Rich On Work: Responsibility And Meaning, Human Capacity, Kindergarten Soccer, and Bathroom Breaks For Lawyers In NYC

Chinatown, NYC. Lots of workers out there.

Hey Penny,

I was going to write an eloquent post about the nature of work, it’s philosophical basis, the various ways of looking at it, and so on, followed by a blurb about my own current work situation. But alas, my own current work situation leaves me with little time to organize an eloquent post. So, I’m going to wing this at the real world level, like our old-fashioned emails (which is how this blog got started), and ramble, making philosophical comments as I go along.

PROFESSIONAL SELF-AWARENESS AT AGE 42

Work has taken an interesting turn, and I’m busier than ever. Where to start?

I’ll start by mentioning that I’m in a leadership program — a formal course, run internally at the company, stretching over several months and designed to prepare me for executive-level work. It’s a lot about being self aware and learning how to deal with yourself and others from a leadership position. I was observed in a “leadership lab” for several hours and the observers — mostly psychologists and leadership consultants — gave me specific feedback on how I was performing. Additionally I’m getting executive coaching, as well as participating in a group where I talk about leadership challenges with peers in the course.

The whole thing is quite involved.

At first I wasn’t sure how the leadership course would go. I was kind of lost on how to apply it, because I was in the process of looking for a new position within the company. I wasn’t sure of my place. Well, I found a new position — more on that later — but even before that I found the course to be extremely beneficial. I’ve learned a lot about myself and, just as importantly, I’ve learned how to view myself as a genuine leader, not just someone trying to lead, if that makes sense.

I’m 42 years old, and people my age are running large companies. I’ve always had self-confidence, but at the same time, it’s easy to look around and see others who are more influential and more professional. I’m not talking about jealousy or envy, I’m talking about self-regard and getting past the infamous “impostor syndrome.” The reality, I’ve learned, is that I’m just as professional as many of those I consider successful, and I have been for a while. I can embrace my own career reality.

This is not to say I can’t improve — I have LOADS of room to improve. But I don’t need to be full of doubt.

BECOMING COMFORTABLE WITH DISCOMFORT

Realizing this, internally, is a personal game changer, in a couple ways. First, I’m more comfortable in situations that might otherwise be intimidating. Second, I realize that however comfortable others look, they’ve had to overcome their own insecurities too. Have you ever been to a party or an event where you thought, why am I the most nervous one here? Do I belong here? Well, probably everyone is just as  nervous and uncertain. This is all human nature and a trick our brains play on us. Once we realize this, we can take some control over our own brains and overcome these hurdles.

As I said, I just started a new position in our company.  I interviewed and I was nervous. Quite nervous. I had interviewed for a different position and didn’t get that job, so I was nervous that I’d be rejected twice in succession.

After the interview, I took a long walk because I had no idea how it went. Interviews, for the most part, stink. The awkward introductions. The delicate dance of being confident but not overconfident, comfortable but not cocky, smart but not a know-it-all. Waiting for an answer. Interviews stink.

Surprisingly, I got the job! I’m not sure if it was my interview or my connections or the suit I was wearing … and I don’t care. I got it. It was probably the suit, the J. Crew Ludlow. [Note: People should never discount the value of looking professional at work. Dressing well has helped me advance since I was a waiter. I know a guy who was baffled at not getting a certain job, and yet he adamantly resisted dressing well. It’s like trying out for basketball with cowboy boots on — it just doesn’t work.]

Funny how career paths develop sometimes. I’m now very glad I didn’t get the first job I interviewed for, because the position I ended up with is much better. One can never predict these twist and turns, and I’m sure I would’ve adjusted to a different outcome. In some ways that’s the whole point of having decent self-awareness — to realize that no matter what you are doing, you are the same person with the same qualities.

Attaining a particular job or role does not change who you are, essentially.

RESPONSIBILITY, KINDERGARTEN SOCCER, AND HUMAN CAPACITY

So what’s the point of reaching for new or challenging roles, you might ask? You are who you are, right?

I’d say … not exactly. Being self-aware of who you are at any given time is not the end of the story. When you see who you are clearly, you want opportunities that match your abilities. And if you have drive or ambition, you want opportunities that exceed and stretch your abilities.

We are always changing, evolving, growing or regressing. Attaining a new role or taking on a new responsibility is an opportunity to first be who you are and then to become who you want to be, or who you could be, by using and growing and stretching your capacities. In other words, roles can help you change. Potentially, to become a better self.

I think you’re a Jordan Peterson fan, Penny, and he talks a lot about how people find meaning in life (here’s one snippet). One of his basic conclusions is that people gain meaning by taking on responsibilities. By taking on a responsibility, you then have an obligation to do something, and by doing that something, whatever it is, you find satisfaction and meaning.

Example: I am coaching Kindergarten Soccer. I signed up, initially, on a whim. The league was desperate for coaches. At first I questioned this move — I was adding something to an already busy schedule, it messes up my Friday evenings, and I didn’t know what I was doing. I still don’t know what I’m doing. But I can see that Peterson is right. Taking on the responsibility to these kids and their parents brings me satisfaction, another sliver of meaning, and a nudge to personal growth. Paradoxically, it gives me more energy rather than less. And it makes me a more interesting and well rounded person. It opens the door to a new community of people, which may or may not result in friendships but I’d never know if I hadn’t signed up.

Coaching soccer is a relatively small obligation. The point is, anything can be a meaningful obligation. The trick is to try things, find out what works, find that set of responsibilities that gives life meaning. According to Peterson, no one is as miserable as the person who has no responsibilities and nothing to do.

For a lot of people, the standard responsibilities that drive them are work and family. Rightfully so. Even though people often complain about these responsibilities day to day, there’s a lot of evidence that their absence would create personal nihilism. People become sled dogs without a sled to pull.

THE NATURE OF A CAREER: LAW AND ORDER WITH BATHROOM BREAKS

Anyway, back to my new position at work. It is close to a dream job at this stage in my career. Interesting work, more responsibility, professional recognition, and it could potentially lead to more cool opportunities down the road, if I do well. It’s also demanding, difficult, and my head is spinning because of the learning curve.

This is the nature of career advancement. Success is great, but success often leads to bigger challenges. A person needs to decide if bigger challenges are interesting to them. We all have our limits, and it’s part of the journey to figure out what our personal capacity is. What’s the right level of personal and professional balance so that one can experience flow (competent enjoyment of a challenging activity) and also experience health and sanity?

Sometimes I think about TV shows featuring high performing professionals. Generally they are cops or doctors or lawyers who are smart and savvy. It’s usually an intense, difficult profession that requires commitment and expertise. There are always exciting situations, because it’s TV. Being a District Attorney in NYC looks amazing on Law and Order. On TV, there’s dramatic music and deep, interesting conversations with mood lighting. Why are these shows interesting? One of the reasons, I think, is because characters on these shows are showing the limits of human capacity, the weight of responsibility that humans can take on. We root for them to do well even at personal cost.

Can I get some dramatic music to go with working late?

In real life, being a DA in NYC is a long career road (law school, starting out low on the totem pole, etc). And then the job itself, which is a big career achievement, is probably stressful and difficult much of the time. Even boring. In real life, there are bathroom breaks, days off to care for sick kids, dry cleaning, bad cafeteria food, and cramped offices.

Fiction is not reality, of course, but art can imitate life. An interesting exercise is to look at your life as if it were a story, with you as the main character. Would the story be interesting? Would you be rooting for the main character to fully reach his/her potential? Or would you want the character to spend 3 hours a day on Facebook and Netflix?

When I look at my story, I like the direction of the main character and the overall cast of characters, in broad strokes — leaving out the parts about bathroom breaks.

MY SCHEDULE, RIGHT NOW

Here’s a typical day for me now:

Continue reading “Rich On Work: Responsibility And Meaning, Human Capacity, Kindergarten Soccer, and Bathroom Breaks For Lawyers In NYC”

Monthly Money Check: Rich Increased Net Worth By $200K in 2 Years And Bought A Car Online — August 2017

We bought this car online. It’s Mrs. Rich’s Mini Countryman, AWD. It’s cool.

Dear Penny,

First of all, you’re having another baby — congrats! We do have a lot to catch up on, obviously! But I will never catch you in terms of babies. We got the buy-one-get-one-free deal with twins and that’s plenty for us.

I have some stories to tell you about flying across the country with 2 crazy boys and a cat. And buying a car online. And a thousand different moving expenses. These will need to wait as I get back in the blogging groove. I should be able to start writing more again now that we’ve moved.

It’s time for the monthly money check.

AUGUST

Overall, I’m happy with August. A net worth gain of $19,530 in a month is nothing to sneeze at. We are currently ahead of the pace (to reach my goal of $1MM at age 45) by $26,735.

August was a good month mostly because we got paid 3 times. And we had a nice vacation at the beach. September will be interesting, and expensive, because of moving expenses, which I will detail soon. But I’ve got a nice buffer to work with.

Here are some highlights by category.

Cash: $15,832, decrease of $6,384

  • We bought a car! Online. Through Carvana. It was so easy. I’ll never go to a lot again.
  • The car purchase is net worth neutral because I’ll be adding back the car value under investments.

Debt: -$9,400, paid off $200

  • Nothing to see here. I’m waiting until we get settled in the US to decide whether to aggressively pay this or roll it to another 0% offer.

Investments: $230,919, increase of $16,815

  • As mentioned, the only real change here is the value of our new (used) car. We’re drawing down some alternative investments simply because they aren’t very tax efficient. The LLC value isn’t updated monthly.

Retirement: $419,354, increase of $8,899

NET WORTH CHECK

Here’s a chart showing my progress for the full 2 years we lived overseas. The blue line shows actual results, while the red line shows the pace required to meet my goal.

Click on image to enlarge.

I like that.

In 2 years, we were able to increase our family net worth by 44%, more than $200,000. This without a strict budget or a high allocation in stocks.

I have no idea how the next year will go. Back in the US, we have a huge rent expense (around $48,000 per year). However, we won’t be paying for preschool (which was $30,000 per year), so I’m optimistic we can at least maintain the pace for my goal.

More soon!

Rich

 

Monthly Money Check: A Sunny Summer Update Of Rich’s Net Worth, Full Of Money Porn And Eye Candy … But BUDGETARY WINTER IS COMING — July 2017

Dear Penny,

This post will be full of detailed numbers (money porn) and cool graphics (eye candy) — because it’s summer, and summer is fun and bright and cheery. July was a sunny month for you and for us as well. Clear skies, no turbulence. As you can see, my net worth jumped by a happy $10,559.

Click on image to enlarge.

BUT … BUDGETARY WINTER IS COMING.

(SHUDDER. OMINOUS MUSIC. CLOSE UP OF NIGHT KING’S EYE.)

We’re moving back to the US in August, and our expenses will be going up faster than you can say “Littlefinger is a creepy douchebag.”

I’m not sure if you get these references to Game of Thrones, Penny. If you don’t watch it, you might consider it after your tech hiatus. You could binge during a free trial of HBO on Amazon Prime!

Readers, start your free trial of HBO by clicking above — no cost to you, a few pennies for the blog.  Full disclaimer on affiliate links here. 

Anyway, before I dump the cold reality on you, here’s a recap of July.

JULY

Cash: We’re building cash to buy a car in August. We’ve been living on one car overseas but we’ll need two in the US. My philosophy on cars is to pay cash. I look for cars that are 3 years old (or so) with under 50,000 miles. The “new” car will be for Mrs. R, and I’ll keep driving my 2006 Rav4 with 120,000 miles on it and deep stains from kid snacks.

Debt: This is 0% debt. I’d like to pay it, but I want to wait until we get settled back in the US. We always pay our debts.

Investments: I didn’t add new money to taxable investments, but I adjusted the value of my LLC holdings upward by $1,730 after doing a detailed breakdown on the blog.

Related Post: How Rich’s LLC Turned $30,000 into $200,000 — A Story About Brothers, Bubbles, and Prairie Dogs.

Retirement: Maxing out 401k and IRA accounts is really the key to our low risk ride to $1MM. This alone will probably ensure a decent sized nest egg in 15 years or so. We won’t need to rely on BINGO.

Related Post: Rich’s Retirement Plan: Playing BINGO Will Not Be A Source Of Income. (Part of the #DrawdownStrategy chain)

What I like about July’s report: A 5 figure net worth gain is nothing to sneeze at, even if you have allergies.

What I don’t like: If I were paying $4k in rent, my gain would only be $6,500, which is not quite enough to stay on pace for my goal.

THE COLD REALITY

When we move back to the US, we will start paying out the nose for rent and parking. As in $4,000 per month. I’m not complaining, we’re happy to spend more so we can live in a walkable city neighborhood rather than commuting from the burbs.

Related Post: Rich Is Preparing To Move. He Enjoys Moving. Wait … He’s Paying HOW MUCH On Rent???

Additionally, we’re going to need some odds and ends like beds for our boys, a couple other pieces of furniture, work clothes, and that car.  

Here’s my list of upcoming expenses; I might be estimating low. 

Click on image to enlarge.

By the end of August, I’ll have enough cash to cover most of this. Besides, we won’t buy everything at once. That said, I expect the budget to be tighter the rest of the year. I don’t follow a strict budget, but with such drastic changes coming up, I wanted a rough idea of what our spending should look like. This is what I came up with.

Get ready for a bunch of graphical eye candy:

Click on image to enlarge.

Some of the items, like the HSA, won’t kick in until the new year. What do you think of this budget? I rather like it. So colorful and symmetrical. No idea yet if it’s realistic.

Here’s what it will look like for a complete year.

Click on image to enlarge.

So what does this mean for my savings and my net worth goal? 

Continue reading “Monthly Money Check: A Sunny Summer Update Of Rich’s Net Worth, Full Of Money Porn And Eye Candy … But BUDGETARY WINTER IS COMING — July 2017”

Monthly Money Check: Penny Had Her Lowest Monthly Spending Of The Year! — July 2017

Dear Rich,

Hey, guess what? I wasn’t even thinking about it, but when I totaled up my numbers for this month, I FINALLY made it under the $2,000 bar that I had set (kind of lukewarmly) set for ourselves. I guess that’s what happens when no major expenses come up. It won’t be that way for long though… big school bills coming up next month.

Before I get into all that, let’s talk about where the rest of our money is at. The last time I explored this was in April. In April, our student loans were at $147,037. We haven’t been able to put any extra money toward this since our tax refund, so it hasn’t moved much. It is now at $145,421, because we do pay a little bit more than the interest rate acquires every month in our automatic withdrawals.

Related: Penny’s 13 Year Plan to Repay $173,000 in Student Loans

One thing we are going to start doing, in response to advice from a reader, is instead of taking $1,000 out one time a month, we are going to have $500 withdrawn two times a month. This will help save since the interest is compounded daily on student loans. (My husband just has to make a phone call, which I keep reminding him to do…)

We have also built up more equity in our house since April. Back then, it was valued at $214,000. Now, it is valued at $229,460. (I come up with this figure by taking an average of the Zillow estimated value, $252,421, and the property tax estimated value, $206,500.) So, take that amount and subtract the amount we owe on the house ($88,670), and it looks like $140,790 is the current equity we have in the house.

Here’s a snapshot of our current net worth:

That’s up $25,318 from our net worth in April, but that’s basically because our home is valued $25,000 more than it was in April. If we took that out of the equation, our net worth would be basically the same.

Continue reading “Monthly Money Check: Penny Had Her Lowest Monthly Spending Of The Year! — July 2017”

How Rich’s LLC Turned $30,000 into $200,000 — A Story About Brothers, Bubbles, and Prairie Dogs.

Dear Penny (and Mr. Othalafehu and Mr. Retirement Manifesto),

After my Retirement Plan post, Mr. O, specifically, asked about my LLC holdings. Happy to oblige. Here’s the story of how a $30,000 investment in farmland turned into more than $200,000. There are bunch of graphics and some stories from my neck of the woods.

Note: This page has affiliate links to good products we endorse. Full disclaimer. 

BROTHERS LLC

I’m going to start this story at the end, and then talk about the beginning, and then return full circle to the very end, like one of those annoying historical fiction novels that jumps between the past and the present. I’ll try to do this without being annoying. Go read or watch Julie and Julia for a barometer of this approach. If you can stomach it.

Careful readers of my Retirement Plan, like Mr. Manifesto, noticed that around 30% of my Net Worth is currently tied up in what we will call Brothers LLC (Limited Liability Company). Here’s my net worth pie chart, updated:

Rich’s Net Worth Pie. Click on image to enlarge.

Brothers LLC is like an investment club I’m in with my 2 brothers. More accurately, it’s me and Mrs. Rich and my brothers and their spouses. We all own our shares through our respective family living trusts (which I highly recommend for estate planning — more on this in a future post).

My brothers and I each bring unique contributions to our company.

  1. Brother 1 is a former doc and a visionary. He can afford to be a visionary because he made huge money as a doc. He owns 55%. The LLC was his idea, and most of our holdings have come through his connections.
  2. Brother 2 is a banker, he’s our numbers guy. He also makes big money, but he’s fairly conservative, as bankers can be. If he doesn’t like a deal, we usually pass. He owns 20%.
  3. Brother 3 is me. I’m the youngest. I bring creativity and comic relief and the occasional flash of insight. I own 25%.

The foundation of Brothers LLC is farmland. None of us are farmers anymore, but we farmed growing up and we come from a long line of wheat farmers. My ancestors worked the land in France before immigrating to Canada and the northern Midwest, USA. It’s here that I must introduce a seedy character named Grandpa Jack. Get it? Seedy?

That’s not his real name, but people called him that. And now, we go back.

Related: Rich’s Financial Origin Story: From Farm Boy To Theology Student To High Income Professional

GRANDPA JACK, NORTHERN MINNESOTA HILLBILLY

Grandpa Jack was a farmer who didn’t graduate from the 8th grade because, as he told the story, he was afraid of my grandmother. I didn’t get it, but I nodded when he told the story.

His whole life, he worked on the farm. Even in his 70s he would be fiddling around, fixing up old trucks, cussing about broken parts. His favorite was “Damnitalltohell” — properly said as one extended compound word. Honestly, I was afraid of the guy. Later on in high school, I told him I was going to start traveling to help people in other countries. His only question was, “When will you be back to the farm to work?” My grandma slipped me a card with $50 inside, and she wrote: “For your trip. Don’t tell Grandpa.”

Grandpa Jack had a falling out with my Dad, for various reasons, including the fact that when he retired he didn’t give Dad the land as he had promised. He made my Dad buy it in sections, full price.

In 2005, Grandpa Jack died, and true to form, he did not leave any land to my Dad, even though Dad had worked it for 40 years. Grandpa left land to his daughters (my aunts) and to a grandson (Brother 1). Other grandchildren received silver bars that Grandpa Jack had hidden in a woodpile in his backyard. I’m not kidding.

This is real farmland.

AUNTIE JUNE, NORTHERN MINNESOTA HILLBILLY

In 2008, my Auntie June, a chip off Jack’s block who had inherited 80 acres of land, was looking to sell. I have no idea why. Auntie June is a total mystery to me and I can’t believe we are related.

I just finished reading the excellent book Hillbilly Elegy (that you recommended, Penny). Grandpa Jack and Auntie June remind me of characters from that book. I’m not sure we have a good name for these people in Minnesota, rural folk who drink terrible beer and tell dirty jokes, and also shovel the sidewalk and wave to everyone they see. Imagine crossing a hillbilly with a character in the movie Fargo and stick them in Little House On The Prairie, and there you go.

Could we call them Prairie Dogs? I mean that with all respect.

Auntie June smokes like a chimney and carries dice in her purse, just in case anyone wants to gamble for quarters. And if you see Auntie June, you’re going to gamble for quarters. I’m guessing this habit has something to do with why she wanted to sell the land.

BROTHERLY VISION AND A DECISION

Like I said, Brother 1 is a visionary. After he inherited the farmland (151.5 acres), he immediately began pestering us to form a company and use the land as the basis for more investments. He could’ve done this himself, but he wanted the land to be a family asset and he also wanted to decrease his own risk. We ignored him at first.

But then he heard Auntie June was selling. So Brother 1 proposed that we pool our money to buy Auntie June’s land, and he would add it to his own land and give us a discount in the process. We would then have 231.5 acres to work with in an LLC.

The total cost to me would be $30,000 for a 20% share of the total. $30,000 was a lot of money to me in 2008. I was newly married, we were paying of Mrs. Rich’s student loans (totaling $30,000) and we were thinking of saving for a house.

We had to decide: house or LLC?

It was philosophical. Conventional wisdom says own a home. But we liked the idea of growing our investments and renting our residence. And I liked the idea of starting a family business with my brothers. So we scrapped together the money and BROTHERS LLC was born — from the ashes of Grandpa Jack’s grave and Auntie June’s cigarettes.

Chart reflects Iowa prices, but this is an example of farmland mania. Click on image to enlarge.

THE GREAT RECESSION AND THE FARMLAND BUBBLE

With my brother’s discount, our $30,000 was immediately worth $50,000. And much to our surprise, we had bought farmland just before land prices skyrocketed. In 2008, our land was worth around $1,150 per acre and rental prices were around $65 per acre, per year. A decent ROI of 5% or so. Then the Great Recession caused the Fed to lower interest rates, causing wheat and land prices to go nuts. Land prices tripled and rent prices doubled.

In 2010 and 2011, I started seeing articles about farmland in the NYT, WSJ, and USA Today. Not normal. By 2012, I was pounding the table with my brothers, telling them that we may never see prices like this again. Even my Dad, who loves to say, “God ain’t making more farmland,” was convinced to sell a section of land. That said, we didn’t want to sell ALL of it — it’s our family heritage and a unique asset. So Brothers LLC decided to sell the 80 acres we bought from Auntie June. And that’s how my $30,000 investment jumped to $186,000 in a flash.

As you can see on this chart, the value of our land went up 220% in 4 years and my investment went up right with it. In rural Minnesota, you just don’t see moves like this. It’s not New York, it’s the Prairie!

Rich’s share of the LLC from 2008-2012. Click on image to enlarge.

There was a bidding war and we got a great price. I think my profit after taxes and fees from the land sale was around $39,500. Instead of pocketing all the cash, I used $30k to purchase an additional 5% in the LLC from Brother 1. So, now I own 25%

DIVERSIFICATION AND LEVERAGE

The story of BROTHERS LLC after that is mostly a story about diversification and leverage.

Continue reading “How Rich’s LLC Turned $30,000 into $200,000 — A Story About Brothers, Bubbles, and Prairie Dogs.”

Rich’s Retirement Plan: Playing BINGO Will Not Be A Source Of Income

A common image for retirement is a sunset. Is that depressing?

Penny,

I just realized I have no idea what you think about retirement. You probably aren’t thinking about it very much, considering the student loans you still need to pay off. But when you hear the word “retirement,” what do you think of?

Growing up, I thought of retirement as for only the very old. You got old, you couldn’t work anymore, so you had to stop working. It wasn’t a choice so much as a stage of life. And in the northern Midwest, you had 2 options:

  1. Become a snowbird. This was the usually preferred option for those who could afford it. Move someplace hot (like Arizona or Mexico) for the winter, and return to the Midwest in the summer (to a lake house).
  2. Stay in the Midwest year round. This was the option for those who didn’t want to change their way of life. During the cold winters, they’d watch TV and play BINGO.

As you might guess, I’m not into these options. No gray haired communities in a brown desert. No BINGO. I want travel, adventure, and good food. Mostly, I want the freedom and flexibility to decide later. I can’t be sure what 65 year old Rich will want (or, more importantly, what 60 year old Mrs. Rich will want), but I want enough dough to do whatever our future selves want to do.

So how will I get there?

Recently, some personal finance bloggers started a series called the Retirement Drawdown, so I thought it’d be interesting to analyze my own retirement plan and join the series. Please refer to the end of this post for more information and links to all the bloggers who have contributed.

RICH’S RETIREMENT PLAN — WHAT WE’RE STARTING WITH

As you’ll see in the chart below, most of my net worth is in retirement accounts — 401k and IRAs. 63.4% of my net worth, to be exact.

Click on image to enlarge.

Aside from retirement accounts, my biggest investment by far is in an LLC I own with my brothers. We started the business in 2010 and we invest in farmland, commercial real estate, and one small business. Every year it seems we find 1-2 new investment opportunities.

My share of the LLC is currently worth $198,370. I’ve contributed $69,000, so it has done well. We receive occasional distributions from the rental income and the sale of properties. I’ve pocketed $38,670 so far. In retirement, I’m hoping it will produce regular income — more on this later.

THE NEXT 15 YEARS — PREPARING FOR RETIREMENT

My working assumption is that Mrs. Rich and I will both be working 15 more years. She’s younger than me, so maybe she will work a few years longer. Our kids are 5 years old, so in 15 years they will be 20, and by then we’ll have a good idea if they are “launching” as they should. We’ll see.

There’s another reason 15 years is a good estimate for running our numbers. We are in the lucky position of having a company pension. In around 15 years, I’ll be able to receive the full pension benefit, more or less.

So, what’s the plan over the next 15 years? Get ready for an exciting, unprecedented, and innovative answer …

!!!

We’ll keep doing what we’re doing. Managing cash flow, investing opportunistically, and maxing out retirement accounts. It’s a low-risk ride.

FUTURE ASSETS

Here’s what I expect from my various net worth categories over the next 15 years, in 5 year blocks:

Click on image to enlarge.

Ok, so this will take some unpacking.

Cash: Easy, this is just a gradual build.

HSA: I’m going to start maxing out an HSA in 2018. Currently, one can contribute $6,750 per year. That number may go up over time, and there might be investment gains. Then again, I might spend some of it on health expenses. So, I’ll assume no increase in contributions and a 0% rate of return here. The calculation is just $6,750 x 15.

Investments:

Opportunity Fund– Opportunity Fund? Well, I don’t like the stock market very much right now, so I want a fund that will earn some interest and give me some dry powder for future investment opportunities. I’ll initially use my state’s Municipal Bonds for tax free 4% dividends. I plan investing $1,000 per month for 2018, and increasing this by $250 per month every year until I hit $3,000. At 4% compounding, it’ll add up fast. Finally, I’m assuming that I’ll use $200k of this on college for the kids, either by transferring it to a 529 or just withdrawing the money.

I should note that I’ll probably find other investments along the way, so this fund is a place holder.

Alternative Investments– I’m always looking for new and different investments. For example, I’ve earned a total of $30,000 investing over several years in marketplace lending via Prosper.com. I do this now primarily in a Roth IRA, for tax efficiency.  

Note: This page has affiliate links to products we endorse. Full disclaimer. 

LLC– My assumption is that the LLC keeps growing at a decent pace. Even without appreciation, the land and properties are creating good cash flow. I assume $10k each year for the first 5 years, $12,500 each year for the next 5 years, and $15,000 each year for the final 5 years. These are actually fairly conservative numbers, around 5% return on investment.

There’s a bump in value to the LLC in the final year due to an expected farmland inheritance.

Retirement: These accounts are on autopilot, and my estimates are very conservative at 2-2.25% compounding, which is currently the rate on “risk free” treasuries.

Thus, at the end of 15 years, my pie chart will hopefully look something like this:

Click on image to enlarge.

All well and good. A $3MM nest egg! 

At first I thought my retirement plan was boring, but there’s nothing boring about a $3 Million nest egg. I try to remember this every month as I’m slowly but surely saving.

And now, my plan for income …

Continue reading “Rich’s Retirement Plan: Playing BINGO Will Not Be A Source Of Income”

The Best Of Penny And Rich So Far — 6 Months Of Conversations Across The Income Divide

Dear Cousin Penny,

We’ve been at this blog for around 6 months, so I thought it’d be a good time to go over some highlights. This article will contain numerous links to some of our best posts. Of course, a complete list can be found via the Posts tab.

For any new readers, I’ll quickly reiterate our premise. We’re cousins from a small Midwestern town. One summer, around age 10 or so, I think we played together every day for 80 straight days. Good times.

Our adult lives diverged but we kept in touch, often writing long emails to each other about life and happiness and money — which is essentially the genesis of this blog.

You got married young, you have 4 kids, and your husband went from teacher to chiropractor. Along the way you gathered a boat load of debt, but you have no regrets. Low income doesn’t seem to bug you.

As for me, I went from the farm to theology school to French language study in Paris. Much to my own surprise, I landed a high income career, married a woman with similar career goals, and had twin boys. High income agrees with me. Why wouldn’t it?

Our full origin stories can be found here:

RICH’S GOALS

Click on image to see the details of Rich’s plan.

What’s a personal finance blog without goals? My goal is to reach a $1 Million net worth sometime during my 45th year of life. And after that I want to build a generational family legacy (um, in 3 easy steps!).

I admit, since starting this blog, the goal has become less important than the journey, the process … life. As I’ve thought about my philosophy of life, it’s become clear that it’s really not about the money. It’s about relationships, growth, and freedom — these are the keys to happiness, incidentally.

I have also become keenly aware of how lucky I am. I don’t want to be a selfish materialistic hedonist; I want to be a generous squirrel. I never thought I’d write a parable about squirrels, but this is modern blogging. Animals can talk.

So, I hope I can meet my goal the right way. Since we started the blog, I’ve been able to keep pace.

Click on image to enlarge. My actual pace is the blue line, the pace I need is the red line.

So far so good!

But, again, I’m much more concerned about happiness than money.

PENNY’S GOALS

Click on image to see the details of Penny’s goal.

Now to your goals, Penny. You have enough student loan debt ($173,000 at the start of the blog) to make Dave Ramsey drop a dadgum mess in his britches. You’d love to pay it off, and you’re making good progress. I’m not sure how much you have left right now, but I think you’ve already lopped off $20k of debt in a few short months.

I’m continually amazed at how frugal you are when I read your monthly money checks.

But, like me, you know money is not the key to happiness. You spend very little because you just don’t value things that need to be bought. Even with low income, you feel the need to give more than the need to get out of debt faster. In addition to giving, you’ve learned the art of receiving.

THE IMPORTANCE OF HAVING CONVERSATIONS ACROSS THE DIVIDE OF INCOME INEQUALITY

Penny, sometimes I think we agree on a whole bunch of topics and sometimes I think we couldn’t be more different. But what I really appreciate is that no matter the topic, we can have an honest conversation, even if there are points of disagreement.

Continue reading “The Best Of Penny And Rich So Far — 6 Months Of Conversations Across The Income Divide”

Monthly Money Check: Rich Spent More On 4 Items Than Penny Spent On Everything — May 2017

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Dear Penny,

Your lack of spending is really astounding. As we’ve said many times, the point of making money and spending money isn’t money itself, it’s to get something of value in return. At first I thought maybe there just wasn’t much that you valued because you spend so little. I think that’s partially true. You don’t value vacations like I do, for example. You don’t value clothes at all. You don’t, in general, value many things that cost money. But when you do value something, like education, you’re willing to pony up.

Turns out I value plenty of things in life that cost at least a fair bit of money. I value travel, eating out, a short commute to work (because I value work) and so on. Even though I’m not going to detail all my expenses (waste of time), I can still sneak some money porn into the post by highlighting a few things Mrs. Rich and I specifically valued in May. To wit:

Click on image to buy on Amazon.
  • Vitamix Ascent A2300 Blender: $380.30. Because we value healthy smoothies.
  • A beach house rental for the summer: $653.22 (partial payment). Because we value family beach vacations.
  • A deposit on our new apartment: $1,100. Because we value an apartment close to school, close to work, and close to enjoyable activities.
  • A painting by a local artist: $410.88. Because we value art, and we value a beautiful reminder of our 2 years overseas.

According to many personal finance blogs, this is just craziness. We spent $2,500 on a few things and what did we get, really? A glorified blender, a painting, and some overpriced places to stay?

Yes, actually. That’s what we got. I do realize this kind of spending will prevent us from retiring early. But I don’t want to retire early if it means no smoothies.

I also realize that we spent more on these 4 items than you spent on everything in May. That does seem a bit crazy. How could we be so different? Which one of us belongs in the looney bin?

Most of all, I value going through life without worrying too much about money. I like thinking about money and managing money, but not worrying about money. I value financial security. Financial security is the basis for my goal of reaching a $1 Million net worth at age 45.

NET WORTH PROGRESS

Let’s check on that goal. Going into the month of May, I had a net worth of $603,982. Therefore, I still need $396,018 with 53 months to go. I need to average an increase of $7,472 per month. In May …

Click on image to enlarge.

… my net worth increased by $7,749. Ding! In 2017, I’m up $57,951 , or $11,590 per month. I won’t keep that up but I think I’ll stay on track for my goal. Here’s a chart showing my progress since I started tracking it in September 2015.

Click on image to enlarge.

Now, let’s look at each net worth category separately to see how I’m maintaining this upward trajectory.

Continue reading “Monthly Money Check: Rich Spent More On 4 Items Than Penny Spent On Everything — May 2017”

Monthly Money Check: Penny Just Can’t Spend Less Than $2,000 A Month

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Dear Rich,

Frickin-A. I just can’t seem to get under $2,000 a month in expenditures (not including the student loan payment)! I tell you, I will celebrate when that finally happens. I was only $61.31 away from it this month. It’s the school fees that keep creeping up on us. It’s a tuition payment in January, elementary registration fee in February, high school registration fee in March, high school supply fee in April, and now an elementary student fee in May. Blerg, again, I tell you!

Even though we’re getting financial aid, I was thinking of how much sending our kids to these private schools is costing us. With my oldest on her way to a private high school in the fall, as well as the middle two at a private elementary and middle school already, this will be our most expensive school year yet. In tuition alone, it will be $5,200. But just look at how all those other fees add up, that’s at least another $1,000. That’s around 15% of our income going to these private schools. But, as they say, where your money goes shows what you value, and we definitely do value these private schools for our kids, but… DANG!

Anywho, here’s how my numbers added up this month:

FRICK.

I had entertained the idea of re-allocating some of our charitable givings to go toward the private schools instead, but I really don’t want to do that. I want to be able to give close to 10% of our income, so we’re going to keep trying to do that.

Looking at our income for the first four months of this year, we’re at $12,979. If we keep up at that rate, that will make for a yearly total of $38,937, which is actually a little bit less than what we made last year. And now we’ll be paying roughly $3,600 more in school costs than we did last year. Hmm… I don’t like how this is adding up.

Continue reading “Monthly Money Check: Penny Just Can’t Spend Less Than $2,000 A Month”

Monthly Money Check: Rich’s Expenses Are Lumpy. $150,000 For Child Care Lumpy. So Why Track Coffee? — March 2017

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Hey Penny,

I think a lot of people who read personal finance blogs do so because they want to see in public what most people keep private. It’s financial voyeurism. Money porn.

What’s funny is we receive around 2 readers per day who, apparently, are searching for some combination of “money” and “porn.” I don’t think a personal finance blog is what they have in mind. Imagine their annoyance. “Hey, this isn’t money porn! It’s just a couple bloggers who are cousins bickering over nonsense!”

My question is, what the heck are they actually looking for??

Don’t answer that.

Ok, let’s have a look at my finances for the month of March. First, net worth.

Click to enlarge

In March, Mrs. Rich and I got paid 3 times. That’s the primary reason our net worth jumped by $22,488. Our average net worth gain per month in 2017 has been $12,358, waayyyy ahead of the pace we need to reach my goal of $1MM when I’m 45. 

Now for the bad news. We won’t be able to maintain this pace, because we’ve got some lumpy expenses coming up. 

OUR EXPENSES ARE LUMPY

I’ve been tracking my expenses for 3 months now. I’d never done it before, but I thought it’d be interesting money porn for you and our readers. Have you found it … exciting?

I think I’ve confirmed 2 truths about my budget that I had suspected. First, we spend a lot on food (average = $2,200 per month). It’s more than I expected, but not ridiculously more than I expected. We’re not frugal when it comes to food, I knew that already.

Second, I’ve confirmed to myself why I don’t usually track regular, recurring expenses. This will sound crazy: I don’t think they matter in my situation. Look at this chart (click image for a better view):

Something is jumping out at me here … click to enlarge.

Everything is in a narrow, somewhat predictable range, and then BOOM — half a year of preschool for 2 kids for $12,000. In the past 2 years, we’ve spent, I don’t know, $60,000 on preschool-related expenses. We more or less had to send our kids to this preschool because we’re in a foreign country, but even without preschool we’d still need full time child care. In the past 5 years we’ve spent $150,000 on preschool + child care. Conservatively.

Continue reading “Monthly Money Check: Rich’s Expenses Are Lumpy. $150,000 For Child Care Lumpy. So Why Track Coffee? — March 2017”