Sunday, November 26, 2006

Why I do What I do -- Or, the Joys of Delayed Gratification

So, haven't been around much. I've been working for the most part, and having fun with the boy, who is currently sitting on my lap. Already 5 months old, and he's in the 90th percentile in height and weight, to boot, so he looks like he's about 8 months old.

I'm feeling a bit better about a lot of things, because I've adapted to the amount of work I need to do, which is about the work of 4.5 people. And I mean, it's not like I *have* to do everything I'm doing. I could up and quit, I could transfer out, I could just let things go to shit, these are all choices I have, but choices I refuse to take.

But the question is, why put up with the torture?

I'm a strong believer in having a plan. And I'm also a strong believer that good things come to those who wait. So I'm making some sacrifices now which will pave the way for a better future for me and my family.

Like right now, even though my wife and I have a total salary exceeding $125,000, we still live like college students. We hardly go out (we didn't even before the boy was born) and we don't spend extravagantly on ourselves, except for things like appliances or furniture, but you can argue that even then, we're being frugal, because we're spending a bit more for something that will last for 15 years instead of 7.

We each have one credit card, and we pay off our balances every month, unless we discuss going over budget beforehand (like, for instance, when we had our home gym installed).

So, why do this? So that every extra penny we make can go to paying down our mortgage. At the rate that we're paying it off, it will take about 6.5 years to pay off our 25-year mortgage. Since the boy wasn't born when we bought the house, he'll be about 6 when it's paid off.

Think about the freedom that not having a mortgage provides. Going back to school, taking a job at reduced pay, not working summers while the kids are out of school, all these things become not only possible, but easy. I'm currently making $3,200 worth of mortgage payments every month including all the extra payments, which will become a surplus when there are no payments to make. So even if I only worked 10 months of the year (July and August off), we wouldn't be lacking income.

I am bound and determined to correct all of the failures I saw in my parents' parenting. By paying off my mortgage as quickly as possible, not only am I buying financial freedom, I'm also buying time. Time to go on vacations, time where I can refuse to work overtime, time to help with homework and housework. One of the things I hated when I was a kid was that my parents worked so hard, but no matter what they did, because they didn't have a long-term financial plan, they always seemed to come up a day late and a dollar short. Vacations were often cut short and budgeted to the penny, and we'd always be hounded by vacation guilt, knowing that we'd have to scrimp harder upon our return, and that a lot of the time, it just wasn't worth incurring extra expenses. To me, that's not what a vacation is.

It seems ridiculous, but I've already planned the first thing we're going to do to celebrate the mortgage being paid off. We're rounding up the kids and going to Disneyworld for 2 weeks. I've already started planning the trip so that the end seems real, even though it's 6 years away.

Another reason I stay at my job is because of the years I already have in. I started with my organization at 23, so I already have 7 years in. With the way my pension plan works, I can retire at 55, or at a full pension at 58. Again, the joys of delayed gratification. If I started in another organization, I lose my pensionable time and have to build up my retirement savings more aggressively to retire at the same date. Since longevity runs in my family, I figure that I could benefit from nearly 40 years of retirement should I retire as early as I can. Again, short term pain for long term gain.

As I've written earlier, the poor savings rate and massive amounts of speculation taking place in today's economy is setting us up for a rocky road ahead. What better way to insulate against potentially wild fluctuations in interest rates and inflation than to not have any debt? The way I see it, our additional income in a few years will go towards buying assets at the bottom of their economic cycles, and selling at the top. One of the advantages of having more uneducated speculators in the markets these days is that it's much easier to spot the trends and see where the sheep are flocking to. It doesn't take a lot of foresight to get there first, and to make sure you're not the last one at the party.


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