talk with me and they'll talk with me and they'll say, "I'm going to do this. I'm going to do this. I'm going to do this. I'm going to do this." And year after year after year, they still haven't done it.

And the reality was it would have been better if they'd said, "I'm going to do this. Okay, did you think about it? Did you think carefully? Are you willing to accept the downsides? Yes. Okay, go." And then it fails. And then they go do something else. And by the time we got to the third or fourth year, they would have failed at two or three things and probably found something that actually worked that they couldn't see behind it.

But since they're still stuck in a system sometimes of, "I'm going to do this. I'm going to do this. I'm going to do this," they never get a chance to get started and figure it out as they go along. And this is a current obsession of mine of how can we make failure okay?

How can we encourage failure? How can we build it and plan for it so that you can learn to deal with failure? Because if you look around from a financial perspective, if you look at business people, the average business owner who is wealthy has had some failed businesses. But for people who have never run a business and have never failed at a business, have never gone bankrupt, if you look at them, they often have this fear of failing.

But if you look at those who have massive businesses, I think of many times some of the people who have empires. The three that come to mind are Richard Branson, Donald Trump, and Warren Buffett. Richard Branson, I can't put my finger on which of his companies have failed, but I'm certain that several of his companies have failed and have gone through bankruptcy.

Donald Trump, his casinos right now are in bankruptcy and going through that. Warren Buffett, Berkshire Hathaway, the flagship company was a completely utterly failed investment that because he failed with the textile factory that was Berkshire Hathaway, turned it into a holding company. So in my mind, like you said, this is why school and education is such a big deal to me, we shouldn't be praising, I mean we should be praising effort, not necessarily results.

And we should be encouraging failure because that's when the envelope is pushed. And it's a totally different mindset than we have culturally right now. No, I agree. It's really interesting to watch my own kids grow up and develop and learn things. They are a little bit more comfortable with failure than I would say I ever was.

And I had to kind of evolve into it. I was a strong introvert growing up, so to me, talking to people was just sort of a "huh." And now I sit here and I've done umpteen different media interviews and such things after my book came out. I kind of laughed, it was terribly ironic that I ended up on the national newscast here a couple years back after my book came out.

So people were like, "Oh, I saw you on the news, blah blah blah." And I was like, "Yeah, it was a three hour afternoon, longest interview of my entire life. I was exhausted by the end of it." But it turned into a great little piece of inspiring people how to actually go about retirement planning.

Right. It's interesting, I look at even my life, and we're just hitting on a theme that for me is important, and especially important for early retirees, because you know what? You might fail in your retirement plan. Maybe your spouse gets sick and you have hundreds of thousands of dollars in medical bills that aren't covered by your insurance.

And so therefore your retirement plan is staved off for longer. But you might fail at anything. But if the fear of failure holds you off, I think in college, I was so scared of getting bad grades. I always got good grades. But in college, looking back now, in order to maintain a high GPA and getting good grades, I wasted so many opportunities to take classes that I was interested in, but I didn't want to take them and get bad grades and mess up my GPA.

So I took classes that I was good at. And looking back on it now, I think, "I was an idiot. How cool would it have been if I had taken all these different classes? And who cares about the failure? I'm paying for it. I don't care. I don't have to meet society's expectations to be able to put a 3.89 GPA on my resume.

Like why not? Where else in life does somebody have the opportunity to explore the things that they may or may not be interested in and try a whole bunch of stuff? No, I agree totally. Actually, with early retirement, one of the last chapters in my book, I touch on this and I kind of harp on it a lot with other people, is this.

Have backup plans. Basically, plan your retirement, keep it reasonable, but the reality is this. You can't cover every contingency in your plan. It's physically impossible to brainstorm every possible permutation of government policy, taxation development, and everything else that will happen in the next 40, 40 years. So don't even try.

The odds of you getting it right are so minute, it's not even bother to go after. So really, I just harp on the idea of have some backup plans. Have some contingencies. Like one of the backup plans in mine is this. I don't use the house equity at all for anything in my plan.

It's just sitting there like an albatross not being used. And the reality is, yes, I'm acutely aware of things could go wrong. I could screw up. I may have to go back to work. But the reality is this. At least I have something sitting there as sort of the backup plan in case things go sideways and buying me some time and some flexibility going forward.

Other couple of little basic ones is this, is have some slush funds of cash available when you start your retirement. The biggest thing I've seen over and over again is people taking money out during a down market and it's like going, "It's so easy to avoid. Just keep two years slush fund in your freaking bank account for cash of just rolling GIC or whatever.

Any investment, I don't care what, as long as it's relatively available and that will help buy you time when things go sideways. So when the market's tanking, you can sit there and go, "Oh, I'll just sit on the sidelines for a couple of months. Thank you very much." Absolutely.

People have this idea that just because you stop working, you can never work again. And I'm telling you, I haven't. The only person so far that I brought on the show that stopped working and hasn't earned any money in retirement that I was able to find was Doug Nordman who retired at 41 and he's actually made a good amount of money since retiring.

He just gave it all away. He gave it all to military charities from his books and from his blog and all of that. He just has given the money away. But there's this idea we're so connected with our corporate identity, our jobs. Who are you? What do you do is the question, not who are you.

And so one of the biggest challenges even with traditional retirement planning that I've learned is if you don't help a client transition their identity, you find it's a major part of successfully retiring. Even if you're 65 years old and you're going to retire at that traditional age, so much of our identity is wrapped up in the work that we do instead of who we are that you've got to fix that psychologically to help people through it.

Oh, I agree totally. The biggest thing I think to do from the happiness aspect is to bridge yourself from your current state of where you are in your work and your identity and everything else and how to build a new identity that's independent of your current work one and going forward.

Like one of the ones I say with people that you have to kind of focus on a little bit at least be aware of the issues. Most people don't really consciously aware of this until they go through it. Think about all the friends you have in your life and then think back to how you met all of them.

The average person will discover almost all of them had some inspiration and some level of work at some point. And so your social interactions were largely out of your work. So when you retire, that's only gone if you take that away. And then how are you going to fill that in, that void?

And that's how you get a lot of unhappy retirees regardless of the age coming out is they didn't they plan the money side down the last dime, completely ignoring the other 2000 hours a year that was your job and suddenly is now available. You've got to consider you can't play golf every day.

I don't care who the hell you are, what you're trying to do and how much you love it. The average person that won't work as a strategy. So you have to develop interests. You have to develop relationships and hobbies outside of your current thing and then build that up slowly.

So I love the idea of people that can manage to pull this off or they've reduced their amount of work slowly over a number of years and then stepped out of work on a slow basis. I think if employers were more willing to put policies in place to support that, it leads to a better succession planning going forward because there's nothing better than someone who wants to be at work and doing their job.

I think about if you could have a situation where a retiree goes, "I'm going to pay that over three years. I'm going to start drop down to 80% time, then maybe 60 and then maybe 40 over a couple of years." How beneficial that'd be for them because they free up their HR budget to hire a new employee who's junior and get umpteen years of training with the senior one.

And by the end, you have a senior person around who's happy to be there. You can assign them a special project or something and they'll get it done and then they'll go. They'll be happy to leave. Right. It's an interesting idea. I wonder if it would be … I guess it seems like it's such a small percentage of the population who is able to run their lifestyle on a lower amount of income.

Most people it seems in our society, their income equals their outgo and/or their outgo exceeds their income. So there's not a lot of margin there. But it would be interesting if somebody has margin, if they are an aggressive saver. I know I would … if I were working in a career that was having a slowdown and we're saying, "We want to pool … we need to reduce our costs.

Would anybody like to volunteer to work 50% of the time for the next … we anticipate this is going to be for about six months." Then that would be a real benefit to an employer and to an employee to have almost a sabbatical where it's just 50% of the time or to be able to take a sabbatical.

And then as the general market trend, whatever market it is, comes back and they can just step back into their job. Yeah. I agree with you. It would be nice to see that evolve. Actually, I ran into a situation of when my second son was born, I took seven weeks of parental leave off.

My wife being self-employed didn't qualify for any government coverage on that. So I actually capped in the program instead as the other parents and then my work was going through a bit of a slowdown. I was doing a consulting firm at the time. So my boss kept saying this to me over and over again, "I don't understand why you want to take the time off, but to have you off the books for seven weeks right now is really helpful.

So I'm approving this anyway." Right. So it's funny that I got time alone with my family and that new baby and enjoyed it immensely. And financially, we had savings so we could afford to do this. It was a conscious choice on our part. But the reality is a lot of companies aren't really set up to realize that that's a good thing or even talk to their employees like it's a good thing.

It tends to be this all or nothing approach to employment, unfortunately. And as you see self-employment take off, it's almost interesting that some people have realized that's the route to go in regards of be your own employer and fire and hire clients as you need based on your interests.

My wife's in a really envious situation of the fact that she very much picks her clients based on personality and how they're going to do and their children are going to interact with the rest of the kids going on. So she's very, very, very picky. So she interviews a lot of potential clients but only approves a handful of them.

And she's very much in a market where the supply does not meet the demand at all. So she can't afford to be picky. Wow. I think we could take that and apply that though as engineer. I think it's awesome that she's in that situation. My immediate thought is how can I be in that situation?

And I think many of us, if we're running our own businesses especially or professional services in some capacity, we either can do it or we can create a plan to get there. There's always been a benefit to me of my industry, which is financial planning, is that I could choose who I worked with and there were clients I just didn't like them and I never called them back.

And I fired two clients and actually formally said, "I'm not willing to work with you because I don't want to work with someone who is not a win-win." And that comes back to that self-direction, self-ownership. I see one of the fundamental primary benefits of early retirement and teaching that as an approach is that it can build self-confidence under us as individuals, which will affect or can affect every aspect of our lives going forward.

If you have savings, even if you're not saying, "I can never work again," but if you have a year's worth of income in the bank, you're less likely to go after a client who's not a good fit for you because you need the money. You're less likely to do a deal that's not a great fit for you because you need the money.

Usually you have some time and so you can work towards those great clients or those great deals or those great businesses. You can do them better or right. And in that sense, you can really, I think, build stronger businesses, stronger relationships, stronger customers. And much of it starts from being on that solid foundation.

And I think over a lifetime, that can make a dramatic difference in someone's quality of life. I agree. It can be helpful. But the same concepts can even be applied to an employer situation. Like right now, part of the reason I got my 90% time approved is I'm in a situation where I have 10 years worth of savings.

Living expenses saved up. I really am brutally honest with my bosses about my situation and what I'm doing and what I'm interested in. They're aware of my plan to retire early because hell no, it's on the internet. Pretty hard to hide. But the reality is they trust me because I've proven again and again, I'm here to give you my best advice.

I'm working for you. But the reality is I also won't put up a certain degrees of bullshit. I will tell them where I think they're making a mistake. And some people are terrified to do that because they feel they're so dependent on their job because they're leaving month to month, just trying to keep their things going on.

So any degree of savings, I think, buys you that degree of confidence and satisfaction knowing you can talk to your employer and go, "Hi, I'm not interested in working full time. I'm doing these other things in my life and I need the additional time. Can we come up with an agreement that will work?" Right.

What percentage of your income have you strived to save over the last six years that you've been focusing on this project? Well, it's scaled up quite a bit over the years because I really kept the expenses largely similar over the course of the years, even with kids and everything else.

They've kept it quite below inflation in that regards. What we've managed to do is right now I'm saving about 65% of our income coming in. Great. Awesome. I would imagine you might be familiar with, especially with your writing and reading about early retirement and financial planning within other cultures and other countries.

Do you think that you have it better as a Canadian, better off? Is it easier to do early retirement with a Canadian? Is it more difficult? Do you have any concept of the scale and the impact that living in Canada has made to your life? I think Canada offers a really big benefit to early retirees that our basic health care is all covered by government.

So as you mentioned, the fact that we do pay quite a bit more taxes, so you have to be more aggressive in your tax planning front. It's kind of the price you pay for it. The option is this. I know after my son was born, 10 weeks early, and he had two rounds of neurosurgery, I didn't have a bill for anything.

I didn't pay a dime, not one freaking dime. Why? Because our society as a whole was accepting the fact we pay more in taxes up front, but that also means then that we don't have this disaster situation ever occurring where I'm going to have, oh, half a million dollars of debt from one medical procedure.

So from that end of things, it does change the context of, you'll notice in Canadian law, we don't really talk about insurance all that much for health care at all because it's kind of an incidental side one of, you have to worry about your dental and your vision and maybe some extra drug coverage at best, but the reality is all your basic stuff is already covered by the government.

So it's kind of, I've heard some people who have read the blog from a U.S. perspective comment, it's almost refreshing to see someone who's not paranoid about health care in Canada because of her situation. And so it does create a bit of an oddity of, it's not easier or harder, but the worries are quite a bit different of, I don't worry about those situations that most people in the States would have going, well, how am I going to cover health care?

Do I have enough save? If I have a big issue, if my wife gets sick, do I have to go back to work? That doesn't really ever enter my head. The option is though, my taxes are a heck of a lot more, so I have to be a little more forward thinking on that front and organizing and being aggressive on the tax planning side to kind of compensate for it.

That would seem to certainly be the easier thing to do. I don't know much about the Canadian tax system, but any progressive tax system and any progressive tax system is relatively easy to work among, and especially when you can build out the ability to live a great lifestyle on not much money.

That allows you to take advantage of all the deferral accounts, and those deferral accounts can help over time. And then because you don't need to make much money, you don't need, excuse me, because you don't need to spend much money, you don't need to make as much money, and you don't need to save and accumulate as much money to live a great lifestyle, and so therefore you can avoid the strong penalties for doing well with a progressive tax rate.

I mean, to me that would seem the easier thing to do. Am I wrong, right? What do you think? No, I think you're kind of on the broad strokes of what makes it easy. You do have to think about it, and it's not earth-shatteringly difficult, but you do have to remember that the reality is as you keep saving, your interests get aligned with the business community a lot more, and you realize the tax code is really set up for businesses.

And that whole investment thing, it's very much encouraging that end of things. And so as such, I've noticed that the more I save, the more I agree with the tax system here and the progressive nature of it. So yes, the people who are making millions and millions of dollars are paying a lot of tax in theory, but the reality is they have a ream of options available to them to kind of defer, hide, otherwise manipulate their tax bill into something a little more reasonable.

As people like to think Canada's really expensive, but really when you get aggressive on your planning side of things, it's pretty easy to bounce things off. Like what happens for me is my marginal tax rate, the most tax I pay on that last dime of dollar I make is about 40%, which sounds really high, but when you consider after I'm done filing my taxes each year, my average tax rate is only 20%.

All right, what's the highest marginal bracket in Canada that you know? Not much further past that, it's pushing almost 50%. Okay, well that's, we're up to 55% in the US and the highest brackets when you bring in the extra taxes with the Affordable Care Act. So it's interesting that it's comparable at this point for high income earners.

So I think my guess is that your brackets are probably at a lower, do you have any idea where you enter into that top bracket as far as how much income puts you in ballpark? Oh, I can't remember off the top because the issue is here we have dual brackets.

We have each province has their own tax brackets and the federal government has its own tax brackets on top of that, so they don't always align. It ends up these weird little permutations that crop up. Crudely, I'd say maybe about 150,000 is where you start entering up towards the top or end.

So that would be the difference because in the US it's much more, depending on the makeup it's much more, it's much closer to 400,000-ish, higher or lower to get you into that top bracket depending on the structure. So that would be one of the major differences. Last question that I have and then I'll give you the final word to share anything that you want to share, but the last question on my list is what are the biggest objections that you get on the blog or as a result of the book?

Some people come over the book and they say, "Well, this is just a stupid idea." What are the objections that you get most commonly? I'd say probably the most common two objections I get is one, people like to complain, "I'm all theoretical. I've never actually done it. I'm not there yet because I'm still working towards actually getting there," ignoring the fact of what I've saved or accomplished in the last six years.

Like somehow the fact that I've already got $300,000 saved is nothing, which I kind of laugh at because I'm like, "Well, really, given my age, a lot of people do not have that much money in the bank and a paid off house. It doesn't really happen that frequently." The other big one is they don't believe it's possible to live on that low amount of money.

It seems to be the other common one that crops up. They just seem flabbergasted that you can spend so little amount of money and still be a middle class existence that's pretty normal and happy. That's where I get back to that whole aspect of the key thing is to really personalize your spending.

It's not that it matters to you to spend accordingly. My wife likes clothes a lot more than I do. I can wear the same three pair of jeans all week and I really don't care. She cares a lot more and so she tends to keep her spending cash and puts that into clothes because she cares about that.

But even with her, she's kind of aware of ... Sometimes she gets into these mindless buying patterns where she's like, "I'm not really even enjoying what I bought. This is silly." Because she works in daycare, she doesn't want to wear her nice stuff during the day, during the week because, hello, she has kids throwing things or other craft projects that get messy clothing.

So she's realized that she's changed things around a little bit. On the weekend, she wears her nice stuff now. So she's always outdressing me everywhere we go. That's fine. Right. You know what's interesting to me? Both of those objections are absolute stupid logical fallacies, but yet they're pervasive in both of our cultures.

They're certainly pervasive in the US context and in the Canadian context, it sounds like they're pervasive. Number one is, the first one is an ad hominem attack. Well, who are you to say that? Instead of dealing with your actual argument and trying to find a flaw in your logic or in your argument and disproving the argument, it's an attack on you that just because you say this can be done but you haven't done it means that it's not possible.

And then the second one is basically personal incredulity, simply saying that just because I find it difficult to believe, it's therefore not true. Well, just because you find it difficult to believe doesn't have any bearing on whether it's true or not. So this is on a societal perspective. It seems as though societally speaking, we have lost the ability to think in terms of logic and fact and we resort to fallacies instead.

And it's a shame because if somebody can start and identify those fallacies that just be – if they can identify the fallacies, they can gain and they can join you and me on our early retirement journey. Well, that's actually true. I've actually been struggling with this. Since I wrote the first book, I've been trying to come up with how – that was the core of my problem was how do you get people to get past this default point of view thing.

And so I've been struggling for multiple years here trying to come up with a format of a book that would work to try to actually deal with that exact issue of teaching people that your life is largely constructed defaults. You didn't decide much of anything of who – where you live, what job you're in, everything else was very unusually defaulted decision-making, not per se conscious in a lot of cases.

And so you don't really realize how different your life could be if you just let it. And then even the harder thing is then how do you transition from one lifestyle to another lifestyle, which is where I'm struggling to write a book on it. Absolutely. Well, Tim, this has been fun.

Do you have any final words of encouragement or thoughts that you would like to leave with the audience as we go? I think the biggest thing is to get comfortable with disbelief of things. A lot of people say they don't believe it's possible for me and I'm like, "Well, I don't really believe it's possible to waste $100,000 a year of income every year on a lifestyle that looks largely similar to mine," which I'm doing on 30.

So it's finding out you're comfortable being yourself and realize it's okay to do that and aim for that and then structure your life around that. Give yourself permission to be different. It's okay. It's supposed to be different. We're not all clones. We're not all coming from the same little vats of whatever DNA.

We all have different opinions and thoughts and patterns. So build your life around you, not what everyone else tells you to be. Tim, this has been fun. I appreciate you coming on and I look forward to following your journey. If you ever would like to come back on and share with us again, you're welcome anytime.

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