Category Archives: Wealth

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.

More Thoughts on Ambition, Depression, and An Otherwise Ambivalent Life

When I was a child, I was remarkably judgmental. My parents raised me as such. For them, having grown up in households with parents who were not college educated, who were bluecollar workers or clergy, who lived only slightly above the lifestyle afforded by poverty, I understood their hatred of all things they worked so hard to escape. Although my town was quite diverse, as a child I always felt better than many of my peers. My parents created and reinforced this notion. I never felt better in the sense of actually liking myself or better in that I was able to make and maintain friendships, but I was told time and again that there is a large faction of others in the town, and while I was allowed to be friends with those people they were not like us.

To be clear, this was not a racial issue, as my parents looked down upon people of all ethnicities – though, of course others “like us” – Jewish families, typically got a pass. It was horrible, and yet at the time it made sense –  was our shared values of education and working hard to achieve goals, with a general disrespect for cultures that, by stereotype and outcome, didn’t have the same type of lifestyle. It wasn’t their fault, or at least it certainly wasn’t the fault of the children, and yet there was still this sense of sameness and otherness that pervaded our view of our town. It is how I, despite being miserably depressed and empty as a child, was able to find some solace in going shopping with my mother and purchasing hundreds of dollars in Nordstrom Brass Plum shirts and pants and skirts and dresses. It is how I managed to push myself harder to get where I am today, because deep down I was terrified of becoming one of “them.” I could never truly envision myself a starving artist or struggling parent. It wasn’t in the vernacular of my limited foresight. It was the only truth I knew, which now I know to be no more truth than any other dream or goal.

We were never rich, but my mother dreamed of great wealth and my father wasted away his life eating himself fat and working long hours to provide for our family so we could maintain our illusion of happiness in the shape of comparative success. My mother would frequently go on and on about how she wished she had married someone richer, not once considering returning to work herself. That was somewhat normal of a train of thought at the time. My father, meanwhile, earned a rather high salary for his middle management consulting role, and we lived a very comfortable life. My father liked to purchase “nice” things, although I didn’t always agree with his taste. My mother, for the most part, liked to purchase whatever QVC or the Clinique woman happened to be selling her. And I grew up with this painful sense of privilege compiled by the guilt of knowing none of it was deserved. Through each year, that guilt grew stronger. When my mother made an off-putting comment about a friend at school whose parents rented instead of owned, I cringed inside, knowing that criticism was completely unjust, especially against a child who had no choice to whom she was brought into this world.

I do believe that so much of your ambition is tied to how your parents wired you for reward. My reward came from meeting and surpassing expectations of this illusion of our stability and relative superiority. If I wasn’t to be a math genius, I was to be a great painter. I had to be something better than the others. I had to be special to matter to my parents at all. They certainly didn’t appreciate when that special came with a fragmented mind and a hyperactive, mess-creating child who longed so desperately for the attention and approval of others, unless, of course, this need for approval resulted in something they could brag about.

As an adult now, having been through enough sociology classes and life to know that everything that I thought was real as a child is a complete clusterfuck of a post-war generation and immigrant family mentality tossed down through the ages, I want out of this. Out of trying so hard to prove something to someone when no one is even listening anymore. Sure, my mother still shares every thing I post on Facebook as if I had won the freaking Olympics, with pride acceptable for a 12 year old daughter, perhaps, but not a 31 year old. And in my little puddle of psyche so empty and ambivalent I kick myself together trying to find the shape of a person who has some motivation, some drive, some reason to exist beyond merely existing or earning a paycheck. And I can’t find it. I can’t find anything that tastes real anymore, except the incredible and overwhelming love which my alter-ego of a boyfriend – warm, quiet, sensitive, needing no attention or approval – bequeaths to me in ample supply.

But one cannot live on love alone. And I often think if I didn’t have this love right now, I would be so fragile, I’d have nothing to keep me going. Thank god for his kind heart, his deep compassion for all the people of the world and all that is unjust and cruel. I am happy to have a safe place to go, wrapped in his arms, far from the judgmental warfare of my suburban family home.

I don’t want to just set out to help others when I’m not ready for it yet. One can easily do more harm than good. If I fuck up in business it’s terrible for sure but, at least in the communications side of things, a fuck up here or there never killed anyone. But to dedicate my life to helping others, I don’t want to do it for selfish reasons, because that won’t go over well. I need to find something deep within me, something so true, which I can become passionately obsessed with, something which can become my intention for life. It could be motherhood. It could be psychology. It could be design. It could be writing should I ever muster up a plot, realistic dialogue and the tenacity to draft more than eight pages. For someone who writes so much as I do it should be easy, but my stunted empathy has made it quite impossible to dream up others. I’m still trapped deep within myself, this little, weak, shell of a human being who attempts to claw out of her flesh to find her guiding light.

Middle Class? Not So Fast. A Tale of a Downwardly Mobile Society

With election season starting to heat up, so is reporting on the so-called “middle class.” Apparently, 9 in 10 Americans consider themselves “middle class” (I’m no math genius but something tells me medians and averages don’t work that way.) Given most Americans are middle class in their minds, and middle class today isn’t what it used to be, in short, everyone is freaking out.

Ok middle-class math, why does America hate you so much?

“The middle-class label is as much about aspirations among Americans as it is about economics. But a perspective that was once characterized by comfort and optimism has increasingly been overlaid with stress and anxiety.” — Telegram

I see. So most Americans aspire to be middle class, as everyone has been sold this dream of working hard to get the basics in American life — a decent house, backyard, education, healthcare, maybe vacation once a year. No one is expecting to afford regular Gucci on a middle class income. We were just all told work hard and you too can be middle class, and quite frankly upwardly mobile from your parents lifestyles. Yet, even if you’re doing exactly the same thing your parents did, you’re actually worse off today. No wonder we’re all anxious.

“A recent report from economists at the Federal Reserve Bank of St. Louis concluded that “families that are neither rich nor poor may be under more downward economic and financial pressure than common but simplistic rank-based measures of income or wealth would suggest. The study, conducted by William R. Emmons and Bryan J. Noeth, found that one reason many Americans viewed themselves as struggling was that their real incomes had not advanced significantly beyond their parents’ even when they reached higher educational levels, while those who matched their parents’ achievements were actually worse off.”

The New York Times published an article this week titled “Middle Class, But Feeling Economically Insecure.” That headline, brilliant, sums the middle class anxiety up to a T.

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Hello 2015! Goodbye 2014. And so on…

It has been one hell of a year. Accounting for all that has happened, no wonder I feel mildly overwhelmed. As life speeds ahead, I’m grateful for this one day a year to stop and reflect on how much changes in the course of 365 days. A lot, to say the least.

I’m trying to become a more mellow person, but that’s a struggle. Whatever seems massively important today, unless it has to do with your loved ones or close friends, isn’t really that important at all in the grand scheme of things. When I care too much about everything, that’s when shit starts to hit the fan. Work is work, love is love, and the two should never be accidentally interchanged. I’m not saying that one shouldn’t work hard and get shit done, but the amount of stress I create for myself on this impossible quest to perfection, and the ultimate downfall of such anxiety, is not worth it and it doesn’t help anyone.

In 2015, I’d like, more than anything, to manage a solid and productive year at my current job. This will not only enable me to reach or at least get near my 2015 financial goal of $400k networth (up from $300k today), but it will also provide me with the confidence I need to be highly employable going forward, with a playbook to use which can be followed in any role I take, at least within my specific type of position and industry. It’s creating the playbook that’s hard, especially when you have to learn from trial and error.

In my last opportunity, I realize now that a lot of the challenges there were not my fault. I didn’t make the right plays, for sure, but sometimes young companies have issues beyond what a marketing or sales person can help. Lesson learned there is to never take a job unless I believe 100% in the product and also know there’s a large pain point it is solving.

That’s not to say anything is going to come easy in 2015. I am in a much better situation, but some of the realities are the same as the last and I want to make sure not to make the same mistakes. While I don’t want every year of my life to be dedicated to my career and working long hours, I think 2015 is the year to do it. I don’t have kids yet (but hopefully will soon) and outside of a stable relationship with my boyfriend of nearly nine years, I don’t have much of a social life to speak of, so I might as well invest my 2015 into, as calmly as possible, kicking ass at my job. (And accepting help from the right people who can actually GSD. I.e. hiring smart and making decisions not based solely on resume but on my gut.)

I’m also accepting that there are some things I’m good at and some things I’m not so good at — and I want to forget about that and try my very best to see what I’m truly capable of — if that isn’t good enough for this role or this type of role then, well, I need to figure something else out. I’m hoping that’s not the case, but we’ll see. The difference this time around is that I want to push myself to do whatever it takes to succeed. It is going to be a struggle every step of the way, but what good taste of victory isn’t?

As a working professional, I’m not allowed to be scared, but I am, but I’m also reminding myself that it isn’t worth being scared over succeeding or failing in a job as long as you believe you’ve actually done your best (and you have enough of an emergency fund in the bank to help you through whatever transition needed should you falter.) I have to wake up every morning and ask myself — what needs to get done today? And I need to get that done. Period. No getting distracting on projects that may help the bigger picture but aren’t contributing to your core objective. To succeed at work, you have to be selfish. You have to learn to say “no” a lot. And you have to get results so people trust that when you say no, it’s for good reason.

Outside of work, I hope 2015 will be an exciting year on the personal front. It should be the year my boyfriend proposes to me, which I’m actually excited about given we’re pretty much married at the moment and there is no other person I’d rather spend the rest of m life with. What I have learned about myself is that – while I thought I’d want to marry someone who is career-minded and well-traveled, for many adventures throughout the next however many years of my life, I’m actually much more of a homebody who prefers stability in my relationship. That’s not to say we don’t take trips on occasion, but we’ve yet to travel abroad with each other (my Southeast Asia trip was with a high school friend, not with him) and that’s ok. I’ve discovered that the value of a relationship is having someone to come home to at night, to share a meal with, to watch a movie or tv series with, to cuddle with and wake up next to in the morning. And, of course, to raise a family with when the time is right. All of the other excitement can be obtained outside of a relationship in the form of individual adventures and sharing time with good friends.

2014 has also been a year of seeing my parents go through their own transitions. My mother turned 60, my father, in his 60s, still has terminal cancer, yet is doing miraculously well, #knockonwood, and they’ve been remodeling all of the bathrooms in their home, considering purchasing a condo in Florida to spend the long winters, and surprisingly enough have not killed each other on a series of road trips across their part of the country. I have to remind myself often that I’m now old, and so are they. I mean, 60 isn’t that old necessarily, but 60 year olds are grandparent age, and neither I or my sister have had a child yet, so they’re occupying themselves with a variety of other engagements. But it is strange, how fast life goes, and remembering your parents when you were young, and knowing your time with them, even without accident, is limited. Living far away, if you see them twice a year, for 30 more years, that’s even just 60 more times to say hello and goodbye to the people who made you, and that’s a terrifying thought, no matter how many times they drive you to want to jump off a bridge on each visit.

I hope that 2015 is filled with success, love, and friendships. My resolutions are to go to the gym every weekday (or walk at least one hour with commute), to NOT pig out, binging on crap food just because it is the only thing that helps combat my terrible anxiety, to focus on the primary success metric on my job and relentlessly show results to my boss and team so they can trust me and I can expand to do the things I enjoy most while still delivering unprecedented results, and to spend reasonable amounts of quality time with my family who are across the country, not just my parents, but my cousins, grandparent, and sister. I also want to get rid of tons of shit and live a simpler life.

Finally, my New Years resolution, which is crazy, is that I don’t want to buy anything (other than perhaps a new suit and coat) between now and June 2015, as my focus is on losing weight and saving money. I want to have my 401k and HSA maxed out by March ($20k), following by investing in a post-tax IRA ($5.5k) and manage to save another ~40k-75k through some serious frugality over the year. I can’t focus on that though, as it distracts me from what gets me there, being successful at my job, and growing into an actual executive who looks nothing like the me prior to 2014. Bring it on 2015, I might not be ready for you, but let’s make it happen.

 

How Much Will Your Investment Be Worth?

One of the open questions I have re: investing is what – realistically – my investments will be worth after X # of years. Of course, one can estimate 3% annual return on the S&P 500 to be “conservative” and 10% to be the opposite, but in reality, what is the likely average annual return of the stock market?

While there’s no way to predict the future, lucky for us, there is a way to look at historical data to understand how we’d answer this question if we were to begin investing, say, in 1980.

According to this calculator – The S&P 500 Dividends Reinvested – we can find out that answer:

Scenerios

  • We started investing in 1990, and stopped in 2010, giving us 20 years of investment.
    • Total S&P 500 Price Return: 256.374% (inflation adjusted: 118%)
    • Annualize S&P 500 Price Return: 6.6% (inflation adjusted: 3.974%)
    • S&P 500 Return, Dividends Reinvested: 437.278% (inflation adjusted: 228%)
    • Annualized S&P 500 Return, Dividends Reinvested: 8.770% (inflation adjusted: 6.13%)
  • We started investing in 1984, and stopped in 2014, giving us 30 years of investment.
    • Total S&P 500 Price Return: 1094.274% (inflation adjusted: 427%)
    • Annualize S&P 500 Price Return: 8.6% (inflation adjusted: 5.7%)
    • S&P 500 Return, Dividends Reinvested: 2299% (inflation adjusted: 960%)
    • Annualized S&P 500 Return, Dividends Reinvested: 11.175% (inflation adjusted: 8.19%)
  • We started investing in 1974, and stopped in 2014, giving us 40 years of investment.
    • Total S&P 500 Price Return: 2829% (inflation adjusted: 538%)
    • Annualize S&P 500 Price Return: 8.8% (inflation adjusted: 4.7%)
    • S&P 500 Return, Dividends Reinvested: 1204% (inflation adjusted: 1963%)
    • Annualized S&P 500 Return, Dividends Reinvested: 12.049% (inflation adjusted: 7.8%)
  • We started investing in 1964, and stopped in 2014, giving us 40 years of investment.
    • Total S&P 500 Price Return: 2239% (inflation adjusted: 206%)
    • Annualize S&P 500 Price Return: 6.5% (inflation adjusted: 2.2%)
    • S&P 500 Return, Dividends Reinvested: 10367% (inflation adjusted: 1270%)
    • Annualized S&P 500 Return, Dividends Reinvested: 8.748% (inflation adjusted: 5.3%)
  • We started investing in 1999, and stopped in 2014, giving us 15 years of investment.
    • Total S&P 500 Price Return: 37.5% (inflation adjusted: -2.845%)
    • Annualize S&P 500 Price Return: 2.1% (inflation adjusted: -.192%)
    • S&P 500 Return, Dividends Reinvested: 81% (inflation adjusted: 28%)
    • Annualized S&P 500 Return, Dividends Reinvested: 4% (inflation adjusted: 1.6%)

Well, what this shows us is that generally investing in the S&P index over the long term works out fairly well. After inflation with dividend reinvestments 5% is a reasonable conservative estimate annual return for a long-term investment. However, if you started investing in 1999 and have invested for 15 years, you’d pretty much be at break even at this point (assuming you put all your money in up front.)

I’m still looking for a more robust calculator that enables one to input annual investments and see what these would have turned out with historic data. Do you know where one exists or care to build one I can use? 🙂