By the time he's 40, Timothy Stobbs hopes to realize his Canadian dream – to retire from his engineering job and enjoy life with his wife and two sons in Regina.
"Retiring would be my 40th birthday present to myself, if everything goes according to plan," says the 37-year-old, who carries no debt, has hefty savings and says his family isn't lacking for anything.
And no, he didn't win the lottery. By day, Mr. Stobbs is a chemical engineer for SaskPower.
In his off hours, he's also known as Canadian Dream, his handle with Flatland Publishing, his print and digital media company specializing in personal finance. In 2006, he began writing Canadian Dream, Free at 45: A blog about early retirement and happiness. In 2011, he self-published his book Free at 45: How to Retire Early & Happy.
"The more and more I got into it, I realized that [retiring at 45] wasn't as far-fetched as I thought," he said. Things have gone better than he planned, and now he's aiming for 40.
The youngest of four boys, Mr. Stobbs was born in Manitoba but has lived in Saskatchewan most of his life. He recalls learning about financial literacy at an early age.
"At around age 11, we went to the bank and I was interested in investing," Mr. Stobbs recalls. "I was told I would qualify for a term deposit that would pay more interest than a CSB [Canada Savings Bond], so I realized if I had more money, I had more options.
"It got me interested in the financial side of life."
His passion for saving took off around age 13, after reading his dad's copy of The Wealthy Barber. "It made sense: Don't spend all of it, save some of it and you can have everything you want."
For many years now, Mr. Stobbs has been better off than a lot of Canadians. A report released in January by the Parliamentary Budget Office, for instance, concludes that Canadian households have seen the sharpest rise in debt of any Group of Seven country since 1990.
Mr. Stobbs and his wife, Rhea, have supplemented their income over the years. From 2009 to 2012, Mr. Stobbs was a trustee with the Regina Public School Board. Rhea has been running a home daycare since the birth of their first child, so she could be home while contributing to the family money pot.
Mr. Stobbs has managed his own finances. He paid off his mortgage in 2012 on the family's four-bedroom home purchased for $190,000 in 2006. He estimates it's now worth about $400,000. "It was dumb luck on our part we bought preboom – it probably saved me five to 10 years in my retirement goal," he says.
The couple have also amassed savings of about $600,000 held largely in registered retirement savings plans and tax-free savings accounts, with plans to reach the $750,000 he figures he and his family will need after he retires at 40 (that doesn't include the house equity).
Mr. Stobbs has also put $58,000 into registered education savings plans (RESPs). The couple opened them when their children were young.
"A lot of people assume we're somehow sacrificing lots of things, but we're not really," says Mr. Stobbs. "We optimize spending quite heavily to what we care about."
While they travelled to Hawaii for their 10th wedding anniversary six years ago, they only have one car. They don't have the latest cellphones, televisions or other gadgets, although they have a cable subscription for one of their TVs because "my wife is a big sports fan and won't give up her TSN."
Anyone can achieve early retirement, Mr. Stobbs maintains – but only if you really want it.
Here are other tips from Mr. Stobbs:
- Start saving now: Put away even a little bit every month, through automatic withdrawals from your bank/paycheques. “Once you get into the habit of having less to spend, it becomes an easy habit to maintain,” Mr. Stobbs says.
- Don’t freak out if you lose money early in your investing efforts: You have time to learn from your mistakes, he says, and change up your portfolio. He initially held index funds in his RRSPs, but “later I took more risks in TFSAs, and opted to expand in individual stocks – but that takes a lot more research and learning.”
- Don’t get buried in mortgage debt: “If you really can’t afford to buy a house, and you want to have any life over the long haul, accept that renting may be a better option in the short term.” Your home can, however, be an important part of your retirement plan – you could sell and move to less expensive housing, even in another city, and live off some of the equity, he says.
- You don’t have to spend money to have fun: The Stobbses are passionate readers and go to the library instead of buying books. “We also like to entertain, and I make my own wine, so we put a few servings of food together and have a great evening with friends.”
- Try buying second-hand: Check out garage sales and the online market.
- Don’t make it all about the money: “Make sure you’re happy doing all this and not miserable for 30 years,” Mr. Stobbs advises. Start early transitioning from your work identity to something that leaves you fulfilled and happy. He, for one, plans to write fiction and volunteer.