Retiring Early

Friday, May 25, 2007

Countdown to retirement (or whatever!)

Ok, this is some admitedly geeky stuff, but you can't help but want to get some yourself once you see it (or maybe it's my inner geek just coming out). So, some of you know that I am running Windows Vista on my laptop and one thing that it lets you do it to pick amongst a number of "gadgets" that you can place on your desktop that provide you live updates over time. Things like clocks, weather, stock updates, etc.

As I was browsing through some of the available "gadgets" that are available, I came across a gadget that lets you "count down" to any date of your choice. Naturally, I added the gadget, set my retirement date goal and promptly labled it "until FIRE", meaning "until [I'm] Financially Independent and Retiring Early". I set it to count down in weeks, but you can also set it to days, hours, minutes, or even seconds.

You can see some of the gadgets I have on my desktop to the left, including my retirement countdown timer on the bottom -- only 226 weeks to go! (Also, as you can tell, we're having a pretty nice day in Seattle today!)

If you're running Windows Vista, you can get your copy of the gadget here.


Wednesday, May 23, 2007

Getting what you deserve

Over the past 7 years that I've known my wife, she has worked at a number of different companies. She has a self-described "2 year itch", meaning after about 2 years, she wants a change of environment -- new employer, new colleagues, new surroundings, etc. Well, I'm not sure if it's just that it's spring time, but that time has arrived.

She likes her current situation, but isn't in love with it. She does have a LOT of perks, however. First, she works in the city in a nice, modern loft space, and it's only 8 blocks from home. As if getting to work was a problem, she also has the luxury of working from home at least one day a week! Extra vacation time isn't a problem. ...and the work? She has mastered the job and can do it in her sleep, and she's viewed as one heck of a value to her company. She's a go-to person -- the kind no one in their right mind would want to leave. So what's not to like?

Well, to be honest, she took a pay cut from her last job to take this one. Yep, the 2 year itch strikes again. Now, she's not making minimum wage by any stretch of the imagination, but there's just something about taking a pay cut. She has had 2 raises and a few bonuses over the past 1.5 yrs, but she's still not back to making what she was prior to taking this job.

So, to make a long story short, she had her annual review discussion with the owner of the business and the owner gave her a respectable 4% raise, but surprisingly, left the door open for discussion if she wasn't happy. 4% is not a bad raise these days, but for someone who took a pay cut to take a job, it looks downright minuscule!

Any time someone leaves the door open like that, it's a huge tell-tale sign that you're not getting what you are due. With that in mind, I strongly encouraged her to fire back and get a larger raise. Much to my surprise, she wasn't going to ask for another 2-3%, but she went for a full-on 10% raise! Holy cow, that's incredible!

So I helped her craft an email message and justification, and low and behold -- without hesitation -- it was approved within minutes (strange that you can negotiate these things completely over email!). I was so incredibly proud of her!

The lesson?
Of course, it's easy to let the 2 year itch take over and jump ship to find a new role, but getting what you deserve can be as easy as just asking for it. And it goes without saying that significant raises get you to retirement much more quickly, so it's a boon on all fronts!

(Image courtesy of irinaslutsky)


Sunday, May 13, 2007

Easy come, easy go.

Lottery winner sues a investment adviser and accounting firm over bad advice. It's partially another dot-com bust story, but it's also a story about the need to really understand what is happening with your money. Trust and money don't go together.

He won about $5.5M and decided to take an "immediate lump sum - in his case, about $2 million - that he could roll into investments. He'd just live off the earnings and interest." This is where the real trouble started:

He alleges that within a few months, the Smith-Barney advisers had 98 percent of his money invested in individual stocks, substantially technology companies.

The year was 2000, which would prove a spectacularly bad time to sink one's entire fortune into tech stocks. Cicero's lawyer has alleged the advisers were "breathtakingly irresponsible" to put a lottery winner's windfall wholly into individual stocks.

"Fifty to 80 percent of their income ought to be in bonds and other fixed-income investments," Stoltmann said.

The court and financial-arbitration filings tell the story in flat terms, claiming Cicero lost $600,000 or more in bad investments. And he ended up paying $240,000 more to the IRS for penalties and interest after he learned the hard way that a lump-sum lottery buyout doesn't count as capital-gains income. There was also a divorce.

"You want to talk about a sob story, he's it," Stoltmann said.

So, not only did he get screwed by Smith-Barney and an incompetent tax accountant, but he also wound up in divorce court? I really do feel sorry for this guy because my guess is that he thought he was trusting real professionals that knew what they were doing.

The lesson? Even so-called professionals need to be scrutinized and double-checked.

(Photo courtesy of: Lazy_Lightning)


Saturday, May 12, 2007

Some really good stuff...

While I have not had a lot of time to blog myself, I have been really enjoying the posts of my fellow bloggers. Lately, blogging on the weekends is all I've had time for and I'm sure that will change in a bit, but for now, here are a few posts that I found interesting:
  1. Lazyman on removing inflation to get the real rate of return.
  2. Stealthbucks on being socially selective on where you spend your money and on why it's not a right to own a home -- you have to earn it. I've posted on that second one a few times myself and it's a great riff. Stealth is on a role with these -- check them out!
  3. Madame X on acquiring and owning things that further isolate you.
Hope you enjoy them as much as I did.

Sunday, May 06, 2007

On to something more fun...

Wow, that last post took a lot outta me, or perhaps is was the 116 comments I read. Anyway, I'm off to enjoy some free entertainment: a hike in the Cascades. Happy Sunday all.

Have's and Have-not's

Some of you saw it reported last week that King County, Washington (where I live) now has over 68,000 millionaire households (excluding primary residence), making it the 10th largest concentration of millionaires in the country. While I am not surprised by this given the companies located here (Microsoft, Amazon, Starbucks, Boeing, Nordstrom, etc), I am absolutely shocked by the fall-out of comments posted on the SeattlePI website. There must be 100+ comments on this story! ...and they're entertaining as heck!

While there is a LOT of commentary and heated discussion, following is a random selection that hopefully captures the spirit of the debate:

The immediate reaction was "Tax them all" to pay for all of our problems, like schools and our massive transportation issues. Since we have a higher sales tax in Washington to offset our lack of income tax, a renewed interest in a state income tax was being discussed.

Then there was talk of the "obligation" to give back. I firmly believe in giving back, but as I've discussed in the past, I don't buy into the fact that I need to give back financially, especially not right now as I'm on a push to hit financial freedom. I give back with my time, and that's my choice. The "obligation" word bothers me because it implies that someone else is "entitled" to it.

And then someone chimed in with an IRS stat about "45% of wage earners paying no tax at all" -- suggesting that, perhaps low-income folks were getting a pretty good deal already (that stat is pretty shocking if it's true). And then, finally, several people posted about "The Millionaire Next Door", claiming that more people should be living below their means, instead of making questionable lifestyle choices, choosing jobs knowing they don't pay well, and keeping up with the Joneses.

Of course, then the conversation moved on to the topic of native Seattlites being pushed out of their homes (real estate prices have been high for a long time). Someone even made the comment that all of these "nouveau riche", who moved to Washington, should move back to where they came from. These are real comments from some pretty passionate sounding folks. I was starting to wonder if I'm part of the problem here -- really. To be fair, I'm not one of the 68,000 households because my liquid assets are well below $1M.

Then, the conversation shifted back to: "HARD work got me to where I am -- stop complaining and do something productive." "Why do you think you're entitled to my hard earned money?", one guy wrote. Another one chimed in with a "you're not entitled to anything" argument. If you want it, you need to work for it, which is an attitude that has driven me all my life. I really hate that entitlement attitude.

...and then finally, someone chimed in, saying that a million dollars is not worth nearly as much as it was in the 70's and 80's, where one was really, really rich with a million dollars. One word: inflation. His point was: these people are well off, but they are not rich -- and clearly some of the less than financially savvy folks out there don't understand the concept of inflation and decreased buying power, given their comments.

Bottom line: It's clear that having money and showing that you have money is a recipe for pretty harsh criticism in this town (and probably most places). I had no idea there were such deep feelings and also mis-understandings about money, simple things like tax percentages, and how wealth is created. It's scary because people like this have the potential to drive important public policy (votes on state income taxes, etc), some of which will negatively impact even lower income households! We really need to start financial education in schools and possibly even requiring students to read books like "The Millionaire Next Door" so people understand this stuff. Hard work (not just working hard at your job) and LBYM really can make all the difference in creating wealth.

(Image courtesy of 4x4jeepchick)