Monday, December 31, 2012

Last Post

When you set out to do what you wanted to do, it is time to stop.

I have enjoyed writing this blog over the last four years.  But like all good things, it has to come to an end.  I have been writing this blog since November 2008 - almost 2000 posts at this point.  It is time to call it a day.  Why?  A number of reasons.

1.  I did what I set out to do, and I'm done.

2.  The bog has become a bit of a time-bandit for me.

3.  The postings are becoming repetitive and redundant.

4.  I am not sure my message is getting across - or could get across - due to human nature.

This last reason is most troubling.  The transformation I have gone through in the last five years has not been some sudden revelation on my part, but rather, I think, a transformative change that occurs in most people as they reach a certain stage and age in life.  It does not occur in everybody, or at the same age, of course.  Many folks never end up "getting it" and go to their graves as angry and destitute middle-class people.

But I think when you reach a certain age, and face retirement and death in the face, you realize that life isn't what you thought it was at age 20, or even age 40.   And for many people, this becomes a "mid-life crises" where they get a divorce and spend even more money.   But for others, it is a time for taking stock and realizing that the party doesn't go on forever, and what's more, that in a very short time, the earning years will end - and that is a good thing.   I don't want to work forever.  Or if I do, I want it to be a personal choice not something forced upon me.

If you try to tell a 20-something that spending all their income on pot, beer, cars, cell phones, and other bling is just a stupid waste of money and net worth, you are shouting to deaf ears.   Kids want toys, and being "adults" for the first time in their lives, they want to drink deep from the well of life - even if it means borrowing from their future self to do it.   They set themselves up for misery later in life and there ain't much that can be done about it.

And when that misery kicks in, at age 30 to 40 - when it seems that they never will get out of debt, and no matter how hard they work, they never seem to get ahead - they will blame others rather than look inward at their own malfeasance.  It is Wall Street's fault!  It is the Big Corporations!  Nothing you can say will convince them that their credit card debt was a result of their own life choices - chasing after frequent flyer miles instead of low interest rates.  And their four years of Party U. that was paid for by student loans?  Has to be someone else's fault - along with that onerous "funny money" mortgage they signed.  Right?

It is simple human nature.  It isn't about to change.  A very few people might "get it" - but not many.  I know I didn't, until about age 50.   I thought, like most Americans, that chasing after "things" was the point in life, and that having nice stuff meant you were wealthy.  I was wrong.

A reader e-mailed me when I announced I was ending the blog and said, "Congratulations for not falling into the blog trap!" which I thought was an interesting comment.   A blog can be a trap - a time bandit that sucks up all your energy and starts to lose focus.   And after a while, it just peters out - as so many do that I have seen - and people forget about them or abandon them.  Better to leave intentionally than to just give up.  Better to leave on a high note, as Seinfeld would say.

And who knows?  Maybe I can organize and revise these better postings into a more coherent narrative and put them into e-Book on Amazon or something.  It would be a better use of my time.  I did not "monetize" this blog as the sorts of side-bar ads that would appear would be for the worst sort of odious deals that I rail against.  And that is one thing I am proud of.  This blog, for better or worse, is not just some Search Engine Optimized "content" designed to generate click-through revenue - like so much of the crap on the Internet today.  And I may revisit some of these postings and "polish them up" a bit, correct typos and misspellings, dead links, and whatnot.

Writing this blog has improved my writing skills and typing ability, both of which were no slouches to begin with.  While I could do about 60-80 wpm before, I am hitting 100 wpm on occasion, and fully "touch-typing" today, not looking at the keyboard at all.   It is helpful for my career, which involves a lot of writing.

But what about the journey, and what have I accomplished?   When I started this blog, I was in debt.  I had been in debt a lot, having well over a million dollars in mortgage debt at one time.  But that was for investment properties, most of which I sold before the market crash (my office building sold in 2008, after the crash, but I still realized a $400,00 capital gain from that, which is rally what precipitated the crises that started me down this road).

I realized that I made a lot of money in life - millions in fact.  Most people do, even at a $50,000 a year job, you will make over a million dollars by the time you retire.  But where did it all go?  Here I was, 48 years old, having made a ton of money and still in debt.  I had a mortgage on my home, another on my vacation home, and thanks to a capital gains fiasco, I had a $40,000 credit card bill to pay off.

At the same time, I owned two boats, five cars, a jeep, an RV, an antique tractor, and a host of other "things" all of which were very nice things, and were "paid for" but were in fact costing me money.  The taxes alone on my two homes were costing me $10,000 a year.  I was spending another $5000 a year on homeowner's insurance.  I was paying $500 a month on life insurance policies.  I was still making the final payments on my student loans!  And I was paying for two internet connections, landlines, cell phones - all sorts of stuff.

And foolishly, I did not rent out my vacation home to help cover some of these costs.

That is where the money all went.   It went to lots of little expenses, lots of little purchases, and a lot to interest payments on credit cards and mortgages.

And then of course, the market crashed.  My income dropped as the economy collapsed.  While I had a good amount in savings, I saw much of this cut in half by the recession.  And while I could "keep all the balls in the air" with a high income, as my income declined, it became readily apparent that I was burning through savings to pay expenses.

Something had to be done - and should have been done a long time ago.   I realized that while I could "afford" fancy cars and vacation homes and boats, having all of them at once was just too much.  And it was too much work, as well.  Mowing five acres of lawn took hours every week.  And changing the oil on five cars?  Winterizing two homes and two boats?  Forgetaboutit!  I realized that I was a slave to possessions - they owned me, I didn't own them.

It is possible, in this country, to live the life of what in the past would have been a rich man, on a middle-class salary today.  But maintaining all that sort of stuff is where it all breaks down.  Really rich folks can afford to hire people to paint their mansions and maintain their fancy cars.  When we have to pay someone to do these things, that is where we run out of money.

I started by cutting expenses - to the bone.  I cut my homeowner's insurance costs in half, merely by shopping around and going to higher deductibles and lower coverage.  I cut my life insurance down to zero by converting policies to paid-up status (and they now pay me every year instead).  I shopped our cell plan, our landline, our internet services.  I looked at every area of spending - our food, our clothing, our utility bills.  And I realized that there was no one area of "waste" in my life, but rather a lot of spending a little too much here and a little too much there, that added up to a lot of money over time.  You stop watching the little things and they become large things in short order.

Just saving $10 a day, for example, adds up to $3650 a year, which if invested, would be a couple hundred thousand in retirement.  And for most folks, this "sacrifice" might mean little more than packing your own lunch or not buying a Starbucks.  And yet many middle class people say they can't afford to save!

And credit cards!  I got rid of the high-interest-rate ones and rolled them over into low-rate cards and then paid them off.  It was difficult, and it took years to bring the balance down.  How I allowed myself to get into that debacle, still eludes me.  What was I thinking, signing a loan document at 14.5%?

I tried early on to save my lifestyle - which proved to be pointless.  While I was able to cut costs, the expense of owning so much "stuff" was still considerable.  Cars need repairs over time.  Antique Tractors strip a camshaft gear.  And while I always wanted to rebuild a flathead Ford, it is better to do such things at a time and place of your own choosing, rather than to be forced to do it as the lawn gets higher and higher.

But pride goeth before the fall.  And we see this all the time in the recent meltdown - people wanting to hang on to upside-down mini-mansions and luxury cars, rather than be perceived as "giving up" by their neighbors.  We see this all the time here on Retirement Island - people getting reverse mortgages so they can "hang onto their homes" even if they really would rather downsize to something simpler and easier to maintain as they get older.   The reason?  They don't want to be embarrassed in front of people they don't even know or care about and be perceived as "poor".

Myself, after owning eight homes over the years, realize that a house is just that - a house.  And since none of the houses I owned were Frank Lloyd Wright homes, they were not worthwhile making into showplace estates.  You can make the perfect lawn - as my neighbors have done - but who really cares that you have made a bland and inoffensive tract home look tidy?  No one.  And yet that will be the epitaph of many an older man - "He had a really nice lawn."

We were growing tired of maintaining two homes, too.  It was a lot of work.  And frankly, while it is fun to go on vacation, it is not necessarily fun to go on vacation every year to the same place, and spend half your time on home maintenance.  Houses, like cars, don't like to "sit" unoccupied, and vacation homes have special troubles of their own, just from sitting.

So we bit the bullet and sold it - at a loss, of course, the first time in our lives we lost money on Real Estate.   We sold the boats, we sold the cars, we sold the tractor, the Jeep.   It wasn't sad to see it all go.  It was liberating.   And most people will never have the experience of going into the bank and depositing a check for a half-million dollars - to a befuddled bank-teller in training who had to call the manager.

And paying off the mortgage and that remaining credit card debt?  Priceless.  It was like, well, ecstatic.  Like 100 orgasms in a row, that first acid trip, or whatever.  The idea that you had no debt whatsoever was as liberating as, well, liberation.   I was, for the first time since I was 21, no longer a slave to debt.

But it hasn't ended there.  I realized that while knocking $30,000 a year out of my budget was good, there were still a lot of expenses in my life - homeowners insurance, car insurance, utilities, property taxes, and the like.  It still costs $1000 a month just to live in a house "free and clear" here.  And maybe, someday down the road, we will sell this place and move to something smaller and easier to care for - so we can do things rather than own things.  When building our pottery studio, we realized that you can build a nice house for not a lot of money - and not need a lot of room to live in.   A simple Park Model home, for example, might be all we need.  Who knows?

As 2012 winds down, the world is more uncertain than ever, but appears to be headed for recovery.  What will happen is anyone's guess.   But today, we are prepared for the worst far better than we were in the past.  We have no mortgage to go upside-down on, and we don't have to worry about making X number of dollars a year to get by, as our personal life expenses are down to nil.   If we make more than that, we can spend the money on doing things rather than owning things and we look forward to that a lot.  For example, renting a 40' yacht in June of this year, in France for a week.  It will cost less that the storage and insurance costs on our 28' boat for one year.   And I don't have to change the oil or grease the outdrive, either!

And the most wonderful thing of all is that I could retire right now, if I had to, as I have enough money to retire.  How did I do that?  Simply by lowering my lifestyle costs.   If I can live on $50,000 a year, as opposed to $150,000 a year, the money I have in the bank can go a long, long way.  More than three times as far, in fact.

I suppose some of the old habits may creep back, over time.   Perhaps.  It is inevitable.  As we make more money, we tend to spend more - Boyle's law at work.   But I doubt I will be going back to a barbershop and spending $20 on a haircut - for the rest of my life - as we now have these hair clippers.   And I doubt I will ever set foot in a Starbucks again - now that we are drinking tea (and coffee today just gives me horrific cramps).   And while we may visit the Harris Teeter for their Indian Food Section, we still shop at Wal-Mart for their inexpensive crackers, cheese, and other staples.

The battle is never over, and the marketplace is a battlefield.  You have to fight the merchants and purveyors all the time.  And moreover you have to fight yourself - your own urges to "have it all now" and want the latest shiny, shiny, instead of having less "junk", saving more, and having real wealth.

So, dear reader, if you got something out of this blog, I am happy.  But as I noted when I started it, I wrote this blog for my own purposes - to turn my own life around.   Writing about something tends to reinforce ideas, and the more you pound these ideas into your own head the more you program your brain with positive normative cues.

If I can leave you with one thought, that would be it.  Stop watching television, the media, and the advertisements that all pound poor normative cues into your head.  You don't need to be "up to date on the news!" other than the weather.   And obsessing about politics is a bad idea.   Concentrate on your own life and what you want out of it.    Unplug from society's expectations.  Stop worrying about what other people think of you, and worry more about what you think of yourself.

Be happy.  It isn't hard to do in this country, and sadly, so few do it.