Category Archives: Wealth

The Job Downward Spiral: There’s a Physics to my Employment

Either I’ve done a better job overall this time around or things just move slower in public companies. I think it’s a mix of both. But now a year-and-a-half in and it’s clear I’m past the phase of newcomers victories and excitement and well into the phase of “I suck at this.”

I’ve been assigned a few larger projects to manage and after failing at one or two my boss was really hoping I could pull off the latest and greatest, but nope, I fell right on my face. Looking back I see a few areas where I could have improved, but overall I just feel lost. I don’t know how to help drive collaboration when I’m unsure what the expectations are. I did uncover these expectations along the way (and feel I could do a much better job managing a project like this next time) but the problem is I seem to keep missing the obvious and not getting what I’m supposed to be doing… which at my level, as my boss points out, is not acceptable. She used nicer words, but that’s what she meant.

The good(?) news is that I’ve been assigned a slew of projects that I HAVE been successful at. Unfortunately, these projects are one-off “do not make any sense on a future resume” type of projects. Maybe it’s time I stop caring so much about said future resume and just try to do what I do best–which is run with the punches and take on creative projects that no one else would have the foggiest how to manage versus trying to become a manager of cut-and-dry processes and failing time and again.

At 35, it’s no longer cute to fail or figure shit out. I should have it figured out by now and it’s clear I don’t. I’m scared because without resume-building projects I have no where to go after this. It’s hard to have that conversation with your boss because you aren’t supposed to be thinking about “after this.” And it’s less about moving up at this point and more about maintaining some semblance of a living wage once this job is no more. Maybe I’ll stay in this role until I retire with inflation-based raises, but that’s unlikely. I know my boss sees that I can do SOME things well (otherwise I’d be OUT already) but is that enough? I don’t want to be the easy to cut person in the organization and without adding clear value I’ll be cut sooner or later.

I just wish the last project didn’t end up the mess it was. I really don’t know how I could have done it all better. I still am not sure I could really do it better if I started over, which is the scary part. I don’t know how to get teams inspired to do great work, or to collaborate. Everyone seems to think I go off and come up with ideas on my own and decide everything without consulting others, but I keep asking everyone else what they want and I’m not getting any answers. I guess I’m not asking them in the right way. Or… they just hate me and don’t want to collaborate. I don’t know. My one co-lead on the project was super nice, but he also ended up driving things down a path that made it all more complicated and took away my control–which, funny enough, is what my boss wanted me to have… control to make the project great, but then also be collaborative and get everyone else’s input, but to lead. At the end of the day, I’m a shitty leader. But I’m not going to stay in a senior-level role without BEING a leader in my field. Independent contributor is not worth much and I’m way overpaid to be one right now. Good problem to have? I guess. It makes me feel like crap every day. I can’t even look my colleagues in the eye anymore.

I’ve set 7 time-based goals for myself to stay in the company and just try to survive. And by survive I mean do great work that keeps me employed, but also do not try to move up or gain resume-building experience… just do whatever my boss(es) want me to do and stop trying to do the things that would help me move up but do not come naturally to me. That’s 7 dates across 33 months that I need to survive and then, as long as there isn’t a major recession, I’ll have some sort of flexibility to figure out my next steps… I mean, not a ton of flexibility because if I have a mortgage and another kid, flexibility is out the window unless my husband is willing to move to a lower cost of living area and he isn’t.

It is just all so suffocating… I’m so fortunate for all I have and I know I’m in a much better spot than many others in this country, but I just can’t breathe. I don’t want to get caught in this self pity crap but I also don’t know how to be better. Once I start thinking this way it’s hard to focus and be productive. Every little thing I do I self doubt so much that I slow down my output and my output gets worse and worse until I inevitably get let go. Fired. Whatever. That’s what I do. It’s not funny. It’s not poetic. It’s just my life.

But with a toddler and wanting another child, it CAN’T be my life. I’m really fucking scared right now. I don’t know if I’ll ever see the day I have a. job where I’m not worried about getting fired. This is the best situation yet as the head of the department likes my work and has given me the opportunity to do projects seen by our senior leadership team, but that still doesn’t make me professionally immortal. And I know even if I can hold on for dear life these next 33 months, there’s still after that… if my resume has nothing on it other than weird projects that make no sense at another company, or would be comparable to what a much more junior person would do with a much lower salary, I don’t know what I’ll do —

I was talking to my husband and we agreed that our mortgage should be no more than $5000 with his father adding another $2000  in rent (basically $2500 for each of us per month plus $2000 for his father.) My husband really wants his mother to go in with us on the property but I’d prefer to buy separately and just have his father rent from us (his parents aren’t married, it’s complicated, but I am comfortable living with his dad if he is renting from us and it’s clean cut like that.) So we can put down $300k on a $1.5M property which is about $7k a month. That might be doable even if I lose my job, but it will be hard to maintain 30 years of a career that can support $2500 a month. And it’s going to be very hard if not impossible to find a place that costs $1.5M that has a good place for his father to live.

Ugh. When will my life not be a mess?

Another post on the impossible goal of buying a home in the Bay Area

When I drive from point A to point B I’m often calculating various life possibilities in my head. As of late, my math is focused on determining what kind of mortgage REALLY makes sense for my family. I figured $8000 a month DOESN’T make sense, but given prices of housing here are ridiculously high, I was hoping to at least get a number that felt somewhat doable.

Even though our household income should be over $400,000 this year (as long as I maintain my employment), there is absolutely no way to guarantee we’ll come close to this every year for the 30 years ahead. With my husband making $90k 1099 (I consider that $60,000 salary equivalent since it has no benefits and is taxed at a higher rate), and my income ranging in the past 10 years from $150,000 to $400,000 (total compensation), I feel fairly comfortable committing to $200k total family income for next 30 years–a combination of my husband staying in his job OR getting a job with benefits with a $60k salary minimum, and my having a job making at least $150k a year on average (which seems reasonable based on the various offers I’ve received in the past.) Theoretically our income would go up with inflation and more experience, but my husband has never asked for a raise and is not inspired to take on more clients beyond his one client, and I am fairly confident I’ll have to take a pay cut over and over again to remain gainfully employed, not to mention that I’ll likely take some time off to have kid #2 (and #3?) Plus, I figured out recently that we spend about $3500-$4000 a month not including housing on our lifestyle. Sure, we could be more frugal BUT I don’t want our housing to get in the way of being able to travel to see my family, see the world, send kids to summer camp, etc. I don’t think our lifestyle costs will go down that much as our kids get older–we’ll cut in some places and add to others.

So $200k a year in salary is $16k a month. If we max out our IRA/401k, that’s about $3k a month, leaving us with $13k pre tax, or about $8k after tax.

I think planning our next 30 years based on $8k after tax income makes a lot of sense. It still feels aggressive and scary to commit to anything based on it, but it’s not unreasonable.

If we make $8k in after tax income and our monthly expenses are $3500-$4000 a month, then we have $4000 left for a mortgage OR rent. Of course a mortgage is fixed while rent can go up over time… but let’s ignore that for now and just say that we can afford a $4000/month mortgage (including taxes, etc, esp since there are no meaningful tax deductions for real estate anymore.)

If my math is correct, IF we can put $600,000 down (50%) we can afford a $1.2M home.

But we don’t have $600k to put down, and the opportunity cost on putting that much of our life savings down will basically kill our retirement. We can put down less but then our monthly costs go up, which would significantly impact our lifestyle.

Even if we got our living costs under $2500 a month, that leaves $5.5k for a mortgage, taxes, etc MAX. That seems like better math… a $1.2M home with $300k down (more reasonable at 25% down) would be about $5.5k a month. BUT I don’t think we can find a house for that in this area — if we buy a condo, then condo fees would be on top of the mortgage, meaning we could afford less in a condo than in a house (sort of… maintenance costs in a house would eat up the HOA fees and then some.)

I keep running the numbers and I just don’t understand how anyone can afford a house here. I’m terrified of being stupid about this and buying something far from perfect for way too much money because I really want to own a house. It just doesn’t make sense.

I wish I could have a rational conversation with my husband about this. He just wants his mother to gift him the money and then we’ll live with his parents for the rest of forever. I want to find a place WE can afford on our salary without his parents living with us. He isn’t willing to consider getting a job that pays more and I can’t commit to earning more than $150k a year for the next 30 years.

My thought is that our best strategy right now is to rent a 2br/2ba and stay there for a few years and wait to see if our savings increases or what happens, but he’s pretty adamant about not renting. He makes me feel pretty crappy about not wanting to commingle my savings with his mother’s money (even if she is “gifting” it to him.) It’s beyond a matter of pride, though that’s part of it. I just want to have flexibility and once we buy with his parents we’re stuck for the next 30 years.

We could rent a 2br/2ba for $4000-$5000 a month now.

We could stay in our 1br for another year (or two, depending on when I get pregnant) — for $2500 a month and continue to save. Once we hit $3M in net worth, I can see putting $600k down on a house as we’re still diversified. But $600k on $1M in networth is too much.

That said, we’ll probably have a recession in the next year or two and our $1M will be worth a lot less. So selling stock now to buy could be a good move… or will housing prices come down with a recession? I wish I had a crystal ball.

 

Why I want to be rich

When I was younger, being “rich” equated to buying stuff. Now that I’m older and wiser, I still want to be rich, but for different reasons. Sure, I still want to buy things, but the things I want to buy have changed substantially.

Having just hit the $1M milestone with my husband (with almost 90% of it being my savings), I am not rich yet, but feel finally on our way. Rich, to me, is having $10M in assets. This is what I would do if I was rich:

  • own a home outright and be able to comfortably afford taxes and maintenance on investments/interest (i.e. in Bay Area a $2M home)
  • easily afford college for all kids in full and leftover $ to help them get started out (but not to the point where they become lazy)
  • pass down some wealth to my children–enough to help them but not enough so they do not know the value of a dollar
  • “treat” friends and family to meals out, buy them nice gifts, even take them on vacations and pay for the trip
  • donate to causes that matter and/or put $ into trust for later donation after it grows to more substantial amount.
  • take time off to spend with family and travel
  • afford IVF if needed to have 2nd + 3rd kid
  • pay for kid’s extracurriculars, camps, pre college programs, etc, without worrying about $
  • have enough financial stability to start my own business (or non-profit) and it not impacting long term financial goals
  • not worry about retirement or long-term care or unexpected disability
  • hire household help to cook healthy meals, clean, personal trainer, etc, esp while working
  • buy my mother a home and make sure her financial future is stable
  • help future grandkids out as needed
  • take classes in art and photography, focus some time on my hobbies and see if I can get any better at them
  • write books or at least have the time to write them

I don’t think I’ll be “rich” ever but if I do get to $10M it will be after many years of working and I’ll likely be on my deathbed! But it’s good to have goals!

My downsized goals: chasing the miniature American Dream

The baby (singular or plural) may – or may not – happen. But, I’m turning 34 NEXT FUCKING WEEK and I feel like I need to have some new goals in my life. Some new goals that involve not living like a just-graduated-from-college person for the rest of my life.

I was absolutely fine living my 20s in shared living situations to save money, and my early 30s were completely acceptable sharing a 1 bedroom apartment with my husband. But – as I’ve taken home $160k+ per year, minus taxes, for the last 3 years – I wonder what on earth am I doing this for if I can’t have some semblance of the adult life I want.

All the east coast dreams of the grande house with the huge backyard are gone. I’ve downsized my objectives – but I still have them. I’d like to own a house on not-the-crappiest street. I’d like to be able to take time off in the future (in health or in sickness) and not worrying about running out of money. I’ve made progress, but I still have a long way to go.

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The plan (with flat stocks):

2017 – close the year with ~$525k networth
2018 – savings = $45k investments + $30k after-tax bonus = $600k
2019 – savings = $45k investments + $40k after-tax bonus = $685k
2020 – savings = $45k investments + $40k after-tax bonus = $770k
2021 – savings = $45k investments + $40k after-tax bonus = $885k

OR

The plan (with ~5% growth):

2017 – close the year with ~$525k networth
2018 – savings = $45k investments + $30k after-tax bonus = $625k
2019 – savings = $45k investments + $40k after-tax bonus = $740k
2020 – savings = $45k investments + $40k after-tax bonus = $862k
2021 – savings = $45k investments + $40k after-tax bonus = $990k

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This all assumes I can perform well in my current job for the next four years, age 34-38, and not take significant time off, all while (hopefully) having two children.

My goal has always been to have $500k in the bank before having children. I have obtained that goal. My next goal is to have $1M in the bank before 40. Ideally well before 40. I’d like $1M in the back as my emergency fund and retirement fund and the fund which I do not touch. Over this same time, my husband will be doing what he does and not investing his money because he’s very risk averse. This is fine, because he will be saving up for the down payment on our (not in this part of the country) house.

Assuming I have one child in 2018/19 (age 34-35); and one in 2020/21 (36-37); by the time I have achieved this plan, I have one child who is ~3 and one who is ~1. This will enable us to, before we have to think about putting the kids into school, move to a part of the country where housing is more affordable. My husband can continue his career as a teacher in a region it is more cost effective, and I can perhaps pursue an entirely new career – or take time to spend at home with the kids.

I realize $1M is NOT “early retirement.” This is step two in my… however many step, not very well thought out plan…

Step 1: $500k before having children (age 30-35)
Step 2: $1M before 40 / + $200k cash downpayment (husband)
Step 3: $2M before 50 / + home 33% paid off (or more)
Step 4: $3M before 60 / + home 66% paid off
Step 5: $4M before 70 / + home 100% paid off / retirement

I’m not sure if any of that makes sense. So far steps 1 was achieved (woohoo) and step 2 seems like it might be achievable, if I can hold on to this job for the full four years. I am going to hold on to it with all my might. The having kids things definitely may throw a wrench in this plan regardless, but I’m hopeful I can take minimal time off for my kids when they’re really young (and/or work remote and still do my job, which might be possible)… then, after four years, we leave. We have to leave. We will never be able to afford a house here. I don’t know why that’s so important to me – I realize homeownership is a horrible financial decision – but it is. I can’t shake it. I want to design my own bathroom and kitchen… I’d like a backyard I can sit in and enjoy the sun without feeling the prying eyes of others all over me. I want a place for my children to grow up and a home to know.

So, that’s the plan. It suddenly seems all so very short term. I feel quite old. 34 is no joke. 34 is just a few years away from 40. And 40 is no longer fake adulthood. It’s serious, full-on, you’re an adult – and you’re only going to get MORE adult until you’re PAST that… and, I’m trying not to freak out about that, because I know life is so very short, and I need to just enjoy the moments and try to achieve some semblance of both freedom and control before I’m too old to enjoy it.

 

My Parents Are Actually Not That Great with Money

When I grew up I knew two things to be fact – my dad was talented at earning money and my mom was equally talented at spending it. My mother constantly complained about us not having a lot of nice things – and we indeed were upper middle class and not a millimeter over the upper class line – but we had it rather great. As my father worked a professional job requiring his math brain, the money kept rolling in. And my mom (and I) would keep spending it.

But despite the “every time we come back from the mall” fights on spending it never was  a “real” issue. We weren’t in danger of losing the house. My private college tuition was paid for outright. So was my sister’s private school for a learning disability and then college. Apparently at some point my father’s company was sold and he did fairly well for himself in his stock and income appreciation. My parents should be comfortably set for life and then some.

However my father (who was told he had two years to live about nine years ago, mind you) and my mother have spent and spent and spent post “earning” years and with the stock market underperforming all his estimates about his finances didn’t quite pan out. Shocking for a man who made a career out of calculating risk. Yet, here we are today, with my father looking at all the numbers involved in the family finances and he can’t make heads or tails of it. There’s a massive home equity loan out that has to be paid back fairly soon, and there’s little left on it to borrow at this point anyway. He wanted to spend a lot on my wedding but, now that I better understand their financial situation – I realize it was not a good idea. It’s not that they are broke – they have social security and pension money coming in… about $100k a year. But in order to afford not only my wedding but also a winter condo they bought in the southeast and renovations to that condo and fixing a bunch of things breaking around their main house there is the reality that my dad had to pull out a bunch of money from the IRA bumping him up into a higher tax bracket so most of the income they’re making goes to taxes.

So they have to in the next few years pay back about $200k in home equity. How? The idea seems to be either from a reverse mortgage (which as I learn more about I really don’t like) or taking more money out of the IRA and paying a lot of taxes on it or, well, there aren’t many other options. The money is there, but it isn’t. They’re so much more fortunate than most people their age (due to smart saving at least and the possibility of a one-working-parent household being able to afford a nice life and a decent retirement) but their spending is just out of control. It’s not just my wedding – which theoretically my father had budgeted “forever” for – it’s the lack of acceptance of 1 – what life really costs and 2 – what their life really costs.

My father keeps talking about how they’re going to have to “get frugal” and I can’t help but laugh. They aren’t exactly going on luxury vacations but my parents do spend. My mother has no concept of money and I worry she’s going to eventually spend every last cent of her retirement money leaving her with “just” the monthly income – which at some point may not be enough to pay for her care. I’ll help, of course, as much as I can – but I’m stuck in the reality of my world which = I cannot ever afford a house, I cannot figure out how to save enough for my own/my family’s retirement, even on my current substantial income (which will not last because I’m about to completely crack in my current career and my next step is something less profitable but more personally fulfilling, I hope) – in any case, I’ll need to help out of guilt knowing how much my own life has cost them, but it’s still frustrating that this didn’t have to happen… they were doing so well and then they had to put an addition on the house and had to buy too-nice further for the vacation property and had to get a new dress for every wedding-related event coming up (I’m glad I talked my mother out of purchasing a $2000 dress for my wedding when the $300 dress she got looked WAY better than the one the fancy store was trying to sell her.)

I just worry too because I know that in so many years my father’s cancer will eventually end his life (I hope this is a long time out but who knows) and my mother will – god willing – life a very long time. But as bad with money and gullible as she is she’s suceptable to all sorts of scams and con arts and just about any potential way for her money to disappear. My dad likes to talk to me (so awkwardly) about how he wants my sister and I to get an inheritance – and I can’t comment on that because on and hand I think inheritances are just plain awful and unfair and should not be allowed and on the other hand the world we live in is one where people can or can not afford to, say, buy a house or send their kids to college due to such mini dynasties. It’s not a topic I’m comfortable talking about and I certainly don’t want to be the person held responsible for convincing my mom not to, you know, spend that money that one day would possibly end up trickling down to me and my sister – even though I honestly don’t want it if she needs to spend it, I just don’t want to see her getting conned. I worry I’ll have to be the responsible one because my sister knows nothing about money and clearly I’m the best educated on the topic (I don’t know how that happened but anyway, it happened.)

My father was even asking my advice on how to repay the home equity. I have no idea. $200 is a lot of money. It took me a very long time to save $200. Now I have almost double that. But it’s all locked up in retirement funds and such. It’s about half of the cost of their actual house. I don’t understand home ownership and the whole taking loans out against your property. It seems like he has a really great rate (2 percent?) so maybe that’s a smart/good thing. But it’s only smart insofar as the needed to spend the money. It’s my wedding but it’s more than that for sure. It’s just this nature of spending and spending and spending and being delusional slash not wanting to deal with the time to come when they really do need to be “frugal” in their own middle class sort of way… not something my mother has known how to do for years. I worry they’ll lose their home – though my father said that will never happen – but I’m starting to doubt his ability to predict these things. He seems rather surprised about how much taxes he owes in general and how things add up and money keeps disappearing. He seems perplexed that the stock market didn’t perform strongly so his networth shrunk more than expected and he didn’t have a backup plan to deal with this. And this all has led me to the conclusion that my father – the math guy – the financial industry risk expert – is actually really bad with personal finances. I worry for them, and I also hope somehow I can do better with my own family and wealth. I’m beginning to think that all starts with NOT owning property – EVER. Rent is expensive but at least it’s not handcuffs.

Is Income Inequality Necessary?

As we get into the thick of election season, it becomes apparent we have two Americas — the Trump ‘merica, and the Sanders America. Everyone else falls somewhere in between. Trump’s success stems from his “I don’t give a shit” mentality, offering solace to those angry over years of political correctness getting them nowhere – he wants to “make America great again.” Sanders offers a voice to those who see corruption – legal or not – causing greater inequality and the downfall of our country.

Who’s right?

I’m bi-economical. I’m a socialist and a capitalist – but neither at the same time. Socialism sounds great, until you realize how that limits the opportunity to work hard and get ahead. Capitalism, however, requires inequality. It provides the opportunity to get rich, but that opportunity is light years away for those who didn’t inherit wealth, or work hard and due to a mix of luck and tenacity and good timing make enough money to catapult them into the upper echelons of society. Old money versus new money.

There is no right, persay, but we can look at which countries are happier than others, and how that relates to inequality across their residents. In this Gallup Poll and the World Top Incomes Database, the point is made that in countries with the biggest income gaps between rich and poor, the middle class find themselves unable to afford some simple luxuries like private schools and a house in a good neighborhood.

 

Obama decried income inequality this week in his final State of the Union address. The standard Democrat message — support a thriving middle class  — was front-and-center in the speech.

“Companies have less loyalty to their communities. And more and more wealth and income is concentrated at the very top,” he said. These trends have “made it harder for a hardworking family to pull itself out of poverty, harder for young people to start on their careers, and tougher for workers to retire when they want to.”

Many blame Silicon Valley as a leading source of furthering income inequality. A 330-page report by the World Bank released on January 14 notes that “the economics of the internet favor natural monopolies, the absence of a competitive business environment can result in more concentrated markets, benefiting incumbent firms. Not surprisingly, the better educated, well connected, and more capable have received most of the benefits – circumscribing the gains from the digital revolution.”

I know that income inequality is at play in America because I’m in the top 5th of income earners and am in the fourth quintile (of five) of all U.S. households in terms of my networth, and still I am unable to afford a home in a good neighborhood or to send my “future” children to private school, should I want to. If I feel this way, I can only imagine how the rest of America feels, outside of the .01%.

Paul Graham, a prominent super-rich Venture Capitalist went on recently about how we need income inequality. “You can’t prevent great variations in wealth without preventing people from getting rich,” he wrote in an essay that went viral online last week, “and you can’t do that without preventing them from starting startups.”

Starting in the 1980s, a gap has been widening between what the best-paid Americans earn and what everyone else in the country earns. Economists Barry Z. Cynamon and Steven M. Fazzari shared in a new paper that “Rising income inequality is now a significant barrier to economic growth and full employment.”

I’m worried. I’m worried about the future of America. History has proven that income inequality, when let go for a long time, causes big problems, even civil wars. And in 2016, lower pay for the poor is causing an even wider income gap.

Since the late ‘70s, most of the growth in workers’ earnings has gone to the people who have made the most money. To be precise, the wages of the top 1 percent of workers have grown 138 percent since 1979, while the wages for the bottom 90 percent grew only 15 percent during that period. Yikes. This especially hurts our social security system, which underestimated income inequality, making higher income earners pay a much smaller percentage of their income in social security tax than lower income earners.

This is a huge problem since the number of seniors will double by 2060. If we think income inequality is bad now, it will only continue to get worse.

I find my idealistic side wishing we could get rid of money altogether, but my realistic side worried about creating a decent life for my future family. Where I live, it certainly feels like the only way to do this is to have a household income in the 1% ($400k+) per year, and even that is really just “upper middle class” here. Achieving that is very challenging. It’s much more likely that I’ll be priced out of Silicon Valley as I decide to have a family, and I’ll drop into a lower household income level to be able to afford a middle class lifestyle somewhere else.

 

The Secret to Happiness: Value Time Over Money

Money. We need it to pay for our basis needs and all the other things we want. But can money buy happiness? It can’t, at least according to a recent survey of 4600 participants.

New research that was collected over a year and a half and published by the Society of Personality and Social Psychology suggests valuing your time rather than pursuing money may be linked to greater happiness.

Time is highly valuable, yet hard to put a figure on. Adults who are employed full time work on average 47 hours per week, according to Gallup. That’s an hour and a half more than a decade ago. Americans also tended to take fewer vacation days than their international peers, according to a 2014 Expedia.com survey.

In fact, American’s work more hours than anyone in the industrialized world. And we take less vacation, work longer days and retire later.Like any American child who grew up in the 80s and 90s, I was told that America was the best country in the world. I just accepted that. Sure, Europe had some really exciting history and culture, and other countries had some beautiful untouched landscapes, but America was far and beyond the best place to live. I won the lottery in terms of being born in the land of the free and home of the brave. I lived in the greatest place on earth, likely during the greatest time on earth. How lucky I was!

Many economics and futurists had dreamed up a world when, filled with wealth and technology, we wouldn’t have to work so much. Meanwhile, some studies claim the typical modern workday should start around 7am and end at 7pm — a 12 hour workday.

Of course, these are American companies — Sweden, on the other hand, just introduced the concept of a 6 hour workday.We’ve become such a work-focused culture that we leave little time to actually live our lives. For those earning minimum wage, this isn’t at all a choice. In many parts of the country, it’s necessary to work an 86-Hour work week to afford basic rent for a one-bedroom apartment. And for those earning higher salaries, working less hours means risking those jobs. Workers are expected to be on call at all times, many cases including weekends, holidays and evenings, and have golden handcuffs where they’re worked to poor health in order to maintain their jobs and support their families.

What if we were able to opt for time as part of pay, and this was acceptable. To ask for three months off a year as part of a compensation package, to be spread across the year, to be able to experience life — to take three-week vacations to see the world — to spend time with our families and loved ones before it’s too late. What if we were able to negotiate time just as we negotiate money, and not be seen as lazy or a poor worker. If time has a dollar value, what would that be?

He’ll Teach Himself How to Be Rich…

Ramit Sethi and James Altucher frequently spam me with email content that I actually want to read. Both are brilliant marketers, having built their own brand around taking a strong stance in the world of finance (if you don’t know them — that’s Sethi, with his make more vs save more philosophy, and Altucher with his whole shtick of I’ve been rich and broke and rich and broke and rich again, all while being depressive and charmingly neurotic.)

Both write LONG emails. Both are anti-establishment yet pro money. They clearly each have a lot to say. And, of course, both have written books and maintain a sizable following of their personal brands. If I were a more productive and focused and confident person I could maybe do that as well, but still after all these years I hide behind anonymity because I’ve yet to decide to quit my job for good and become some sort of motivational personality. Cue that annoying cheerleader song.

Every so often one of the emails sent by Ramit or James sparks a little flame in my mind that twirls around until I put it out with a blog post. Today, Ramit’s pitch was on “invest in yourself.” This isn’t anything new from him, but he did detail out how in his childhood he grew up in a lower class family and his parents found $800 to send him to an SAT class because they believed strongly in investing in what matters. He extends that philosophy to now investing $50k in “luxury items” per year (which he can do because I’m sure he’s making well over $1M per year with all his speaking and writing and workshops and such) – but underneath the clever marketing ploy to convince readers to invest in his programs for their personal growth (and fund his next $50k worth of luxury purchases) lies a good point — we have one life, invest in the things that make us better.

This year, I’ve decided to invest in a personal trainer. She comes to my apartment complex three days a week in the morning and calls me up if I’m not out of bed yet. I hate working out and I hate waking up even more, but that $50 a session / $600 a month is completely worth it. Health is everything. As the stock market starts to tank this year (and my portfolio appears to have paper losses of about $25k year-to-date (uhh, that’s just 9 days of $25k “losses”), it’s a good reminder that investing isn’t everything. Or, sometimes investing in yourself is just as valuable as investing in some hot growth stock with a miraculously low P/E despite an overvalued market.

I’m still going to try to sock away at least $30k this year of net new savings, and for all I know this year may end up being a wash. But really, at this point, I’m letting go a bit when it comes to aggressive savings. It’s time to live a little. I’ve got one or two years left before I have kids (hopefully), so it feels like as good a time as any to spend a little more than I normally would on things like health, education, hobbies, travel and other experiences (i.e. upcoming wedding.)

While I may never sign up for one of Ramit’s super expensive classes, I do agree with his general sentiment – invest in yourself first. It’s like oxygen masks on an airplane – make sure you can breathe first before helping others. Soon I hope to do nothing but help others. For now, I’m figuring out how to breathe.

November Networth Check-In and Retirement Update

Now that I am “in between incomes,” so to speak, I am re-focusing my objectives for total assets this year, and beginning planning for 2016 based on my potential earnings at my new opportunities.

As a reminder, my goal was to close out 2015 with $400,000 in net worth. That figure was always a stretch, but it isn’t going to happen this year. My new goal is to wrap up the year with at least $350,000 in net worth, which is about a 15% increase in my nest egg – not bad but not great either. My goal is to give birth to my first child in the summer of 2017, when I’m about to turn 34 (yikes.) That means getting pregnant in the fall of 2016 or soon after would be ideal. That means that I still want to aim for $500k in net worth by the time I have my first kid (let’s call that July of 2017.) This is about 19 months to increase my net worth by $150k.

Let’s start with where I am today — according to www.networthIQ.com my current net worth is $380,783. I will subtract my car ($8000) and stock options that will soon be worth nothing from that ($16,000) to what is my “actual” net worth — so about $356k. I’m also losing money now since unemployment doesn’t cover my monthly expenditures, so assuming the stock market does decently this month and I land a new job for December start (which is looking quite likely) I should be able to close out the year about $350k. A reminder, in January of 2009 I had about $5k to my name (see graph below.)

november net worth

In order to hit my goal of saving $150k in 18 months (assuming ending 2015 with $350k), I need to “save” $8333 per month. How is THAT going to happen?

If I (knock on wood)  increase my income levels in my next job to $190k (which is super exciting and feels like too much yet if the market will pay that for my services, I’ll take it!), that is a take-home of about $9400 a month (which is a lot and really starts making this dream possible – this is where it gets exciting!) Even with my average spending of about $3500 a month,  I will have $5900 per month to put away. But this also, theoretically, is two years of 401k investment, which I can max out each year. So that’s $36,000 of the total $150k right there (assuming I can keep my job and do well at it!) Ok, so one opportunity has a 3% match of your salary on that, which is awesome (I’ve NEVER had a 401k match in my entire career!) That means each year I’d make an extra ~$5700 just for putting the money in my 401k (if I’m understanding the match thing correctly.) So that is $11,400 on top of the $36k. Ok, so that takes care of $47,400 of the $150,000, and leaves a slightly more realistic $102.6k left to save over 18 months, or, $5700 per month. Income is reduced a bit with the 401k investment, of course, by $18000 a year – but that’s all pre-tax. But with bonus, etc, it should balance out to still taking home somewhere around $9k a month, or maybe a little less. That’s still a lot for the short-term goal.

Now, let’s assume my stock portfolio / the market increases by an average of 5% each year. It could be less and it could be more, but let’s say 2% – 5%. That is somewhere between $7000 and $17500 for year one, and a max of $20.9k in year two (at 5%), minimum of $8368 (for the entire year, but I’ll count that in these numbers since even if I’m not working my portfolio will continue to gain interest.) Ok, so on the more conservative end with just a 2% year-over-year gain, I’ll have another $15,368 covered by investment interest…

$150,000 goal
$36,000 = 401k investment
$11,400 = 401k match @ 3% of income
$15,368 = portfolio interest at 2% YoY
———————————————
$87,232 to save in 18 months, or,
$4846 per month

This is very doable, as long as I select a job where I can stay a minimum of 18 months. One opportunity does not have 401k match, so I am leaning toward the one that does, since this clearly helps substantially in reaching my long-standing goal of $500k by childbirth.

Once I have kids, I am expecting to work part-time and see my annual savings levels decrease. Of course, I’ll have a husband who is also working, but he doesn’t earn as much as I do or invest his savings beyond a Roth IRA (which he’ll no longer be eligible for once we’re married – yeay marriage.) We’re not really combining incomes when we’re married – just continuing to split major household expenses. We’ll probably start to split a little more… right now we just split rent (I pay more since I make more) and food (we spend way too much on food for two people) — but in the future when we’re married I can see us splitting healthcare expenses, and maybe things like gas/transit. When we have a kid all those expenses will be split too. Luckily I have a penchant for household accounting. What a great hobby!

Seriously, though, if I can get to $500k before I have a kid, this frees me up so much from this looming fear of the future I have. It’s not exactly a nest egg that will make me rich, but it’s a very good start to be at $500k by 34. The goal was by 30 but so what… goals are meant to be hard to reach, but they keep you focused on getting to where you need to be.

With $500k, if I can manage to not touch that money until I’m 65, at an annual return of 5%, that gets me to about $2M in retirement (not counting any future earnings or my husband’s earnings/savings. At a 10% YoY return that’s about $8.7M in retirement. Heck, if that grows at 10% YoY in 20 years once hitting $500k, that will be worth $3.3M – not exactly placing me in the .01%, but certainly providing enough income for early retirement / starting my own business / doing what I want when I’m 55 years old. I know a lot of women in their early 50s and I can see this age being a good time to have that flexibility. You’re still healthy enough to trade and have fun, your kids are old enough to appreciate spending time with you (hopefully) and overall if you’ve been smart about saving over the years, you can take a moment to actually enjoy life.

So when people read this blog and comment about how this $500k goal is so silly, well, it really isn’t.

The MOST important thing right now for all of this is picking a job where I can stay stable at for the next 19 months, at a minimum. That’s a long time and I’m going to take it month by month and focus on being so productive my employer couldn’t even dream of replacing me. 18 months is just 6 quarters, and that will go fast, especially if I’m pregnant for half of them!

I really hope I can do it. I’ve come so far. This seems within reach. Having my first kid at 33/34 is not ideal, I’m going to have to have my second at 36 and if I want a third, well, that’s going to have to be pretty much right away after that. This leaves me little time to keep earning at the same rate, especially in my field, where having kids doesn’t seem to align with the amount of hours required to work. I have to make the money now, so I can leave the options open for the future.

 

 

 

 

 

 

 

 

Financial Independence – What it Looks Like to You

When one is on the road to wealth, the dream of financial independence lingers in the distance. Financial Independence means different things to each person. For some it may mean being able to take year-long luxury vacations around the globe and returning home to a mansion. For others, just being able to live a modest lifestyle and not have to work in order to afford it is enough.

I ran into this interesting article discussing financial independence.It posed a few questions which help paint a clearer picture of what this dream would really be like:

  • What time would you wake up?
  • Would you be awakened by an alarm clock or by your body’s clock?
  • Once you arose, what would you do first? Second?
  • When and what would you eat?
  • What would be the main activity of your day?
  • How would you spend the evening?
  • What would determine when you went to bed?
  • What would your home look like?
  • What kind of vehicles would be a part of this typical day?

I thought I’d take a stab at answering the questions, as they probably will help guide in my determining my ideal lifestyle with or without said financial independence. How would you answer these questions?

What time would I wake up?
Probably 8 or 9am.

Would you be awakened by an alarm clock or by your body’s clock?
Body’s clock. I hate alarm clocks.

Once you arose, what would you do first? Second?
I don’t know. If I don’t have work to go to, I tend to just waste time. I’d probably be bored very quickly. I’d likely waste away my days unless I had a project to work on… like work.

When and what would you eat?
If I had “luxury” financial independence, I’d have a cook who would make me healthy delicious fresh food everyday. I’d also be a better cook because I’d have a nice kitchen and a maid who would clean up after the mess I make. I’d frequently dine out – sometimes at fancy places but mostly at modest restaurants. I’d try to eat healthy. I’d have a personal trainer.

What would be the main activity of your day?
Well… other than sleeping and watching television, which would get old fast, I’d want to be working. Maybe I’d take classes. If was wealthy I’d want to just spend my life learning. I’d probably take a bunch of psychology, art and writing classes. Maybe I’d just get a bunch of master’s degrees. I’d spend a decent amount of time floating around my pool. I’d travel and take lots of road trips across the country.

How would you spend the evening?
Cuddling at home with my boyfriend, watching movies, taking relaxing baths in a luxury bathroom that I designed. Sleeping.

What would determine when you went to bed?
What I was tired. It would usually be pretty late. I’d be doing something creative at night and fall asleep whenever, knowing I didn’t have to wake up at any set time in the morning (unless I had class.)

What would your home look like?
It would be in a neighborhood where I had friends who lived close by, who were also financially independent or had more flexible lifestyles. It wouldn’t be giant, but it would have a sizable yard with a private pool (optional) and enough room for entertaining and having guests. I would personally design my own unique kitchen and bathroom. I’d have a robot that does my laundry and folds/hangs my clothes!

What kind of vehicles would be a part of this typical day?
I’m fine driving the basic honda/toyota type car. If I was the rich kind of financially independent, I might buy a Tesla. But I’d be too scared to drive it because I tend to bump into inanimate objects. Maybe I’d splurge on a Lexus or something. I don’t need a Ferrari.

What is most interesting about this analysis is that clearly I’d be massively bored if I was financially independent. I like to work. In fact, I can’t imagine ever retiring. Still, I want to achieve financial independence. To me, financial independence is $2M in networth, or $1M with a modest lifestyle in one’s 30s/40s that is growing to $2M. It isn’t some super fancy lifestyle. And even if I was financially independent, I’d want to work. I would just want more flexibility in deciding where and when I work. And I’d also want to have the opportunity to take more classes and change careers frequently, not caring about taking lower level jobs to be learning something new all the time. Hmm.