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Subject:  Re: What to do AFTER the house? Date:  5/8/2005  3:36 AM
Author:  PaulEngr Number:  38261 of 46936

One respondent, cocomurph1, pretty much paid off a certain gentleman's debt that he may recall by putting it all in perspective. That's probably why as of this writing, there's 20 recommendations on the post.

First off, let me get through some mechanicals here. Several people mentioned certain monetary things like making sure that I've covered all the basics (insurance, kids education, etc.). Let me summarize:

1. College and other higher education programs have been growing in price at double digit rates for some time now. I don't expect this to continue forever since they are outstripping the cost of living and will eventually be "expensive", but at least for the foreseeable future, I better plan on continued high single or double digit growth rates. The kids are <3. So I'm planning on the money for college and actually $8K a year is sufficient (it's not $6K in a Roth of 2005+, it's now $8K).

2. Reading your post, I get the impression that you've got a great salary and strong foundation for your future, but that you've still got to work in some capacity today. Make sure that you keep your head about you and be sure that you're prepared for the eventualities of disability, disease, or premature death, because any of those can ruin the best laid plans.

As to health, I've got LTC. Disability is covered very nicely as a benefit by my employer and my wife's employer. In my case, it's mostly because I work in "heavy industry" where it is so trivially easy to get squashed or turned into a pickle or a flaming marshmallow. So unlike a lot of folks, my wife and I take the whole disability/long term care thing quite seriously as a consequence of dealing with the possibility of needing it on a daily basis.

In addition, I get annual hearing, basic phyiscal, and eye exams. I get EKG & full blood workups (cholestorol, blood sugar, PSA) every other year. So far, I have some abnormalities but they are all related to being in excellent physical health (low heart rate and such).

I shelled out for term life insurance though in case I bite the big one (primary wage earner). This means enough money to cover paying off all outstanding loans (mortgage) and enough income to cover all expenses fully for 5 years. I can handle loss of my wife at least financially.

3. Several people mentioned maxxing out 401K to achieve retirement earlier. This may make sense for those whose goals are to hit the magic age and then switch 100% from wealth producers to wealth consumers, it is not in the psyche of myself or my wife to live in that fashion. We will continue to contribute to society in some fashion for the rest of our lives. For that reason, we will probably start a business or do some other such activity even if we retired early. So we have no value in early retirement (as retirement is conventionally known). Even if we do, we need those assets to be more liquid than they are in retirement accounts where the money can't be used until we actually retire in some fashion. So it has no value.

Furthermore, if we continue to contribute at our current rate and we use conservative growth rate estimates, our income in retirement will substantially exceed our current living expenses (what's left after taxes and saving). If you can live well beyond your means in retirement, then in my opinion, you should be looking to strike a better balance. That's why there was no reason to continue saving at a higher rate.

If I retired today, we'd have to live substantially below our means, but we are at least capable of doing so already when I'm 34 and my wife is 28!

4. We've got an arbitrager in our midst:

I would give some thought to the notion of whether paying off the mortgage is the best use for your money. The reason is the 5% rate. If that is a fixed rate, that's cheaper than the cost of living increases. That means you will be paying this back with cheaper and cheaper dollars as time goes on. I think I would, rather, perhaps save that money in a separate account and build up the reserve to pay it off if you wanted to. A good investment advisor ought to be able to help you get better than that 5% as a return on your money.

In other words, arbitrage is a good thing. I hardly disagree either. We did the same thing with the student loans...saved the money and put it towards better growth vehicles until it just became more trouble than it was worth keeping them. Then we just paid them off in total.

5. Multiple suggestions to take cruises and European vacations.

Mrs Poz has convinced me that we need to take time off to "smell the roses" and her favorite manner of doing that is cruises to various parts of the world. To the savers, it may seem extravagant. However, if one were to do a thorough comparison that included travel costs, entertainment, meals at nice places, an exotic places visited, we have found that cruising offers a very nice value.

Due to the rarity of my resume material, we've been forced to move around the country quite a bit. So in essence, we have "Marco Polo'd" things quite a bit. I've lived in several places that are at least 6-8 hours drive apart, so essentially they are all completely different regions of the country. We routinely day-trip it at least once a month. Classic LBYM.

The downside is that most of the vacation time is tied up in visitting family. It finally worked out fortunately this is really the first year that I'll have any vacation time to actually take a "real" family vacation that isn't simply visitting relatives. Now my wife and I are mostly debating about how to use that time.

Essentially, we've got the money but not the time. Best we can do is request unpaid leave.

BTW, I appreciate redneck sense a lot. I grew up on a farm. My wife & I laugh not only at the jokes on "Blue Collar TV" but even the audience since the "big town" nearby for our shopping excursions at one time was Athens where it is filmed. All of the places I have worked have been 99% rednecks.

6. A suggestion to splurge a little.

While I'm not in your shoes, I understand your predicament completely. With means that outstrip your goals and a deeply ingrained scarcity mentality, it can be quite a foreign concept to learn that "hey, it's okay to spend." What might help a bit is actually putting together a budget item that says "entertainment." It can even start small - say $50 a month.

We have that already. We budget everything, especially entertainment. Let's put it this way. How did they invent copper wire? A Scot and a Jew were fighting over a penny. My wife and I have Scottish heritage. It may be a cultural problem. From some of the research I've read, as a group, Scots tend to be extremely aggressive savers.

When it comes to me, I'm one of those "don't buy anything unless I actually need it" guys. And then I don't buy the cheapest thing that will work. I will buy the most expensive one that has every feature I want and will last until I die. So I don't spend money often, but I do it in very large increments.

My wife is similar. She can go into one of those warehouse stores. You know, the place where you go to spend $50 and you come out with $300 worth of stuff? She'll amass $500 worth of stuff in the shopping cart. If they don't have the $50 item she walked in to buy, she'll say "I don't really need the rest of this stuff" and we walk out empty handed. Even if they have the $50 item, she might only buy one or two others. For her, the entertainment is in the SHOPPING, not the buying.

7. One thing I would NOT do is buy "rental property". Yeah, a monetary return may be there but you will work for it ... not to mention it'll be a guaranteed source of stress and headaches. If you have the urge to own more property, I'd suggest a couple of solid REITs. The "cruise" thing has appeal or have you thought about a place to "get away" once in a while.

I keep looking at the rental property stuff and it's been recommended several times. But each time, I keep coming back with more questions and "pits in my stomach" than answers. It appears that there's something to it, but the best scenario I can see is going the duplex route where we live in one of the units. Trouble is that this is also the housing style that is most dramatically opposite our lifestyle. We're "wide open spaces" kind of people.

The only guy that I truly trust the opinion of in that business owns several units and is a very good family friend. The trouble is that being a landlord is literally a business for him. It is nothing like passive investing. When I approach it from the passive investment angle unless I consider REIT's, I just can't get over a lot of issues.

8. Multiple "take a vacation" suggestions. You've worked hard and while I don't suggest you start to squander I do think you deserve to enjoy life. I've found that one trip where I really treat myself well is worth three where I was being overly 'economizing'.

In my line of work, there's a lot of physical labor involved. It is also highly detail oriented and there's a lot of planning. So you can trivially "lose yourself" in your work. I'm on call in the middle of the night too. When I'm not on vacation, I really can't ever actually stop thinking about work 24/7.

I've had much more success "losing myself" and breaking the work thought-pattern since I moved to NJ than any other place I've lived in. The only annoying thing about NJ is that it is also the most expensive place I've ever lived in. Then again, listening to the local Bloomberg broadcast from NYC puts it all into perspective. The other day they said that "average" prices for housing in Manhattan "only" went up 18% last year so that the average is now $800K or some ridiculous number like that.

The rest of the suggestions boil down to something like this:

Now that I've "made it in life", take a look at the things that need to be improved and work on those. For instance if the job basically sucks, go find another line of work! I'm now on my 7th major industry relatively speaking. I like my job. Everything is big, heavy, and the environment is downright nasty almost all the time. You've got to be smart and tolerant of a lot of rotten physical conditions and willing to be a team player. The weak simply don't survive. About 80% of the new hires don't last two weeks in spite of aggressive pre-employment screening. That means that those who are left are smart, loyal, and easy going. It attracts people who are great to work with.

I've got a good boss, and I'm making a positive impact. I can visibly see already where in 4 months, I'm making visible changes to the culture.

Would you also enjoy or even prefer something else? You are in a position to change careers from doing what you do to doing what you love. I know of a mechanical engineer who retired at 48 and became a field research assistant to a geologist. He travels for pleasure (and incidental learning) in winter and during the part of the winter that he's home he does engineering consulting. Come spring he reconnects with a geologist who needs help with summer field work, though there is no budget to pay anyone.

I think I would. But I've got to develop certain skills before I can get there. Without those skills, where I'd like to be would make me very, very miserable. I realize my limitations though so I'm working on them. This takes time.

My wife would very much like to live in another part of the country. But my career field has certain geographical limitations. Right now, after the last career/job change, I also addressed those. I'm well on my way to making us both happier in the future.

I hope you will take another look at helping others. I agree that writing a check to a large organization can leave you disconnected, butI think you can get more creative with your charitable contributions. Why not pick a local school, children's center, etc, and see if you can make a real difference in some people's lives--not just by writing a check, but by getting involved? Or travel and experience a different culture while assisting the folks in bettering their communities. More fun than a new RV by a long shot.

I don't even give to the United Way (what a waste of your money). Instead, my wife and I help people on a personal level. Far more fun and rewarding than plunking our money down on something.

Saving the best for last...

If you are not practicing the " Three L's"....."learning, loving and laughing".... you may be walking around, but IMHO, you are essentially "dead".

Incredibly true! I grew up in one of those sick/twisted truly disfunctional families. The problem was verbal abuse. I've moved twice since the last time I had any contact with them. I think they think I dropped off the face of the earth, especially since I moved almost a thousand miles each time. There's a lot of hurt there. My wife worries that I haven't "gotten over it". While that may be true, I don't know how you ever "get over" that kind of thing. You just recognize the cycle of abuse and put a stop to it. The emotional cost exceeded any benefit of continued relations so unfortunately, I had to quit paying.

Also, my last job pretty much summed it up. Although I learned a lot in the last one, I was working 12-16 hour days 6 days a week and putting up with nothing but constant abuse from my boss. The guy is a real piece of work. He treats his wife and kids like crap too. I can't believe she hasn't divorced him yet. It's the only job I ever walked away from with a smile on my face that lasted for a week. I was supposed to be having some of the happiest days of my life (having babies) and instead, I was utterly miserable. As soon as I had a chance, I didn't look back. It has done untold damage to my marriage.

As I climbed the ladder of "success" in the corporate world, I thought I had to have the big house, new cars, etc, etc, ad nausem. What utter bull...and a tremendous waste of resources! "Things" mean nothing....people and relationships mean almost everything. So now, despite the fact that I am semi-retired and could afford better things, I live in a small condo, drive a 10 year old car.....and use the money I save for pursuing the things that make me and those I love smile.

See, that's where I started this at. I disagree in part. There are some basic things that you do need in life. You need to be able to put food on the table. You need some place to live. You do need health/LTC/disability insurance. And you need to be able to be "financially independent" in order to provide for those basic needs. You do need a car (at least in most cases). And at least early on in life, you will spend a good portion of your emotional energy worrying about money. But once you get beyond to the point where essentially, you really don't have to worry about money anymore (I don't mean you can languish and totally forget about it...just that it is not a major impediment to the basics), then the goal becomes something else entirely that has nothing at all to do with money (at least directly).

At that point, you stand at a crossroads. You can do a whole lot of emotionally bankrupt things like investing for investment's sake, or buying certain things just because you can (big house, big car, big boat, fancy cell phone, toys). Or you can pursue completely different goals like those you mentioned.

My first post was partly framed in a financial context but I was looking out beyond the finances. I find myself spending more time now focussing on things which have very little to do with money.

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