I didn’t focus on being financially independent until about three years ago. I had an idea what my net worth was, but wasn’t fully clear on the exact number. The lack of a plan made it a nebulous target.
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In my 20s at the start of my career, retirement seemed so far away. I relied heavily on my accounting career to give me financial security. After all, I chose the career knowing that I’d always have a job. Consequently, every ounce of my energy went into working. There were summers that I never saw the light of day. I never knew when I was getting home and I made many sacrifices. Believe it or not, it was exciting and I enjoyed it. I latched onto an upward trajectory of promotions and raises. When I had full autonomy over my position, I liked being relied upon and the responsibilities that went with it.
A partial gravitation to financial independence emerged about fifteen years ago. I had just started a new position and was wildly enthusiastic. These were the days that I couldn’t wait to go to bed so that I could get to work the next morning and knock the world over. I wore a silver charm that read “Make Waves” and lived up to the saying.
My direct manager was a great guy at first. After a short period of time, he was the picture of malevolence, expressing crazy anger for innocent actions. Sadly, I think some managers sense the heightened eagerness to please and match it with an equal amount of contempt, disdain, and hostility, for what reason I can’t figure out. Such environments turn normal people into schizophrenics. When he threw a fit of anger at me for something really stupid, it was a life-altering moment. I decided that I didn’t want to be a corporate slave full of mortgage-payment anxiety.
Feeling the weight of my mortgage debt, I was glad to be earning more at the new position, but my savings were lean, only three thousand dollars. I made a very important decision. Instead of my ambition focused only on my career, some energy would be reserved for my debt-paydown. My accounting-planner brain cells kicked into high gear to conjure up a four-year plan and a serious discipline that led me to pay down one hundred ten thousand dollars while simultaneously saving fifty thousand dollars. I kept the statements for months, tracked my progress, and enjoyed reviewing the interest and principal balance changes. It was a fun process and ultimately rewarding to be rid of that debt.
Merging Onto The Financial Independence Expressway
You’d think that after spending ten years working at Bear Stearns would have made me a really good investor. Wrong. I had a high awareness of stock markets, but never really knew how to put my money to work for me. Forget about investing advice. See my guest post on Distilled Dollar.
I invested here and there, but made many mistakes.
I was cruising along in my career until 2008. When Lehman Brothers went bankrupt and their employees were televised hauling their boxes out of the New York headquarters, I thought I was safe in a public accounting firm where services are needed by large corporations that don’t want to hire their own back-office professionals. Wrong. The financial news was so shocking that it caused knee-jerk across-the-board downsizings. Like so many others, I lost my job.
I’d always been a saver so I had a nice cushion built up. In my mind, those savings were not meant to be touched, therefore, I had to find an equivalent position. It was time to scrape up my mojo from a puddle of dejection. However, the entire employment landscape had changed. Many people were looking for jobs and everyone was scared. No one knew what to expect from the economy, it was as precarious as a manic-depressive off their meds.
I landed at another large corporation, ambivalent about saying Yes to the job offer, but with no other alternatives. This gem of a department lacked social skills and managed by exploiting insecurities. I was one of four public accounting rejects and had a stomachache and headache all day, every day. Clearly not a good fit, I devised an escape route. It involved leaving corporate life behind for good.
I’d applied for a government job years earlier and turned it down because I was promoted while I waited for the application to be processed. Now, the government life became an end-all for me. Let’s put it this way: it was the government job or a career at Starbuck’s – that’s how negatively I perceived my return to another corporate job.
I applied again when I was still at the last corporate hell, but my application didn’t make the deadline. However, the response letter indicated that I was a perfect candidate and should apply in the next round.
Return To Living
Maybe it’s because I left the corporate rodent race and had more time to think. Maybe it’s because I crossed the boundary of being within a decade of the penalty-free retirement withdrawal zone. Maybe it’s because no job is perfect and I found out some things about my current position after it was too late to do anything about it. Maybe my financial ambition secretly hid behind one of my lifetime goals, that of writing a book, and didn’t come out into the light until the book’s research required it.
It’s possible that the downwind of the Great Recession damaged my faith in the employment game. It could be just my personal account, but it seemed like the world’s brush with economic disaster instilled a new fear of the unknown. That transformed into the new normal where employers became that much more distant. If they were callous and detached before, the Great Recession turned them into contemptuous stewards, only hiring out of necessity with no regard for the human element of hiring humans.
Whether it was from a single event, or a culmination of the above reasons, I decided to pull my assets together and construct a wealth accumulation plan.
Rebuilding My Forgotten Financial Status
While somehow managing my day-to-day corporate stress, it dawned on me that all I was really doing was balancing my sanity against the insanity of office politics, antagonists, and the unreliability of the train schedule. The mental exhaustion compounds after decades. Then there are always people that you will never make happy, no matter how hard you work or accommodate everyone.
I’m well entrenched into the government life, glad to have left corporate life behind. Job security, reduced hours, and better benefits, what’s not to like? I traded my high salary for a lower salary with decent work hours and healthy benefits like teleworking. Seven and half years in, moves up the pay scale and one promotion later, I still make a decent salary. Trust me, the work/life balance makes up for it. When I’m done adding up all my perks, I’m doing OK.
One of my personal goals was to write a book. I didn’t know when I would get to it, but I knew I would.
With reduced hours and extra time to myself, I could decompress my mind and think. That’s when I decided to go for it and write the book. With personal financial planning as a side career, I indulged my storyteller side by using a fictional setting to write about concepts in financial planning. See How Ally Found Her Financial Freedom
The extra time also allowed me to nurture some neglected housework. I found things in my desk that were forgotten years earlier. What’s that? A stock certificate? I revisited a file that became a moth’s nest. It had statements from dividend reinvestment plans (DRIPs) that I’d opened at various times. Due to splits and restructures, I obtained stock certificates from other companies. I wasn’t even sure if I still owned them. So I worked the phones a bit, and registered all the accounts online so I could start actively investing again.
My book, How Ally Found Her Financial Freedom, required a good amount of research and I learned a few things along the way. Such as, my investment accounts were being watered down by fees. I gave it some thought. After all, I liked my wealth manager but I wasn’t sure he was doing things in my best interest. For instance, from 2009 through 2014, the stock market exploded. Yet, my account only increased about 6%, net of fees. The fees were hard to locate on my statements and I wasn’t even sure what percentage I was paying. They keep it hidden for a reason.
One particular point was the dealbreaker when it slapped me upside the head. I had transferred some Vanguard funds into the actively managed account. The Vanguard fund applied an expense fee, and then the asset manager applied his fee. That meant I was paying two fees on the same money. Although it didn’t jump off the monthly statements, similar fee arrangements existed with the other actively managed funds.
What?!? Back up the bus! The dual-fee situation was confirmed with Vanguard.
I sent a series of emails to my “adviser” that started, gently, on Monday with, “Hi, how are you? How much are the asset management fees on my account?” and ended, bluntly, on Friday with, “Please liquidate my accounts to cash.”
I also didn’t like the fact that said financial adviser never advised me to continue contributing to my Roth IRA. Now, that’s basic. I probably wouldn’t have contributed much, as those were my lean earning years, but he should have emphasized the recommendation. That’s how I knew that he wasn’t paying any attention to my situation. He was simply an asset manager, moving my money in and out of recommended funds, and deducting his fee from the asset balance. Not much else going on. That’s how easy it is to lose valuable wealth accumulation time when you’re busy making other plans.
I moved all my money out from assets-under-management and began taking my wealth accumulation seriously.
See above for my current job satisfaction. I’m very happy with what I’m doing right now, however, not all is perfect. When I found out a few things (the hard way) about the manager payscale in the government, it left me feeling used and abused. Talk about anti-motivation. That fueled my chase for early retirement.
I became a tornado of investment research. Warren Buffett’s 3 Favorite Books was the first. I learned all about value investing and absorbed all the financial terms that I’d heard of but didn’t pay any mind to.
I read more headlines on Yahoo! Finance and put my cash into investments, instead of leaving it idling in a money market account. A few examples, Alibaba (BABA), the largest IPO in history. I bought some low and some high. Investment gain to date: seventy-five percent. I waited for Apple (AAPL) and Netflix (NFLX) to split and bought in. Investment gain to date: fifty percent and eighty-eight percent, respectively. I make maximum contributions to my Roth IRA and chose stocks to purchase with that money. My long-term growth pick is Salesforce.com Inc. (CRM), unrealized gain: twenty-five percent, and a recent buy was Welltower Inc. (HCN).
Another long-term growth pick: Veeva Systems, Inc., (VEEV). I expect big things from this company. I constantly read their headlines and have a fairly low basis. Unrealized gain to date: thirty-three percent.
Comcast Corporation (CMCSA) was acquired from a previous split-off: I started with five shares, it split three-for-two, getting me to fifteen shares. Since then, I’ve built up the DRIP to over three hundred shares. Unrealized gain: approximately seventy-four percent.
In 2014, I opened a DRIP in Disney (DIS). I set up an automatic contribution of one hundred dollars per month. I don’t miss the money and own over forty shares to date.
By getting organized, I found that I’m the millionaire next-door. I never thought it would happen, but it did.
I continue to read about investing. Here’s a partial list of recent books I’ve read:
Short-Term Investing Goals
I never stop perfecting my retirement planning. My retirement plan contributions are jacked up to the max with catch-up contributions. After two years of thinking about it, I established a Health Savings Account (HSA), read Related Post. I have a three thousand dollar investment account in the HSA and will increase it when I convert traditional IRA money into 2018 HSA contributions. Read my post on end-of-year money moves.
My next focus is on asset allocation. By doing research, I pulled a number of asset allocation theories together. Cramer’s Get Rich Carefully and Tony Robbins’ Money: Master the Game both have helpful information on creating strong portfolios. I need to round out my portfolio with TIPS, long-term Treasury bonds, and commodities. After I’m done beefing that up, I’ll get back to building up my dividend stocks.
I read how all the financial bloggers boast of living on passive income, ride their bicycles everywhere, and recycle their clothes so that they don’t have to buy paper towels ever again. If I really wanted to, I could move into a 200 square foot home, sell my cars, and live off the grid. I’m somewhere in between, sensibly managing money but not resorting to wearing potato sacks. I’m doing a financial hokey-pokey, using extreme frugality tips in moderation, still working, but living comfortably. The FIRE song is constantly playing in the background and I tune and tweak it appropriately. The volume rises and lowers to meet life’s needs and wants but I feel like I’ve found the happy medium: liking what I do, getting paid fairly, having major flexibility and generous benefits, all the while saving and investing aggressively and staying debt-free.
Finding happiness is being happy where you are, not lusting after someone else’s illusion. I would encourage everyone to find their happy place. That means you don’t stop looking until you find your comfort zone and then, courtesy of Timothy B. Schmidt, take it to the limit.
For you, it might mean taking it in steps, like paying off debt first and then switching to a job with a better commute. Or working at an employer that doesn’t require endless overtime. If you travel too much and it’s wrecking your health, you owe it to yourself to find something else. When you do make a move, you have to manage the hell out of the benefits available and establish an aggressive savings plan to reach your lifelong goals.
I recommend that everyone take advantage of every benefit available. Any employer benefits should be at the top of the list. Then, a personal IRA. Everyone is entitled to contribute to a personal IRA, whether or not it’s tax deductible. That goes for transit benefits, child care, and flexible spending accounts. Because I take my own advice, I make sure that I’m maxed out on all of the above, where it applies to me.
Unlike some other bloggers, I don’t like traveling all the time. Many years ago, I traveled twice for vacation and once for work in a six-week period. For six months, when I woke up in the middle of the night, I didn’t know where I was. They tout a life of leisure with no reason to earn money ever again. I learned that if you work the math right, you can achieve the life of passive income, then work when you want. But my impression is that opportunities for working sporadically may not be fall into your lap when you want. Without a side of healthy stress, the motivation may not be there. Also, employers that pay a respectable wage don’t want fly-bys. I could be wrong, but planning on working whenever may not happen according to intention.
When I read about bloggers that live on passive income, I think about how limiting working years severely curbs future Social Security payments. The anti-government theme is well at work here, clearly not expecting Social Security to be in existence when they reach retirement age. I give them credit for getting by on their own resources, but Social Security is contributed to in earning years to be collected during retirement years. I don’t know about you, but Social Security will factor into my monthly income.
Another omitted tidbit not emphasized by the full time bloggers/small business owners is that blogging and owning your own business requires time. Yes, they’re not slaving away for others being told what to do every day, but the responsibility is theirs to fulfill. That means getting up every day and working it. Blogs require lots of time and attention, trust me. Small businesses require energy, tons of it, and can suck the life out of people. I can’t imagine a lucrative activity that runs on auto-pilot, without needing constant devotion. So you see, it’s not all rainbows and laying around like a blob.
Living A Structured Life
Call me crazy, but sometimes I welcome structure. Having to get things done before the weekend’s up keeps me engaged. Abandoning all responsibility sounds like lazy on the brain to me. Self-imposed deadlines are too easy to ignore and require the accountability that the early retirees are desperate to avoid. Finding a place for everything in life, while still working, is as good an option than striving to leave a secure income stream.
If I pull the plug before reaching my full Social Security retirement age (67), it won’t be unless I’m absolutely certain that my pension plus passive income covers my monthly basics. I want to postpone collecting Social Security to derive the maximum benefit. By then, it’ll be added gravy, not income to scrape by on. There will be no going back to work for me.
As age 59 ½ gets closer, I look forward to the dilemma of ditching the full-time paycheck for a life of passive income or staying on and enjoying the best of both worlds. When I lie awake at night and wonder if I should retire, then I’ll know I’m halfway there. Knowing that I will have the choice will help me fall back to sleep.
The thought of retirement makes me nervous about finding a new purpose. I’m lining up teaching, writing, and speaking opportunities while conducting financial planning workshops. Any future endeavor will be a solo activity, no employers involved.
I am continuing to work as hard as I can at my career. It’s not how much you make (it’s what you spend), but earnings are important. After all, life requires money and no matter how resourceful one is, we can’t all live on the edge of deprivation. There’s a small divide between frugality and scarcity. I avoid splurges and Pier One Imports but when I’ve postponed purchasing certain items too long, it cramps my style. I’ll buy what I need and figure out how to hit my savings goals, thank you. My raises increase my savings goals, not my standard of living. As I mentioned in my post about my 20-year-old car, I put off major expenses.
There’s also a heavy focus on my health. It’s cheaper and less stressful to be healthy than it is to constantly have doctor appointments, be on prescription meds, and miss work. That routine would interfere with my grand plan. How I take care of myself today determines my health tomorrow. That’s why I continue with my weekly Pilates classes. I don’t pay for one-on-one instruction anymore, I’m in a small group class. I could be saving the money, but it adds to my health in countless ways. I’m stronger and more flexible than I was twenty years ago. I look better than many people younger than me. I have great balance and energy. Having healthy muscle is protection against injury and infection. It matters for health reasons and financial reasons. I take no medications and want it to stay that way.
Playing The Game
I don’t know about you, but with the new tax law, I feel like I’ve been sold a bag of sh*t packaged as Special Christmas Reindeer Manure. There are many opinions on how the new format will benefit the economy and I’m not sure what exactly will trickle down, but it sounds like a party for the one percenters. I’m hoping to share in the wealth via my investment portfolio. If the new corporate welfare is reflected in stock prices, any increase in personal taxes that I have to pay will be offset by portfolio wealth.
When your tax benefits, or any benefits, have been pulled out from under you, it’s time to reevaluate all the options. That’s all the more reason for sucking every employee benefit dry.
Content With Contentment
I’m lucky that I have a job with autonomy, flexibility, and opportunity to advance. The benefits are too generous to give up. My ideal world involves merging my working life with my bucket list.
Next on the list is a cross-country drive. Like everything else, I’ll get to it. But if I don’t, I’ll know it’s because I found satisfaction filling my days with other fulfilling activities.