Don’t Call Me Lucky
Wednesday, April 7th, 2010Author Tony DeMaio
Hi. My name is Mike. I’m 42 years old. I’m retired. That means that I’m living the kind of life I want while not working and not looking for a job. I still dabble in some investments and do some consulting, but I don’t take them very seriously.
Folks say that I’m “lucky”. I tell them it wasn’t luck. I didn’t win the lottery. They then ask me how I did it. Here is what I tell them.
When I went to high school, I studied and got good grades. My friends were out at football games, dating, building cars, “working out”, and “enjoying” their high school years. I studied mathematics and science; they didn’t study—they took “shop” courses and “business math”.
I went to college. I lived on about five bucks a week “disposable income”. I didn’t date since I didn’t have any money. I couldn’t afford the price of a free football game ticket, much less a movie or dinner. I studied hard and got good grades—I had little else to do. As I came from a lower middle class neighborhood, my friends got jobs in the trades or where ever they could after high school. They had “plenty” of money. They dated, went to bars, took vacations, and generally enjoyed themselves. They considered me “stupid”.
My grades were sufficient to get me a scholarship to go to graduate school. FINALLY, I had “money”. I had $250 a month to live on and my tuition was paid. My friends were making about $1,000/mo. Some were married and had kids. Some of the wives worked.
I finally graduated and got a “real job”. I went to work for government. My friends had a home, nice car (or two), wife, and kids. I was 25, graduate degree, no experience, but finally the “waiting was over”. The future was here. I had an entry-level job making $800/mo with the state of California. I also had essentially no physical assets. My friends laughed at me and called me an “egghead”. They asked if the $800/mo was worth all that waiting and study.
I was well prepared for the job. Within six months I was promoted three levels and had doubled my income. My friends were shocked—I was making more than they. I told them it would take over 15 years at the pay differential for me to break even with them.
Two years later, my career was skyrocketing—I had received several promotions and raises—when I made a mistake. I took a moral stand. Within two weeks, my career was in shambles, although (being Civil Service) I still had a job at a “nice” rate of pay.
I sat down with myself and decided that working for government was “nice” in that it provided a nice wage, nice benefits, and great job security. It was “not nice” in that it was morally bankrupt. I had to decide what path I would take. I could:
1. “stick” with government and carve out a foxhole and try to maintain my integrity
2. “join” the (government) team
3. find a different job or go into business for myself
4. “use” the government and stay with them, doing my job as best as I could while saving my money and retire early.
I calculated that with a reasonable rate of return, I could retire in 10 years if I lived below my means, saved my money, and invested it. At the end of 10 years, I would have enough money to live out my life without ever having to work again. I chose to do that. I transferred to another agency and began my new career—retirement preparation
When my friends purchased homes, I purchased rental property. Five years later, my friends bought their “dream home”; I bought an apartment house.
My friends talked about “paying a handyman” to do things around the house; I learned to BE a handyman. My friends paid a plumber; I also paid a plumber—once. Then I bought a book on plumbing and never paid another one.
My friends had their house painted. I painted my own house, and also my rentals.
My friends went to Tahoe and Vegas for three and four day vacations; they went to the Olympics; they went on vacation to Hawaii and Ireland. I used MY vacations to repair my rentals.
My friends bought a boat and went to the lake; I did consulting.
My friends inherited money and went on cruises; I studied the tax laws.
My friends went out to the bars and restaurants. They became “expert” on fine wines, fine food, and liqueurs. I worked overtime and became expert on fast foods and domestic beer.
My friends purchased new cars; I kept the same car (a Pinto) for 20 years—200,000 miles. The car never saw a mechanic; I did all the repair work myself.
My friends “saved” their money in passbook accounts or certificates of deposit; I studied the stock market and invested.
My friends subscribed to Playboy; I subscribed to the Wall Street Journal.
My friends spent their spare time watching television; I spent my spare time watching the stock market.
My friends were in credit card, mortgage, and car/boat payment debt up to their ears. They were spending 20% of their income on interest; I had no consumer debt.
My friends purchased nice clothes, jewelry, and thoroughbred dogs. I purchased my future.
I told my friends that what they were spending on cigarettes and booze could fund their retirement; they told me that I should “live a little”; that we could all die tomorrow.
It worked out pretty well. On my fortieth birthday, I submitted my resignation. I had done it. I had “given up” or “sold” my “thirties” in order to “buy” the rest of my life. I was “free”. No man controlled the bread I ate or the roof over my head.
My friends were somewhat amazed that within the space of two months, I sold my rentals and transferred the money to income generating investments with no tax consequences. I shut down my small business (but continued to do some consulting). I bought a new car, went on a month’s cruise, and moved into a luxury apartment. I underwent a complete change of life style.
All things considered, it all went pretty well according to plan. There were/are just two problems:
1. I have a tendency to scream, swear, and turn red or blue—sometimes plaid—when someone calls me “lucky” because I’m retired.
2. I tend to get quite aggressive, antagonistic, hostile, and at times even violent when folks tell me that I have “so much”, I should “share” with “those less fortunate”; that others have “a right” to my wealth.
With respect to the above, I’m usually content to simply state: “We all make choices in this world. Justice requires that we reap the rewards of those choices. If you will provide ME with THEIR MEMORIES during the time I was working hard, I will happily give THEM my entire fortune.” I’m USUALLY content to say that—unless they push it.
(Three unintended/unexpected consequence of the above actions were as follows:
1. I neglected to take into consideration the expense of working. As such, my standard of living has increased since I retired.
2. Because of my past history of doing my own repairs, I have become very self sufficient in my life. I need depend on others for little.
3. Because of my years studying the stock market, my wealth has grown beyond all reasonable expectation.)
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Desertrat says:
April 7th, 2010
4:56 pm
I didn’t become that well off, but by age 45 I had become independently not-broke. So, I dropped out of the organnized world. I worked when I wanted for whom I wanted on a sort of contract basis.
I’d be drinking a beer of an afternoon on what most folks considered a “workday”. Somebody would comment about how lucky I was to be able to do that. My usual comment? “The harder I worked, the luckier I got. Now I don’t have to work if I don’t want to.”
Hey, somehow I’ve made it through another thirty years without having to worry about the next meal…
Michael Mauldin says:
April 7th, 2010
11:08 pm
When Lycos went public in 1996, I got lots of questions from the press about what it felt like to be an overnight success… I always laughed and said that after 19 years of hard-work, it felt good.
When other kids were partying in college on Saturday night, I was at the computer center because the hourly rates were lower and I could afford to do more programming.
As Thomas Edison said, Everything comes to him who hustles while he waits.
Congrats on your retirement!
Tony says:
April 8th, 2010
1:13 am
Michael,
Aktually, that’s not me. (I wish I were 42.) It’s a synthesis of things I’ve observed over the years. Most of my posts are a combination of fact and fiction. Sometimes, even I can’t separate them.
rebel without a job,
tony
lynne says:
April 8th, 2010
11:23 pm
Gosh I do consider myself lucky, I survived. But I know what you mean. I had a niece tell me she wished she was disabled like I was so she could get a check from the government like I do without working. I was just gobsmacked. I wished I had said let me crush 3 vertebrae in your back, blowout 2 knees several times, oh yes the flayed chest was lots of fun. Plus just the random broken bones tears and sprains. Heck they have been worth the check that is less than min. wage.
Not to mention I paid in for the last 20+ years and overpaid when I got a bonus in the Army. Yeah I do think I have earned my check. But another buddy told me they(US Government) robbed me just as much as any mugger or burglar. What you going to do now? Suck it up and drive on.
Damn we need insurance against the Government from robbing us. Could we get a rider on homeowner insurance policy?
mmm says:
April 9th, 2010
11:10 pm
how did you have these “friends” when you had nothing or time in common with them, or perhaps you got retired “lucky” cause you were the financial leech as government on their back and against their wishes mostly…..while im sure they might have waited in line at the public library or train stations for the expensive wall street journals…mr…big shot
oldmanriver says:
April 10th, 2010
7:31 pm
Tony,
Congratulations, your hard work paid off. My story is similar except my dream was always to be a farmer. Unfortunately my ending didnt turn out as yours did although I put in just as many hours, worked just as hard as you did and sacrificed just as much as you did. By that measure you are lucky. By the time I was 30 I owed the bank and my father large sums of cash and I was a flour unloader at an ethanol plant. The farm basically went broke when the bottom dropped out of the hog market in 98. I spent the bulk of my 30’s paying other people off. Working even longer hours because I was still farming. Finally in 2006 I got everyone paid off. In 10 years I went from being the lowest job in the plant to being a plant manager of my own plant. I think that ethanol is one of the stupidest things put forth on the American public in recent years and thats saying something considering the the administrations that we have had in that same time period. I dont own my own house, believing that to be one of the worst places to put my money. I own a 2005 model vehicle that I paid cash for when my 90 model vehicle crapped out and all of my worldly possessions will fit in that vehicle. I do not own a bed,I sleep on a surplus army cot because I got tired of sleeping on the floor. I have 2 chairs, a table, a laptop and a few other odds and ends. The only thing that I have spent money on frivolously are travels to different parts of the world and food(I tend to eat a lot of fast food). Here is what I learned:
1. You have to work hard to be successful.
2. Just because you work hard does not mean you will be successful.
3. Being successful takes a good deal of luck even if it just means you were in the right place at the right time.
4. Just because you are successful does not mean you will be happy.
5. Do something you enjoy.
6. The older I get the more I realize that I dont know.
There are only 3 things which a person should spend money on once they have the basic necessities taken care of.
1. Education formal and informal
2. Friendships and human connections
3. Life experiences which create memories
In the end it really dosnt matter how much money a person has when they die. Im to the point where I believe that the people with the most money tend to be the unhappiest. Its great that you got to the point you are in life, but it doesn’t always work out that way. There is no justice or karma in life that says if you do x then n will happen.
Tony says:
April 10th, 2010
8:06 pm
Old man River,
Many thx, but as I said above, that ain’t me. The story is a combination of fact and fiction.
I suggest to you that if you define “success” in terms of money, you are doomed. I suspect that folks that “aren’t happy and have money” made money the focus of their life. The problem with “money” is you can always desire “more”, and are never satisfied/happy.
As I’ve said before, what do a person really NEED? A few pounds of food; some clothes to keep the cold out; a warm place to lay down; some useful way to spend his time. The happiest time of my life was just after my divorce. I had rented furniture, a 10 year old car, a rented apartment, some personal effects (clothes, etc), and a 15 year old 16 foot sailboat.
If you want the read a book about unhappy people, read a book that tracked lottery winners. Most are quite unhappy–and broke to boot. You see, they didn’t “earn” the money. I don’t know why that’s important, but it is.
Linda Brady Traynham says:
April 10th, 2010
8:12 pm
Tony, crew, what can I say? Perhaps that this article and the comments should all be mandatory reading in grade school, high school, and college. MDC and I are always amused when we go buy second-hand cows or used farm machinery and the owners tell us in delight that they are retiring from ranching. Charles and I grin happily and reply that we’re retiring TO ranching. We have more leisure and more joy, even on nights like this one when we have to go milk a goat and milk a second one for colustrum for two newborn kids and feed it to them. (This could really annoy us because we have two full-time hands whose time includes doing basic chores on the weekend in return for shorter work days in the week. However, this would only upset us without changing them. Very few people in any field have adequate work ethics.) Who wants to retire and do nothing, at least when we “work” at home? At our ages we aren’t going to be hazing cattle into the squeeze chute, branding them, and neutering several tomorrow, but there isn’t a thing on this ranch we CAN’T do and don’t enjoy. If we HAD to brand ourselves, we’d manage. We’ve stayed busy and excelled all of our lives, and sheer horror would be to just sit here reading and growing old and dull. Every day is a vacation for us. It’s hard to get away because of the difficulty of finding people who will be truly responsible for the livestock while we’re gone, but between us we’ve been a great many places and done an awful lot of things, and we’re happy doing what we’re doing. May all of you find a way to “retire” to doing something you love. And now I MUST go steal baby goats and feed them for the next three months so that they will bond with us and become companions and cooperative about standing still to be milked when they have kids of their old. Takes all kinds in this world, doesn’t it?! Tony, please pass my admiration to your friend, Mike.
Tony says:
April 10th, 2010
8:20 pm
Folks,
Here is a question for you:
Take 10% of what you make and invest it at 10% return. How long will it be before your investment income is equal to your salary?
Unless you’re a mathematician, forget it, you ain’t gonna solve it. That doesn’t bother me–what bothers me is that you never even thought about it.
We take our kids and send them to school where they are taught drugs, driving, sex, music, art, sports, etc. THEN we tell them to go out and be average and earn $25,000/yr for 40 years, or a million bucks, and give half to the fed in taxes and the other half to the banks in interest. We don’t teach them how to spend a million bucks.
What’s the first thing a kid buys when he gets out of school? Yep, a car–AND an expensive car. He gets in hock and never gets out.
The answer to the question??? 23 years. That tells me that any punk kid can start at 18 and retire at 41 if he’ll just save 10%. (At 18, he should be able to save far more than 10%.)
rebel without a job,
tony
Tony says:
April 10th, 2010
8:24 pm
DIMGOTTIT!!!!
HOWSE MANY TIMES DOES I HAS TO SAYS IT????
Tony says:
April 10th, 2010
8:25 pm
DIMGOTTIT!!!!
HOWSE MANY TIMES DOES I HAS TO SAYS IT????
Mike do not exist!!!! or if he do, I don’t know him.
rebel without a job,
tony
oldmanriver says:
April 11th, 2010
3:22 pm
Tony,
I couldnt agree with you more. Its interesting but I have noticed that people who inherit their wealth tend to be the same way. I have known plenty of people who married or inherited money and people who made it. The people who made it were usually a lot happier. I think we do a huge disservice to our children when we push to make money the sole reason for doing anything. I know that is something that I have only figured out lately. I can remember thinking when I was younger…if I could only make $15 or $20000 more then everything will be great. Well I would get to that point and I would be satisfied for about a day and a half. Then I would start thinking the same thing over again.
I agree about not teaching people how to spend money. Most parents spend more time teaching their child how to play some sport than they do about money management. I was pretty lucky in that my father hated sports so our quality time was spent working together. He taught me about commodity markets, how to figure out when its a good time to replace equipment, how to run a business. I remember when I was 10. At 10 years old you became an adult in our house. For my 10th birthday I was given my first gun. I was also taught how to run the tractor and was expected to do field work. When I was 12 I was given an allowance of $20 per week. It seemed like a huge sum of money at the time and it was also given to you in one lump sum at the beginning of the year. All my expenses had to come out of that $1040 dollars…clothes, school lunches,books, anything extra that I wanted. I was pretty much on my own. I was a salaried employee of the farm. That year he also got a subscription to DTN which was a satellite feed of the commodity markets and he started teaching me about them. I bought my first silver for $7.63 per ounce. I had a great time watching the markets but I also learned how they work. It was at this time I got my own checkbook and he taught us how to balance it. I learned about interest, credit cards etc etc. Senior year in high school everyone had to take a basic money management course. If you took a test and passed you could opt out. I took the test and passed with a fairly high mark but took it anyhow. Taking a class isnt the same as living it which is what dad did for me. I realize now how lucky I was to have a father take such an interest in this kind of education. Most people are not that fortunate and their parents probably never had the knowledge either. Which is exactly how our country has ended up in the mess it is in today.
lynne says:
April 11th, 2010
3:45 pm
I did have a couple of friends in the Army that did something similar to the 10% idea. They found they could live at an E-3 pay grade and invested the rest.
Not sure how well they did overall but I do know one of them paid cash for a new Benz 8 series convertible.
A good example is folks that win the lottery and end up going bankrupt. Of course they probably don’t have good money skills if they play the lottery.
Tony says:
April 11th, 2010
4:08 pm
Old man river,
Many years ago, Time magazine did a survey. They asked folks:
“What is the ideal salary?”
The results didn’t make sense until they found the key. It turned out that the answer was:
“About 20% more than my present salary.”
The effect you’re talking about is called “accomodation”. It is similar to driving at freeway speeds, then taking an off ramp and driving at 35 mph. It seems so slow for a while. Same thing with raises. It’s great at first, then you “accomodate” and “adjust”.
I once took a motivation class. The guy said that raises were much like eating. No matter how much you ate, you will be hungry again. In like manner, no matter how much of a raise you get, you will want another.
always,
tony
lynne says:
April 11th, 2010
9:19 pm
saw a study folks had a choise of making 50, 000 or 100, 000 All it depended on what others were making. You could make 100,000 with everone else or you could make 50,000 and others made 25,000 and they picked 50,000. Wow my mind was blown.
How does folks making more or less affect your life?
Desertrat says:
April 12th, 2010
7:14 am
Somehow I never worried about what other people had, whether money or things. In large part, it just wasn’t my business.
I figured out that sequential fun meant less work and effort. So, being lazy, I didn’t chase that brass ring of financial success. I had several years of sports car racing. Several years of deep sea fishing. Several years of hunting on a great deer lease. Several years of owning a 172. So, looking back, I had several decades of a bunch of good times–at relatively little cost.
Memories are forever, and the admission fee to the museum of my mind is $0. I don’t care who you are, there will come a time when that museum is all you have–pauper or billionaire.
But I and my family have lived pretty comfortably, and there’s something soul-satisfying in knowing I got up in the morning when I wanted to and not when somebody else told me to.
Personal freedom has a pretty high value.
Tony says:
April 12th, 2010
7:33 am
Lynne,
Quite simple.
If you’re making twice as much as everyone else, you’re gonna live “twice as good” as everyone else. (note the quotes)
If you’re making the same as everyone else, you’re gonna live “just as well” as everyone else.
Do you want to live “just like everyone else” or “better” than everyone else?
See “How do you see the left side of the classroom” at Whiskey and Gunpowder–http://whiskeyandgunpowder.com/author/tdemaio/
rebel without a job,
tony
lynne says:
April 13th, 2010
3:49 pm
You are right Tony, I always seem to have enough to do just keeping my own life straight that I never worried how other folks were doing.
CheriVNB says:
April 20th, 2010
7:36 am
Tony
Where is you invest your money to get a 10% return every year?
~C
Tony says:
August 12th, 2010
1:49 pm
Cheri,
LOTS of places to invest money and get 10% return. HOWEVER, you ain’t gonna get it by putting it into a CD or Treasury. Anyone can get the going CD rate. If you want more, you’re gonna hafta WORK for it.
You might look at options, or commodities, or leverage. Personally, at this time, I would simply find a good gold or precious metals mutual fund and put some money into it. Maybe GDX or GLD.
Alternatively, real estate is looking pretty good right now–particularly second mortgages. Also life settlement plans.
Here’s one for you–depending on your age. Get a group of friends together and each throw ten buck into a pot every week. One of the group is the “manager”. Buy discounted second mortgages. Usually the discount is 75%, but in today’s economy you should be able to do better.
If you don’t like THAT, get a group of 5-10 folks together that have home repair skills. Many of the repossessed houses have been trashed, but most of the trashing is quite superficial. (Holes in the walls?? Just put up new sheetrock. Stove stolen–get a stove at Good Will. etc). Go to the bank and offer to take the house off their hands if they will give you a good loan. Right now, THEY are paying the taxes, insurance, upkeep, repairs, and worrying about the vandalism. (Some houses have had the copper wiring stripped out of them.) Rent them, and in ten years, sell them. The tax breaks from the depreciation alone might get you 10%.
If you don’t like that, check out “everbank”. They have foreign currency CDs that not only will appreciate against the dollar, but also pay a decent rate. (check out Canada, Austrailia)