SWB's path to financial independence

Where are you and where are you going?
SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Fri Sep 08, 2017 12:33 pm

I went through the interview rounds at an interesting startup after someone contacted me via a Github issue. Got to the compensation point and they offered me $130k plus 0.4-0.5% equity (at seed stage, haven't raised series A but already profitable). I passed. I'd rather have $150k plus whatever horrible percentage options at my current employer. The work-life balance is good too. The good news is it made me appreciate my current gig way more.

The first startup I worked at in the SF Bay Area has so far cost me quite a bit for stock. They were doing really well, > $1M in revenue per day on many days. But they hit a wall due to how they advertised and it was key to their business model. Too funded to just stop at that level of growth. They recently did a firesale capital round with a reverse split. Exercising the options pushed me into AMT that year (they didn't offer early exercise at the time I started). So I paid a whopping amount of tax on theoretical value that is now gone. I have no idea if I can write it down on taxes or not or how to do so. If so, I should have a nice $3k deduction per tax year for 3-4 years.

I am now jaded and cynical about venture capital-backed startups. If you're in the employee role, your ownership is so little that it's a joke. Doing your own thing and bootstrapping it with your own money is a much better way to go. There is much less pressure, your ownership is much higher and you can grow at your own pace. The downside is you don't have piles of VC money to shove at user acquisition and that shot at a billion dollars in less than a decade. But I'll pass on those very very low odds and take the odds at hitting good results with a bootstrapped business anyday.

The most interesting thing about all of it in the end isn't even the money. It's the lifestyle and years of your life wasted. I've seen enough leader engineers in SF Bay Area startups that had health issues to know there are downsides. And I've seen enough founders stuck in the startup they have created that isn't going to make it to the point to satisfy VCs but is not dead. These funded zombie startups keep walking. I worked for one. It's still going. Crazy.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Sun Oct 01, 2017 7:51 pm

September 2017

Current: $377,800
Progress: 31.5%
Spending: ~ $52,800/year
Goal: $1,200,000 USD
Years saved: 7.15
Weight: 246 pounds

Current savings jumped due to missing some accounts while totaling net worth. I was lazy and using Yodlee but they upgrade to a new platform and it is bad enough that I jumped to Mint. In the process, I caught this issue. I think it was one of my wife's accounts somehow not being included.

Goal dropped from $1.6 to $1.2 million. I'm comfortable stepping off once we are at that number (and my wife is working so we have benefits through her). By stepping off, I mean transitioning to my own businesses.

Spending increased to reflect what we have discovered by keeping track of expenses. We're closer to $4,400/month right now with all the extras that come up. Housing is a big part of this and we are actively looking to reduce our expenses there. We are in a lease for another 6 months so will likely sit it out and then move. I'm stumping for moving to a rental in a condo building that has docks right on a lake. We'll see. We put an offer in on a house too but we were too low. The local market is too rich/high for my blood so unless we find some kind of deal that happens to work out, we'll likely stay renting until the market gets cooler. That said, by moving to a less expensive rental, we should be able to get our monthly expenses down by about $450 to $3,950/month.
Last edited by SavingWithBabies on Mon Oct 02, 2017 9:23 am, edited 3 times in total.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Sun Oct 01, 2017 9:14 pm

I forgot one thing: I incorporated our first business (the one I have with a partner) with the state and opened a business checking account. Then I was able to deposit the backlog of checks we've been sitting on.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Mon Oct 02, 2017 9:26 am

I updated the weight for September down to 246. I had put it at estimated 252 but 246 is what the scale said this morning. Last monday morning, it was 247.6. I thought I wouldn't lose any as this past week I spent 3 days eating super high calories to try to make the blood work look good for the life insurance health exam.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Tue Oct 17, 2017 8:14 pm

Now down to 241.6 lbs (25.4 lbs down). I had one stall week and then the last week the weight loss kicked in again.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Fri Oct 20, 2017 9:10 pm

Image

I've been working on my spreadsheet. This graphs renting versus buying (at ~ $250,000 w/ 20% down). It might look more like this if we can increase our month savings by $300/month after buying a house (our rental cost is about $1,750 month + utilities, mortgage w/ taxes, insurance, etc roughly $1,300):

Image

My target is 5-7 years out at ~ $1.2M. I am nearly certain something will change and it will not go like this but it'll be fun to see what happens.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Mon Oct 30, 2017 1:37 pm

This morning, I weighed in at 239.6 pounds! By the BMI calculator, that puts me into the overweight category from obese (240 pounds would be obese). The next step from overweight to normal weight will be at 199 pounds. I'll do the hip-waist measurements too at some point (I know BMI has some downsides but still handy for motivation). My goal is 192 pounds.

The weight loss has tapered off for the past couple of weeks. In keto, apparently this is typical and not anything to worry about. But if it continues to stall, then might need to adjust calorie intake down (at least that is my understanding). I probably eat too much protein and a little too much cheese. But I'm going to wait to see if it's just a stall before adjusting consumption.

I could complain a bit about the day job but overall it's good and letting me meet my goals (savings and time for side project). So instead I'll just be thankful for that.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Thu Nov 02, 2017 11:05 pm

Progress: 32.3% ($387,100/1,200,000)
Weight: 240 pounds
Goal weight: 192 (48 pounds to go)

Expensive month with life insurance payment (full year), car insurance (1/2 year) and some paint repair to one of our vehicles ($425). Otherwise, keeping on trucking. I realized my spreadsheet was based on being fully invested but we're not fully invested (~$30k cash right now). I think we're going to keep sitting on that but I did change my automatic post-tax investments back to going into the market (via Vanguard mutual funds).

Weight loss stalled for a couple of weeks. I might need to adjust my calorie intake. I'm eating less at meals but I do enjoy snacking on cheese. I'm going to wait a bit and see if it is just a normal stall.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Wed Nov 08, 2017 12:17 am

I wrote a long post basically convincing myself we should try to target $2,500/month in spending (for 2 adults, 2 children). That would lead to a +$2k/month in additional saving. That would lead to +6 to +10 months faster to $1.2M and also mean that $1.2M would go much further. I ended pondering if we should rip the band aid off sooner and try the ERE-book recommended lean and ratcheting up approach. Reasons to wait would be we can't impact the elephant in the room (our monthly housing costs) until +6 months and to get the spouse on board. Reason to go sooner is there is no good time and we'll shrink the elephant later. I'm going to talk it over with the spouse.

Also met with my business partner in person. I think we're closer to being on the same page in terms of expectations around both of our roles in growing the business. We'll see how it goes. If my partner can successfully learn sales, our business will grow and I could potentially double dip on incomes for 2+ years. I am a realist and odds are low but much better than startup options or lottery tickets. We'll see :).

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Wed Nov 15, 2017 9:48 pm

I've been looking at open land around here in the 5-10 acre range. It's a bit disappointing as some of the areas require a minimum of a 2,000 square foot house for single story new construction (2,400 square foot for two story). Although this might not be a problem as we're debating the idea of having two in-law/grandparent suites. But if we don't do that, 2,000 square feet is... a lot. This is all just an idea right now. May or may not be something we actually do.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Tue Nov 21, 2017 8:41 pm

My weight loss stall broke. Yesterday, I weighed in at 233.4 pounds for a total loss of 33.6 pounds. We go walking every day with our toddler and baby but it's slow going with the toddler. We added a walk after lunch where we convince the toddler to stay in the stroller for most of it so we can walk at a much brisker pace. I don't know if that helped break the stall but it can't hurt.

Out of the blue, a potential customer for the side project contacted us via our website. We still don't know how they heard about us but we got a demo scheduled for a couple weeks out. They are unhappy with one of our competitors and are looking for an alternative. Fingers crossed. It'll be interesting to learn how they heard of us.

DSKla
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Re: SWB's path to a not so extreme ER

Post by DSKla » Tue Nov 21, 2017 9:52 pm

Awesome work! For what it's worth, my fiancee also stalled in her keto. She was cutting weight for a fight, and lost a lot initially, then nothing for a few weeks. She finally decided to cut out dairy and peanut butter, and the rest melted off too fast. She missed weight by three pounds--too far UNDER. Seems like a keto stall, when you have no more carbs o eliminate, can benefit from eliminating foods thatare sometimes inflammatory and high calorie, like PB and cheese. Anyway good luck. Look forward to following your financial and health progress.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Fri Nov 24, 2017 12:03 pm

@DSKla Thank you! I'm really motivated by the pounds coming off. I knew I should have done this a long time ago but I was lazy. But I already am feeling much better. I think the keto diet is amazing because of the rate of loss (at least in the beginning), the lack of hunger, the mental clarity and the potential to eat very much like this for the rest of my life. I do want to introduce more (healthy) foods back into my diet when I reach my goal weight. But I also know I can monitor my weight and go back towards keto if I start gaining. But most of the time, I don't feel that limited in diet and I enjoy eating lots of healthy vegetables (cauliflower, broccoli, salads, etc).

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Tue Nov 28, 2017 11:15 am

So the weight loss is no longer predictable as it was up until recently. Taking into account CICO or (calories in, calories out), I'm simply eating too many calories per day. I suspect part of this is due to my body now consuming less calories (which happens as you lose weight) and partly to my pushing the boundaries of the diet and snacking on things I shouldn't yet (like salted cashews, roasted almonds, too much soft cheese) and eating too much protein.

So next is paying more attention to these things and being disciplined to not snack after dinner. I find I snack now more out of habit -- my appetite is small. But some things like salted cashews are easy to eat too much of and often you think you want a snack when your body is really signalling thirst. So I will try replacing snacking with drinking more water/tea.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Wed Nov 29, 2017 12:04 am

I have blocked the following sites on my main computer:

* Facebook
* Twitter
* Reddit
* CNN
* BBC
* TheTruthAboutCars.com

I made this list by keeping track of what page I open when I get stuck on something and want a diversion. I decided to block these sites because I don't get much value out of them. I can still access them on my phone or a tablet. But I'm leaving them blocked on my main computer.

All of these sites are feeds of articles/content that frequently changes so there is always something new to read. But enough is enough. I can't do it. I've had them blocked now for 3 days and it has boosted productivity and focus. I'm also more likely to just get up and go get a drink or something else if I really need a break which is much better.

SavingWithBabies
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Re: SWB's path to a not so extreme ER

Post by SavingWithBabies » Fri Dec 01, 2017 11:08 am

Progress: 33.6% ($403,270/1,200,000)
Weight: 231.4 pounds (39.4 pounds to goal weight of 192)

The strong markets pushed us up over $400,000 in net worth. I finished maxing out my 401k. Next we would max out our Roth IRAs. I know we have until April of 2018 so debating if I should try to time the market (by keeping it in cash for now), fund them fully right away or start depositing every month. I lean towards the last option.

I edited the title of this thread from "SWB's path to a not so extreme ER" to "SWB's path to financial independence" as my actual goal is clearer to me now.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies » Wed Dec 06, 2017 3:40 pm

Today, I was thinking about how, by far, my biggest financial influence growing up was watching my parents(*) struggle with money and finances. We always ate but times were not always good. That instilled a saving mentality at a younger age in both myself and my brother. Although I did have a period of spending a fair amount of money, I always saved too. That helped a lot to get me on the right path even though I floundered around and didn't graduate college until I was 30. So I'm 10 years into my post-college career and we have a net worth of $400k. I'm happy with that. I could "what if" a lot of things from the past but I can only impact the future. I chose the path I did over the past 5-7 years to put me in a position to start my own business and to try to catch up with what could have been at least to some degree.

Sometimes, I've opted towards the more money than pleasure side and I don't regret it. On another thread, someone pointed out this is like the shit sandwich -- you can chose to work a hard job with long hours and high pay or an easier job with less hours and less pay. I'm in the odd situation of having a fairly easy job with fairly normal hours and high pay. I am still discontented with my day job and I put a lot of hours into my own business. Life is far from perfect job-wise. But it's pretty okay. Maybe even good. I'm thankful for what I have and particularly for my spouse.

* Interestingly, my paternal grandfather was an investor/saver who passed away in his late 90's with significant stock holdings and a paid off house. With two children, the inheritance wasn't instant retire or anything like that. But it definitely set up my parents for a better retirement. One of my parents has retired and unfortunately they are spending savings even while one draws social security. I don't know if my parents can change. At least they'll have social security and kids that will help them (I've discussed this with my brother too). I won't subsidize their lifestyle but they will always have a place to live and food on the table. Hopefully, they'll see the light. The one that retired is thinking about a part time job.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies » Tue Dec 12, 2017 11:05 am

I spent a good part of Saturday fixing a free snow blower. During the summer/fall, we went to an estate sale and a house across the street put out a small snow blower with a free sign. It had a new set of rubber paddles on top. Seemed to be in okay condition so I grabbed it and stuck it in the garage.

I pulled it out and took a look. The paddles were riveted on with steel rivets. I have a rivet tool but only for aluminum (probably too weak for steel). So I decided to use bolts with nylon-insert lock nuts(*). I drilled out the rivets, got all the new paddles on and mixed up some 50:1 gas (2 stroke engine). It's been working fairly well. The whole machine is a lower end bottom of the line deal so the enclosure for the beater area is plastic and is starting to warp. The new paddles are much bigger and hitting some parts of it. Hopefully, the paddles will wear down a bit and everything will be a little smoother.

I figure I can get a couple of years out of it. It's small though...

There is also a much nicer big snow blower (Toro 824) that was in the garage when we rented this place. I took a look at that. It needs a replacement pull start rope (or the whole mechanism, looks like just the rope though) and someone put a fuel shutoff valve on it and that is extremely leaky. Maybe I could pull it apart and replace an o-ring. Might take a look after I swap it out for a Briggs & Stratton $5 plastic fuel shut off (also picked up some fuel line just in case to return if I don't need). Then I just need to get some rope. Local store has way more than I need for $10 but I can use the excess for other projects.

I enjoy fixing and tinkering with things. I've never had a snow blower before and we have a long driveway at our rental along with a city sidewalk that I like to keep clear. I'd rather tinker and fix than shovel!

* I'm a bit worried about bolts now after using it -- there is a lot of vibration and force. It would be potentially very bad if it spit out a bolt/nut during operation. Going to go check they are all tight. The nylon insert should help lock them on but I might get some thread lock too for peace of mind.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies » Fri Dec 15, 2017 10:45 am

I had the first conversation in a job interview yesterday. It sounds like a very good fit for me however my fears about compensation were confirmed -- they mentioned their compensation was good but couldn't match SF Bay Area salaries. I think that means closer to $100k instead of $150k. While my current job is annoying in many ways, the potential job could be a better fit and right now I'm not willing to go down to a lower salary without some other form of compensation making up for it (ie ownership). I see getting to FI as difficult still -- it's possible but who knows what unknowns lie in the path. So it's not a simple matter of going from 5 years to 8 years as things are going to happen along the path no matter what. And yes, bad things might happen after goal but at least we'll have made it to goal and can weather say an economic downturn by tightening our belts.

Another facet of this is I see some employers can pay me a certain amount. That makes me question why others cannot. I think right now there are lot of businesses that could pay SF Bay Area salaries to their employees but chose not to. Because they can get away with it. Instead of that money going to employees, it goes to owners or to pay down loans that fuel more rapid growth (that ultimately benefits owners, not employees). So I also see getting a high salary as acknowledgement to some degree of what you are contributing to a company. It's just most want to pay as little as possible while still finding employees.

What this really means in the end is perhaps I'm walking down that path towards self-employment and/or being an entrepreneur full time. No employee job will pay me what I can actually contribute. Almost none will allow me a role in which I can contribute maximum value (and get maximum reward in return). It just doesn't work that way with the employer-employee system. And for most people that is probably fine. But I increasingly think not for me(*).

* The biggest potential problem is health insurance. It looks like it is likely that my wife will go back to teaching when our kids are older. So, unless a side project/business starts to do very well, I might need to work for benefits until then. In this scenario, when FI goal is already reached, the better fit job at lower pay is more attractive.

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Tyler9000
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Re: SWB's path to financial independence

Post by Tyler9000 » Fri Dec 15, 2017 11:26 am

Congrats on the interview! I've always found that process exciting.
SavingWithBabies wrote:
Fri Dec 15, 2017 10:45 am
Another facet of this is I see some employers can pay me a certain amount. That makes me question why others cannot. I think right now there are lot of businesses that could pay SF Bay Area salaries to their employees but chose not to. Because they can get away with it. Instead of that money going to employees, it goes to owners or to pay down loans that fuel more rapid growth (that ultimately benefits owners, not employees). So I also see getting a high salary as acknowledgement to some degree of what you are contributing to a company. It's just most want to pay as little as possible while still finding employees.
That certainly happens in some cases, but not always. For example, when I ended up moving out of the Bay Area I was particularly attracted to my new employer because the owner clearly had a rock-solid business model and operated with no debt. They were smart about salaries, but I respected that. Stressed businesses make for stressed employees, and in some cases paying a little less to minimize that financial anxiety makes the system a lot healthier.

If it helps, while I knew they would probably offer a little less I went into the interview with a bottom-line number in my head that I had calculated would result in equal cash flow from my Bay Area income while accounting for the change in expenses. I personally cared less about feeling validated by my salary than I did about maintaining or improving my savings rate.

That said, the idea of working for yourself is certainly exciting. While I satisfied my need for career improvement with job-hopping, I admit it frustrated me once I finally realized that there's no such thing as a Job Charming waiting out there to sweep you off of your feet. Cutting to the chase and charting your own path is higher risk but absolutely higher reward.

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