If you are like most Canadians, you dream of a long and enjoyable retirement. Is it possible to retire early and achieve that by the age of 48? While it is an anomaly, my guest today did just that. Bob Lassaline worked for 30 years and retired when he was 48 years old. He is 80 years old today, so he has been officially retired for longer than he was employed.
How did he do it? Full details are in the podcast, but here are his top five tips for how to retire early:
Tip #1 Avoid Debt
Bob had a mortgage on his house when he first bought it, but he made it a priority with his payments. He also never carried a balance on a credit card. Not having interest payments makes it a lot easier to retire early. Putting your full payment towards the principle and not towards interest means you can devote more of your income to your savings.
Tip #2 Pay Yourself First
This may be the most important tip. We've heard this tips from personal finance experts in many variations. Bob's mantra is:
10% of all you earn is yours to keep
Before he spent money, Bob's goal was to save 10% of every pay cheque. It's a bit different today with lower interest rates on returns. Factoring that in, Bob believes he would try and save closer to 20% if possible.
Tip #3 Rethink Priorities
You must prioritize savings over spending. If you make savings more important to you than spending, you will naturally save money. It works both ways. Prioritizing spending over savings can lead to debt.
Tip #4 It's All About Momentum
The first dollar is the hardest to save, particularly if you are in debt. Once you clear up your debt and start saving, it becomes a habit, which makes it easier.
It's easier to grow money once it starts to pile up.
Watching your money grow is very motivating. That motivation helps you stay on track and continue to save.
Tip #5 Be Yourself
Don't worry about what everyone else has, or what they think. Bob's dream house is small by today's standards, but he's happy. It's easier and less expensive to maintain than a large house. A large house typically comes with a large mortgage; the thought of financing that amount isn't tempting to Bob, regardless of what his neighbours have.
Resources mentioned in today's show:
FULL TRANSCRIPT show #125 with Bob Lassaline
Doug Hoyes: Imagine what it would be like to retire early. If you're under the age of 65 and listening to this podcast, retiring early is probably one of your dreams. There's a big insurance company that advertises freedom 55 where they show you how to retire at the age of 55.
My guest today is a guy who retired at the age of 48, so he was way earlier than the age 55. Now maybe when you hear that you say to yourself well, okay there were probably some exceptional circumstances, he was probably one of those dot com millionaires or he was the CEO of some big company. Nope, my guest today didn’t go to college. He worked in a factory on the line and then moved into an office job at the factory. So, he made okay money but he was never one of the highest paid employees.
Now you might think okay, he retired at the age of 48 and then ran out of money and had to go back to work. Nope, in fact today he is 80 years old and still comfortably retired so he's actually been retired for more years than he worked at his main job.
So, how did he do it? What's his secret to having a regular job and still being able to retire almost two decades earlier than the Canadian worker? That's our topic today here on Debt Free in 30. What can you do to retire early? Feel free to take notes but we'll have a full transcript of this podcast up on our hoyes.com website and at the end I'll summarize the top five tips for retiring early. So, let's get started. Who are you?
Bob Lassaline: Bob Lassaline.
Doug Hoyes: And you retired at the age 48, is that correct.
Bob Lassaline: Right, just a little bit before my 48th even.
Doug Hoyes: How old are you today?
Bob Lassaline: 80 years old.
Doug Hoyes: 80 years old. And the reason why I know you and we're recording this today is I've known you for, I don’t know, 20 some years. I married your daughter 21 years ago. So, it's been longer than that. This is my father-in-law Bob Lassaline who retired at age 48. And I'd like to go through the scenario of how you did that because if I do my math correctly, you've been retired longer than you worked.
Bob Lassaline: That's true.
Doug Hoyes: Is that true?
Bob Lassaline: Yep.
Doug Hoyes: So, you started working in what year?
Bob Lassaline: 1954 at Chrysler, I worked a year before that at Underwood Typewriter.
Doug Hoyes: So, Chrysler's was where you were for your entire working career, other than as you said at a brief job before that. So, you retired 30 years later, that would have been 1984. When did you first start thinking about retiring early? I assume it wasn’t the day you started working in 1954, when was it?
Bob Lassaline: That is something that came into the union at - the automobile industry, came up with a 30 year and out plan and that kind of popped into my mind based on what I started my life and involved with my finances and the way I acted my life and that just kicked in that it's time to start planning for my 30 years even though it was quite a ways away.
Doug Hoyes: So, let's talk about that. Starting to plan for the retirement and the people who are listening today maybe they're not retiring at this age or that age but at some future date we all want to retire. And one of my goals was to retire before I hit age 48 so I could beat you. But I'm 52 years old today so obviously I didn’t make it, I've been working longer. So, walk me through the thought process then. What was your strategy to retire in effect early? What kind of things were you doing, you know, 10, 20 years before retirement?
Bob Lassaline: Well, I think it started off with my whole way of hanging onto a penny or a dollar at that time. I started working on my dad's farm, he paid me two dollars a day to haul weeds in the summertime while I was going to school. And I just put that money away. Fortunately my dad didn’t charge me interest so whatever money I made from his farm I just hung onto it as a package knowing that I'd like to have a car someday and I'd like to have a good job someplace because my father encouraged me not to stay working as a farmer.
Doug Hoyes: Tell me about saving then. Once you started working at Chryslers, what was your savings approach, what was your process? Did you have some target, I want to save this amount of money? How did you do it?
Bob Lassaline: Well, I think the target that you're talking about started with my first car. I wanted to own a car on my own. I bought a used Studebaker and I bought that in 1953 and I paid $850 cash for it. And that was coming from the $2 a day that my father gave me.
Doug Hoyes: And so that was even before you started working at Chryslers, that was a year before.
Bob Lassaline: That's right, yeah.
Doug Hoyes: And so the first purchase you wanted to make was that car. Was that the first car you ever bought or did you have a -
Bob Lassaline: First used car, no that was it.
Doug Hoyes: First car you ever bought, a used Studebaker and what year was the car?
Bob Lassoline: 1947.
Doug Hoyes: So, it was obviously a few years old at that point. And so you knew it was going to cost $800.
Bob Lassaline: Yep.
Doug Hoyes: And you didn’t go out and get a car loan to do it, that's how everyone does it today. You didn’t lease it, that's the other way everyone does it today. Did they have such things as car leases back in the 50’s?
Bob Lassaline: No, no you either paid for it in installments, say maybe buy the car today and in six months pay the balance. But I had enough to pay for the thing right outright.
Doug Hoyes: So, you were able to walk in - did you buy it at the dealership, did you buy it from someone -
Bob Lassaline: I bought it from a Studebaker dealership, right.
Doug Hoyes: And so you paid $800 for it.
Bob Lassaline: 850.
Doug Hoyes: 850 and that's money you saved yourself, you had the cash for it. So, why did you buy a used car and not a new car?
Bob Lassaline: 'Cause I didn’t have any more than $850. And the money wasn’t in the bank; it was at home in my drawer.
Doug Hoyes: So you didn’t even have it in the bank.
Bob Lassaline: No.
Doug Hoyes: And why was that?
Bob Lassaline: Well, because I knew what I was looking for was a car and I didn’t need a bank to help me with it. I knew I would be able to pay for it when I needed it.
Doug Hoyes: Now you're retired today, do you actually have money in the bank now or is it all in a drawer somewhere?
Bob Lassaline: No, I'd like to keep it in a drawer but unfortunately it's in a bank.
Doug Hoyes: It's in a bank. Okay, so today your money's in a bank. So, tell me about your first house then. When you got married you were renting a place.
Bob Lassaline: We rented from an uncle of mine, right.
Doug Hoyes: So you rented a place and then at what point did you buy your first house?
Bob Lassaline: We rented there for about a year.
Doug Hoyes: And then you bought your first house.
Bob Lassaline: I bought a house, a used house, I made an offer for, I had $10,000 in the bank. By that time I put the money in the bank, I had $10,000 in the bank, cash, and this house came up for sale so instead of renting we decided to buy the house. Offered $10,000 but the rejected it and my wife was a bit upset because I wouldn’t go up any. I said I got $10,000 and I'm going to use the $10,000. So, about three weeks later they called back and offered me to buy the house for $10,000.
Doug Hoyes: Kind of called their bluff. Now how in the world were you able to save up 10,000 bucks? 'Cause even today $10,000 is a lot of money and obviously we're talking about the 50’s, the late 50’s I guess is what we're talking about when you bought that house. So, in today's terms that's got to be, I don’t know, 30, 40, $50,000, 60, $70,000, I don’t even know how much it is, it's a lot more. So, how were you able to save that kind of money?
Bob Lassaline: Well, when I started my job at Chryslers I realized that it was a pretty well paying job and I realized I didn’t need that much money so I was able to put some away.
And I came up with a theory that I think it was old at the time but my theory was a part of all you earn is yours to keep, which in my mind meant 10% so I put a plan down that everything that I saved I would put 10% of it for mine to keep. And that doesn’t mean go and buy a car or a truck or a bicycle, it meant that I'm going to keep that money. So, I started with that principle before I got to the point where I moved into this new house.
Doug Hoyes: And so how did that actually work? So, when you were working at Chryslers back in the 50’s, how often did you get paid?
Bob Lassaline: Once a month when I was in the office. I moved from the factory to the office, once a month.
Doug Hoyes: So, once a month. That makes budgeting even more difficult than if you got paid every week I would think 'cause you've got, that paycheque has to last for the whole month. How did you actually save the money then? So, did you - you actually got a physical cheque back in those days, it probably wasn’t direct deposit I'm guessing. So, what did you do? You took your cheque to the bank and, explain to me how you actually saved the money.
Bob Lassaline: Yes, the bank was right across the road from the office at the Chrysler plant that I worked in and I opened a bank account there.
Doug Hoyes: So on payday you'd take your cheque to the bank.
Bob Lassaline: Right.
Doug Hoyes: You'd deposit it in your bank account. And then how did you save the 10%, did you have a separate bank account?
Bob Lassaline: I had a separate bank account for the 10%, right.
Doug Hoyes: So, you had your normal chequing account, a savings account. So, the first thing you did with the paycheque was put 10% into the savings account.
Bob Lassaline: Right.
Doug Hoyes: And then you lived off the other 90% obviously. You had, you know, your groceries and all your other living costs. Back in those days, do you have any recollection of what a paycheque was?
Bob Lassaline: It was $1.35 an hour at Chryslers when you got your seniority.
Doug Hoyes: $1.35 and that wasn’t a junior person, that was you'd been there for -
Bob Lassaline: I had seniority, yeah.
Doug Hoyes: And it was typically a 40-hour week?
Bob Lassaline: Right.
Doug Hoyes: So you were making, whatever that is, 45 bucks a week or something like that. So, less than a couple of hundred dollars a month is what you'd be able to earn there.
Bob Lassaline: Right.
Doug Hoyes: So, you put the money into the savings account, did you earn interest on it in the savings account?
Bob Lassaline: No, that was one little mistake I made. I just kept it in the regular account and it wasn't paying any interest. I wasn’t giving that a thought at that particular time. But then I had a friend that started to work with me that worked in a bank and he told me about these things called GIC’s that you could invest in it and get an interest rate instead of just leaving it in a bank and looking at it and counting it and watching it. He told me that I could go back to this bank and they would take my money and they would give me interest for a period of time.
Doug Hoyes: So, one of your first mistakes was not realizing that you could actually earn interest on your savings.
Bob Lassaline: In the beginning, I didn’t know, yeah.
Doug Hoyes: In the beginning. So, you bought the house, so your first house you paid $10,000 for.
Bob Lassaline: Well, it had a mortgage on it but when I made a deal to buy it I was going to pay cash, I told them I wanted to pay $10,000. I'd pay them $10,000 cash for that first house that we bought.
Doug Hoyes: And you lived in that house for roughly how long, a couple of years, three years?
Bob Lassaline: Yeah, I think about probably five. But I didn’t pay cash for the house by the way because my real estate agent told me I didn’t have to. He looked at my paperwork and there was a 4% mortgage on that particular house that was through the war bank or something, through the banking this guy had a loan for 4%. And he told me I was getting 7% on my savings, my $10,000 so he advised me to just take over the mortgage.
Doug Hoyes: Do you roughly remember how much the mortgage was? So, it was like half the $10,000?
Bob Lassaline: Yeah, it was under half that still had to be paid yet.
Doug Hoyes: So, it was a $10,000 house. You had the $10,000 in cash but you ended up putting down, I don’t know, let's say $6,000 taking over the $4,000 mortgage. So, you're able to leave your cash in the investments you had, the savings, the GIC’s that were earning 7% 'cause you're only paying 4% on a mortgage.
Bob Lassaline: Right.
Doug Hoyes: So, someone listening to this is going to say boy, those were sure great days then. When you could be earning 7% on a GIC or in an investment at the bank, obviously the interest rates are far lower today, that's not even possible I guess. Do you consider yourself lucky to have been at that time or do you think you could have done something similar today?
Bob Lassaline: No, that to me that was normal at the time. And that wasn’t even the best, the cream of the crop was yet to come because there was more interest rates than the 7% out there shortly after that.
Doug Hoyes: Well, so let's go through the story then. So, you bought your first house for $10,000. You ended up having a mortgage for a portion of that, even though you had the cash just 'cause the interest rates worked out. And then you decided hey, I want to build my dream home. So, at what point did you start that whole thought process, tell me what that was like? You ended up finding a - some land in the country.
Bob Lassaline: Right. I came from a farm and I wanted a farm. But my father advised me against it because he said I was better staying working in the auto industry.
Doug Hoyes: And so you found a plot of land though.
Bob Lassaline: I did, I found a piece of land that I could buy for a small amount of money and I bought 11 acres.
Doug Hoyes: And there was no house on that property.
Bob Lassaline: Nope, just a bare piece of property.
Doug Hoyes: So, you bought the property and then started building the house?
Bob Lassaline: I put feelers out to sell the house I was in and was able to use the money from the house that I sold. I got $30,000 for it. And then the second house I built cost me $25,700 to build it.
Doug Hoyes: How much did it cost to buy the land?
Bob Lassaline: That was, I think it was $1,000 an acre, $9,000 for 11 acres, yeah.
Doug Hoyes: So, $9,000 to buy the land. And how long did it take to actually buy the house then, 'cause you still had the other house that you were living in.
Bob Lassaline: The purchase of the land happened in the late fall. And we were in, by the next August we were in the new house.
Doug Hoyes: So less than a year. And so they started building in the spring then did they?
Bob Lassaline: Yep.
Doug Hoyes: I'm trying to think through what the messages are for people who are listening to this today. And it sounds to me like you did not buy your dream house the day you started work. Not right out high school I'm buying my dream house and I assume the reason was pretty simple, you didn’t have the money. You didn’t have $30,000 or $40,000 or whatever it cost.
Bob Lassaline: No, I didn’t. And I wouldn’t have made that decision until I had the money to do it.
Doug Hoyes: And that's where you are different than everyone today. Because today, everything's a mortgage, like nobody buys a house for cash today, it's just not done. I mean you can get a mortgage for 95% of the value of the house. What do you think of that? Like if you were a young person today, let's say you're 30 years old today and so you've still got another 20, 30 years to work, you've got some money saved up.
And let's say today the house you lived in back then, the house you paid $10,000 for back then probably cost what does it cost today, $200,000 for that house, $300,000? I don’t know. Let's just make up some numbers here. So, let's say you had $50,000 saved up and it's going to cost $300,000 to buy the house, would you still - there would be almost no way to save the money today, would there?
Bob Lassaline: No but again the other period of thought to is that while this was all happening the interest rates were going up and up and up. At one point I had money in the bank - at this point I didn’t need any money anymore 'cause I had my house and it was paid for. My second house was paid for. So, I put money in GIC’s and I even got some money as high as 15%.
Doug Hoyes: 15%, that was not the mortgage you were paying, that was the interest -
Bob Lassaline: That's the money I had left over and saved and that comes out of my 10% of all you earn is yours to keep. I kept doing that. I kept on doing it even after I bought the house.
Doug Hoyes: All you earn is yours to keep.
Bob Lassaline: Yeah, 10% of all you earn is yours to keep.
Doug Hoyes: It doesn’t really matter what the interest rates are I guess, that principle still holds true. Tuck the money away, tuck the money away, tuck the money away is what you do.
Bob Lassaline: Right.
Doug Hoyes: With interest rates today, they're obviously very low. You know that as well as anyone.
Bob Lassaline: Right, I'm experiencing it now.
Doug Hoyes: You're experiencing it now. How does - what are your thoughts on that, how does that make you feel?
Bob Lassaline: It makes me feel that it's not a very comfortable situation for people to be able to retire.
Doug Hoyes: It's almost as though borrowing is the thing we want everyone to do, not saving.
Bob Lassaline: Right.
Doug Hoyes: Because I'm again thinking, people are listening to this and they're going okay, well that was great in 1954. Even though you were only making less than $200 a month, if we did our math right, you were still able to save up $10,000 and buy a house.
Today that would be impossible. I mean you would be earning, I don’t know, $50,000 working at the same job today I guess. But if a house is $300,000 and if you can't borrow, if you can't put the money in the bank and earn any interest on it what's someone supposed to do today? What advice would you give to a young person?
Bob Lassaline: I think you just might as well finance it. It's cheap to buy a house now if you can finance it for 2 or 3% interest.
Doug Hoyes: Because for you compound interest was something that benefited you.
Bob Lassaline: Every seven years it doubled.
Doug Hoyes: 'Cause of the rule of 72, when you were getting the interest rates that you were, whereas today it would take - well, if you were earning 1% interest it's going to take you 72 years to double. I mean it's not even possible. So, when we look at advice then your number one piece of advice is to be tucking away 10%?
Bob Lassaline: Yep.
Doug Hoyes: Is there anything more important than that?
Bob Lassaline: Not really, I think it would work today even if you still insisted on making sure you stick on that pattern.
Doug Hoyes: Even if interest rates are low, as they are today, the other thing you're saying is you've got to prioritize savings over spending. So, the 10% that's the first thing that comes off the top.
Bob Lassaline: Right.
Doug Hoyes: People today don’t want to do that. Interest rates are low so I can borrow, I can get a line of credit, I can buy whatever I want. How did you resist the temptation to buy whatever you wanted?
Bob Lassaline: Well, I bought what I wanted, my house that I'm in now with 11 acres. I have what I wanted but it's not a very fancy high priced home on the market today. But it certainly was all I needed. I could have got a bigger house. I could have went out and got a mortgage and bought another house but I was happy with the one I have.
Doug Hoyes: What about things like spending money on vacations and a second car, a boat, things like that?
Bob Lassaline: Well, I've spent money on toys, right. I collect antique tractors and restore them.
Doug Hoyes: And you always pay cash for them.
Bob Lassaline: Right. I've never owed anybody any money.
Doug Hoyes: So, I want to bring this back from the olden days to today and I want to make sure I've got the numbers right here. So, back when you started wages were just over a buck an hour so you were making, you know, 45 bucks a week, you know, less than a couple of hundred dollars a month. You were able to buy a $10,000 house. Obviously you had to save money but it was actually possible.
If you go to The Bank of Canada Inflation Calculator and put in a dollar from 1954 that would be over $9 today, so, you know, money has, you know, gone up in value nine times or I guess stated more properly it's actually devalued that much. That same house that you bought for $10,000 back in the 50’s, today would be worth how much, ballpark number?
Bob Lassaline: $400,000.
Doug Hoyes: How in the world - so, I'm sitting here thinking okay if I was a 20 year old person, 30 year old person today I'd think boy, you sure had it great back then because even though wages were lower, I mean even if you use the inflation calculator that would equate to $10 an hour in today's money. Obviously people are making more money than that but I'm assuming back then taxes were a lot lower.
Bob Lassaline: Oh definitely.
Doug Hoyes: So, out of your paycheque you got to keep most of it.
Bob Lassaline: Right.
Doug Hoyes: So, you were able to save a lot and then whatever you did save you were able to put in the bank or put into a GIC and earn lots of interest.
Bob Lassaline: Right.
Doug Hoyes: So, it was actually possible to do what you did back then because you got to keep most of your paycheque, you were able to live frugally and then you were able to put it in a risk-free investment and still earn a decent rate of return. Would that be even possible today?
Bob Lassaline: Well, the difference of today that the person that wants to go out and buy this $10,000 house that I bought, their expectations have gone way off the maps someplace. They think they deserve a 500 or $600,000 house instead of if they bought a $30,000 house at a small mortgage they'd be just as well off as I would have been.
Doug Hoyes: So how big was that house, that first house that you bought in terms of square feet, like was it a thousand square foot house?
Bob Lassaline: Probably just a little over a thousand.
Doug Hoyes: And I guess that's one of the big differences today, I mean no one's buying just a little thousand square foot house, we all want a 2,000 square foot or 2,500. So, the dream house that you built, which was many decades ago now I guess, how big is it?
Bob Lassaline: 1,300 square feet.
Doug Hoyes: And in fact that's where we're recording this today, in the basement of that dream house which is 1,300 square feet, which today I guess people would look at this and say hey, that's a starter home. That's not a dream home.
Bob Lassaline: No, not compared to what they're buying now.
Doug Hoyes: So, if you were starting out today even though interest rates aren’t as favourable perhaps as what they would be, you would still be able to do what you're able to do because you'd be, you know, more frugal is that really what it comes down to?
Bob Lassaline: Right, I was in my mind said don’t spend what you don’t have to spend. Make sure when you buy something there's something else left after you're finished buying. And don’t forget too there's more things today, more toys that people are being tempted to buy. Back when I bought my last house we weren’t looking for a whole bunch of dream, we were just looking for a house that was reliable and a nice place to live in.
Doug Hoyes: So, give me some examples of the toys we have today that you didn’t have to worry about in the 50’s and 60’s?
Bob Lassaline: Well, three cars, four cars in one family and I had one.
Doug Hoyes: And you were able to get a deal on cars and even then you still had one.
Bob Lassaline: Right, we had one car.
Doug Hoyes: So, did everybody else who started at Chryslers when you did retire in 30 years or did a lot of them stay longer?
Bob Lassaline: A lot of them stayed longer. Actually I was the first one on a management job on salary to take advantage of the 30 years and out.
Doug Hoyes: And so, what did the other people there say, what did your boss say when you said hey, I'm leaving after 30 years?
Bob Lassaline: Well, he told me I was making a mistake. He realized I had enough money to live on it but he told me inflation rate was going to kill me and I'd be in trouble by the time I was 50 years old. But if he would have told me interest rates would have dropped down to 1 or 2% that you're getting on GIC’s now I might have taken his advice. But I wasn’t worried about inflation 'cause I knew I had enough stashed away to cover inflation. But I didn’t have enough stashed away to over the fact that you can only get one or one and a half percent interest on a GIC.
Doug Hoyes: So having to do it again maybe you would have worked a bit longer, you might have had to I guess. But you really not have much in the way of a pension. I mean it's really your savings that have done it as opposed to some kind of pension 'cause you left so early.
Bob Lassaline: Right, leaving early my pension is very, very small.
Doug Hoyes: So it's entirely the savings that are doing it. Now let's talk about investments. So, tell me about your career in the stock market. I assumed you invested lots of money in the stock market, you did a lot of day trading, tell me about the stock market.
Bob Lassaline: Well, that didn’t happen. I felt on this little plan that I made with somebody else it was the same theory as me that we would do this savings 10%. We did buy stocks, I bought a couple of three shares of different stocks but it didn’t go so good, it kind of fell apart on me. In fact I've still got the paperwork today and it's still sitting there. But I can't even find out how much it's worth. So, I abandoned that idea and gave up the fact that I was going to rely on the stock market, 'cause I like to sleep at night.
Doug Hoyes: You like to sleep at night. So, the investments you made in the stock market basically went bust.
Bob Lassaline: They're bust, right.
Doug Hoyes: They went bust. So, you decided pretty quickly that that wasn’t the way to go for you.
Bob Lassaline: That changed my theory, yeah.
Doug Hoyes: And so, all of your investments were in what?
Bob Lassaline: GIC’s or investing in my own property.
Doug Hoyes: Investing in your own property, so you've not had a mortgage for decades and decades and decades then.
Bob Lassaline: Right.
Doug Hoyes: Is it prudent then for young people today to have as low a mortgage as possible then? Or with interest rates as low as they are, would you be doing things differently?
Bob Lassaline: Well, I would certainly jump on the bandwagon and try to - if I had to borrow money I wouldn’t mind borrowing money at 3% or 2%. But not necessarily would I do it because it's too late now for me to make a change now.
Doug Hoyes: Do you think you'd be doing anything differently stock market wise if you had started 20 years later or would you still have the same -
Bob Lassaline: I still, it's embedded in my brain.
Doug Hoyes: And the whole not being able to sleep is a big thing.
Bob Lassaline: Absolutely, yeah.
Doug Hoyes: So you're willing to accept a lesser return if you can, as you say, sleep at night.
Bob Lassaline: I know I can keep it. Whatever return I got, whatever I've got saved put away it's still there.
Doug Hoyes: And so really what it comes down to then is frugality, that's the bottom line on it.
Bob Lassaline: Yes.
Doug Hoyes: So, what advice then, and our sound man today is my son, your grandson, he's working the board here for us today. He's 18 years old, the exact same age you were when you started at Chryslers. What advice would you give to your 18 year old self, or to your grandson who is 18 years old today, the world's a different place obviously. Interest rates are different, things are a bit different but what advice would you give in today's world?
Bob Lassaline: I don’t think I could give him any advice because I don’t think it would work. What I did wouldn’t work today.
Doug Hoyes: Because of the interest rates.
Bob Lassaline: Because of the interest rate that I'm not getting to carry on.
Doug Hoyes: But as I look at what you said, so I'm trying to kind of distill your theory for, you know, this book you're going to write. And the book would say number one pay yourself first, 10% of everything is yours as you said, right? So, that advice still works today.
Bob Lassaline: Yes it does except you don’t get much return on it.
Doug Hoyes: But 10% of everything you make you tuck away. And you're right you don’t earn as much on it as you could have but I mean perhaps, and I guess not perhaps, that's why today young people middle aged people are more likely to be putting their money into mutual funds and whatnot, obviously there's higher risk to that. But I guess the risk is spread out a bit by putting it in mutual funds not individual stocks, that kind of thing.
The second thing though was the way you prioritized your spending over savings. You didn’t take 10 vacations a year, you didn’t have four cars and you didn’t buy a big house. All those things are still applicable today.
Bob Lassaline: Yeah, right, you could do that.
Doug Hoyes: If you were starting out today, if you did those things, put aside 10% and, you know, didn’t spend extravagantly, would you still have your savings in GIC’s or do you think you would do something riskier?
Bob Lassaline: No, first of all I would say 10% put away isn’t enough; you'd have to put away 20% now to compensate for it. If I was doing it again, that's what I would do. I would save 20%. In fact probably I saved more than the 10% anyway because money, it's easier to grow money once it starts to pile up.
Doug Hoyes: Yeah, the first dollar's the hardest one and then once you start building from there. So, how do you lower expectations? Is that a proper way of putting it? How do you be comfortable with a 1,100 square foot house instead of a 3,000 square house? 'Cause that's the thing today, all my friends have a 3,000 square foot house. All my friends have two cars or three cars, all my friends have a boat or an ATV or something. How can you not have those things?
Bob Lassaline: Well, I think because I'm not - I don’t want to be in a class that I don’t belong in. My house is what, in value is what my life has been valued at, that's my money's worth. My house now probably is worth $400,000, mainly because it has 11 acres with it. But I put the value in that. Somebody else might think they would rather have 100,000 but I'm not looking for a fancy house, I'm looking for a good house that's done the job for us.
Doug Hoyes: Do you worry about what everyone else thinks?
Bob Lassaline: No. I think about it but it can't change me, it hasn’t - nothing is going to change.
Doug Hoyes: If the five guys you started with at Chryslers all had a big house and you had a reasonable house, would that gnaw at your or not so much?
Bob Lassaline: No, not a bit.
Doug Hoyes: Really that's the secret to your success then.
Bob Lassaline: Yeah, right. I could have stayed a little longer and spent a lot more and I would be in a different situation than I'm in now.
Doug Hoyes: And really it doesn’t matter what the interest rates are. I mean sure it matters but ultimately if you say you know what? I'm happy with this house, this car, this pair of shoes, then that solves most of your problems.
Bob Lassaline: Yes.
Doug Hoyes: 'Cause in my experience, that's what gets people into trouble. Have you ever carried a balance on a credit card?
Bob Lassaline: No. I pay for it when the bill comes.
Doug Hoyes: So if you can't afford it you don’t buy it.
Bob Lassaline: Right.
Doug Hoyes: It's pretty much that simple.
Bob Lassaline: I would not finance anything.
Doug Hoyes: So, is there any other advice you can give anyone under the age of 80, which I guess is young people, from your perspective, any other advice you would give them to be able to keep their mindset such that no, I'm happy with what I've got.
Bob Lassaline: I'm sure there's still people like me out there. And I would hope that the younger generation might, something might happen in the next few years to kind of bring it more in balance.
Doug Hoyes: And that's really what it comes down to, you've got to have that balance.
Bob Lassaline: Yeah.
Doug Hoyes: Well, that's good. I think that's a good summary of how the world in many respects was quite different whatever that was, 50 years ago, but the basic principles are still the same. Pay yourself first and wait till you've got the cash before you spend it, keep your borrowing down and ultimately maybe you can't retire at 48 but, you know, maybe you can retire at 58 or something today. Excellent well thanks very much for being here.
Bob Lassaline: Well, thank you.
Doug Hoyes: That was my conversation with Bob Lassaline my father-in-law. He started work on the line at Chrysler, or as they say in Windsor, Chryslers, with an s on the end, at age 18, but in his 30 years and retired at the age of 48. His pension was small so most of his retirement income comes from his savings.
So, what lessons can we learn from Bob? Well, there's no doubt that some things are different today than back when he retired. Interest rates are lower so it's virtually impossible to invest enough money in a savings account or a GIC and still generate enough income to live on in retirement.
Taxes are higher, so we don’t get to keep as much of our paycheque as we used to. It's not easy to get a great paying job right out of high school. Today to get a good paying job it's likely that you'll need a college or a university education. And that means that you're starting work later in life and perhaps with a lot of student debt. Those were problems that Bob didn’t have to worry about.
It's also true that Bob did retire from his job at 48 but he also took a victory lap after his formal retirement. Back on show number 108 my guests were Jonathon Chevreau and Mike Drak, who wrote the book Victory Lap Retirement where they explained that after you retire you can still do things to have fun and earn money.
Of course 30 years ago the concept of victory lap retirement didn’t exist but that's exactly what Bob did. In the year or two after he retired, he worked on contract at another company, helping them set up a new plant. It was work but it was also on his terms. For many years after retirement he also used one of his tractors to cut lawns at a few businesses. He enjoyed it, so he didn't think of it as work but it did generate some income.
Some things are different but what are the five tips we can learn from a guy that retired at age 48? Well, tip number one, no debt. Bob did have a mortgage on his house at the start but he paid it off as quickly as he could and he never carried a balance on a credit card. Not having interest payments makes it a lot easier to retire early. And certainly that's something we've discussed many times here on Debt Free in 30.
Tip number two and this is probably the most important tip, pay yourself first or as Bob puts it, 10% of all you earn is yours to keep. That leads into tip number three, which is to prioritize savings over spending, if you pay yourself first and make a commitment to saving money before you spend you can save money.
Tip number four is that there's a momentum to savings. As Bob says, it's easier to grow money once it starts to pile up. The first dollar is the hardest to save but once you establish the savings habit, it becomes easier.
And the final tip, tip number five is don’t worry about everyone else has or thinks. Bob lives with his wife, my mother-in-law in a house that's small by today's standards but they're happy with it. And they don’t worry if someone has a bigger house or more cars or goes on more vacations. He's happy with what he's got so he's not tempted to try to buy more than he needs. That's great advice and that's how he retired at age 48.
That's our show for today. Full show notes, including a transcript of today's show are available at hoyes.com that’s h-o-y-e-s-dot-com. Thanks for listening.
Until next week, I'm Doug Hoyes.
That was Debt Free in 30.