Tim Stobbs of Canadian Dream Free At 45, which was featured in Hardbacon’s Top Canadian FIRE blogs ranking, is the ex-engineer who crushed his early retirement goals 5 years ahead of schedule. And he did it without resorting to the extreme frugalism that’s been known to leave a bitter taste in the mouths of FIRE critics a plenty. But how did he do it? Well, with a lot of FIRE fundamentals to be sure. But most importantly, breaking up with the idea that what you do is who you are.
Tim is everyone of us who have ever felt trapped in that 9 to 5 funk. You know you’re doing what you’re supposed to be doing but it just doesn’t feel right. There has to be more to life than punching a clock ad nauseam and living for the weekend. If that’s life on the right track, Tim knew it was time to derail. With a down to earth pragmatism, Tim has centered his strategy firmly on presence, intention and redefining your relationship with money – and most importantly yourself.
You can count on Tim to shoot from the hip with actionable, well vetted resources while modeling the kind of flexibility you need to give yourself a fighting chance. On his blog you will find a validating practicality that allows you to dip your toe into the pool of FIRE if taking the plunge isn’t quite your style. If you’ve ever felt overwhelmed, Tim is there to reassure you that life is what happens when you’re busy making other plans. It’s ok to slow down, pivot and practice self care. Rome wasn’t built in a day.
If you’re not quite sure how to get started, Tim’s authenticity creates a safe space for you to ask yourself some tough questions – who am I and what’s important to me? And really, that’s the most important step on any path towards personal growth. Freedom of choice begins with deciding what kind of choices you want to have available to you.
In a candid interview with Hardbacon, Tim opened up about his “ah-ha” moment, the unexpected emotional side of retiring early and how the best things in life really are free.
On the blog you talk about disassociating yourself from the status of being an engineer and how you no longer identify with that part of your life. But do you feel that your engineering background helped you on your FIRE journey?
My original goal was to retire at 45 and I did exceed that by retiring just before I turned 40. While I don’t really think of myself as an engineer much these days I fully admit that having an analytical mindset was very helpful in getting to FIRE. It allowed me to break down that larger goal into a series of smaller steps that made it less overwhelming to consider doing. So rather than worry about how to save several hundreds of thousands of dollars, I focused on how I can save more next month. But somewhat ironically I’ve always also had a healthy interest in psychology which was equally important to make sure I was enjoying my life while I kept saving for FIRE over a decade.
What has been the most surprising thing you have learned about yourself?
That being happy often has very little to do with money. A lot of your life can be happy without much money. Hanging out with friends can be done at home with a $10 bottle of wine or even just a cup of coffee. So yes, do plan for FIRE but keep in mind you have to be happy now. Don’t think FIRE will make you happy because it won’t. It can give you more choice but not make you happy by itself.
What was the “ah-ha” moment that inspired you to start your FIRE journey?
I actually felt sick on Sunday before going back to work at a job I hated in my early 20’s and I realized that life was too short to keep doing this. So I came across the idea of FIRE and loved the idea of making work an optional thing in life that you can do on your own terms. I ended up leaving that job shortly afterwards but I made myself a promise to never let myself get to the point of hating a job again and started on learning more about FIRE.
What is the one thing you know now that you wish you knew before you started FIRE?
FIRE isn’t a solution or the end of the game. It’s a tool. It allows you time to consider your choices and the flexibility to do what works best for you. But it won’t make you more fit, happier or nicer. That requires work you have to choose to do or not.
What advice would you give to someone who has never invested before? Where should they start? What is the first thing they should do?
Start saving first. Set up an automatic withdrawal and get going NOW! The investment you start with doesn’t matter that much in the beginning since you have so little money to start but if you don’t have any clue where to start I highly recommend reading about the Couch Potato Portfolio. They are easy to use and don’t take much effort which gives you time to learn more about investments and take on higher risk ideas (such as individual stocks) later on once you know more.
Can you describe your investment portfolio for our readers?
The money is in three main pots. I have an old work pension that I can’t use until I turn 50 which is mainly in a conserative investment fund. Then my wife and I both have RSPs with low cost index ETFs (exchange traded funds) which are balanced with stocks and bonds (60/40 split). Finally we have our TFSA accounts in individual dividend paying stocks which are mirrored to our monthly bills (so some banks, insurance companies, utilities, etc) and some preferred share ETFs to balance out the risk. In the TFSA we only use the dividends and leave the principle alone.
Why did you choose that specific investment strategy?
I like index funds because they are easy to use, have low fees and do a decent return over the long haul. The TFSA accounts were our highest risk investments but those are doing well overall partly because we mostly leave them alone. Yes I have some investments that lose money but that is offset by the ones that do well. I only took the leap on individual stocks after I got used to being able to read annual reports from the companies. It takes a lot more work to set up but after that it isn’t too bad to maintain.
Do you manage your own portfolio, use a robo-advisor or a mix of both?
We manage it all ourselves. It only takes about 15 minutes or so a year to rebalance the RSPs and I only do trading in the TFSA about once a year. So it’s easy enough to keep doing.
What investment brokerage do you use and can you tell us why you chose them?
I went with my local bank for the RSP so they are linked to my chequing account to give easy access to the money. However, for the TFSAs we went with Questrade because of the low cost to set up the accounts. I also like having that money a little less easy to access as it makes me consider if I really need to take money out of those accounts.
How do you balance sticking to a budget with spending on things you enjoy?
I highly recommend having some ‘fun’ money while you are saving for FIRE. Life is meant to be lived now and in the future. So yes, keep some money aside for a vacation or a treat once in a while. Just try to keep it reasonable. I personally keep a small fund of personal money aside to buy whatever I want with it ($200/month) and so then I have to decide if I want that meal out today or save towards a new laptop. You can have everything you want….just not all at the same time so pick your priorities and when in doubt. Wait 24 hours to see if you still want to buy it.
How do you manage slip-ups and unexpected expenses?
Emergency funds are your bestfriend for when life gives you unexpected things. Start with a few hundred dollars and work yourself up towards $1000 and eventually a few months of living costs. That way a true emergency of a tree falling on my car isn’t a problem since you can use your funds to cover the deductible on your insurance. Just don’t ever fool yourself to think a trip is an emergency. It almost always is a want.
Can you share some of your favorite, and most unexpected, money saving hacks?
My cell phone cost me $14/month. How? I bought a prepaid phone and got the most basic plan because I realize I almost always use my phone to text people. I rarely call them and I am, most of the time, within a free WiFi so I rarely turn on my data. Compare that to $80 or more a month of an unlimited everything phone plan and the latest phone costs and life is really great. I didn’t even know a prepaid cell phone plan could be that cheap until I shopped around about three years ago.
What is your opinion on credit cards and do you use one?
Credit cards are a great tool if you keep to the golden rule of them: always pay off the balance each month. NEVER pay interest on a credit card. There are so many other options out there like a line of credit which are much cheaper if you need to buy something expensive. We just have a basic Visa card that has a modest fee of $40/year and gives us some points which we use to pick up the occasional gift card. We get more free gift cards than we pay in fees so it works well for us.
Are you using any other credit tools to enhance your FIRE strategy?
We had a mortgage on the house which I did pay off prior to FIRE but we kept the Line of Credit that was secured by the house. It’s a $100,000 limit with a low interest rate which I keep around in the event something goes REALLY wrong like my house burning down, my car getting wrecked and my kids outgrew all their clothes in the same week. I rarely used it prior to FIRE and never since I left my engineering career but it is a nice emergency way to cover a cost immediately and then figure out the cash flow to pay it off later on.
Many Canadians are living paycheck to paycheck. What advice do you have for people to break out of that cycle of struggle?
Get into the habit of saving something because even a tiny bit of money saved will allow you time to consider your decisions. $5 a week doesn’t sound like much but it is start and the you can invest in things like a prepaid cell phone and save even more down the road There is always a choice and I get it is REALLY hard some days but trust me that having a bit of savings is a REALLY nice feeling to have when things go wrong in life.
Was there ever a time when you felt this way of life was too hard for you? How did you push through?
You will want to stop at some point. It will happen. However I suggest rather than give up…just take a break for a while. Stop tracking things and just live life for a bit. Often a break from things won’t derail your plan too badly since you often have good spending habits by the time you feel like quitting. And then after a while you can come back to things and adjust things going forward. So perhaps you spend a bit more now and push back your goal in a year or two. It’s okay to adjust things because life happens. That is honestly the heart of any good FIRE plan: be flexible.
Do you believe this way of life is accessible or realistic for everyone? Why do you feel that way?
Everyone needs to retire at some point so yes FIRE can be done by everyone. How early is entirely up to how much you make and can save. The higher the income the easier it gets. So don’t forget to look at ways to earn more as well. So really early FIRE is often done by those with higher income but it isn’t unreasonable for middle income people to also leave work a bit early as well with some planning. It’s just about your priorities in life.
Is your goal to retire entirely or would you like to continue working in some capacity?
I did pick up a ‘fun’ part time job at my local library about a year after I left my engineering career. I like the work of shelving books and I find having a schedule useful to make me get a bit more organized with my time. The money is just a nice bonus and I can always leave at any time. I think part time work can be useful to a LOT of people. We just get so exhausted with full time work that we don’t realize that work you choose to do can be nice in the right circumstances. We too often consider work a binary choice with FIRE: it is either all work at full time (or one) or no work ever (or zero). This is a false choice because there are lots of in between options of seasonal, part time or gig work that might be great for you if doing it is entirely optional. So don’t discount work in early retirement, just take a break for a while and then do what works for you.
What has been one of the most significant moments for you on this journey?
The decision to actually retire. It was a very emotional decision. People often think FIRE is just numbers but often your emotions play just as big of a role in things. But after thinking about the choice to leave my career for a long time that actual decision was really hard to make. I had doubts, feelings of guilt and wondering if I was just being selfish. But after I made the choice I felt relieved and calm. I had made the right choice for me.
Has your FIRE journey changed you as a person?
Yes, it’s given me time to consider things and realize that I used to judge people for their choices in life but now I understand we all are doing the best we can. I’m more open to learning the context of someone else’s choice now and realize most of us aren’t trying to ruin our lives.