jesmine's journal

[jesmine]

I'm starting this journal to help myself process my ERE journey.

Pofile: I am a 34 year old male married for twelve years and no children. Both parents were Amish at one point but never officially joined the church. Except for two years, I lived my whole life on a 10 acre farm my great-grand daddy bought in the 40s. I am an INTJ, Enneagram type 6.

Skills: In the last two decades I did paid labor working as a dairyman, framer, roofer, siding installer, solar system installation, produce deliveryman, stone mason, apartment building maintenance guy, kitchen carpenter, and undertaker. Aside from paid labor I learned other skills of basic plumbing, vegetable gardening, horsemanship, basic automotive and tractor repair, welding, basic woodworking, freediving to 27m, home remodeling, rotational grazing, etc. I bicycled across the US, and learned to ride a 6 ft. unicycle.

Finances:
Assets:
$45k in 401k
$7K in IRA
$26K in checking
$68K in brokerage account
$75K in precious metals
TOTAL NET WORTH: $221K

Current job $50/hr @ 40+ hrs/week. Four-day work week. After taxes wage income = $1500/week.
DW income is around $12k/year
No outstanding debt.
Biggest liabilities: Food, transportation, rent
Total liabilities(living expenses) for DW and I in one year = $24,000

Goal: I want to be able to SWAN while not needing to work for income.
Two years ago, my wife and I committed to one year of not working for income. We sold the car and lived for a year doing whatever we wanted. It was a very enlightening, enjoyable experience. The last month was the most uncomfortable. Knowing I was going back to work for the sole purpose of making money caused anxiety and gave rise to a desire to quit the "vacation" early so I could "get on with it already". As soon as I can SWAN, knowing I don't NEED to do anything for money, I'm ready for the next phase of life.

[jesmine]

The most pressing issue to address at the moment is our living arrangement. At the moment, my parents own the farm property which consists of a main house and barn, a greenhouse, and another house with the apartment we are living in. The current verbal agreement for the last ten years and currently is that in exchange for renting the farm, I will pay property taxes, maintain the buildings, manage the farm and pay utilities. At my parents' decease, I will inherit the property. For many reasons, this arrangement is rife with potential problems. The property was recently appraised at $1.15 million. We are working with attorneys to avoid 4.5% inheritance tax and eliminate the possibility of dad changing his will at the last moment. We would like to do this by setting up an Option to Buy contract which would give me the option to buy the property for $1. Oddly enough, the Option to Buy contract at decease is very common in the Amish and Mennonite communities. It bypasses capital gains for the seller even if the buyer prepays on the principle, and bypasses inheritance tax while at the same time raising the tax basis of the property to be equal to the appraised value. Still looking into this.

It would seem at first glance that I would be INSANE to refuse such generosity from my parents. Acquiring a $1.15M property for no downpayment, no principle, and no interest payments.

This type of arrangement is not well understood by mainstream American culture anymore. When was America no longer agrarian? Stewarding financial capital has become a major industry. Social capital is somewhat resistant to financialization, and in this case, built up and maintained by the example of elders in relation to their young. I saw dad manage the farm and his finances while granddad and grandmom become old and passed, and now my wife and I are the next in line. Only if we want it.

Oddly enough, bringing clarity to the arrangement is simple. Difficult, but simple.
My practical skills will take me a long way. My soft people skills need some help.

Skills to Acquire:
1)Learn how to become aware of obligations and expectations.
2)Learn how to identify unspoken obligations and expectations.
3)Learn how to negotiate.

David Graeber has some good insights on this overlap of social expectations and financial contracts.

[loutfard]

Thank you for sharing your story. I'd be interested to read the next episodes.

[jesmine]

I am beginning to realize that I'm much closer to ER than I may want to admit. Sub-letting farm buildings and and renting the main house on airBNB will alone provide enough income to cover all our expenses and maintain the farm if I do the labor. Maintenance is fun and fulfilling. I'm good at it and I love it. I feel in my gut that saving more cash for a CD or brokerage account isn't really solving a problem that exists.

I'm not sure exactly what the holdup is. Why don't I quit my job if I could? Quitting the job feels like letting money sit on the table. I have this fear that in the future I will need to withdraw from savings to solve a problem. At this point, I would interpret going back to work as a failure to plan adequately. I may be falling prey to the "I might need it someday" trap. Maybe the only real reason I enjoy working is that it dissuades me from fearing falling short on cash income. I don't think I would be feeling this is if my parents were not living on the premises, even though I technically don't have a financial obligation to them. Even though they are about to sign papers to give me the Option to Buy for $1 at their decease, it seems as though I'm freeloading off of them and I'm not truly self accomplished. For a number of years I've only worked three days a week away so that I could better take care of the farm. Looking back, if I would have worked for money instead of "sinking" time and labor into the farm, I would have an additional $300k pretty easily.

So if I would quit my job now, I would feel like a freeloader somehow. I want to deserve what I have, not rely on the generosity of others. OTOH, I've been extremely generous by being willing to maintain and manage a property for a decade that was not legally mine. That had an opportunity cost, and a big one at that.

Looking back it was unwise, but here we are.

[thegoldenpath]

I would offer some thoughts regarding you thinking about your decisions being unwise. This goes into some of what you were saying about success in my journal. While I have never been a farmer, I've worked around people who farmed and I feel no qualms in saying that after a decade of farm work you definitely gained at least 300k worth of skills. It also seems like you have a robust social capital with your family. You're concurrently expressing feeling of being a free loader and having surrendered massive opportunity costs with regards to your family. Perhaps its "balanced"? Do your parents think you're freeloading? I think you may be far more successful than you think.

[delay]

Welcome and thanks for sharing your story!

Current job $50/hr @ 40+ hrs/week. Four-day work week. After taxes wage income = $1500/week.
DW income is around $12k/year
Total liabilities(living expenses) for DW and I in one year = $24,000

Sounds like your income is 48*1500 + 24.000 = 96.000 a year. You spend 24 out of 96, so that's a (96-24)/96 = 75% savings rate. That's pretty good.

Maintenance is fun and fulfilling. I'm good at it and I love it. I feel in my gut that saving more cash for a CD or brokerage account isn't really solving a problem that exists. ... For a number of years I've only worked three days a week away so that I could better take care of the farm. ... So if I would quit my job now, I would feel like a freeloader somehow.

There are other income options besides 40 hour jobs or investing in the stock market. Taking care of a farm is certainly one of them. If you enjoy that, why not move in the direction of taking more care of more farms?

Goal: I want to be able to SWAN while not needing to work for income.

What does SWAN mean?

[thegoldenpath]

SWAN= sleep well at night. A personal metric that means your personal finances are in a state as to cause you no worries as it were.

[jesmine]

Do your parents think you're freeloading?

Not at all.

On a different note... I've never been really very particular about reviewing expenses and income. We write down everything we spend in a budget book but I never really took a good look at it. I think that reviewing expenses/income MONTHLY will 1) help me to question some spending habits 2)give me more confidence to quit my job after income from assets is adequate because average monthly expenses are so predictable 3)eliminate guilt about spending habits I "knew" were expensive, but after doing addition finding out it's peanuts. 4)focus on the low hanging fruit(easiest things to cut/change) 5)observe the stability and rate of income from assets.

[jesmine]

After reading jacob's post where he said,

I'll say that I for one have come to the point where "enough is enough". When it comes to letting "team" interfere with "important work", my strategy is now to avoid dealing with "fools" as much as possible. There's just no way to win. The more things change the more they stay the same. I don't believe that new methods like sociocracy or @riggerjack's software-to-be-invented (but good luck!) will change things, so I now prefer to work around it; building a moat between myself and the fools.

I have finally come to realize why our living arrangements, tied so closely to social capital, bothers me so much. I absolutely despise picking up the tab for the "team" when the "work" isn't getting done. If the "work" is getting done, then I'll do anything for the "team." This will bring clarity to my strategy going forward since I can be aware that even though I love living with family, I will no longer try to trick myself into thinking that there are no fools on the team. In order not to compromise on our values of financial autonomy and personal autonomy on the ERE road, our lifestyle design needs to account for the fact that the people we are essentially inheriting the farm from make foolish financial decisions, i.e. sell the farm to me for $1.

But from their perspective it looks more like, "we really want jesmine and his DW to stick arounnd because he has all these skills we benefit tangentially from, and we don't really want to care for or manage the farm ourselves. Additionally, we don't have the imagination to think about how our life could be different because we've lived here for 60+ years. We feel no additional security in having more than 300k in the bank. Moreover, we value the fact we can live in peace and quiet on the land we inherited from our parents knowing jesmine and his DW will take care of the place and we can die without a care in the world. And if we need a little help in our old age, we've got someone with a strong mind who can help us figure those problems out when we get there."

The question for me, is can I win in this scenario. I totally vibe with the "build a moat between myself and the fools" strategy. Removing oneself completely from the land of fools cannot be done, for wherever you go, fools abound.

[jesmine]

Some of those ERE staples have/are going up faster than the official CPI metric. Energy and food costs have exploded in recent years while new flat screen TV's and clothes have gone down in price.....everyone needs to do a pulse check and figure out their own basket of goods.

The other missing thing from your list would be housing, whether ownership and all that entails or the costs of living at someone else's place (rent or otherwise). This has also gone up quite a bit beyond the CPI in many areas.....though not everywhere.

My first glance into ERE had me thinking that this lifestyle could be replicated by following some simple rules on how one uses their time and money. I imagined that the lifestyle of everybody on the ERE path was very similar. How wrong was I.

While the PA state minimum for a gallon of pasteurized milk is $4.76 I can reliably find clean raw milk for half that price. Post-covid there was a period where eggs were outrageously priced at the supermarket, but not a few miles away from that same supermarket I can find $2/dozen with fresh orange yokes. These prices have been relatively stable for us for years. The cost to access the milk includes a good relationship with the dairyman, because he doesn't let the "public" open the valve on his tank. Of course, everything is in flux and in ten years, all the small dairies could be empty.

To say that ERE staples are going up faster than the official CPI metric is misleading. Its akin to saying ERE transportation costs are going up faster than the official CPI metric. If you walk? If you Uber? If you bus or train? If you use a clapped out '89 Subaru? Biking?

What is an ERE staple? 2lb bag of oatmeal at whole foods? One whole dairy cow ground up at the local butcher for total cost of $3/lb?

[Laura Ingalls]

Welcome

You would definitely develop some interesting perspectives as the offspring of ex-Amish. I am definitely curious and think you could add a lot to the conversation here.

I know from my husband’s family that generation succession in farming and ranching can be very, very tricky. DH family definitely fetishized “the land”. They talk about people “losing” land even if people choose to sell.

[jesmine]

Last week, DW and I signed an agreement with my parents who own the farmette we manage. The agreement was drafted by an attorney and secured by a mortgage. It states that if my parents sell the property in part or in whole, we will receive a 27% portion of the market value of the property at the time of sale.

This is a big deal. Last night an ajoining property of 1 acre with a house and barn sold for $925K. My parents farm property, where we live has 10 acres with two houses, a barn, outbuildings, and 30x70 shop and hoop house. So, in legal terms, our net worth just increased by about $500k. This is comes with a feeling of relief after a decade of investing time and energy into the property with only verbal agreements. Now that it's on paper, new feelings are emerging and it's re-jiggering my thoughts for financial planning going forward.

The parents will states that we inherit the property when they die, but wills can be changed. Frankly, it is unfair to the rest of the siblings. They are all aware of the situation but assume we will be the primary caregivers for my parents as they age. With this agreement, we have the freedom to move off the property if the situation becomes unbearable without the risk of losing financially as well.

[delay]

Congratulations! These legal constructs are interesting. Your parents did not give you an ownership interest in the house, but the right to 27% of the farmette's value when your parents sell it. What happens to the agreement when the farmette changes ownership by inheritance?

[Henry]

We sold the car

So you're Beachy Amish.

[jesmine]

@Henry, technically no. But as they say, you can take the man out of the Amish, but you can't take the Amish out of the man.
@delay, the agreement will pass through to the estate. At this point, DW and I are in the will to inherit the entire thing, but I feel this is unfair. So if we would sell after inheriting, we could point to the agreement for fund allocation to the siblings.

I'm reading The Alpha Strategy by Pugsley, and thinking seriously about stockpiling a shit ton of coal, since we burn it for heat. If I figure for more than plenty, I would stockpile 3 tons for a year. This shit can get wet, won't evaporate like gas or leak away like oil. This has all kinds of risks and fun problems to solve just like any other "investment."

[jesmine]

I don't know why the hell I'm writing a journal. I know I should be interacting with other people on their journals to get the best out of this journal writing thing. Frankly, I'm fascinated on reading journals from 10 years ago and it's taking up all my ERE Forum Reading Time.

[ertyu]

You're writing a journal bc someone 10 yrs from now will come and say, "I'm fascinated w reading journals from 10 yrs ago..."
There's no rush, interact or not on your own time

[jesmine]

RIght now I'm working through the realization that I could retire, that is, do relatively nothing but manage and maintain the property I live on. There are a few components to this realization.

I feel scarcity when I think about choosing to quit my job altogether. I wonder if this feeling comes from enjoying the safety and security of a steady good paying job and that with time, I will learn to enjoy the safety and security of time freedom. Maybe this fear will be overcome gradually in time as I become more comfortable with my savings turning into investments for an income source. When I logically consider that my non-work income is greater than my living expense, it doesn't fully mitigate the scarcity feelings. If the worst case scenario for retirement is that I fail and need to return to the workforce, I fear that I wouldn't be able land the high wages I currently enjoy.

As an enneagram 6, I am strongly motivated by safety and security and so it would seem to me that the next logical step would be to get clear as to what a SWAN strategy looks like.

[jesmine]

I'm reading early forum posts and learning how to search for the info that's relevant to where I'm at in this whole journey. There seems to be a very heavy emphasis on money issues here on the forum. As of this writing, there are:
ERE Journal posts, 66K
Money & Investment, 41K
Philosophy & Lifestyle Questions, 40k
Technical Skills & Tools at 15K

This may suggest that those who seek ERE and post here over-value money getting. IMO, of all the skills that one acquires to achieve ERE, money getting skills is one of the easiest to develop. From an ERE perspective. Money-getting is not particularly valuable if your money expenditure is very low. "C'mon man, get off your butt, make some money. It'll take 5 years minimum,10 years max, and you could be done with 99.9% of the "work" required for money getting"

It is conceivable that when I have a feeling of scarcity in relation to finances, it may be tempting to double down on financial accumulation when what is really needed is the development of other skills that are completely disregarded, sometimes unknown, chronically undervalued, and often openly disparaged by family, friends, and society.

On any skill acquisition, see viewtopic.php?t=12598

[jesmine]

I liquidated precious metals and trading account to cash off a small rental property. My carrying costs include taxes/insurance/maintenance is less than $5,000 per year.. Market rate for rents are around $1200/month but I would only need to charge $800/month to maintain 3% withdrawal of full price paid. I already have good tenants that I've known for years that would like to stay for a while.

For some reason, this pivot from a liquid position in capital markets to a position in real estate has caused me to really think about capital appreciation and cash flow dynamics. I have all the financial capital I need to retire. 90% is in real estate which, for some reason, is really helping me with SWAN. Learning how to modulate the cash flow is going to be a fun skill to learn.