Early Retirement
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The word goal has taken on dreaded status. Over the decades I’ve attended several informational and motivational seminars. Whenever the topic of goals comes up, heads duck. It shouldn’t be that way.
I think people dread goals because they feel obligated once they are on paper. There is also some fear of stating your goals because they entail your deepest desires.
The thing is, goals should change. Not every goal deserves consideration. It would be nice to skydive. Sure it would. But after careful consideration other goals might interest you more. More family time might be the goal you wish to pursue instead and the rewards (in your mind) might be better than falling from 10,000 feet.
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As the weight started taking its toll I adjusted as best I could. First the other blogs were cancelled. Then my farm was sacrificed. The weight of my choices extracted a serious penalty.
I have always been healthy. I did have a heart operation in junior high, but outside that I was like a machine. I enjoyed life and took the largest bite I could chew. If life is worth living it is worth living to the max.
It was easy to brush off the first warning signs. Yes, I was working long hours, but I enjoyed the work so why not.
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Traditional retirement plan contributions come with a loan attached to it with a variable rate of interest, to be determined at a later date by the tax code and your income level.
We all know that traditional retirement accounts get a tax deduction at your ordinary tax rate to the retirement plan contribution limits. We should also know that these account grow tax-deferred and that all distributions are taxed at ordinary rates.
This is a real problem if your goal is to maximize your net worth. In the early years the tax benefit makes it seem like it is the best deal on the planet. But as time passes the math tells a darker tale.
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Brooke needed a car and we spent plenty of time looking for one fit for her needs. She still lives at home so her other bills are practically zero. She helps around our house, too, so mom and dad are open to her staying until she decides where (and with who) she wishes to move forward in her life.
The next day Heather confided in us that she caught Brooke in the bathroom fighting back tears. She might have paid cash, but this is the first time her account value declined because she spent it. It wasn’t a good feeling.
A valuable lesson was learned. Spending is okay to get things that benefit you as long as you realize the price for such luxury. She could have biked to work or hitched a ride. Winters would have been hard, but manageable.
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Once I digested that it was only a number I decided to do what I always did. I try lots of things, grow my business and expand my sources of income, much of it passive.
You see, I learned the most important step of all: It’s the journey that matters, not the destination. And I had the best mate in the world along for the ride.
It was that day when I was a 32 year old man that I learned to live life for the first time. Live, for Real.
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It’s official. I’m back in the real estate business!
Before you get too excited, let me explain. Waaaay back in the day I was a third owner of a real estate partnership with my dad and brother. We bought investment properties of all kinds. We specialized in single-family homes, but owned plenty of multi-unit buildings, storage and rooming houses.
My partners were more along the lines of the silent kind. I, of course, could bounce ideas off them, but the workload fell on me. I hired maintenance staff and crews and was always interviewing potential property managers. Before we closed shop we had taken an interest in 179 buildings (not all at once). At the peak we had somewhere north of 80 units scattered all over NE Wisconsin.
We sold properties frequently once our inventory grew. We held some properties longer — our first property was one of the last to be sold.
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You might notice the bloggers spouting the same gibberish get picked up by mass media outlets while your favorite blog (that had better be this one!) gets nary a mention. The reason for this is people prefer the familiar to an honest answer that could make a real difference.
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Because a lot (most) of your gains are deferred anyway with an index fund and the tax rate is lower when you do sell (compared to traditional retirement accounts) and there are no RMDs or early withdrawal penalties, non-qualified accounts should play a central role in the portfolio of most investors.
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