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Reality check and finances
Posted by: HoboSylvain | 2012-01-07 09:00:00 | Dorval, Quebec, Canada
Keywords: finances, money, preparation
A few months ago, Iíve decided to change my life totally next year... and become a full-time traveller... touring the world as a way of living, rather than just short pauses throughout a life of work. Iíll write more soon about what triggered that change and what my motivations are and all the preparative steps. This is my very first text to document the preparation of my new life.

Included in my list of preparations was a reality check.  Iíve discussed my plans with close friends who know me, people who know my passions.  They essentially validated that my plan was a realistic one.

One other validation I had was to meet with my psychologist.  Iíve had a depression episode two years ago, as a consequence of my unexplained health issues and Iím still on anti-depressants (on exit dose however).  I wanted to check with her if my plan could be a symptom of my depression, or part of a manic-depressive state, etc...  After a few meetings, we came to the conclusion that my plan was a healthy one and I had all the tools to achieve it.

Of course, thatís a big step and a leap into the unknown.  Although there are tens of thousands of people living that kind of live right now... many of them for over a decade.  Of course, there are many aspects of it that worry me and frighten me.

One of the aspects Iím worried about is money of course.  I often dreamt of winning the lottery and spend my life as a permanent vacation, touring the world.  I studied the question and I figured I would need to win $4 millions; the interests off that capital would allow me to spend my life traveling, without touching the capital.

Now that Iím looking at things differently, I know I donít need a thousand dollars a week to do it... but more like a thousand dollars a month most of the time.  Suddenly, I donít need to win the lotto anymore.  A thousand dollars a month is a relatively simple amount to earn in an Internet world using Canadian/American standards.

I also know that I need to have some lump sum to start with... then once Iím adapted to the new lifestyle, Iíll have ways to earn a living... including in ways I donít imagine at this moment.

I always had a strange relationship with money.  Coming from a poor family, money wasnít in abundance.  My virtually illiterate mother was living from small paycheck to the next... without any planning or perspective.  I often said I wanted to make enough money not to have to plan weeks ahead to buy a toaster.

Even when I began earning a very decent living, I kept that living-from-paycheck-to-paycheck mentality: never planning the long term.  I did place money in retirement funds... but mostly for their tax return benefits.    Not being educated on credit, etc... I never really connected the balance of my credit cards with debts I had to get rid of, etc.

Since I was deprived of many (material) things when I was young, I kind of told myself that now that I can afford lots of things... I will.   Most of the time, I had the goodies I wanted and paid them with credit cards.  I had some satisfaction coming from being able to get more shiny toys.

I never dreamt of the family life with 2.1 children and a white-picket fence suburb house.  To me that was not a goal or an ideal.  I didnít think I could get that environment on a personal level and I didnít think I could afford it.  I didnít see that as a sign of success either.

So, I never paid attention to my financial situation, as long as I could get a roof over my head and some food in my fridge... even if that meant loading up plastic cards.

But for the first time in my life, I have a long-term plan... a long-term vision.  Then I realize how financial stuff is not a boring concept preventing me of having what I want and cannot afford... but a way to in the contrary get the tools to get what I want (once I adjusted my wants to a realistic perspective).   I no longer feel the need to surround myself with things to make me feel comfortable and reflect a good image... a success image according to the worldís perception.

So, for the first time in my life, I sat down and I decided to make a portrait of my finances.  The goal is to determine exactly how much debt I have and how soon I can get rid of it... in order to begin piling up money towards my trip.

I know by most standards Iím not in big debts... although my debts are toxic ones (credit cards).  But I earn a very decent amount of money... and I know that my debt level doesnít represent 50% of my net earnings in a year.  I have lots of money in RRSPs and in stocks.  Technically if I take everything under consideration, Iím far from being in debt... my active being greater than my passive.  But I want to get rid of my passive assets, so I will take into consideration only the cash flow components... not the invested parts.

In my weight loss process, I had taken the approach to weight myself at a regular interval (like every Sunday at the same time, etc, after a weekly cycle).  I decided to take a similar methodological approach and I thought for a moment about when would be the best moment to assess my financials on a monthly basis.  The best moment for me is the first Saturday after my first paycheck of the month.   I can then apply virtually the full amount of the first paycheck of the month to clear debts and sit calmly for an hour or so to not only punch in numbers but also to reflect on what I will do in the next month to improve my financial situation.  I will also take the time write here about my progress.

I know it will be many months before I can declare myself debt free, and meanwhile I will reduce my expenses... but I will not deprive myself of every pleasure.  Iíll take a financial diet... in which I will reduce my expenses not related to the long-term objective, but I will also allow me some punctual pleasures like going to the restaurant or the movies as well as some comfort items like a full cable subscription, a fast Internet connection, etc.  Iíll keep in mind my goal... but while still living in my current reality.  As I will grow closer to the departure date, I will gradually reduce these indulgences.

So, today, Iíve punched in the numbers taking into account my various bank accounts, credit cards, etc... Overall, I have roughly around $9,000 of passive I want to get rid of.  I have slightly more than that in stocks and other investments I could easily cash in to get rid of my debts.  But I will not liquidate those investments, at least not before Iím ready to leave for my trip... and I want to consider the retirement money as a safety net I could use to settle myself somewhere in the world (perhaps even coming back to Canada).

I honestly have no idea how much I can eradicate from my debt every month.  My guess would be around $1000, but time will tell.  There are so many factors to consider... like the sale of my belongings, extra income, reduction of the interests on my cards as my balance will shrink, etc.  I keep that estimate conservative for now... and predict Iíll be debt-free in September for now.

Related posts:
Itinerary and finances
First year of savings
Spent more, produced less
Blog away...
Becoming more productive towards my goal

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