SWB's path to financial independence

Where are you and where are you going?
SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

One way I've tried to solve this startup equity problem (described in prior post), is by contracting instead of being an employee. I got into that almost a year ago and it's been great. Health insurance is a hassle but it's doable. We self-insured for dental. This was all going very well but then COVID hit and people pulled back so there are less opportunities. When things were going well, I worked as many hours as I could and this paid off well when the contracts stopped or slowed.

But then I get pinged by recruiters for full time employment jobs. I'm not FIRE/ERE/FI yet. After taking off some time last year, it was nice to see the net worth increase with the contracting. So it is tempting to ride out COVID with income. So I pursued those opportunities.

But (and I'm writing this for future me, sorry to complain) interviewing sucks as does negotiating. Particularly if you're negotiating in a 3 way thing with you, the recruiter and the potential employer. For whatever reason, there is an emotional aspect to it for me that is not enjoyable. Due to how we tie health insurance/benefits to employment here in the USA, it also brings up some lock-in issues as once you switch to the employers health insurance, it's kind of a hassle to switch back to another option. Certainly not hard to do so it's more of a mental thing in some ways (but you also have to give up fairly good benefits at a subsidized rate for worse benefits or no benefits -- like dental -- at a higher rate unless you're income is kept low).

I guess interviewing and contemplating full time employment just sucks up too much energy and is too annoying. Contracting is easier to roll on and off. I get paid for the hours I actually work which is great.

So I should continue contracting. To do that, I need to grow my brand and talk up my achievements as recruiters and potential employers are not getting the full picture of what I can do and what I'm good at (I think I would be worth more or get more opportunities if they did although such branding/promotion efforts can take up a lot of time and be hard to get a good return on).

Or just wait until things go back to normal for the startups that are not in COVID-impacted areas and see if the contracts pick back up. In the meantime, either make no money or suck it up and be an employee.

At the root of it, I'm kicking myself because now is really the time to focus on early stage ideas and I should be doing that. Yes, it would be easier to do that when I'm FIRE/ERE/FI however I think you also loose some drive and/or your motivations change. Maybe that is okay though? Maybe I shouldn't be hard on myself?

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

@jacob I was thinking about the parallels while writing that. It makes sense it's about selling a dream. Maybe a more possible dream than many other dreams (like winning the lottery) but still a dream. I suspect it's the same in other industries but the core part of selling that dream is focusing on the idea that hard work will reap the rewards. But from what I've seen so far in my own work, that can happen but more typically careful politicking and/or pre-existing connections (be it personal or to prestige-based things like ivy league schools, etc) are more important. It is starting to make sense why that is though -- the hard work crowd believes in the dream and the path but grows disillusioned when they realize/discover it's not what they think it is (but by then, for many, they did the grind for years). Those selling the dream need to be comfortable knowing it's a dream. So by having prestige, they can justify it based on being innately better than those they are selling the dream to. Maybe? I want to say those that believe in the dream are too gullible and the dream sellers need to be more conniving/less gullible/more something.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Of course, if I turn it all around, the goal is not to hire me it's to hire someone. And if they can offer enough to hire someone, then deal done. It's on me to hold out for more if I think I'm worth it. And if they don't give it to me because others will take less that's just the nature of employment. If you want more, you have to start your own thing or do your own thing or go in with a preexisting relationship and/or have some prestige (ie make your own prestige if you missed out on earlier opportunities).

From this, I can take that negotiating is a very important part of becoming an employee and I should no longer allow the compensation aspect of the negotiation to happen between the recruiter, me and the potential company because it's too many people involved and the recruiter (like a real estate agent) does not necessarily have my own best interests at heart.

The annoying bit here though is it really assumes we're all interchangeable cogs. And maybe that is true to some degree -- the whole purpose of job titles perhaps. But the one thing I've definitely learned in startups that I do think is true is that it's all about the execution. And the right person/team makes a difference. So on the one hand employers want cogs but on the other hand they want specific cogs. But they want those cogs to take what they would give to any other cog. They kind of want it both ways?

Of course doing your own thing has risks and odds are it's not going to work out. So it's not for everyone.

So maybe that fractional ownership is fair. I still don't like the deal for myself personally. And I don't like what I perceive as the lie/dream aspect of it. And I'm getting closer and closer over time to the point where I can take more risk. But the issue is do I wait to take the risk when the risk is less risky because I'm FI? Or do I need some of the fear that comes with taking the risk sooner while not yet FI?

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Still working out about 6 out of 7 days per week with my wife. It feels really good and I'm already noticing better balance and my core muscles getting stronger. We do a mix of different exercise programs and some have a lot of jumping and I was able to annoy the nerve in the center of my left foot. I swore my sock was folded under my foot when I went for our evening walks but I realized it was internal. So I cleaned up a pair of tennis shoes and made those indoor only for exercise (we don't wear shoes inside normally). After about a week or two with shoes, foot is almost back to normal and if there is a ton of jumping, I switch to crunches (or sometimes pushups -- will likely do more as my arms get stronger). I'm listening more to my body this time around and I think it's good. Not wanting to slack but also not wanting to get hurt -- goal is to stay in the "race"!

Weight-wise, hovering around 235 pounds but I expect some fat pounds are going to muscle. I've been back on the keto diet for a while (6-8 weeks) with some cheat days. I think this time around I want to figure out how to eat some carbs some of the time so I can increase things like beans eventually. And splurge by having non-keto tortillas sometimes. We have tried making them out of almond flour and almond + coconut flour and they are not bad but kind of pricey and it's hard to beat real tortillas. Flour tortillas were also made but I didn't try them yet but it's amazing how the regular flour is so elastic. The keto ones I roll out between two halves of a gallon zip lock bag with the edges cut off so I can separate the two plastic sides and then peel the tortilla off. These are not pliable/stretchy at all but they are foldable after cooking if careful not to overcook.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 63% ($756,000/$1,200,000) although probably owe around $12-20k in 1099 taxes (figuring out this month)
Weight: 234 pounds

Still mostly in cash on my investment accounts (didn't do anything with them after selling). Missed some gains lately but I'm fine with sitting on the sidelines for a bit even if it ends up costing me a bit in the long run. Still waiting on the full time employment offer to land but will most likely take it if it does. This month, need to get the sailboat repaired and back in the water. Then do a some maintenance on the camper.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Contract from the potential full time employer has a "no outside activities" clause which basically means they want me to ask permission before I work on anything outside of the company. That's a no go. Looks like I'm going to walk on it as this on top of other warning signs point to a poor fit/alignment.

I was thinking about this in the context of careerism and why this kind of negotiation is so stressful for me. I'm trying to figure out if I have given up the idea of a career and it is just stressful because of other reasons or if I'm deluding myself and I'm still career-focused at my core and that is why it is so stressful. I mulled that over and I think it is not the later because I'm willing to walk. I've had fellow (younger) employees tell me after conversations that they didn't realize I was so cynical and perhaps I am quite cynical. But I can't understand not being cynical about businesses and employment. Perhaps it's a very different point of view partly influenced by ERE/FI and partly by core ideals I hold (that aren't necessarily related to FI/ERE but certainly push me in that direction).

Once again I'm thankful for having started down this path and continuing on it because it lets me be true to myself.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

I ended up walking away from the job offer due to the clause mentioned in last post. I think it was a good call as the whole issue pointed to underlying concerns with a solo non-technical founder not necessarily trusting his team (which may or may not be a good thing or have basis in reality but ultimately is not something I really wanted to walk into).

Supposedly, the contracting company is seeing work/opportunities pick back up. I think my ideal is going back to that.

Chase contacted me about PPP loan and I'm back to waffling if I should just fill out the paperwork. Friend of mine that also contracts had his 3rd attempt go through with another bank. Hrm...

Lastly, I'm getting recruiter contacts for a FAANG (Facebook/Apple/Amazon/Netflix/Google) position that is finally a remote one. I don't know that I want to work for them. Well, I don't really. However I am pragmatic and want to get to FI (I'm assuming the compensation will be very good) and being challenged/pushed in new ways might be good. Plus there is cachet to having a FANG on your resume/past experience so it wouldn't be a bad thing in that regard.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 63.5% ($762,500/$1,200,000) but bunch of 1099 taxes need to be paid still (have to get that done by the 15th so time to learn quarterly taxes
Weight: 239

Switched up the diet to be less meat intensive. Eating more beans/tofu/etc. So far so good. Weight up 5 pounds but I did just pig out on some frozen deserts and it's late in the evening (usually weigh myself mid day). So probably just noise but I should start paying more attention to it in the short term to see if diet change impacts it.

Haven't followed up on any of the recruiter contacts yet (have 3 at the moment) but probably should do so. However, we're going camping for a couple of weeks so probably will ping to talk to them later. I should really mull over if I want to interview with a FAANG as it would require a lot of interview prep (I did so once before mostly on a lark with practically no prep and it was interesting but definitely see how prep is required).

Fixed one pair of shorts on the repaired sewing machine (fixit thread). I was impressed just how strong I was able to make the area that failed with heavy duty stitches. I bought two pairs of inexpensive shorts with no flex in the crotch and they tend to ride down, then I squat and they rip in the crotch. In the meantime, I broke down and bought two pairs of shorts on clearance that do have flex in the crotch and are a little less casual (not intentional, just what the deal was on).

We've been watching the local real estate market but so far still disappointing. Our lease comes up soon and it doesn't go month to month unfortunately so we'll have to decide if we renew another year, move to another rental or buy. For some reason, I have a hard time plunking down the money to buy right now. Maybe it's not being employed nor having any contracts going (technically have one but it's no hours right now). But I have the cash in post-tax investment accounts. I'd have to sell some holdings which would incur taxes. Hrm... Everything just feels so overpriced though (investments, real estate, etc).

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

I paid Q1 & Q2 income taxes on the 1099 income. With deductions for retirement account contributions, that came to about $3500. Less than I thought but I guess the retirement contributions are front loaded so if I had continued to make more 1099 income, the later quarters would be higher.

For our 2018 taxes, I passed the audit. Well, my revised 1040 which showed I was owed almost $1700 was accepted so I'll get a refund instead of having to pay their estimated $10-15k. I guess the IRS is like emergency room doctors in focusing on the worst case scenarios. Perhaps that encourages more action? It's not over until we have the official letter and the check of course but thankfully everything worked out and it seemed like the agents just wanted to get it correct too. So I had a good experience being audited although I'd prefer not to go through it again if possible.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 63.5% ($762,500/$1,200,000)
Weight: 243

Net worth stayed flat even though I paid Q1 & Q2 taxes. I guess gains offset expenses however still sitting out with bunch of my funds. Yeah, hindsight being perfect, would have been better to stay in but I did sleep well? Bigger problem is do I buy back in with some or not. I'm punting that decision along for now. It's probably good to experience this dilemma :).

Nothing new on the job front yet. Not really looking that hard though. Still working on my sailboat (redoing the wood work -- it doesn't have a ton but what it does have needed to be stripped and redone).

classical_Liberal
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Re: SWB's path to financial independence

Post by classical_Liberal »

SavingWithBabies wrote:
Fri Jul 03, 2020 11:27 pm
We've been watching the local real estate market but so far still disappointing. Our lease comes up soon and it doesn't go month to month unfortunately so we'll have to decide if we renew another year, move to another rental or buy. For some reason, I have a hard time plunking down the money to buy right now. Maybe it's not being employed nor having any contracts going (technically have one but it's no hours right now). But I have the cash in post-tax investment accounts. I'd have to sell some holdings which would incur taxes. Hrm... Everything just feels so overpriced though (investments, real estate, etc).
Housing costs are hard. Everytime I convince myself to buy something for a long term advantage, I look at realistic cash flow, even in a cash bought house, and see how much more it'll burn in the short term. Duplex or some multiunit solves for the cash flow, but added work I'm not sure I want to do. There's something that just "feels" fragile about renting. I'm not sure why, maybe it's the home ownership culture in the US, or maybe something deeper.

The reality is, the flexibility of renting can actually provide a ton of positive in life though. Plus you're not locked into a hyper local market that can change outside of your control. Too often life and home investment are too intermixed to "just sell" for financial reasons. Have you tried to optimize renting? Can you find a cheaper rental that has what you want? or did you pretty much optimize that least time?
SavingWithBabies wrote:
Sun Aug 02, 2020 12:01 am
Bigger problem is do I buy back in with some or not. I'm punting that decision along for now. It's probably good to experience this dilemma :).
Every transaction has more than one side, that's the problem of getting out. :D

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

I received a check from the IRS for the 2018 income tax snafu (as I mentioned in the past, they sent a letter saying I owed roughly $15,000 and, after carefully redoing my taxes correctly due to errors in self-employment part, I discovered they owed me roughly $1,700). No official letter yet but I think that means I can be fairly certain it's done.

@c_L Good points however I think it boils down more to wanting to be settled and wanting that attachment to a place. That along with being free to modify our house* to match us instead of living with the flaws and constraints of a rental. I also think if we stay in the house long term, it will be more affordable. We did optimize our rental cost here to some extent but we also were carefully looking at the walk/bike aspects. But still, when I look today, I think we're paying a fair price. But this is a small college town and rents are fairly high here. Real estate is also fairly high but I think we can go from paying $1,275/month plus electric (for a 3 bedroom in a two unit converted house) to a whole house (potentially 4 bedroom but likely 3) for around $150,000 - $225,000. On the lower end of that range, we'd probably end up spending a big chunk on short and long term mostly-DIY updates so maybe it should be more like $185,000 - $225,000.

[*] I also want to do some hobbies that are hard to do in a rental like trying building a small boat, learning welding, firing up a kiln I've had sitting around to try ceramics (could do that here really but would prefer to have a better/safer setup), dabble in some home metal machinery tinkering, etc. All in due time of course -- I just have a long back list of things I'm interested in that seem difficult to do in a rental.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Potential FAANG remote job is a no go -- they are doing a 3 phase roll out based on geographical location (1st phase is proximity to current offices by like 400 miles or something like that). I'm way off in phase 3. My sour grapes on that is it doesn't make much sense but nobody is listening to me about that of course.

Negotiating with my business partner/friend has been fruitful. I think we've got it down to a fairly generous (to him) buyout that is not onerous to me and will preserve the friendship. I think we have the details hammered out and I need to talk to a lawyer (or look into DIY but... yeah, I think a lawyer would be best). Not sure how to find a lawyer for that but I'll figure it out.

Lease renews for another year at end of month and we haven't found a house we want to buy in cash yet (except one I want to buy but waiting for the corporate owner to get it listed -- part of a portfolio of houses but this one has/had water damage and they are still fixing some things). It's got a beautiful wood craftsman interior and having all new floors wouldn't be a bad thing.

Stress level still peaks higher than it should on occasion which I think is due to:
- not doing enough (whether it is fixing boat or working on side project or ...) -- I've started working on my side project again now that the buyout seems to be happening and it's feeling good
- still adjusting to not working full time
- trying lower meat diet with wife and it's hard not to binge on carbs sometimes (with a keto diet, I notice a sense of calm)

Current mindset is to focus on the side project, particularly once the buyout is finalized, and begin the effort to try to sell it. Although there might be some deferred work to do first (some features that haven't been released and some other fairly low hanging work that should be done soon).

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