SWB's path to financial independence

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SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Unfortunately, the contract that didn't make the last payment a bit under 2 years ago and recently set up a payment plan did pay the first payment but now has not paid the second one. It's just under $5k/payment and there is supposed to be a total of six payments. They are a startup in the travel industry that has had prior financial issues so it's not really surprising but shucks... Not getting paid on contracts is one of the things that boost up contracting rates and honestly, I'd built it in so I was okay with it and am (as in, not kicking myself -- still want the money if they'll pay it). But it would still be nice to have that nearly $25k additional cash coming in.

There is surprisingly little you can do that actually makes senes to do if contracts don't pay. There are collection agencies and lawyers. I've tried the first one and it was not good. Lawyers get expensive fast and end up eating all the money you're trying to collect (unless you have a good connection). Massive generalizations there but that's been my experience so far (fairly certain about collection agencies being not worth it, still hoping maybe one day I'll find a lawyer to work with for that kind of thing that has an approach that makes sense).

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

I was right! Hilariously low ball salary offer. So I currently get $155/hour from the contract I have with them and they offered me $90k/year. Um... They are bottom feeders. No wonder they have a hard time hiring. I should probably be insulted but I don't think that way. I more think they have bad instincts, poor leadership and they are going to assemble a team of desperate people that only stick around until they find something better. Amazingly short sighted. I countered with $180-220k but even if they come back with something in that range, I think I'm out. I think my value system is way too unaligned with theirs. Yes, cash is cash but it just speaks to how the rest of the relationship is going to be with them. So couple more days of contracting with them and on to side projects (and/or some time on the other contract but that is probably going to have a slow spell).

Thank god for ERE/FIRE/FI/Jacob/this forum. I know I'm an oddball here but this is why I'm here.

CS
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Re: SWB's path to financial independence

Post by CS »

Gah, that is terrible. They probably think they have everyone over a barrel and can just be complete asses. Yay to your instincts to walk from them.

I second your praise for the forum. So many of my friends and family are worried about bills and losing their jobs. I try to not talk about it so much, since nominally I'm still writing as work, but being able to walk from that job in hospitals was the best thing ever. From what I've seen of hospital admins, no, I'll never trust them with my life, thank you very much.

classical_Liberal
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Re: SWB's path to financial independence

Post by classical_Liberal »

I agree with your decision as well. You've earned the right to, at least, be picky about how you earn for the rest of your life. Leave the trash for those who are desperate.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Thanks for the votes of confidence. Today, they came back with +$10k over their initial offer and I told them I wasn't interested (I assumed we were done negotiating but apparently they thought we still were). So that is over and done with.

Interestingly, the network/agency I contract through mentioned this Small Business Protection program applies to those of us impacted by COVID-19. I bank via Chase and they want a pre-existing business bank account through them. As a one person LLC, I've been lax and just used my personal account. However, my side startup has a business account there and they don't clarify on their form if it has to be for the business impacted so... I'm not sure about taking advantage of this but I filled out the form to learn more. I think how it works for my situation (which is impacted by COVID-19 as the client said they were stopping contract hours due to it), I would calculate my annual income but max of $100,000 (so it would be $100k) and then there would be 2.5 months of payroll so basically:

($100,000 year /12 months) * 8 weeks = ~$15k

That amount would be "loaned" to me but actually forgiven.

That said, seems like the program is a huge mess and banks are going to take care of their own first. I'm a small potato and they might try to filter me out by not having a pre-existing business bank account for my exact business. But we'll see.

On the one hand, I feel scummy taking advantage of something. On the other hand, I do have to pay self-employment taxes and if I am going to be diluted as a whole by these government programs, maybe I should take what is offered if it applies?

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

My plan B is to buy out my business partner on the side project and pivot it somewhat in pricing and approach (along with taking over sales). That has been going well (put this in motion a couple weeks ago) and I think I will do it. I do need to work with someone on it to bounce ideas off of and my wife is onboard with working on it together. This doesn't really have the earning potential that contracting has but it should be more stable, and likely won't require 100% of my time except in big feature/refactoring spurts (so it will up front for a while). That means I can still try other things or do some contracting if that comes back.

Overall risk is basically the same as going forward as we are now but I'm out maybe a year of "profit" (I put that in quotes because if go by the hours put in, we don't actually make any profit but such is life with a lot of bootstrapping efforts).

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Yay! Contract that was kind of the "bane of my existence" (same one that offered me $90k salary, maybe not quite bane-level*) is over and done with. Their CEO is still messing around with delaying payment on the invoices and there is a total of nearly $42,000 pending invoices but only a portion of that will be late (starting tomorrow). Plus an invoice for a couple more days for this week.

So will they pay or not? Now begins the waiting game.

The other contract is awesome in comparison. Less hours but so much nicer to work for and now we'll wind my hours down while we wait to see if the project is successful enough to continue investing more engineering time into it (which is exactly what I would do too).

* Now I go look up "bane of my existence" and see it's often used similarly as kind of a dramatic statement but not for truly horrible things.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

And another contracting opportunity emerges from the mists... We'll see if I land it but I am going to apply and interview for it. It's a good fit for my tech skills so we'll see (there were other opportunities too in the past week -- much less than normal -- but none were really a good fit for me).

Still no movement on payment but we'll see.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

With the recent turmoil I've been trying to process why I let it get to me. Will it be different at 100% FI? Or perhaps 150% FI? I suspect not however I also don't think I'd get into the same situation again (I don't think I'd be up for people offering me a job at 100% of 150% FI -- I mean in those kind of circumstances).

Is it due to putting too much value into my career/work?

One nagging thing is definitely healthcare but I think I put too much mental time to thinking about it because it's basically a solved problem as long as you have enough income (or the Affordable Healthcare Act continues and you have too little income).

Perhaps part of it is I have a hard time being an asshole. I'd rather turn the other cheek. I mostly think that is a good quality however there are all these confusing power games people play that I'm mostly oblivious to -- I do pick up some but many I'm kind of just... Yeah, whatever or not even picking up.

I'm confused. Humans are weird.

The biggest thing I've learned and had constantly reinforced is that my intuition (or perhaps logical background process) is good and I'm typically right. I kind of doubted that for a long time. I still do. But within the past 2-3 years, I'd say I've been spot on in many situations and my confidence in myself has grown. I've been wrong too but I've also learned to be more patient and to let things develop before jumping to a conclusion or taking action that I might later regret. Life is a delicate balance.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

They did pay apparently. I'm still waiting on the payment to come to me. I think there are another 5 invoices or so to that troublesome organization so it'll be interesting to see if each one is a fight.

Other contract almost down to no hours although seeing some returns on their marketing so hopefully it'll take off.

The potential new contract was at a reduced rate and I decided to stay high for now. So no new contract for me. I wouldn't be surprised if none for quite a while. But I'm okay with that. I think this year I made enough to pay for the whole year of expenses. I do feel an urge to make more money to have more to invest however there is time and I still think my earning potential is better than the rate of returns in some convoluted way of thinking of it -- basically, if I make the money now or in a year, not really that big a deal (just have to work an extra 2-4 weeks to make up the lost of return maybe but... that isn't that much effort).

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Did my taxes for 2019 so I'd qualify for the free government money. In 2018, we made just about $250k and in 2019, right around $100k. I took part of 2019 off (RVing) and in 2018 I had that "two jobs at once for 5-6 months" thing going on with the extra contracting.

For 2020, I think I'm at or close to 2019 in income already with lots of 70-90 hour weeks contracting. But that is basically stopping (going to have some hours going forward but not a ton unless new contracts start coming in). I think I'm close to off for the summer. Maybe this fall will bring more contract work back. But right now, things don't look too good (Google slowing down on hiring, lots of layoffs, etc). Could all turn around though.

But I'm thinking it's best to keep going down the path of the side project and try to turn that around. I think I could get it to basically paying our yearly expenses. Particularly if we sink some money into some land/house and no longer are renting.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

The delayed payments for the recent contract work (not 2018 stuff) came through! This should take us to well above 2 years of spending in cash (after taking out taxes). That's a relief that it isn't going to be some long drawn out battle to get paid.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Progress: 61.4% ($736,500/$1,200,000) minus a big chunk of self-employment taxes
Weight: 238 (goal: 215)

My wife is missing her gym classes and started exercising at home with Youtube videos of the classes she normally does. I joined her two days ago. Feeling sore but good and planning on continuing.

I stopped reporting my weight when we went RVing and I went off my diet. I went back on the diet 6 weeks ago at 255 pounds. With keto, there is some water weight dropped at the start, maybe 8-10 pounds, so it's not like i really dropped from 255 -> 238. It'll be interesting to see how adding exercising impacts the weight loss. I hope to get down to 215 and slowly add back carbs while continuing to exercise in order to keep a stable weight.

I put the cart before the ox and I sold roughly 3/4 of our investment holdings earlier this week. I would have sold all of it but I have one holding left at about $90k which includes $28k of long term gains and I don't know I want to increase our tax debt by that much this year (already sold some holdings with $8k of taxable gains). I'm not opposed to staying partly in and my wife so far wants to stay in on her accounts (roughly 1/7 of our investment holdings). The bit about the cart is in reference to not really having a solid plan of what I'm going to do with the holdings besides having them sit in money market accounts. But my goal is to ride out COVID-19 and/or the recession and my readings here have convinced me I can't stay in. Not now. I also know I could make horrible choices and shoot myself in the foot so the investment learning effort will receive more focus. I did drink the "buy and hold" kool aid for quite a while and I still suspect it's not a bad approach but this just feels different. We'll see.

Contract work is slow but hopefully the remaining part time one will make enough to cover our monthly cost of living for a while.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Still waiting on the personal government stimulus payment. I'm being audited for 2018 (turns out they owe me about $1500, we'll see if I get it) and I submitted 2019 and we qualify for the full personal payment but nothing on the IRS website yet. Not too worried about it but curious when it'll pop up.

I gave up on the PPP (business stimulus). It just didn't feel right to me. I don't need it. It's too blatant of a cash grab for my taste. Yeah, I know maybe I shouldn't let taste come into it but I didn't sign a ~$6k non-disparagement agreement when I felt I was unjustly fired in the past so I guess I have a pattern of turning down easy money based on my morals? It also just didn't seem like it was going to pan out and I was worried I'd put effort into something that would end up not being free after all or would eat up a lot of time.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Still nothing on the (personal) government stimulus payment.

I had a recruiter contact me for an interesting position in an early stage company. Seemed like a good fit after talking to some of the team. It would be full time employment. I'm excited about the project -- it's interesting stuff and actually user friendly instead of user predatory. And in a technical way that is baked in so can't change it later as a business decision -- at least not without pulling a drastic 180 degree. So that is kind of cool too. Now on to the compensation side of things -- hopefully, it works out.

Finally have the small sailboat back in the driveway (winter really ended up here a week or two ago). I need to get the fiberglass materials and core material ordered to finish my repair of the rotted partition. Looking forward to getting that done and getting it back in the water.

RoamingFrancis
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Re: SWB's path to financial independence

Post by RoamingFrancis »

Sailboats are great <3

Can you elaborate on the "user friendly vs user predatory"? I find that really interesting. Some people talk about technology as a set of neutral tools, but I'm not on board with that worldview. It seems to me that social consequences, positive and negative, are baked into the design.

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

Yeah, I'm not sure how big the space is so I'm trying to not be too specific but in this case, they are working on apps that run on your phone and your data is encrypted. It's only decrypted locally on the device. So that means the company can't collect the data to sell or try to leverage it for advertising or some other purpose. There is still some trust involved with a closed source app of course but...

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

IRS website finally showing something for my stimulus payment -- it's being mailed on the 22nd. I did use my bank account to pay my 2019 taxes but I guess they can't direct deposit for whatever reason (and the website doesn't let me enter any details).

SavingWithBabies
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Re: SWB's path to financial independence

Post by SavingWithBabies »

I have a problem and I've had it for a while now and it is that I don't believe in the equity model of startups. How it works is the founder keeps a big chunk (fair), the investors come in and buy a big chunk (fair to unfair -- it varies) at preferred terms (unfair, basically gives them better terms than employees) and early stage employees get somewhere between maybe 1-0.5%. So basically, if I come in as an employee, I get the option to own some very very small percentage of the company. But the typical terms are 4 years with a 1 year cliff -- so if we part ways for any reason before a year, I get nothing. At the 1 year mark, I get 1/4 of that equity. Then for the remaining 3 years, I get 1/36 (36 months) of the remaining 3/4 of the equity. Sometimes there are further equity grants on top of it that also happen -- say at the 1 year mark you negotiate another chunk of equity.

Then the company raises money and each round they create more stock and dilute everyone. Typically, the founders get a big chunk of that to keep their percentage ownership up and they sell a big chunk to investors again. Rinse and repeat and you can see how the usual result is the early stage people keep getting diluted unless they are vigilant and keep on negotiating for more equity.

And even then, what is 0.50% or 0.75% of an early stage startup? The investors expect 1 of 10 at most to take off. So you basically have a very poor chance that the company will be worth enough money that your small fractional ownership is actually worth anything.

So what's the problem?

It's that the whole startup scene always sells this equity share as "aligning the employees" in the theory that we're all working for the greater good of making ourselves rich by increasing the value of the company. But this is not what really happens in my experience. Because startups are a good way to advance fast, it attracts a variety of types that are looking to game the system. So a lot of employees are much more focused on increasing their brand value than on increasing the value of the company. So they make choices based on what is best for them not what is best for the company. And even if you're not focused on your "brand", for those who have been around the block a couple of times, it's very hard to get motivated by that tiny fractional ownership.

For me, I'm internally motivated by learning and doing a good job. And that has gotten me a long way in my career. But now due to ERE/FI focus, I find myself not having to worry as much about that monthly payment and when you step back, that tiny ownership is a joke. So the retort is now you need to figure out how to get more ownership and the way to do that is to start your own things. And I see that. I really do. However, I think venture capital doesn't work well at all. That the startup grind mostly takes advantage of more junior people by selling them on they value of equity and trying to get as much work out of them as possible. Sure, it's gotten better but I think the startup industry still relies on this.

But I got distracted. The problem is this small fractional ownership is just... Not doing it for me anymore. It hasn't for a while. So I focus on just the salary and benefits but still play the game of negotiating the options because it's expected.

jacob
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Re: SWB's path to financial independence

Post by jacob »

SavingWithBabies wrote:
Fri May 22, 2020 12:24 pm
That the startup grind mostly takes advantage of more junior people by selling them on they value of equity and trying to get as much work out of them as possible. Sure, it's gotten better but I think the startup industry still relies on this.
This holds for any industry that requires grinding (literally and figuratively). Up or out industries. Academia that dangles a professorship for the 1 in 10 grad students who make it. Law firms make people work to maybe eventually become a partner. Any kind of asymmetric reward scheme, really, the newest being competitions that only pay the winner. It works as long as everybody believes that they're the exception who makes it big.

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