Notes on Early Retirement

It’s been a while since I’ve written and boy oh boy, has the past little while been a doozy.  For starters, my early retirement timeline was graciously expedited by my former employer.  So I can officially say that Wednesday August 15th, 2018 was my last day of employment.  You know how Alcoholic Anonymous members always give the exact date of sobriety?  This is my version of that.  So on Wednesday August 15th, 2018, I officially stopped trading time for money and commenced life as an early retiree.
This is what I’d wanted for so long.  The ability to wake up without an alarm clock.  To laze around all day, listening to audiobooks and sipping on chamomile tea. To take long walks at dusk, when the sky is an amalgam of oranges and pinks.  To book last-minute trips on a whim and fly out the following morning without seeking permission.  To escape superficial workplace conversations about the weather.  To read Russian literature to my heart’s content.  To take midday naps.  To never worry again if our pharmacy is going to hit our quarterly PFS numbers.
Based on the aforementioned, one might surmise that since Wednesday August 15th, 2018, I’ve been living my own avocado-fueled, millennial utopia.   But getting fired is tough regardless of how horrible your job is. Not to mention that Rob, (to whom I’d lovingly dedicated an entire blog post) dumped me just 3 days before said firing.  Thus, I’d been ensconced in a cacaphony of rejection from all sides.  In fact, on the Holmes-Rahe Stress Inventory, I’d not only experienced #3 (relationship dissolution) and #8 (getting fired) but they’d happened in the same week.  All I needed was to be incarcerated to experience the complete FML trifecta.
But the truth is, you can’t make an omelette without breaking a few eggs.  I could have spent decades collating my various investment accounts and running Monte Carlo simulations without actually pulling the trigger.  Because pulling the trigger is really, fucking hard.  So I’m glad someone else did it for me.  And here I am, pretty & smart & retired & entitled to severance.  I guess life isn’t so bad…

Love and spring are in the air

So I’ve found someone perfect.  A kindred spirit, of sorts.  You know how sometimes you meet someone, and you just know you’ll like them? That’s him.  He’s goodlooking and smart obviously.  But he’s also kind.  He has a loving nature that makes you want to open up to him.  And he treats every single person he meets with respect.  And he does the right thing, even when it’s easier not to.  He opens car doors and pays for more than his fair share.  He eschews gender norms.  He cooks for us and listens when I give him investment advice.  And he listens with such intent that he makes me feel like my opinions are valuable.  I love sharing from my realm of knowledge and gauging from his.  But more than anything else, it’s just easy.  That’s the best way to know that a relationship will work: it’ll just be easy.

The progression of our relationship has felt natural and fluid.  I’m not thinking about hitting relationship markers at a certain pace.  My weekends are pre-planned because I just want to spend time with him.  Our time together is amazing and our time apart is made sweeter simply by knowing that he exists.  We don’t fight or bicker.  We quip and banter but when something is done, it’s done.  There’s no residual resentment or hostility.  I’ve never been mad at him and I can’t fathom why I ever would be.  I’d always chalked up failed relationships and my spinster status to my own shortcomings.  But really, it had been them.  They just weren’t Rob.  It’s funny how all the defense mechanisms and false roadblocks fall away when you find the right person.

FIRE Update

Despite their initial bellyaching, my insurance is finally stepping in and paying up. And although I had to endure much stress and aggravation to get to this point, I am now pleased that all of my rentals have had complete overhauls this year. My bungalow is adorable and well appointed, with brand new windows, roof, furnace and AC. My condo has all new appliances, flooring, kitchen and bathroom… along with really pretty waterviews. And the townhouse… well, the townhouse is coming along. When the work is done, the townhouse have gotten all new floors, walls, paint, furnace and AC. Hopefully this’ll mean I won’t have any costly repairs for at least a few years.

This past summer also provided the opportunity for me to increase my gross monthly rents. The monthly rent on my condo was increased from a pitiful $1575 (long-term tenant with rent control who literally DIED in my condo) to a more reasonable $1800 (+$225). The rent for the townhouse was increased from $1450 to $1600 (+$150) with the change of tenants. And my bungalow tenants agreed to an increase from $1800 to $1900 (+$100) after a 2 year freeze. Given that my total mortgage debt is approximately $200k and locked in at a 2.54% for 4-5 years, my monthly mortgage payment is $900 with gross monthly rents of $5300. The only thing that irking me now is the $168 monthly Reliance payment I have to make on my bungalow’s HVAC system. <Note to self: use tax refund to pay off Reliance. (+$168)> With the Reliance payment gone, I’ll have increased my cashflow by nearly $650 per month or close to $8,000 per year! So even before the mortgages are paid off, I can likely expect monthly rental income of $3,500.

The beauty of building wealth is that once you get started on the right path, it becomes easier every single day. It’s almost like a wealth snowball. Each month, my rentals pay me $3,500, my employer kicks in $5,000 and my investments increase by $2,100. My employer contributes $475 to my retirement savings and $168 to my ESPP. My mortgage balances decrease by roughly $667 monthly, boosting my net worth further. Thus, even though I only “make” $5,000 from employment income, my net worth increases by nearly $12,000 per month. Mind you, this is strictly theoretical. I mean, the market could crash tomorrow and take half of my portfolio with it. Just have to forget about the numbers and keep trucking.


Rental Property Fun

I had a massive flood at one of my rental properties. Well, it would be pompous to call it “massive” given what’s been going on elsewhere. It has, however, rendered my little townhouse uninhabitable for the time being. Before I recount the tale, let’s rewind a little…

In my quest to reach financial freedom before my 33rd birthday, I arranged for several large, costly rental property renovations to be completed this summer. Without a stable job, I would not have the cashflow to fund major rental repairs, should they arise at some future point. I paid for a new roof, new windows and eavestroughs for my bungalow. My highrise condo unit had the flooring replaced, got all new appliances and was professionally painted throughout. My townhouse got a new air conditioner, furnace and water heater. During the HVAC replacement, I was told that the figuration of my laundry room / HVAC units presented a fire hazard… so naturally that was all reconfigured.

I’d spent close to $35,000 on the aforementioned work but before I could catch my breath, my longstanding townhouse tenants provided me with 60 days notice of their intention to move out. And thus, ensued a mad dash to clean, stage and re-list my unit. Luckily, I not only re-rented it in a single day, but was able to secure rent that was 10% higher than what the previous tenants had been paying.  With all of the major repairs addressed and my new tenants scheduled to move in, I breathed a sigh of relief. Surely all would be well now… and not a minute too soon. I needed my rental income to start flowing for a few months and give me a chance to rebuild my reserve funds.

Our new tenant, a legal clerk, had delayed moving in for a week and arranged for a crew of painters to touch up the unit. So unbeknownst to anyone, there had been a flood. On Monday morning, the painters had arrived with rollers and paint cans in tow, when they’d noticed water seeping down the walls and telltale water stains on the carpet. The hardwood on the main floor had risen, a sure sign of water pooling underneath. The digital thermostat in the living room displayed a humidity level of 98%. Paint was cracked and the smell of must was unmistakable. My tenant notified me and my parents, bless their hearts, took over as I was stuck at work. Contacting the condo corporation, our insurance company, the neighbours (since their unit was where the flood had originated)…. and we heard nothing.

I mean, you pay condo fees and insurance premiums dutifully for years. You play by the rules and assume that should disaster strike, you’ll be in the clear because you took the necessary precautions. Unlike those thoughtless vagrants, playing fast and loose with the the roofs over their heads, I should have had nothing to worry about. But suddenly, I wasn’t so sure. My mom painstakingly reached out to the condo corporation nearly 15 times, leaving message after message. We called StateFarm, who said they would have an adjuster contact us and to just be patient. Hours turned into days and nothing was happening. The property manager for our neighbour’s unit shirked responsibility, stating that he was not responsible for our unit and to contact the condo corporation. The condo corporation said it had nothing to do with them and wouldn’t return our phone calls. StateFarm said that they wouldn’t do anything until the condo corporation had performed emergency remediation…we were getting the runaround and I was getting a sinking feeling in the pit of my stomach that no one would step up to help.

Sensing our frustration and lack of progress, Nelia reached out to me. As a legal clerk in a real estate law firm, she was an expert at dealing with insurance companies. She documented the damage in pictures and video, sought out and collated insurance policies & condominium declarations whilst penning carefully worded emails to the parties responsible. While previously our calls had been ignored, we were suddenly being taken seriously. Contractors from both the insurance company and the condo corporation converged on my unit to assess damages and determine who would do what. Turns out that my insurance policy not only covers the repairs, but is also responsible for my lost rental income in the interim. Still though, nothing is a given and dealing with insurance is a battle at the best of times.

Despite this, I can’t help but feel that it was somehow meant to be this way. The flood happening before Nelia had moved in and thus, leaving her personal property untouched.  Nelia, just happening to be an amazing legal clerk who could guide us in this process. So *fingers crossed*, when it’s all said and done, I should have all new floors, carpets, walls and paint in the flood affected areas, along with my rental income. Here’s hoping…



Financial Independence Update

I just celebrated my 6 year anniversary with Rexall, coming into the homestretch of my financial independence goal. Prior to being an employee, I’d done 2 years of contract work for them so 8 years of total service. This means that Rexall has been a part of my life longer than my fiancé and high school tenure combined.

These days, I find that I am no longer as integrally focused on my retirement date. This is because I no longer despise my job. I’ve modified my work environment to suit my needs. I have limited my workweek to the minimum required for full-time status.  I’ve found a workplace that is low volume and minimized my commute.  I’ve established positive relationships with my coworkers.  Quitting would mean losing my health / dental / pension benefits and would likely lead to boredom, especially during the winter months.  And by voraciously reading the blogs of other early retirees, I’ve learned that boredom and disillusionment are salient post-retirement.

In summation, I’m not quitting. However, my current job will likely be my last in retail pharmacy. For starters, retail operations of all stripes are struggling to remain viable. Cash strapped governments are looking to reduce expenditures on generic drugs. And fresh pharmacy graduates are flooding the market. Knowing all of this, I’ve made the decision to just stay on until I am fired.

Financial Samurai first discussed how it makes more financial sense to get laid off than quit.  Waiting to get laid off means that I can coast by with minimum stress, banking an extra $8,000/month towards my FI nest egg.  When I am ultimately fired, I can realistically expect about 12 months of severance pay based on my 8 years of service (1.5 months per year of service or $110,000). Once my severance runs out, I’ll likely be entitled to a maximum of 38 weeks of Employment Insurance benefits ($543 per week, total ~$20,000).  There is no reason to walk away from a job I enjoy and simultaneously leave $130,000 on the table.

I’ve also taken to reading my company benefits handbook. My insurance covers laser vision correction! (goodbye nerdy eyeglasses!) And physio exercises! (hello 6 pack!) And my massages! And orthopedic shoes for those 12 hour shifts! I can even get $700 for a TENS machine in case my back acts up. I should probably get my teeth checked and stock up on my prescription retinoid cream while I’m still covered. So in summation, I’ll be mooching off my employee perks a little longer.

Financial Facelift

My friend, Eric, got me started on the path to financial independence back in 2009.  By encouraging me to learn about and manage my own investments, he empowered me to take control of my financial future.  Recently I was presented with an opportunity to have him evaluate my finances and provide some helpful tips, so naturally I took it. It’s really time to do away with the social taboo of discussing finances with friends #zerofucksgiven. 

Here’s what I asked:

Yes, this is what I figure: I only work Tuesday, Thursday and Saturday. My commute is 15km (no highways) and my store is relatively low volume. I am almost embarrassed by my lack of ambition, but I am so complacent right now. Working 3 days per week, with a short commute whilst earning over $75k/year seems to be the perfect recipe for happiness. Last night, I had a former Rexall head office employee come into my store to fill a prescription. He was recently fired and stated that “they are literally going from department to department to get rid of people” since the Mckesson takeover. Hopefully they plan to clear-cut head office (they can start with my regional :D) and add more frontline staff. I could never understand how Rexall had to cut minimum wage earning cashiers and technicians, but had ample resources for an ever increasing pool of managers to manage managers. I’m sure it’s no coincidence that we have had conference calls each day this week, as head office workers scramble to prove their worth to the company.

I suppose I could sell my properties, but I like real estate as a productive asset class. Unlike gold which has to be sold to realize a profit, I can collect rent for the rest of my life and still own the underlying (inflation-tracking) asset. The CAP rates make no sense at current valuations (and thus, I refuse to buy anything at these prices), but I am still reluctant to sell. Of course Garth, as a financial advisor, will tell everyone to sell real estate and pay him 1-2%/year to invest the proceeds. But does it make sense to sell real estate at it’s highest level ever to buy into a stock market at it’s highest level ever? I began investing in 2009 so I have yet to experience any major crashes, but I would feel especially horrible if I invested everything right before the next crash. I also think this is also why real estate prices stubbornly high. My store is located in Islington Village, close to the Kingsway and Princess Gardens, areas where house prices have skyrocketed. However, whenever I ask my patients (usually in their 60s and 70s with $2-5 million homes) why they don’t cash out, they always ask “and go where?”. They like their home / neighbourhood and do not want to move to some hillbilly town just to pad their investment portfolios (although doing so would be a boon for the realtors and/or Garth).

Since you were the first person to ever talk to me about investing, and you’re exceptionally savvy, perhaps you can offer your take on my finances: I currently own 3 properties (a condo downtown that my parents gifted me, my townhouse in Oakville and my house in Hamilton). I own the condo outright, but the Oakville townhouse has a mortgage of $72k and the Hamilton house has a mortgage of $154k. Between my RRSP / TFSA / Rexall pension / nonregistered account, I have about $600k invested. My mortgages are currently at ~2% so I haven’t been rushing to pay them down. I have zero interest in buying more real estate so I have been trying to build up my investment portfolio. I figure that if I have $750k invested + rental income, I can reasonably expect to have $60k-70k/year in passive income. This will be vital as pharmacy will continue it’s rapid decline in coming years. Does this make sense? Should I do as Garth advises and borrow against my properties to invest? And if so, what should I invest in? Everything seems to be expensive right now :S

And Eric’s response:

I am glad to hear that McKesson is cleaning house at Rexall. All of those managers deserve to be promptly dismissed and shown no mercy in the process. I hope that McKesson employs a ruthless scorched-earth policy as it purges the Rexall head office and that the freshly unemployed managers have lots of time to reflect on what they did to the front-line store level employees under the old regime.

I think that you have struck the ideal balance between work hours and salary. Consider that I have to work 5 days a week (66% more days) and commute 30 km each way to earn only a little more. And if I factor in income taxes then I am in fact earning very little for all of those extra work days. Like you I feel that I lack ambition. I no longer see the point of trying to earn more money when doing so will make no difference to my ability to ever own a home in this city where the cost of detached homes are continuing to increase by $706 every 24 hours. All that I would accomplish by working harder and earning more would be to increase the tax revenues of our governments who would then use the additional money that I have provided to them to enact policies that will serve only to make my life even more difficult (such as by sponsoring more refugees to further increase the GTA’s exploding population which will only make my shelter more unaffordable and my commute longer). I would rather deprive the government of that additional revenue and use my resulting extra spare time on activities that benefit me psychologically and physically such as cycling, skiing, canoe tripping or simply reading and relaxing. Also, although working harder might allow me to grow my assets faster those assets could one day be seized by creditors, lost in an acrimonious divorce, handed over to a stranger for compensatory damages following a court order or simply lost due to my own poor investment decisions or market conditions that are outside of my control. On the other hand no one can take from me the benefit that I derive by engaging in recreational activities that I enjoy. No future spouse, creditor or litigator can ever seize the health benefits that the exercise confers on me or the joy that I may have experienced by choosing to work less and pursue those activities. Money, on the other hand, can be fleeting.

It is good that you have come to me for financial advice instead of e-mailing Garth. Because, as you know, he would have started off his blog post by publicly and colourfully ridiculing your e-mail and then arrogantly suggesting that you liquidate all of your real estate holdings to hand that money over to him where he will gladly manage it in exchange for 1% of its value annually.

I agree that everything seems overpriced right now (as everything has seemed for a few years now). GTA real estate appears to be overvalued. But the stock markets have also been on a 9 year bull run and seem due to correct or crash with P/E ratios stretched as they are. Meanwhile fixed income assets are yielding very little and are barely keeping pace with inflation. I think that these distortions are due to the unprecedentedly loose monetary policies that we have had since the financial crisis of 2008. So what to do?

I guess my suggestion would be to be diversified since no one can ever know what lies around the corner. Why not simply keep the three investment properties but gradually become more diversified by not adding any more properties and instead growing your financial assets while including a fixed-income component (GICs or bonds). I agree that it does not make sense to liquidate your rental properties as doing so would cause you to incur large transaction costs (real estate agent commission etc…) and would trigger massive capital gains taxes that would only leave you with less capital to invest in other things. Perhaps you could instead funnel your rental income into a diversified portfolio such that over time you are more balanced and less heavily invested in residential GTA real estate as a percentage of your net worth. I think that would be a sensible approach.

As for paying down the mortgages, I would be tempted to do that if it was me. Sure the mortgage rate might only be 2% (for now) while stocks are rising at 20% per year and doing so will cause you to be even more heavily invested in real estate as a percentage of your assets, but paying down the mortgages will reduce your risk and will provide you with a guaranteed 2% return. If the real estate market / rental markets do collapse (as Garth suggests) then having the mortgages paid off will allow you to fare better than your competing landlords who are no doubt heavily leveraged. In such a situation, you could maintain a profitable rental operation at significantly lower rental rates if you had no mortgage while your competitors would be forced to sell their money-losing leveraged rental properties at fire sale prices. Being conservative as I am I would definitely not leverage up more in an attempt to possibly make more money.

But remember that the fruits of your labour can be taken from you by others. So above all, try to enjoy yourself 🙂

Dating in your 30s

I recently read the book, Dataclysm.  Being the narcissistic opportunist that I am, I’d likely picked up the book to size up my own worth in the dating market.  The author, Christian Rudder, had previously endeared himself to me on his OKTrends blog whilst summarizing online dating response rates.  The following chart, in particular, painted a rosy picture of my prospects:


My takeaways from that chart are 1) Middle Eastern women are universally desirable but 2) we have the least amount of success with white and Pacific Islander males (and with that, my lifelong dream of finding a Tongan man was dashed).  Luckily, I don’t have to subject myself to online dating because I’ve already found my perfect match.  But as an interesting thought experiment, let’s consider how a newly single 32 year old female would do in the dating market.  Like, say… Scarlett Johansson. How might she fair in the rough-and-tumble world of online dating, given that she is over 30 and lacks the added benefit of being Middle Eastern?

Popular dogma suggests that dating as a 30-something year old woman would be tough. One must compete with younger women for an already diminished pool of suitable bachelors.  Plus, the synergy of technology and hook up culture have led to myriad of dating sites and apps, offering a never ending trove of romantic possibility for men.  On the other hand, older women must have some dating options given that Sex and the City had enough story lines for 6 seasons and one feature length movie.  And that was before Bumble.

So let’s see what Dataclysm has to say about female attractiveness through the years:


Ouch.  Apart from a few dalliances in their 40s, men overwhelmingly prefer coeds.  Scarlett might as well put on her flannel pajamas and dig into the Haagen Dazs because it appears her best years are behind her.  I mean, how could anyone refute Christian Rudder, with his dating site and bestselling book and ample data?

Oh, I know.  I could offer my anecdotal experience.  As a “post-wall” 32 year old female, in the past workweek, I’ve received a box of Godiva chocolates, a bottle of wine, and a painting.  I’ve been asked out twice and have had a few stammering men pay me compliments.  Here’s what I haven’t received: dick pics, booty calls, or thoughtless “hey” messages from OkCupid man-babies who can’t shell out $30/month to join  So even overlooking the sampling bias of extrapolating OKCupid data to the entire population, I wouldn’t feel too sorry for Scarlett Johansson.  What we lose in quantity, we certainly make up for in quality.