Lazy Man and Money

What’s Your Plan B?

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Quick Programming Note: I’m going to be heading on vacation next week, so I may not post again until Labor Day. Things are so busy that I didn’t have time to proofread this article, so please excuse the minor grammar error.

About a month ago, life threw me a big curveball. I have been making some good money dog boarding using Rover. In fact, I had a vision that I might make a million dollars.

However, the local zoning officer came and said that I can’t run a business in a residential area.

The conversation got very nuanced. Is someone allowed to bake cupcakes in their home and have them picked up? What about kids and lemonade stands? It’s hard to know where the line is.

There was a week where I researched everything about town ordinances. I didn’t eat much. I didn’t sleep. It was terrible.

I presented the evidence that I can host a few dogs at the house. He came back with a town ordinance that was intended for dog owners – no more than three licensed dogs at the house. It was no longer about running a business. I let it go, because I can work with that.

However, before we got to that point, I was in panic mode.

If I’m not making money from dog boarding, what’s the back-up plan? It has very much become my identity. Several years ago, I would have said it’s blogging, but many of you readers have moved on. I don’t make too much money from blogging, so it’s hard to consider that my job.

Fortunately, I can still make money from dog boarding. However, it feels like less of a job now that I have to keep the numbers low.

My Plan B

When I thought that dog boarding was done, I went into spreadsheet mode. I started to list new potential sources of incomes.

I had bought another bloggers’ website several months ago. I haven’t set it up though. I figured I could probably make $3,000 a year with advertisements on it. That’s a start.

Then I realized that I still have a strong Rover.com profile. I could switch over to dog walking, which would certainly be legal and not a zoning issue. I figured I could make around $30 a walk and do 300 walks a year for a total of $9,000.

Next up, I could make some money from Kid Wealth. Maybe some people would sign up via Patreon. I estimated that maybe I could find 25 people who would pay $3 a month. That’s $900 a year.

I also do some side work at a friend’s company. I have a little ownership stake in it and get some profit sharing. I thought that maybe I could do some extra stuff and potentially make another $5000 from it.

I thought about setting up a small company that provides email services like Aweber or Constant Contact. I know some bloggers that could use this service and save some money. I don’t know what the demand would be and I wouldn’t want to charge much (or else people would just stick with Aweber and Constant Contact). I figured if I could get 5 customers to pay $5 month that would be $300.

As you can tell by now, I really was starting to stretch. I thought that I could set up local small businesses with websites. I put that down as potentially worth $10,000, but I don’t know what the market for it would be.

Finally, I thought I could write a book about dog boarding and put it on Amazon. Books either seems like a hit or miss. I figured that maybe I’d sell 20 books at around $10. This way if it was a complete flop, I only expected to make $200 out of it anyway.

When I totals up all that money, I’d potentially have another $28,400. It’s not great, but not terrible – especially given my other duties taking care of the kids.

However, I didn’t stop there. In addition to all this real money, I came up with the concept of virtual money. I’d “pay myself” to do items around the house that I had been putting off. For example, I’ve had estate planning on my to do list for a long time and it never gets done. Well, I’d consider it worth $1000 to get it done. So of course, it’s not real money, but it’s not sitting around reading endless articles on politics – or something else that doesn’t improve our lives in some way.

I put together enough of these lingering to do items to add up to around $12,000 to give me over $40,000.

Will I Need My Plan B?

It looks like I won’t fully need to implement Plan B as I can host a few dogs. However, with fewer dogs around, I’ll have some more time. That means that I can certainly look into some of these projects instead of letting them linger on forever.

Are You Better Off than Four Years Ago?

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It seems like that is a famous question from the 1980 election when Reagan ran for president against Jimmy Carter. It’s easy to see it as political, given those roots. Also, coming t this time of year with the four-year term of a United States’ President, it’s easy to see it that way. I don’t know if someone in Japan would tie it to politics. Maybe they’d use another number like five.

I don’t tie “Are You Better Off than Four Years Ago?” to myself. I first heard the question from Retire by 40, not from any of the politic-heavy news sources that I typically read. (You should click through that link, if for no other reason than to learn a new phrase like “quadrennial checkup.”)

Hopefully, with the presidential election in the rearview mirror, we can think of the question a little more literally. I like to think about it as kind the opposite of the famous interview question, “Where do you see yourself in five years?” However, because we are looking back, it’s a lot easier.

Being “better off” is a difficult question. It’s a very personal decision. Four years ago, I had a 2 and a (just-turned) 4-year-old. I had a big lawsuit because I wrote I neutral review of an at-home water purification company that was using a test designed to trick consumers. They didn’t like that the neutral review exposed the trick and it ranked in Google, so BAM! lawsuit for me.

My wife’s work was (and it still is) moving the goalposts on promotions and that was causing additional stress. The suicide rates skyrocketed and others died from falling asleep while driving. It was a bad time. I haven’t heard of that happening lately and working from home for everyone helped a lot I think.

That wasn’t a great time – raising kids is difficult. This year has been easier because an 8-year-old and a 6-year-old can do more. They get themselves dressed. They can sort and put away laundry. A couple of times, I woke up and they already made themselves breakfast (cereal). It’s a big difference from having to wipe their butts. It’s all so gradual that it can be hard to notice it unless you take pause and reflect on it.

Four years ago was unique 4 years of my life. Life is a series of unique slices. Four years before that I was just learning how to be a father. Four years from now, there will be new experiences. Those experiences will come with new difficulties. Everyone has difficulties, right?

Let’s break down the last four and give some grades:

Finances

We’re better off financially than we were four years ago. Things have been almost “too good”, so I’m exploring ways to invest more conservatively. On my to-do list today is too look at reblancing into more bonds as stocks have hit new highs once again.

Fortunately, I can say that for the four-year slice before that and the four-year slice before that. I can keep on going back throughout my entire life and almost confidently say that I’ve improved my “fiscal status” over the last four years. I did have a rough patch when the dot-coms busted. I had to scramble for any programming job I could get. One of the core reasons why I started this blog is that I never wanted to be in that space again.

I was fortunate that I was taught early on how compound interest worked. I started investing when I was 16 and that created good financial habits. It really helps over the long term.

I hope that most people can say they are better off financially over most slices of four years. Most readers are hopefully investing… and that’s done well for 10 years now. If you are young, the skills you learn can hopefully grow your income. If you are retired and spending down your nest egg maybe you aren’t better off financially. I think that’s about the cycle of life you are in… again, just a personal thing.

Grade: A

Health

I had a knee problem four years ago. I couldn’t drive for more than 30 minutes. I saw a doctor and he gave me a couple of exercises. My knee got better almost right away.

Earlier this year, I had a molar tooth split lengthwise. The dentist had no choice but to pull it.

Overall I’m pretty good. My health could be a lot worse. I’m four years older (44 now). I got a few more pounds since the pandemic started. I have to grade it on that curve.

Grade: B

Mental/Happiness

I like not worrying about stuff. The last four years have been terrible for that.

I felt like I need to babysit the government… because honestly, my 6-year-old could make better decisions. For example, you don’t put someone whose career is based on destroying the environment like (Scott Pruitt in charge of the protecting the environment. You could ask any kindergarten class if that’s a good idea and they’d unanimously say “no.”

Then when half the country is on fire, these people simply say that they don’t believe the scientists. The sad thing is that they probably make a lot of money despite being so stupid.

Life was much better when the government mostly hired qualified people (even if there were occasional grifting and scandals). I liked the days when I could laugh at the news for making a big deal over a white iPhone or some Kardashian gossip. I was able to be a lot more productive. I talked with some friends and they feel the same way.

Grade: D-

Final Thoughts

The biggest thing for me now and going forward is COVID. We have new leaders who are putting the scientists in place to help with that. We got our second excellent vaccine news yesterday. There are some positives, but the COVID cases still feel like they are doubling every week or two. It is the best of times and the worst of times.

It sounds like it will be less than four years before we can look back at 2020 and say that COVID time was a really unique slice of our lives. Maybe it allow me appreciate the end of 2024 more with whatever life’s difficulties then are.

Exploring My Downsides of Early Retirement

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Beach RetireA while back an old blogging colleague of mine named ESI Money wrote about 10 downsides of early retirement.

Yesterday, Joe from Retire by 40 shared his biggest downside to early retirement. I won’t give you any spoilers. However, when you finish reading it, you’ll see that last sentence was a bit of a pun.

Joe covered all ten of ESI Money’s downsides before giving his own thoughts. Since there are few original thoughts in the personal finance space nowadays, I’m going to blatantly steal the idea, while giving him great credit. It will help if you click on his article, so he doesn’t get mad at me. Just kidding, he’s too happy and nice to get mad.

Exploring My 10 Downsides to Early Retirement

Well first you have to retire early to have a downside, right? Depending on your definition of retirement I either retired at 30 or I will never retire. I like to say that I’m self-employed, but my life isn’t that much different than Joe’s who views himself as retired. Just to make it more complicated we aren’t sure if we are FIRE, leanFIRE, or FatFIRE . For the purpose of this article, let’s just assume that I’m retired.

Let’s look at each of ESI’s top 10:

1. Loss of Income

That’s a natural one. However, my wife has a military pension. We also have a lot of alternative income, which includes side gigs like dog sitting and blogging, along with rental properties and equities. In fact we should have more than $200,000 in annual retirement income with many of our expenses paid off. We don’t have that now, because we have about 8 years of rental properties to pay off. It’s also hard to get to the money in our retirement accounts at our age (43).

2. Reduced Social Security Income

My wife has been a big earner for a long time. I was for awhile, but not as long. I keep paying into social security with my side gigs. We don’t need this income and don’t plan for it, so it’s not a big deal. Last I looked it could be $50,000 a year combined.

3. Health Insurance

My wife’s military retirement comes with a very generous health plan that we can keep for life. We realize how extremely lucky we are to have this, especially in this day and age. We do have to pay for it and I’m sure it will get more expensive. However, it will surely be much better than what ordinary early retirees could get for the money.

4. Mental Decline

Here’s where it starts to go south. It would take a lot of work to be a good software engineer again (if I even was in the first place). I’ve spent the last 7 years focusing on interactions with babies and toddlers. I’ve spent the last 4 years sitting over 200 different dogs. While I have learned some very valuable skills that I treasure, the intellectual challenges are more about patience and understanding, not intense problem solving.

To help combat this, I’m trying to learn Japanese with Duolingo. I’m looking for more things that I can work in to windows of a few minutes of the day. I don’t get a lot of time to sit down and study anything at length.

5. Physical Decline

I’m getting older and that starts a natural physical decline for most people. I try to keep active with lots of dog walks. If I was full-time computer programmer, that wouldn’t be the case. I need to get back to going to the gym and lifting weights.

6. Loss of Social Interaction

This is a big one. I was never very social with my co-workers, but there were adult conversations. This goes back to my main conversations being about Pokemon and Daniel Tiger… or with a barking dog. There’s not a lot of deep peer friendships in my day-to-day life.

I didn’t lose these because of early retirement though. I feel I lost them through a series of moves, my introvertedness, and my old college friends just moving in different directions.

I’m hoping to build some new friendships with other parents through kids’ activities. So far, it hasn’t been very fruitful.

7. Loss of Identity

I very much feel this. I used to be a software engineer who built search engines. It was easy to explain and people understood it in just a few words. Now I’m unexceptional blogger, dog sitter, landlord, investor, customer support specialist, and corporate blog editor. I don’t know if they make a big enough business card for that.

I’m not even “retired” (except for this exercise) and my primary focus is on the kids.

I have no identity.

8. Boredom

You’d think that with all the above that I wouldn’t be bored. If so, you’d be wrong. There are not a lot of “new” things going on in any of those activities. It’s not like I have a new assignment of a special project that requires me to learn a new skill. I suppose that blogging is always changing, but with all the other activities, I have some difficulty in keeping up with the changes.

I’m planning to buy a wet suit next year and take surfing lessons with the kids. The kids joined the Cub Scouts recently so we’ve got a camping trip planned. There are so many new and exciting things in this world, I just need to find them. Many FIRE bloggers love to travel. I don’t like traveling much. Also, it makes sense to wait until the kids are a little older before going to any distant countries. I would want them to remember it.

9. Spouse Overload

My wife already works from home a lot. However, sometimes we do need our space. She’ll go off on a run. I’ll go blog at the library for a bit. We have some different interests, but we share many too. If she weren’t working from home, it might be different. For now we each do our own thing for most of the day.

10. Lack of Challenge/Purpose

This is a little like the identity question above. I did have a good professional challenge in exposing MLM fraud. Unfortunately, we don’t have the freedom of speech in the US that we are taught in school. It’s only available to those who have 3 or more million dollars that they can blow on lawyers.

After being sued several times (and winnning!), I’ve decided that it simply isn’t worth the stress and potential harm to our family. So one of my passions, helping people avoid financial fraud, was thwarted. There’s a happy ending though. More and more media publishers are taking up the cause and awareness of MLM fraud is at an all-time high.

I haven’t found my next true professional passion project. Of course, I have the passion project of the family and teaching my kids new awesome stuff about life.

That’s a very worthy purpose, but it is different from the glitzy career of search engine software engineer or pyramid scheme activist.

Putting it All Together

Early retirement may not be as easy as you think it is. I imagine that’s even more true if it’s pseudo-retirement like mine. If you won the lottery and can hire out all the help you need, that’s a different story.

I’m still hustling quite a bit with all the jobs I’m doing now. As you can tell, there are gaps in my overall happiness, but that’s normal.

Everyone’s early retirement is going to be different. If you are not financially secure, I can tell you that the grass is certainly greener on this side of the street. However, there are at least 50 shades of green and sometimes it can be difficult to compare two.

What’s Your True Investment Rate?

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Usually, when I start an article, I have an idea where it’s going until the end. This is not one of those articles.

Part of the reason is that things have been busy over the last couple of weeks. I’ll explain more in the monthly report, but our dog sitting has reached new records. At the same time, my wife has been spending more time office. I honestly feel like my kids, at age 5 and 6, are more competent than their camp director or counselors (but I try to go easy on them as managing many kids can’t be easy.) Finally, I’m feeling that summer is passing us by as it does every year. It will be back to school in about a month.

The topic of school is a large part of what I wanted to cover today, but first I want to review some FIRE basics. Most FIRE people would say that your savings rate is what impacts you the most about being able to FIRE (be Financially Independent and/or Retire Early). Some bloggers are saving as much as 50% of their income and investing it. With the power of compound interest and 10-20 years, they’ve got a nice nest egg to retire on. That would be a accurate, though oversimplified version of our financial situation.

Our situation is a lot more complicated with my irregular freelance, side hustles, and businesses (blogging and dog sitting), and our investment properties. For this reason, I don’t bother to calculate our savings rate. Instead, I’ve recented used a net worth growth to income ratio. They are both high numbers for us, so that’s a good thing. For most people a savings rate would be easier to calculate.

Spending vs. Saving vs. Investing

You’d think after blogging about these for 13 years, I’d be clearly able to delinate all these things. It’s not always so easy. In fact, there are mashups of them like “spaving”, which is loosely defined as spending money to save.

It possible to have a high savings rate, but not invest it. For example, maybe you love the safety of having cash in the bank, but it’s not paying a good interest rate. Technically, you may be investing on that savings account, but it’s called a savings account for a reason. A high savings rate doesn’t mean a high investing rate.

In our situation, we have a good savings rate. If anything, we may invest too much and it might be better to keep more liquid cash on hand.

I suspect that for most FIRE bloggers, once they get a nice cushion of liquid cash in their emergency, they invest a vast majority of the rest. When I read some blogs, it seems like most of that 50% gets invested. You’ll see the typical brokerage and retirement accounts mentioned: 401k, Roth IRA, SEP-IRA, TSP, solo 401k. Occassionally, you even see a 529 plan for bloggers with kids.

These are all great investment vehicles. We have them too. As explained above, we have a lot of unusual things about our financial lives.

What About “Invest in Yourself?”

For the last few years, we’ve paid around $30,000 a year for school. You may notice that I didn’t wrote “paid” not “spend.” What I really mean to say is that we invested an extra $30,000 in education.

With my wife graduating in about a week, we’ll be down to around $22,000 for the next few years for just the kids. My wife’s investment was for an MBA to add to her Pharm. D. (We’ve messed up our health system so bad that we are asking our pharmacists to have masters in business as well.) It’s too early to tell if that MBA will pay off, but the “powers that be” at her employment have seemed to change course on valuing it when it comes to promotion time. I could write another 3000 words on the topic, but it wouldn’t help anyone and possibly cause more problems.

If my wife moves on from the military to the private sector, the degree will have a large ROI. However, she may choose to just retire, now that she has her pension.

The other $22,000 is a private school for our two kids. We’re “spaving” a huge percent of the typical costs with my wife’s military status. It’s still a lot more than an average private elementary school. Obviously we think it’s an exceptional school. Would you pay half price if you got into Stanford or Harvard? It’s not an easy question at the elementary school level.

What if that money was put in a 529 plan? Almost everyone would agree that’s investing, right? So is this different? What if it leads to a scholarship down the line?

In almost all these cases, they qualify as the old adage of “investing in yourself”, except it’s literally the people closest to me.

It feels like the rest of the community would consider this as spending, no different than if we spent an extra $22,000 on a sports car.

However, if I were start to really calculate our savings rate and investing rate, I’d create a “True Investment Rate” that included school tuition. It’s not in a brokerage account, but that doesn’t mean it’s any less valuable.

What do you think? This is a complicated topic and I’m sure people have different feelings. I can see a lot of gray areas. Is a vacation to Paris museums an education investment? Are tennis lessons an investment?

In the end, I don’t think the characterizations matter. You are the judge of what’s the best value for your money. I find value internally knowing that the money is invested in personal development that matters deeply to us. For a long time, I felt like we should be saving even more in brokerage accounts or wondering why we don’t feel rich. Once I started to think of education spend as investing, my outlook changed dramatically.

Are You Successful?

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That’s a loaded question for three simple words, right?

The only way to get started is to come up with a definition of success. A couple of days ago, Joe from Retire by 40, asked, “What Does Success Mean to You?”

That question indirectly leads us to a definition of success. You are going to have to create a definition for yourself. Maybe you must be a banker to be fulfilled in life. While that may work for a sitcom, chances are your definition of success is much deeper.

Is Money the Measure of Success?

This is a blog about money… it’s in the name. And most discussions of success are going to lead back to money. After all, in the impeccable wisdom of Liz Phair:

It’s nice to be liked
But it’s better by far to get paid
I know that most of the friends that I have
Don’t really see it that way
But if you can give ’em each one wish
How much do you want to bet?
They’d which success for themselves and their friends
And that would include lots of money
I would surely include lots of money
You’ve got to have sh**loads of M-O-N-E-why, money

As you might be able to tell, Ms. Phair values money as a great sign of success. However, I think we can agree that it isn’t the only sign of success.

Most people would consider Saint Teresa of Calcutta as very successful, but money wasn’t a part of that success. Additionally, we have all heard the stories of lottery winners who have been unhappy. Joe made the great point that the richest person in the world failed at marriage.

Joe did what I would have done. He made a spreadsheet of the qualities that he considered important to success. Hopefully he doesn’t mind that I share it here, because it makes it easier to see where I’m going with this:

In his article, Joe then goes through each one and gives a little explanation about why it’s important and why he gave it the score he did. He chose to score each of them equally on a scale of 1 to 10 and average them out.

I (obviously) loved the idea or I wouldn’t be writing about it today. However, I thought I could make a couple of improvements. I love to tinker, especially with spreadsheets.

The first thing I did was take notice that some things are related. Joe has money, material things, and experiences all listed. If money is high (which it is for him) he can trade some for material things. The reason he doesn’t is that he doesn’t value a lot of material things as high as he does his freedom, another item on his list.*

I’ve started to do some mind mapping recently and I’d group some of these related items together. There’s a Four Burners Theory that says you have to split your efforts across family, friends, work, and health. It’s almost impossible for everyone to have enough gas to have all of them on full power.

I decided blatantly steal borrow Joe’s list and put the items in some categories. It’s not perfect, because I’d rather get your thoughts on this draft and evolve it. (That’s a hint to please leave a comment.) I also decided to allot 100 points among all the categories. The categories with more points are more important to me.

For example, Ebenezer Scrooge might have 90 points in the money category… and he might award himself an 85 for his success in getting money. In this system, he will have likely rated himself a great success. Saint Teresa would likely have put most her points in the philanthropy and spirituality categories and rate herself as a great success.

Here’s what mine looks like:

Lazy Success

The first thing you might notice is that my 1 to 100 scale only goes to 70. That’s because I’ve reserved the last 30 points for relationships, family and friends. I’ve decided to keep those private.

One important thing to keep in mind is that the numbers are very subjective. I just went with my gut and quickly filled up a 100 possible points. Then I spent 30 seconds thinking about whether I valued one thing more or less. In fact, I did this so quickly that just before publishing, I realized that I left health completely out of the spreadsheet. (It would have been an average 50% score.)

In the future, I may value material things less, but I bumped it up to an even number so that I could give myself half the points. In hindsight, the overall money category is worth the same amount as relationships (30 points), which needs some adjusting in a future draft.

Lazy Man’s Success Breakdown

Money Category

We have a very nice house and some nice things. However, I’m inherently frugal. I don’t mind Dollar Tree utensils for cooking. I’m very happy to wear an old Patriots sweatshirt from 1993 most of the time. We do have a fancy OLED TV and a luxury SUV. We also have a futon from Wal-Mart and our bedroom furniture is what I got after graduating college.

We have plenty of good experiences which includes our trips to Aruba and Disney World. We live on an island that is 5 minutes from the beach. Our kids get (mostly) the best education money can buy.

We are doing well with our finances. I hope to update this old article this summer, but we should have $200,000 a year in retirement income after my wife’s pension, rental properties, investments, social security, and some hobbies that make money.

Work

Joe included his engineering career and his blogging career. I’ll do the same and throw in my dog sitting career. I wasn’t the best software engineer, but I had some big accomplishments I can be proud of. In 13 years of blogging, I’ve managed 12 million page views and have been nominated for a Lifetime Achievement Plutus Award. I haven’t been featured in Rockstar Finance and I am still Susan Lucci/Ash Ketchum when it comes to winning a Plutus Award.

This is life on the blogger roller coaster.

Others’ View

I didn’t know what to call this category of fame, power, and legacy, so “others’ view” was my best attempt. I don’t care to much for fame and only a little bit about power. I care more about legacy.

I rated myself highly on legacy for things that have mostly flown under the radar. They are the things that show up in the 12 million page views and that Lifetime Achievement nomination. I’d like to write more about this someday, but I’m a little humble. Also, I don’t want it to trigger too much fame.

Own View

I gave myself a 3 of 5 when it comes to philanthropy. Some would look at money that I’ve donated and say that 3 is generous. However, I’ve devoted thousands of hours to helping people not get tied up into pyramid schemes and other scams.

I need to work on spirituality. It should be a larger in both possible points and awarded points.

I was perhaps generous in giving myself a 6 in contentment. It’s something that I actively have to work on.

Freedom

Finally, I gave myself a freedom score of 6 of 8. Maybe freedom should have more possible points, but it shares some of the Money’s points. The score of 6 is based on our financial situation and ability to work from home in a variety of different ways. It’s not going to be perfect because it’s not like we can just pick up and go to France on a moment’s notice. It’s hard to be truly free when you are raising a 5 and 6 year old.

Final thoughts

So I scored 45 of the 70 points. That’s nearly 65%… a solid D grade. Part of the reason it isn’t higher is that I didn’t believe in giving myself a perfect score, as there’s always someone else doing it better. So realistically it is 45 of 59 (I did give myself perfect fame) which is more of a C.

If I go buy a few nice things, win a Plutus award, and meditate my way to higher contentment, I should be able to pull of a solid B.

Now I’m off to go look at my old, very popular how to be successful article and see how I can make it better.

* I may be projecting my thoughts about Joe, but it’s my interpretation after reading his blog for a long time. While I could be wrong, we can still move on as if it were true for the purposes of the exercise.