Tuesday, 15 September 2015

Sweating the small stuff

Every one has heard the saying "Don't sweat the small stuff". I completely disagree and I'll explain why.

Imagine that your finances are like a boat and you are on that boat fishing in the ocean. You have certain quota of fish that you must fill before you are finished or you will not get paid at all! You have all the tools to stop a lot of small leaks or one huge hole. Think of all of the minor expenses you make, like your takeout coffee habit. Now think of these as little pinholes in your boat that are slowly dripping, accumulating water onto the floor. Now the saying of "Don't sweat the small stuff" says not to worry about that coffee, or the small drip in the boat, and don't worry about not packing your lunch, or the new pinhole on the other side of the boat.

Eventually if you don't look after the small stuff, that small stuff will become a larger problem. Now instead of fixing these small holes with a tiny bit of resin you have to fix a large hole using various types of resources.
Now what happens if you start getting the small holes again. With your resources depleted you will be in danger of sinking unless you head to shore for more  resources. If you head to shore you will not be catching fish and therefore you can not finish your job and will not get paid. Now lets put this into context. Think of those small holes as your expenses, so small expenses like coffee, paying too much for cable or going out for lunch regularly. Also, think of the fish as your yearly income. If you go to shore to get more resources that means you are putting more time that you should be fishing into fixing the holes when if you had just patched them right away you would be finishing earlier (retiring earlier).

The same thing can be said for thinking that it's not enough to save $1.00 a day.  I won't even say probably, it is enough to save even the smallest amount when that savings will create more fish for you and allow you to retire earlier. Just that $1.00 a day invested over 10 years at a 5% rate is $4677.88!

So ask yourself, at what age do I plan on retiring? For most it is age 65. If you can save just $5.00 a month extra you could probably retire 2-3 months earlier just like $10.00  would probably increase that to 6 months early.
Happy Retirement
 This is the life I've chosen. I choose to sweat the small stuff and therefore I'm planning to leave the workforce by age 42. Hopefully I'll see you there.

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