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 »

I was happy to receive a check in the mail today from our prior landlord for our security deposit and a month's rent that we accidentally double paid (deposit included the last month's rent). It has been 6 months since we moved out so I was worried we were going to have to go to small claims court which would be a big hassle as we moved 7+ hours north of where we lived before. So it was great news to avoid that.

Looking back, I enjoyed my time off. I didn't always make the "best use" of it but I did that somewhat intentionally as I wanted a break and to recover my energy. I think I did that for the most part. The money aspect was odd -- our net worth seemed to stay the same as the markets went up. Our spending without rent was quite a bit less although if you average the cost of the travel trailer out over the ~2 months... But we'll not do that as I do expect to use it more or sell it. I didn't have a problem spending money though. I mean in the sense of not having income and having to spend the money accumulated to live.

In the big picture though, I'd really like to get to FI so going back to working towards that makes me happy. I just have to figure out how to actually work part time on a part time contract (as opposed to accidentally working full time but only billing part time). I'm curious to see where this contracting goes. The current contract is with tiny company that aims to get acquired within 2-3 years and if things go well, there is the opportunity for employment and getting a cut. This business actually makes sense so I wouldn't be opposed to taking a gamble on it to some degree. Or just moving on to the next contract if it doesn't pan out/make sense.

I have thought about my goal number of $1.2M. It feels like there are a lot of single people here who have the luxury (in my eyes) of having a goal that is for solely their own needs. But my goal includes my wife and two kids along with buying a $100-200k house. So perhaps it is a bit low but I also see these things offsetting the goal (and perhaps making it too high):
  • at 42, I'm 23 years from the 65 year social security bracket
  • my wife is probably going to be working when the kids are a bit older (and she'll have benefits and ideally I'll be on her plan)
  • I'll probably keep on consulting/contracting/trying to make successful businesses
  • if we knocked out rent by buying a house (and of did DIY for maintenance and of course still had tax and utility bills), our expenses would go down quite a bit...
Perhaps the flip side of this is two young kids, future college costs and so forth. So my inclination is to leave the goal as is but become more flexible in how I get to that goal. Ideally, that flexibility will end up in me finding my work more fulfilling (monetarily but more so making use of my skills without having some of the drudgery of regular employment). It is early days on the solo contracting so I'll see how it goes. If it eventually makes sense, I'm okay with going back to regular employment (particularly for benefits) but I'm going to ride out this contracting angle for now.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 55.3% ($664,000/$1,200,000)

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

So a couple weeks into doing remote contract work and... It's not bad? It's a rescue project with a short timeline to an initial integration testing phase with a partner. So the pressure is on me to deliver. But I don't mind it. It feels like a fair trade for a high hourly wage. First invoice should be paid at beginning of December so I'll have enough time to max out my annual 401k contribution (putting the remainder of that amount into my solo 401k as employee along with 20% of net income as employer).

Now would I chose to do this if the alternative was doing something else? Right now, I would. I enjoyed my time off but ultimately, even if my goal feels somewhat arbitrary, I still want to get to it. Plus working on other people's projects always gives me ideas of things I could make (of course, always very tangentially related to the project -- nothing around the same core area so not a conflict of interest). And the recent work is no exception. If I was to calculate out the hourly wage to a year, it's a ridiculous number but I don't see that as particularly likely/viable. It's great though as a roughly 50-70% time kind of thing with me being able to do as I wish with the other time. At least that is the theory. Let's see how it holds up for a year or so? In the short term, it's full time and maybe a bit more which is nice in terms of catching up for the time off (even though our net worth didn't go down -- we definitely did have expenses though so we ate up some of our gains).

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Contracting turned into a rush job but I figured out over time it's probably on an schedule dictated by the partner without any solid reason for the schedule. The partner is a big name insurance company. My peek from the outside into their inner workings and their internal APIs confirms I'd never want to work directly at such a place. No offense meant to any that do -- it's a career path to work at such a place and I've gone nowhere near that path. Perching on the outside, looking in from a contracting position, it's easier to try to ignore some of the employees subtle pokes and jabs[*]. I think when you're in such a place, you likely have no context of the bigger outside world and just how behind the times it feels for those looking in who have a wider range of technology experience (skewing towards the more marketable/recent). To put it one way, they are using some tech that was modern about 20 years ago.

That said, there is good reason not to pursue new tech for new tech's sake. Building on a platform with common consistency of method and protocols is a sensible choice. But there has to be someone inside of this company or some group who looks at changes on the outside and how they might move their internal systems in the direction of best practices perhaps a decade behind current tech (so they can pick the winners). With the short term focus on money making, perhaps this group doesn't exist. At a certain point, the methodology of software development within such a company is going to shift more and more towards being a liability (in the vein of banks needing Cobol developers).

A more pressing concern is that the 20-40 hours/week turned into a mad rush for a deadline. I did push back a bit and I accepted it but I'll have to be more careful about this going forward as it's required much more time on my side than anticipated. I can do this for now and packing away a bunch of money to then have some time off is great but that time off has to come. And it would be nice to have it a little more balanced. So that is an area I'll focus on going forward.

* Not explained well there but I mean flippant remarks to questions about the basics that reveal you don't have institutional knowledge.
Last edited by SavingWithBabies on Wed Nov 20, 2019 8:59 pm, edited 1 time in total.

classical_Liberal
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Re: SWB's path to financial independence

Post by classical_Liberal »

SavingWithBabies wrote:
Wed Nov 20, 2019 4:35 pm
With the short term focus on money making, perhaps this group doesn't exist. At a certain point, the methodology of software development within such a company is going to shift more and more towards being a liability (in the vain of banks needing Cobol developers).
Sounds like a future opportunity for a business! Just don't over do it, we semi-retired folks need our time. :lol:

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

I don't think I could do it. It requires a certain fortitude and interest in long term political maneuvering that would be very draining for me! Although maybe you're joking and that's the joke :).

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 55.5% ($666,000/$1,200,000)

Not including $27k in outstanding invoices for consulting (1099 so before lots of taxes).

We spent Thanksgiving at my brothers in Wisconsin with our travel trailer in tow (not setup). This weekend, the plan is to try to drive as far south as possible in order to get to campgrounds that have running water (and aren't too cold). Then slow travel to New Orleans. The wedding we're going to is right around Christmas so we have a week reserved in a noisy-but-right-in-the-French-Quarter RV park. I've been there once before but in the heat of summer so it'll being there in December will be interesting. Plus this time I'll have a vehicle so we can explore a bit more. Our kids are excited to be going back to camping again.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Net worth hit $700,250 today but with 1099 pay, there is some taxes to come out of that. But that means, with one or two more payments, we should be over $700k after taxes by the end of the year.

RV trip is going well. We're in Biloxi, Mississippi, for a week and then on to New Orleans for a week. We tried boondocking (camping without hookups) for the first time on the way down in a Cracker Barrel parking lot. It was fine. It was a really noisy one due to being right next to a busy highway but we were very tired and slept great.

Mister Imperceptible
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Re: SWB's path to financial independence

Post by Mister Imperceptible »

oh those Cracker Barrel biscuits

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 59.6% ($716,000/$1,200,000)

But some 1099 taxes owed (bit tricky to calculate as have some pretax deductions).

SavingWithBabies
Posts: 674
Joined: Mon Aug 31, 2015 2:50 pm
Location: Midwest, USA

Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 60.5% ($727,000/$1,200,000) but some 1099 taxes owed

SavingWithBabies
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Joined: Mon Aug 31, 2015 2:50 pm
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Best news this week is it looks like the contract from last year that fizzled and didn't make the final payment is going to make the payment along with a small penalty (increased amount). That amount totals almost $30k. I'll believe it when it's in my bank account but it seems to be happening.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

I tend to read the forum daily which is probably a bit too much. With the recent surge in work hours (billed 80 hours a week ago, 68 hours last week) due to two projects, I've been a bit overwhelmed. I realized that when I got grouchy at @C40 about Christmas trees! I took a break for a week or so (and am thinking I should cut back on my normal forum time a little bit too -- it's hard though as I realized I really love this forum).

I hadn't planned on working such hours -- I only started the second project because the first was start-stop with some weeks with 0-4 hours. But of course, as soon as I started what looks like will be a solid regular 40 hours/week contract, the other one got going again. It won't last but in the short term, it seems to make sense to make money while the ground is covered in snow even if it is a bit more stress than I would like. I'm actually really enjoying the erratic-hours contract because I get to do the whole thing on the tech-side. But I think 40-60 hours/week is my sweet spot. Note that is working remote with flexing maybe 20-30 of those hours to when I want to work. Thinking it through, I should probably aim for around 40 hours billable and 20 hours into side projects/learning.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 58.9% ($706,500/$1,200,000) but some 1099 taxes owed

Down due to the recent stock market turmoil.

Still working a ton of hours. Still okay with it for now. I'm dropping most other things though so haven't kept up with the reading for the investment curriculum. I figure my returns right now are better from working than studying (in the short term).

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

I bought in over past 6 weeks. Painful. But I'm in it for the long haul. I realized our cash is low though now and I should really build that back up and thankfully I have a bunch of outstanding invoices (plus one that deposited today) that should have us set for at least one year of living expenses. Probably get up to 2x cash on that and then start thinking about buying in more after seeing what happens over next couple of months. I expect to more hold it in reserve until I no longer feel like I'm catching a falling knife OR I have a good sound investment strategy that I can stick with. We're about $150k below the highs of a month or two ago. But staying the course. Nothing sold.

Biggest thing I'm thankful for is we're still quite a ways from FIRE and while I wish I'd focused a bit more on my investing education (and maybe sold off earlier, plenty of warnings/things to think about in that direction on the forum), right now I'm going to continue to focus on maximizing income. Fingers crossed the contracts keep going.

As of yesterday, we're at:

Progress: 46% ($551,500/$1,200,000) but some 1099 taxes owed

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Got word from the agency I'm working through that they actually have had more interest in hiring developers since all of this as it disrupted a lot of recruitment activities (so they, as in clients, are having a hard time getting new developers as employees). Interesting wrinkle. I also recall last time around, because I was just starting out, that the downturn seemed to impact those just starting out or trying to start out in their career more so than those with more experience (in general, always exceptions, helps to be good at what you do but even that doesn't guarantee, etc). So fingers crossed the work continues. If so, I think we should be back up to $100k cash in about another month but +~1 month to actually get invoices paid.

After we have cash reserves of ~2x yearly expenses plus a bit, then going to build up the cash chest to invest. Worry about the actual details of when to invest and what to invest in and all that until later but obviously thinking about it.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

So I think the contracting company was trying not to panic. Not surprisingly, one of the two contracts (the one I didn't think would) is putting a hold on spending so they are winding down the contractors including me. I was hoping this would be the smooth ride contract but nope! They did offer me full time employment if I wanted to be an employee. If we were living on the edge, I'd probably jump at it but... We're not, they work some crazy hours and some aspects of the project are not that great. I can overlook that as a contractor -- at least I get paid for every hour I work. But I don't want to be an employee there.

The other contract I thought would go on hold is actually launching. I should have thought about it more but I think the reason it's full steam ahead is the partner on the project is basically a "huge cargo ship" of a corporation with more than 12B revenue/year. I think the financial backing ultimately comes from them and this is the tail end of a multiple year effort (given I come in, turn it around and get them to launch within a short amount of time... it makes my rate look cheap in the bigger picture). But they still might launch into a slow market and do a "go slow" with less to no hours for a while. We'll see.

I'm honestly a bit nervous for some reason about turning down the full time employment offer. Rationally, I know we're fine. We have a bit over $30k in cash, $50k in outstanding invoices and another $15-20k in future invoices. Taxes will take a big chunk of that but we'll be fine for quite a while with that. But if I want to become an employee, I think I should look for employment that I prefer over just taking what comes along. And there might be more future contracting opportunities.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Spent some more time mulling over the potential full time offer. I decided I should find out what they are offering. There are some reasons it would make sense to accept it if it's a reasonable offer:

- we might want to buy a house/property in the near future -- easier with W2 employment
- seems like COVID-19 has potential to disrupt things for quite a while
- I should still be able to do side contracting work
- I can push to have some things a bit better for me (for example, they wanted us as contractors to work on PST time and from EDT that is a bit of a pain particularly with kids and mealtimes -- I think I can push them to at least flex 2-3 hours back on that)
- health insurance is rumored to sky rocket in cost due to the virus -- would be nice to have the employer buffer on that (both cost and group policy)
- we might want to have another kid and it would likely be a better deal under a group plan (really far down on the list but still...)
- probably won't have to travel much, if at all, for quite a while

I know what I'm getting into for the most part and it's not horrible. I'd feel obligated to stay for at least a year. But with the virus, things getting back to normal seems far out so it feels like a year wouldn't feel that long. And I don't HAVE to stay if it just isn't working out.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Asked for actual compensation numbers today from potential full time employment offer. Got a feeling of potentially being low balled but we'll see. I think they need me more than I need them but the business never wants to reveal that or be candid. Low ball feeling come from being asked about salary related to geographical location -- some startups have complex formulas that incorporate cost of living and try to make salaries "fair". I've always avoided any company that does that as it's not in my best interest and typically they fail to factor in if you're single with room mates or if you have a family or ... So many other factors besides local cost of living. Sure, a house in SF Bay Area is multiple times what one costs here but unless I'm considering buying a house in both locations, it's not really a factor.

Blah!

More just frustrated that I can run a strong narrative in my head around this topic but failed to do so when actually talking to someone!

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 50.6% ($607,000/$1,200,000 but minus some 1099 taxes)

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