2023 Canadian Financial Summit

The first day’s talks for the 2023 Canadian Financial Summit are now live. These videos (and the videos from subsequent days) will be free for a couple of days, and then available for purchase.

I checked a couple out this morning, and one in particular that I found useful was the talk by Jason Heath from Objective Financial Planners. Take a look, and if you find anything useful please share it in the comments.

Refunds for Interrupted Travel in Canada

I just read an article on Savvy New Canadians about requesting and receiving a small refund (as a flight credit) from Air Canada for a recently interrupted travel plan. We found ourselves in a similar situation in January 2023 but we had a different outcome and I wanted to share our experience.

For context, the Canadian Transportation Agency (CTA) says (as of 2018) that airlines have to give compensation for flights that are delayed or cancelled for reasons that are within the airlines control.

The Situation

In December 2022, we flew from Halifax, through Toronto, to St. Louis to spent the holidays with my family. As you may remember, there was a huge winter storm from December 21 to 26 in North America. We flew to St. Louis on December 21, just ahead of the storm. We experienced a small delay (~2 hours) but that was it.

For our return flight, we were supposed to return on December 27. The evening of December 26 (~7 PM Central Time) we were notified that our flight the following morning at 9 AM had been cancelled “due to equipment availability”. I spent 2 hours on hold to talk to someone at Air Canada, by which time we’d been automatically re-booked on the same flights for December 30 (3 days later). The person I spoke to wasn’t able to give me any better options. We considered some crazier solutions (e.g. driving or taking the train to Chicago) but ultimately we decided to keep our re-booked flight.

The Complaint(s)

After we returned home, on January 1, I submitted a complaint with Air Canada using their form. The auto-response from this form (as well as the CTA policy) promises a response within 30 days. After 30 days had elapsed without a response, on February 1, I also submitted a complaint to the Canadian Transportation Agency (using this form).

Here are the requirements to filing a complaint with the CTA:

The Resolution(s)

On February 6, we received a response from Air Canada (36 days later) offering us $300 per traveller in Air Canada travel credits that expired in 3 years. This was the same thing offered to Savvy New Canadians. I added this information to our case with CTA, with a comment to the effect that we didn’t feel like this met the requirements of the refund process for travel interruptions.

Then, on February 27, we received another response from Air Canada giving each traveller a $1000 refund via e-transfer (and cancelling the $300 travel credit). I’m not sure, but I assume that the reason we received this updated refund offer is because our complaint with the CTA was moving forward. Thus, I would absolutely encourage you to file a complaint with the CTA (in addition to the airline) if you meet their complaint requirements.

If you have any experience requesting a refund due to a travel interruption, please feel free to share it below!

2022 Annual Review

As I said in our 2021 Annual Review, I write with post with some trepidation. In the interest in helping financial independence seem more attainable, I want to be very open about the math behind it. At the same time, comparison is a real source of suffering, and I don’t want to contribute to that. I’m also not a passionate tracker of these things, so our numbers are inherently rough. Regardless, in the hopes that this will do more good than harm, here’s how our finances played out in 2022.

Salary

I still work full-time and my wife still works part-time. This year was our first “clean” year in the sense that we were both working for Canadian employers. You’ll note that both our salaries are lower. For me, that’s because I got a lump sum payout on my vacation time when I left my US employer in 2021. For my wife, that’s because her US employer paid more. Now that our income situations are cleaner, I’m considering taking over our Canadian tax filing. For now, I’m planning to do it alongside our tax accountant and see if I get the same results.

And note that this is just salary — it excludes things like the Canada Child Benefit, re-imbursements, and credit card benefits.

2022202120202019
Me$98,871 (CAD)$123,680 (CAD)$84,652 (USD)$73,599 (USD)
My wife$24,672 (CAD)$35,341 (CAD)$20,418 (USD)$41,581 (USD)

Spending (minus taxes)

USDCAD
Monthly Average$4,913$6,466
Annual Total$58,953$77,699

This year, I shifted to tracking our spending in a much simpler way. Itemizing it simply took too long. Also, I’m not trying to cut our spending, so knowing where it goes (e.g. groceries vs home repair) isn’t important. And I’m leaving out taxes because we’re now having them pulled from our paychecks. Thus, when I pull our spending from our bank accounts I’m not getting them. I’m OK with that, though, as I need to figure them in manually for our post-work phase as we’ll have significantly less taxable income then.

All-in-all, I’m happy with this spending. Would I like it to be lower, sure, but that says as much about me as it does about our spending. Using the 4% rule as a rough estimate, this would mean we’d need ~$1.5M USD / ~$1.95M CAD to retire, with the caveat that we’d need to account for taxes. We’re close to these numbers, but not quite there as our net worth dropped last year.

Net Worth

All values in USD
Jan 1, 2023Jan 1, 2022Jan 1, 2021Jan 1, 2020
Cash$64,611$69,113$124,913$33,132
Taxable$247,552$269,830$134,469$78,060
457(b)s $167,360$184,711$154,718$131,036
Roth IRAs$229,437$279,360$237,008$201,669
403(b)s and RSPs$529,604$645,266$548,075$469,428
TOTAL$1,238,564$1,448,280$1,199,184$913,325

Our net worth went down by 14% in 2022, which isn’t too bad considering the market performance. We’re continuing to hold more cash than we usually would, along with ~$42K in iBonds, with an eye towards paying down a chunk of our mortgage when it comes due in 2025. After we top off our RRSP contributions for 2022, I’m planning to put the bulk of this cash into a 2 year GIC.

Housing

We don’t count home equity as part of our net worth. We purchased our house in July 2020 for $254,000 CAD (~$200,000 USD). The value has definitely increased from there based on comps. I’d guess, if we were to sell it today, we’d be close to (if not over) $350K CAD, which is nuts. When our mortgage comes due in 2.5 years, we’ll owe ~$178K. We’ll likely pay it off (or at least down significantly) if interest rates are high then. If not, we may do another 5 year mortgage.

Conclusion

Even with the market downturn in 2022, we’re still in the ball park of FI. At the same time, I’m not currently considering shifting to part-time work. This is partly because my company is going through a rough patch and I don’t want to make myself appear expendable. In addition, I’ve really come to appreciate the work-life balance that my job provides, along with a salary which would be very difficult (if not impossible) to find locally in semi-rural Nova Scotia. For now, my plan is to stay as a full-time employee for the next couple of years, then re-assess.

In addition, I’ve really come to realize that full retirement isn’t my goal. It does me good to have structure and purpose, and to have projects that make me engage with other people on a regular basis. Ultimately, I’d like to create this type of structure myself through part-time work and volunteering but, for now, I’m appreciating the security of a good salary with good work life balance. At the same time, I’ve started working with someone locally on some IT consulting that could eventually become a part-time replacement for my current job. We shall see.

2021 Annual Review

I have mixed feelings about putting these numbers down on the page. On the one hand, I think bringing more transparency and openness to personal finance is a good thing. At the same time, I think that our tendency to compare ourselves to other people is a lousy thing, and I certainly don’t want to encourage that. Fortunately, there are many people out there who have more money than we do, and there are lots of folks in the personal finance space who spend less that we do, so I don’t think our numbers should stir up too much suffering.

I’m also a bit hesitant to do this as I’m not a zealous tracker of every dollar that passes through our lives, and I realize that this isn’t a popular approach in the personal finance space. Until we moved to Canada, for example, I never tracked our spending or wrote out a budget. I’ve always felt that one of the perks of living well within your means is NOT having to track things religiously.

The combination of the international move and closing in on our FIRE number, though, made me more interested in knowing our actual spending. So I’ve been tracking that since we moved to Canada in the summer of 2020. I’ve also been tracking our net worth for about 9 years.

Salary

Currently, I work full-time and my wife works part-time. For most of 2021, we were both employed by US employers, switching over to Canadian employers in the fall. I got a bonus as I received a lump sum payout for my banked vacation time when I left my US employer. Next year, both of our salaries will likely be somewhat lower. And I’m only tracking our earnings from our jobs. In other words, I’m not counting things like the Canadian Child Benefit or investment earnings (which were all re-invested). We also received a small inheritance (~$15K USD) in 2021.

202120202019
Me$123680 (CAD)$84652 (USD)$73599 (USD)
My wife$35341 (CAD)$20418 (USD)$41581 (USD)

Spending

All expenses listed in CAD
Taxes$39,801
Mortgage$13,711
Groceries$12,152
Home Repair / Maintenance$9,754
Household$6,642
Utilities$3,042
Spiritual Health$2,519
Other$20,448
TOTAL$108,069 CAD
~$85,000 USD

The utilities number is actually a bit higher, as the pellets that we buy for our primary heat source are counted under “home repair / maintenance” (as that’s where everything from a hardware store goes. We probably spend about ~$750 CAD per year on pellets. Finally, spiritual health is a combination of meditation retreats and classes that we do.

Net Worth

All values in USD
Jan 1, 2022Jan 1, 2021Jan 1, 2020
Cash$69,113$124,913$33,132
Taxable$269,830$134,469$78,060
457(b)s $184,711$154,718$131,036
Roth IRAs$279,360$237,008$201,669
403(b)s and RSPs$645,266$548,075$469,428
TOTAL$1,448,280$1,199,184$913,325
Net worth over the years, in USD

We moved in July 2020, selling our house in Tampa, and clearing ~$100,000. That’s part of both the jump in our taxable account, and also the jump in cash for January 2021 — I was dollar cost averaging into our taxable account at the time. The tremendous growth by January 2022 is primarily market gains. We’ve contributed a bit to our RRSPs up here, but I only had a little room.

Housing

I don’t consider our house as part of our net worth. We purchased our house in July 2020 for $254,000 CAD (~$200,000 USD). Crazily, based on the price per square foot of several recent sales in our neighborhood, I suspect it has already appreciated to close to $300,000 CAD. We have a mortgage of ~$195,000 CAD, with a monthly payment of ~$1100 CAD. I’m currently leaning towards paying it off (or at least down significantly) when the mortgage matures in about 3.5 years.

Conclusion

I suspect our future spending will be a bit lower, as we were still getting established in Canada this year. At the same time, we didn’t have any major one off expenses (we replaced our ERV, but that wasn’t too bad) so it may not be too far off. And I feel like the tax portion of our spending will drop significantly in retirement, as some of the money that we’re spending each year won’t be income. In other words, it will come from our taxable account or (eventually) our Roth IRAs.

If we take $65,000 USD as our target for annual spending, the 4% rule would give us a FIRE number of $1,625,000. At $1,448,280, that puts as about 90% of the way there. And neither my wife nor I plan to fully retire in the near future. I’m thinking I’ll go down to part-time in the next year or so, but at the same time with the combination of working from home and generous leave, I’m also thinking I might just stay full time until I’m ready to pull the plug. Regardless, I feel like we’re in great shape.

FI-losophy: Don’t expect results.

One of my favorite Buddhist teachings is a collection of pithy slogans called the Lojong (meaning “mind trainings”). The idea with short slogans like these is that you reflect on them over and over again so that they come to mind when you find yourself heading in the wrong mental direction. One slogan in particular that I find very useful is: “Give up all hope of results.”

The idea behind this slogan is that we spend so much time and energy trying to manufacture certain results, rather than enjoying and being present to what is directly in front of us. This causes us to suffer. For me, this often manifests as “I’ll be happy when…” thoughts. As persistent as these thoughts are, they are a lie. There is no arrangement of external circumstances that will provide lasting happiness. That isn’t how things work. For one thing, nothing lasts. For another, my mood is only tangentially connected to what is going on outside of me. Observing my moods over time has absolutely convinced me of this.

While I certainly see a lot of value in taking a FIRE approach to work and finance, it is challenging to do so while not getting overly attached to results. We have our FI number which, if we’re not careful, can easily become an “I’ll be happy when…” number. We predict rates of return and calculate safe withdrawal rates. All of this is, inevitably, a form of expecting results.

Does that mean we shouldn’t do these things? To me, no. As a layperson (i.e. not a monk), my goal is to be in this world but not of this world. What I mean by this is that I recognize that I’m living in the “worldly” world — I have a job, expenses and retirement savings. To not do any planning in these areas would be incompatible with trying to live an intentional life. At the same time, I need to remember that these things are not, ultimately, a source of lasting happiness. They are not the point.

What does this mean, in practical terms? For me, it means (as best I’m able) trying to hold onto all of these target numbers loosely. It means accepting the fundamentally uncertainty of predicting the future. It also means not sacrificing my quality of life today for hypothetical results tomorrow.

To put it another way, it means remembering that the numbers are not the goal. I need to remember that the purpose of financial planning isn’t hitting our FI number as quickly as possible, or getting a 99% success rate on cFIREsim, or whatever. The point is having the freedom to live the life we want, both in the future AND right now.

In concrete terms, one of the things that means for me is no side gigs. I’ve never wanted to work any more than 40 hours a week, even though that would have enabled us to save more, faster. Focusing on the journey rather than on the destination also meant that my wife took two years of unpaid leave (in addition to a semester of paid leave) when our daughter was born. We would have made more money if she had gone back to teaching immediately after her paid leave was up, but that wasn’t the point. And, finally, it meant that we were free to move to Canada, even though it meant my wife would be quitting her job at a time when my own job had become a bit more precarious. We want to set our family up for the best life now, as well as we can, while also preparing for the future.

Thus, as usual, the answer is trying to find the middle way. How can I plan and prepare for retirement (even an early one) without obsessing over it? For me, the answer is often that I do obsess over it, and I have to very intentionally (and repeatedly) remind myself to let it go, that it is ultimately out of my control. I have to accept that I am doing my best with the information I have at hand today, that it won’t be perfect, and that’s OK. And then I have to turn off my computer and go play with my kid.

What about you? How do you balance the tension between preparing for retirement and enjoying the present moment?


Reading recommendation: If you’re interested in learning more about the Lojong slogans, two books I really like are The Practice of Lojong by Traleg Kyabgon and The Great Path of Awakening by Jamgon Kongtrul.

What does your spending look like? (Nov 2021)

I must confess — before we moved to Canada (in July 2020) I never tracked our spending. I used Mint to aggregate our investments, and I usually added credit cards there as well, but I never cleaned up or looked at the data. I’ve always felt that one of the perks of living within well within your means is not having to track expenses or make a budget.

I changed my tune when we moved because I thought we were near our FI number. To be sure, though, I had to pin down what our spending was. I had a rough idea of our spending in the US, but since we were in a new country I decided to bite the bullet and track it.

I’m using a tool called GnuCash. I’m only using a fraction of it’s functionality — it’s a full accounting suite, but I’m only using it to track spending. I chose it for a few reasons.

  1. It’s free.
  2. It’s located on my PC (rather than cloud-based). I’ve increasingly moved away from “free” apps or websites where I’m providing them with a lot of personal data.
  3. It learns — as I classify expenses each month, it makes better guesses as to how to classify them in future months.

I thought, when I started doing this, that handling multiple currency (CAD and USD) was going to be a priority for me (which GnuCash can also do) but to get the results I want (a single view of my expenses) it’s easier to just convert my few USD expenses into CAD each month.

Here’s how our average monthly expenses broke down for the last 13 months. This is all in Canadian dollars.

Mortgage$1,142principal and interest
Home Repair / Maintenance$931having house (interior) painted
having the garage / attic finished with aspenite
service for our pellet stove and HVAC
every trip to the hardware store
Taxes$857
Groceries$775vegetarian, mostly whole foods, CSA / farmer’s markets, decent amount of organic
Household$716another catchall — if I was looking to cut expenses I might dig into this one
Auto (gas, parking, insurance)$215doesn’t include the purchase price of our used Subaru Outback
Utilities$195doesn’t include pellets (which appear under home repair / maintenance).
Clothes$190mostly winter, shoes / boots, and skates / sporting goods
Spiritual Health$188retreats and classes w/ our meditation group in Florida
Phone$133currently 2 US, 1 Canada.
Gifts$126
Education (school lunches and summer camp)$125
Dining$104
Insurance (home)$81
Dental$66
Professional Expenses$65
Entertainment$59
Other / Miscellaneous$590
TOTAL$6558

There are undoubtedly places we could trim our spending. I also suspect that this first year in Canada will be a bit higher than subsequent years. My goal in this exercise, though, is to understand our spending, in order to get a sense of where we stand in terms of financial independence. And, based on these numbers, we look to be in pretty good shape.

Our current portfolio sits at about $1.3 million USD. Using the 4% rule (an imperfect but reasonable quick and dirty estimate), that should enable spending at about $52,000 USD (or $65,000 CAD) per year. Our current spending is just under $78,700 CAD (or ~$62,000 USD). This is very similar to what we were spending in the US.

If we were to fully retire, some of these expenses (including our taxes) would reduce, and we’d get an increase in some benefits (like the Canadian Child Benefit) as well. If, for example, we were drawing down so that my wife and I both had $20,000 CAD in income, we’d pay less in taxes and get almost $6000 in CCB, which would put us very close to the ~$65,000 CAD spending target.

Regardless, my wife is currently working part time (and really likes her job) and my plan is to go down to part-time next year (I think). We’ll do that for a few years and see where things stand. Plus, I’d like to pay off our mortgage when it opens up in a little under 4 years, which would significantly reduce our monthly spend.

All in all, I was happy to see, after this first year, that our spending in Canada wasn’t too far off our spending in the US. What about you? How carefully do you track your spending? And what tools do you use?

What are you doing with your short term savings? (Oct. 2021, Jan. 2022 update)

Ever since we moved to Canada, we’ve been keeping a lot more cash. This is due to a combination of factors.

  • I changed jobs to facilitate our move (my new job allowed me to work from home in Canada) and my new job is less stable than my previous one. Plus, it is in a very COVID-impacted industry, and there were lots of layoffs in my company.
  • My wife quit her job when we moved, although she ended up being able to work remotely in her old job for a while because of COVID.
  • Initially, I was being paid in USD and wanted a bit of a cash cushion to avoid having to exchange currency at inopportune times.

As we transition to part-time work / coastFIRE, this larger cash holding likely will continue. My current plan is to keep about 2 years worth of cash (mostly in CAD) in order to avoid having to sell investments when things are really low, or to convert currency when the rates are bad.

Finally, I’m increasingly leaning towards paying off our house when our mortgage comes up for renewal in summer 2025, so I’m accumulating a bit more cash than usual with that in mind. We have a 5-year fixed-rate mortgage that’s amortized for 25 years. We can pay off an extra 10%, but it’s a closed mortgage, which means there is a penalty if we want to pay it off completely ahead of schedule. (For the Americans out there, all of this is normal in Canada.) Thus, I’m thinking we’ll pay it off when we hit that 5 year maturity mark in a little under 4 years. This would knock 20-25% off our spending, which I really like the sound of.

EQ Bank

I’m currently using two places for these 2-4 year cash holdings. The first is EQ Bank (referral link). EQ Bank is an online only bank here in Canada that has “high” interest savings accounts for both CAD and USD. As of October 2021, the interest rate for CAD is 1.25%, and 1.00% for USD. To transfer in USD, I have to first move it to a US dollar account at a Canadian bank (I use TD for that) but it has been very fast and easy to move money around.

I-Bonds

The second thing I’m doing is buying US Series I Bonds via TreasuryDirect. The current rate is 3.54%, and it’s going up to 7.12% next month (November, for at least 6 months).  I’ve never held I-Bonds before, but they’re tied to inflation and the rates are set for 6 months at a time.  You can’t withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  You’re limited to $10K per person per calendar year, so I’ve done $20K (for my wife and I) and I’ll do another $20K in January. Depending on where rates are in January 2023, I might do another $20K then as well. This won’t be enough to pay off our house (we’ll owe ~$179K CAD if we don’t make early payments) but it will put a dent in it.

If, like me, you aren’t familiar with I-bonds, here is a good article on how to buy them.

January ’22 update: We’ve added $20K apiece. Our first $10K (each) is currently earning 3.54% (through April 2022), and will jump to 7.12% once that initial 6 months is up. The second $10K (each) is earning 7.12% for 6 months (through June 2022), with the next 6 months TBD. Because we’re intending to use this money to pay down our mortgage in the next few years, I’ll likely leave it in as long as the interest rate is above what I can get from EQ Bank for USD.

What about you? Where are you currently keeping money you’ll need in the not-too-distant future?

How much optimization should you do?

It’s tempting, of course, to say “as much as possible”. Optimization comes with costs, though. Time, if nothing else. And, for me, it often costs in mood and anxiety as well. If I obsess about optimizing something, it doesn’t make me happy, regardless of the ultimate results of my optimization. Furthermore, in most if not all areas, optimization is a process of diminishing returns.

I tend to be a big believer in the Pareto Principle – namely that you get 80% of the results for 20% of the work. And I think this applies to optimization many times as well. I can get 80% of the way to optimized in a given area with 20% of the work. And to get that last 20%, it can take a lot more work. I have a clear memory of a moment of realization after a particularly grueling bout of middle school perfectionism — I could do like 10% of the work and aim for B+’s and A-‘s, or I could keep killing myself trying to get 100% on everything and never look back. For better or worse, I kept that philosophy all the way through my schooling, a consistent 3.6 student who didn’t work very hard at all.

Three Types of Millionaires

In Quit Like a Millionaire, Kristy Chen proposes that there are three types of millionaires – hustlers (who focus on increasing their income), investors (who focus on maximizing their investment performance), and optimizers (who focus on maximizing their savings). Another way of articulating this would be to say that millionaires tend to try to optimize either their income, their investments, or their savings / expenses. And, in her model, each of these types of people tends to neglect the other two financial areas — so hustlers tend to pay little attention to investment performance and savings, etc. While I recognize that all models are imperfect, I do find this to be a useful approximation of the dominant schools of thought I’ve encountered in the world of personal finance. It also got me thinking about where I fit on this.

What I’m NOT is easy. I am definitely not a hustler. I bristle when dealing with salespeople, and find entrepreneurs unrelatable. Early in my adult life, while teaching English in Taiwan, many of my friends opened schools or taught lots of (high-priced) private lessons. I did neither — I taught my classes, and earned plenty of money, but certainly not as much as I could have. And I knew that, if I were the business owner, I’d be thinking about that business all the time, and I didn’t want that. I wanted to clock in and clock out, and that hasn’t changed. And as my career progressed, I certainly did not always make the choices that would lead to the highest salary. I chose majoring in English over majoring in computer science, and then got into education on top of that. I’ve taken some opportunities over the years, and earn good money (relative to where I started, certainly) but I’ve also turned down opportunities because they felt like they weren’t a good fit, even though they paid better.

I’m also not so focused on investment performance, although I do have a bit of experience with that. In my early investing days I tried picking stocks, and also picking actively managed funds, but I ultimately came to believe the research that says that this is very hard to do reliably. Once my focus had shifted to index funds, I certainly tried to get my fees to be as low as possible. I have also kept an aggressive asset allocation (90/10) throughout. And, over the years, I’ve flirted with taking a more aggressive factor-based approach (which I’ve so far resisted). So, while I wouldn’t describe myself as someone who spends a lot of time researching investments to maximize performance, I do try to optimize my investments in a few simple ways: use tax-sheltered space, minimize fees, and focus on equities rather than bonds. I think this simple approach falls well within a Pareto approach to investment optimization.

Similarly, I don’t know that I’m super-focused on optimizing my savings. My wife might disagree on this one, but one of the biggest arguments against my being a big savings optimizer is that, until we moved to Canada, I have never tracked our spending. Not even a little bit. And I only started after we moved because I had a sense that we were very close to our FI number and I wanted to check. All along, though, one of the big benefits of living well within our means is not having to track where every single dollar goes. This is not how optimizers think. At the same time, I will confess that I am a very reluctant shopper and will spend a lot of time hemming and hawing over purchases. I’m also very willing to spend time travel hacking. Again, I think this falls within the 20% work for 80% reward portion of savings optimization, although the truth is probably more like 50% work for 85% reward.

The Pareto Millionaire

So perhaps there’s a fourth type of millionaire — a Pareto millionaire, who does 20% of the work in all three of these areas (income, investment, savings) which, at least in certain countries nowadays, is enough to get you there. To be clear, I’m not coming out against optimization. If it makes you happy, do it. I definitely get much more joy out of collecting credit card bonuses or re-balancing our investments than many other people would. At the same time, though, when it doesn’t bring you joy, recognize that perfect optimization is impossible, and that good enough is good enough.

What is geoarbitrage?

In brief, geoarbitrage is the practice of living somewhere cheaper in order to accelerate your journey to financial independence. It can be done in the accumulation phase, for example by living in employer provided housing or in a low tax country while earning, or in the decumulation phase, moving somewhere that allows for a lower cost of living.

In terms of my personal experience, I’ve never practiced geoarbitrage specifically for financial reasons, but I have certainly seen the impact that living in different places can have on spending and saving. I lived in Taiwan for 5 years in my 20’s. During this time, I earned about $24,000 USD per year, and I saved about half. At the same time, I lived quite well, traveling around South East Asia, eating out every lunch and dinner at restaurants, and so forth. I didn’t pick Taiwan for economic reasons, but it is kind of in the sweet spot as far as earning potential vs. cost of living.

Later, I lived in China for a year. I was working in a smallish city in central China, and my salary was quite low. I earned about $5500 USD per year. Still, because my employer provided housing and some food, I managed to save about $3000 USD, and that’s with taking two month-long biking and camping trips. Again, my goal in China was not primarily to earn money, but clearly the cost of living there can be dramatically lower. At the same time, I returned to China a few years later for a business trip while working for a US university. I was put up in hotels costing $200 USD per night. It was a side of China I hadn’t even known existed. It really drove home to me that, even within a particular country, there can be a tremendous range of both costs and earning potential.

And then, in 2020, we moved from the US to Canada. Again, this wasn’t a financial decision, but it still had financial impacts. Our taxes went up, but our house was a bit cheaper. I was able to take my job with me, so my salary didn’t change, but when my wife found work in Canada her salary was slightly lower. However, as we transition to part-time work or full retirement, we won’t need to worry about paying for health insurance, which can be quite expensive in the US.

In the future, I think it’s possible that we might live overseas again. I suspect we’ll wait until our daughter is in college (which will be a while) but considering both my wife and I have backgrounds as English language teachers, it wouldn’t surprise me if we spent some of our early retirement living in different countries. I don’t anticipate these decisions to be primarily financially motivated, but it’s good to know that if something unexpected happens and our savings are dramatically reduced, there are plenty of nice places around the world where we would still be able to meet the costs of living. Some places I’m personally particularly interested in are Bhutan, Thailand, Chile and Croatia.

What experience do you have with geoarbitrage? What are some of your favorite places to live?

How do you develop discipline?

This may seem like a strange question for a blog about financial independence. What I’m attempting to get at here is the idea that my first impulse when facing many of the “good for me” things that I need to do in life (financial and otherwise) is to NOT want to do them. I know I should, but I don’t want to, at least not initially.

Take exercise, for example. I exercise almost every day before lunch, typically either running, doing TRX, or using a spin bike. I like exercising, but if I’m honest, many days I don’t feel like it. When it’s time, I think “I could just make lunch and watch something on TV” or something like that. And yet, I almost never skip a workout. How is that?

1. Just do it.

I don’t try to think my way into wanting to do something, I just start doing it. In other words, when I have that thought of not wanting to exercise, I don’t try to think my way to wanting to exercise. Instead, I just put on my sneakers and my exercise clothes and walk downstairs. The whole time, I might be thinking that I don’t want to exercise. I don’t get into an argument with myself about it. I just take the next action towards making it happen.

On a very small scale, I do the same thing with the telephone. I don’t really like to talk on the telephone. So when I have a phone call to make, I don’t try to think my way to wanting to make it. I just start dialing, knowing that when the person picks up, I’ll talk to them.

2. Count it, no matter what.

Another trick I use is to count the thing as long as I start it. I encountered this idea in an article about running — a run counts as long as I lace up my shoes and step outside. I continue to count workouts that same way. Some days, it is much easier to say “well, I’m just going to start and see what happens” than to commit to a full workout. And, if I’m honest, I finish the vast majority of the workouts I start.

I take the same approach with meditation. I often have a voice in my head saying that I don’t have time, or that there’s something else I should be doing, but I just start the timer and sit down, regardless of what my thinking is saying. And I count the session as long as my butt hits the bench.

3. Set yourself up for success, don’t rely on will power.

I don’t think my will power is particularly strong, so I try to make it as easy as possible for me to do the right thing. If I’m trying to exercise, I set up a routine where I do it at the same time every day, and I lower the barriers as much as I can. For me, that means doing it at home (or from home, when I run outside). For others, that might mean joining a group, or committing to a membership.

Similarly, if there’s a behavior that I’m trying to avoid, I make it harder to do. If I’m finding a website to be distracting, I block it. This isn’t irreversible, but it works because it interrupts that first impulse. If I want to eat less ice cream, I don’t keep it in the freezer. If it isn’t in the house, I eat it a lot less.

So what does this have to do with personal finance? I take the same approach there. When I need to cut my spending, or invest more, or rebalance more often, or tune out some bad investment advice, I use the above methods. I don’t try to think my way to wanting to do these things, I just do them, and I set myself up for success (and make failure harder) in whatever ways I can. This can mean automating my contributions to an investment account, automating rebalancing, blocking sites that hype questionable investment or offer tempting purchase, and so on. Perhaps most importantly, it means realizing that I don’t need to listen to the voice in my head. I can hear that voice, whatever it is saying at the time, and still take the appropriate action regardless.

In a way, I regard discipline and willpower in the same way I understand courage. Courage isn’t the absence of fear, but taking the action in spite of the fear. Similarly, discipline isn’t always wanting to do the right action, it’s taking the action even when you feel like not doing it.

As I said, I don’t consider myself to be any great shakes when it comes to discipline or will power. I think folks around me would consider me to be pretty disciplined, though, because of what it looks like from the outside. I use these techniques to get me there.

What works for you? Please let us know in the comments!