The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: Northstar on October 11, 2017, 05:56:53 PM
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Brainstorming ideas here and would like some input from the rare like minded people of the world. My current situation if I were to go through with retirement right now :
27 yrs old
Serious relationship, she has a good job as a teacher- not great pay but nice benefits and schedule
Zero debt, no mortgage (would pay off before retiring)
Rental properties paid for producing around $3500 a month after insurance and taxes
Around 500k liquid for investment or security.
I’ve ran my bills and I need around 20k a year to live exactly as I currently do without my mortgage.
I own my own business but have honestly grown tired of the public and everyone’s generally bad attitude I just don’t want to be around negativity any more than I have to.
The issue: I make great money, sounds stupid I know. But if I leave now, sell out or just leave, i forgo years and years of financial security. Basically if I need 20k a year to live comfortably, and can save 200k + per year. Each year of work is 10 years of security in retirement. But currently my Rentals can pay my way, and my Stash can give me the security, and I’m sure I’ll find something else to do in the next 50-60 years to make a little money. Also not having enough SS credits worry me a bit but I’ve never counted on it anyway, what’s your thoughts? Keep at it a little longer or rip it off like a bandaid and see where it takes me ?
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Find a way to change the way you think about your interaction with people.
Believe me, I understand, I work with the public and you get jaded pretty quick.
Relish your contact with those you enjoy, and just expect to do your best with the rest.
I think you need to build a bigger stache, just because you can live at poverty level now, doesn't mean you will always enjoy it. You Won't!
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How much are the rentals worth? What is you level of interest in keeping the rentals forever (if not, then you can't rely on any returns they might be giving you beyond the 4% or whatever percent rule you follow)?
Would you have the interest, are you good at it, and do you see the opportunity to increase your rental holdings and actively manage them like a business? It would still mean working with the public, but it would be a different dynamic than working for clients (if that's what you do). That $500k could go a long way when stretched with leverage, and if you put your own labor into management and/or maintenance you could make more than you need to live on and build up the stash until it can reliably support you when invested more passively.
What is your current business? Do you see opportunities for a related (or even unrelated) business that might be more interesting to you? You can certainly afford to make a transition if nothing else.
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Thanks for the replys,
BTDretire I get what you’re saying and I do take it into consideration that it just comes with the territory I would say on a day to day I enjoy talking to 10 of the 100 I have to talk to, most of it small talk which to me is boring and most of what I’m into other people think I’m crazy ie. retiring before 30 lol. I think you are right, I need to build more of a Stache. I live very well I just have little to no bills now and make more than I care to spend so maybe that’s where some of my issue comes into play, I have options but maybe the best option is to stay the course and stick it out longer.
Terran, my rentals are worth aroind $225k-$250k range. Realestate is actually something I’m very passionate about, I plan to build a larger portfolio but instead of going 1 by 1 I’m single family I’ve been holding out for a nice multi family but they are few and far between in my area. I own another property a commercial car lot in a killer location worth about 700k with a partner, we owe aroind 120k on it and the tenant more than pays the note but we put it all to the principle instead of taking cash now. When that rent comes online it’ll boost me up another $1000 at least per month, also have a commercial lot for sale for 300k and if it sales anywhere close to that I’ll get half and will be in a better position. If I were to quit today I think I would get my Realestate license and try my hand at that a while it’s always interested me. I’m good at rentals and very handy with repairs and truly enjoy it. It’s small now but I run it as a business and would continue to as it grew. Right now I own a restaurant. Its 1 of the busiest in my county and I enjoy the work. Just not the ppl. I have about 50 people on staff anywhere from 17 yr olds to 55 yr olds and the vast differences in attitudes and personalities and schedules and the general neediness of people these days drives me up a wall. Not to mention the public. I could go into food sales but that seems boring and I’ve been my own boss since I was 21 so I’m not going back. I think the way forward is stick it out a little longer and sock away some cash, sell out, invest in more rentals and look into getting my Realestate license just for something to do and make an occasional sale for extra cash. Within 2 years I should have at least 1 million liquid( if I don’t buy a lot more property) and when the other rent comes online should be around 4500 a month passive, and my girlfriend brings in 35k a year so we should be fine. Just worries me to do it so young and give up a successful business. Seems foolish. But my heart isn’t in it. Being truly free is way more important. Just need a little more time to set it in stone.
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My sense would be if you've been that successful with a business you can probably do it again, should the need arise.
That said if you're making that much from the business annually, it seems like plenty of headroom to hire a manager, pick the best of the best, pay them well, and still net a tidy profit on the side. What am I missing with this option?
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AccidentialMustache
You are spot on. The issue comes into play with my business partner, we have absolutely polar opposite management styles. He doesn’t see the need for management, also has a large family with him being the only one providing an income so he feels he needs every penny he can get. We are 50/50 so if we aren’t on the same page things don’t happen. He doesn’t see the value add a manager could bring, where as I do. I’ve even thought to hire a manager for my tasks on the days I work and pay them directly. I would love to hire management and make half the money for very little work. He just simply doesn’t have the big picture perspective. Frustrating at times although I see it from his side too, but Personally I would rather be making good money and be with my family than making great money but forgo time with them. One day he will see the big picture but hasn’t yet. And as far as being successful I do feel whatever I set my mind to I will do well at. It just seems foolish to let go of a great thing when something as simple as employing a manager could take away a great deal of stress. But there again my partner isn’t interested in that so it adds to the stress because to me it’s a no brainer.
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AccidentialMustache
You are spot on. The issue comes into play with my business partner, we have absolutely polar opposite management styles. He doesn’t see the need for management, also has a large family with him being the only one providing an income so he feels he needs every penny he can get. We are 50/50 so if we aren’t on the same page things don’t happen. He doesn’t see the value add a manager could bring, where as I do. I’ve even thought to hire a manager for my tasks on the days I work and pay them directly. I would love to hire management and make half the money for very little work. He just simply doesn’t have the big picture perspective. Frustrating at times although I see it from his side too, but Personally I would rather be making good money and be with my family than making great money but forgo time with them. One day he will see the big picture but hasn’t yet. And as far as being successful I do feel whatever I set my mind to I will do well at. It just seems foolish to let go of a great thing when something as simple as employing a manager could take away a great deal of stress. But there again my partner isn’t interested in that so it adds to the stress because to me it’s a no brainer.
This seems like a great option. What would your partner feel about this? Is there any other drawbacks?
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Change the way you do business. If you don't need as much money, be VERY picky about who you deal with and/or who your clients are. After years of owning an HR side business, I got very jaded and started having the attitude that people suck. So, I just got picky. Now I only deal with people I like, who are enthusiastic, and who are all in. Now I love it again.
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In your immediate situation you have rental income that is already covering your expenses, plus investments, and knowledge that investments and rental income will increase in the next couple of years. Your expenses sound under control. So right now it sounds like you are FIRE if you want to be.
I would question whether you would be FIRE longer term e.g. in future may you want to have a family therefore need to plan to cover for kids' college costs etc., have you planned for/considered such costs? (With $1k to $2k in spare income plus investments not being touched you can probably pay for that as well, but that is just an example).
In the bigger picture, it then comes down to what you value. Remember that $10 when you have $0 is worth a lot, another $10 when you have $1m is worth very little. So while it sounds like you have a profitable business and would give up a significant revenue stream if you got out of it, do you actually need the money? If your current investments and rentals cover all your desired spending, would having more be worth it to you (are there luxuries etc. you might appreciate even if not necessary)? Or, would you have wider plans such as wanting to be able to donate to charity etc. if you had significant excess income.
From your later comments, the obvious move to me is to restructure your business so that you are a silent partner, and have a general manager paid to do all the tasks you don't want to. If there are some tasks you enjoy then retain the option to continue to do those. It may be that to make that change happen you need to offer your partner more than 50%, or set it up as a trial etc. or make other concessions, but it should be possible to get a still-significant passive income in that way. Which, for me, I would not give up, because even if you don't need the passive income at all for planned spending and needs, you could always give it to charity or find some other beneficial cause later on.
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Does your $20k/year include paying for health insurance yourself if the current subsidies disappear? I'd expect that, at your age, you should account for that as a reasonable cost you may need to add in retirement and it's quite substantial. How would that affect your numbers? How about other "life changes" that are potentially in your future (kids, medical conditions, maybe you develop a desire to have a more luxurious lifestyle than $20k/year can provide, etc)?
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Well, you’re definitely FI, so you can say FU to your partner. FI should mean nothing scares you. Nothing! So, hire a manager to do your work, keep some of the equity and profits and do your own thing. Otherwise have your partner buy you out. You’re set, however you choose, just stop choosing to be miserable.
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The joys of a business partner. So, why do you do any future business deals with this partner? Why don't you branch out and do the next business deals on your own? Why do you need a partner? I say keep your current affairs as they are and when future business deals arise, do them on your own. I have a business partner and some deals he is in on and some he isn't. He WANTS to be in on them all but I have a couple that are mine 100%.
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Does your $20k/year include paying for health insurance yourself if the current subsidies disappear? I'd expect that, at your age, you should account for that as a reasonable cost you may need to add in retirement and it's quite substantial. How would that affect your numbers? How about other "life changes" that are potentially in your future (kids, medical conditions, maybe you develop a desire to have a more luxurious lifestyle than $20k/year can provide, etc)?
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AccidentialMustache
You are spot on. The issue comes into play with my business partner, we have absolutely polar opposite management styles. He doesn’t see the need for management, also has a large family with him being the only one providing an income so he feels he needs every penny he can get. We are 50/50 so if we aren’t on the same page things don’t happen. He doesn’t see the value add a manager could bring, where as I do. I’ve even thought to hire a manager for my tasks on the days I work and pay them directly. I would love to hire management and make half the money for very little work. He just simply doesn’t have the big picture perspective. Frustrating at times although I see it from his side too, but Personally I would rather be making good money and be with my family than making great money but forgo time with them. One day he will see the big picture but hasn’t yet. And as far as being successful I do feel whatever I set my mind to I will do well at. It just seems foolish to let go of a great thing when something as simple as employing a manager could take away a great deal of stress. But there again my partner isn’t interested in that so it adds to the stress because to me it’s a no brainer.
Would your business partner buy you out completely or maybe a significant portion of your equity while still leaving you 5-25% as a 'silent partner'?
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Roe,
I’m thinking hard on this one, if I were to pay someone directly he probably wouldn’t have much issue but the issue would be that person would be doing the “bosses” job and would be hard for me to intergrate them into my crew and them have the respect of my employees so could create another issue and employee for myself but I’m still working on exactly when, and for what I would need that person for to optimize my time.
RockeTree,
He knows where I stand with early retirement and my dreadfulness towards the public but I don’t think he understands the severity. Anot 2 years ago I took a month and just traveled across the US, I was burnt out then. Now I’m to the point of planning the exit. When I was traveling I had this sense of peace that I don’t feel in my day to day which I’m sure most people are the same way. But to know everything is fine, financially, no stress, doesn’t matter where I end up or at what time. It was just amazing, my first taste of that other than a 1 week vacation once a year. To buy me out is his option the first right to refusal but I’m not sure he could, and honestly to run our restaurant it takes us both. Wel to run it well, takes two people with the drive and understanding to make it run smooth. Without another person to take my place that is truly an asset I honestly feel the business would fail or greatly fall in profitability. So I wouldn’t want to finance my half of the business to him in payments which is the only way he could be buy me out. But I may explore this further in the coming months.
Asaure,
I wish it was that easy! Being that it’s a restaurant I can’t pick and choose customers, anyone is welcome. Be it the overly opinionated lady who used to “be a chef” and can do what I do much better than me, to the pleasant man who visits every Tuesday for dinner that I sit and talk with each time. It takes all kinds of kinds. It just seems like as the years have went on people in general have became harder to deal with, to please, everyone thinks they are the only person on earth. And their inconsideration for the people around them gets to me. I was hanging out with me 7 yr old niece the other day and I ask her where she wants to get lunch, she says my place, so we go and get a seat and are having a conversation about how school is and this and that, and a two women walk up the isle beside us, cussing, screaming, acting like total fools in public at my restaurant. They didn’t know I was the owner, but that’s not the point. A lot of people just don’t have decency about them anymore. And I don’t like to be around it.
RobFIRE,
That’s a big worry for me, we will get married and start a family so sure right now I’m lean and doing well but I’ve got no idea the costs that kids bring and how that changes my outlook or security. I’m confident I could make do with what I have, and I’m sure I will do something else part time to make money. I’m confident that whatever I decide I’ll find my path with it. The thing is right now I don’t have a family, so if I were to retire. What would I do? I have hobbies but I enjoy them because they are hobbies. My friends would be at work lol. I’m sure I would figure it out but I’m just not entirely sure that NOW is the time ya know. I would offer him more than 50% but that 50% goes to everything. So we split our time there. Our time off. Cash. Everything. So if he went to 75% and me 25% he’d be there most of the time. And if he wasn’t there then why did I give up 25%? The time really isn’t the issue, it’s the people. I donate a lot to charity currently and would like to in retirement but I would have to give it a few months to see how it really goes financially.
Jlcnuke ,
Currently I have no health care, so that’s another issue I need to focus on. Although I’ve not been sick in about 13 years you never know what’s going to happen. And I’m sure life changes will happen, I think instead of focusing on retiring as someone with no kids I need to run my numbers as if I had a family and all and build to that for security before I retire. As far as a more luxurious lifestyle goes I think I’m pretty good, without carpayments and housepayment other bills are pretty low. I enjoy building things and being outside so there’s a lot I do that doesn’t cost a lot of money, hike, kayak, hunt. Ok hunting costs way to much lol. But 20k is just kind of a basis, if I were to stay with my rentals bringing around 40k a year. And draw down on my stache 20k a year it would last 25 years and I’d be living off of 60k a year which is way to much for me. So that’s what makes it realistic to me. I would live off rental income, then dip into the stache if need be. If it became to often that I had to pull from the Stache I’d reevaluate my spending moving forward.
MrThatsDifferent,
I understand, and I’m getting more comfortable with the not being scared part it’s just to break the cycle of working for years and years to retiring at such a young age take a minute for me to wrap my head around. I know things will be fine with whatever happens, there may not be a “right” thing to do, as hire a manager, sell part of the business etc. just trying to find the option that is best suited for the situation.
SC93,
I’ve ventured out and started a sporting goods store on my own and then later sold it and I own property on my own so I’m down with doing my own thing it’s just for the type of business we run it’s not a 1 man job at the scale we run at, it would drive one man insane. He and I own property together because we purchased it with the intention of moving our restaurant there because our lease was up at our current location and the owners will not sell to us. That didn’t happen so we rented to property out so now we just own it together. Which isn’t terrible my partner and I are great friends, we just SEE things differently. He doesn’t want to put management in and have a checks and balances system to keep it all straight and actually be the OWNER he wants to work in his business. I’m not sure he wants to, he just doesn’t see another way. He doesn’t see the big picture at all. And I do, so it’s aggravating when I’m dying to make these moves. If we were to restructure the operations where we weren’t so involved and could back away and just over see the restaurant I would be down to stay much longer it’s just I don’t want to be an employee of my business. And he doesn’t see any other way. Maybe I’ve just failed At educating him on the benifits if not working in your business. He doesn’t look for the knowledge himself so I’ve attempted to explain it to him with no success.
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dude, you're 27. stick it out a little longer. You can likely still have 40-50 years in retirement if you retire at 35-40. $20k a year just isn't very much money.
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Dude,
I feel ya. Retiring by 30 is my goal. 20k a year is just my basic expense. I actually make more off of rentals and if I put my Stache into more property it would produce much more passive income monthly but I wouldn’t be liquid anymore. If I stick it out til I’m 30 I know I’ll be set. It’s nist can I make it 3 more years?! Lol. If I retired now I’d probably be living off 30k a year passive from rentals after some crazy random expenses that always happen. Plus the misses makes 35k a year so life would be fine. It’s just knowing if I stick it out 2-3 more years I’ll be more than fine. So I might as well grin and bear it !
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Dude,
I feel ya. Retiring by 30 is my goal. 20k a year is just my basic expense. I actually make more off of rentals and if I put my Stache into more property it would produce much more passive income monthly but I wouldn’t be liquid anymore. If I stick it out til I’m 30 I know I’ll be set. It’s nist can I make it 3 more years?! Lol. If I retired now I’d probably be living off 30k a year passive from rentals after some crazy random expenses that always happen. Plus the misses makes 35k a year so life would be fine. It’s just knowing if I stick it out 2-3 more years I’ll be more than fine. So I might as well grin and bear it !
This is easier to say when it's not my money but you could get out right now and be fine. If we're talking about the MMM mindset you have almost enough from interest alone, the properties are mostly gravy. Judging by what you've said here you're not going to sit back and do nothing either so you're probably going to end up making decent money in the future just because you need something to do.
All that said, I might stick it out a little longer too. I can imagine it's hard to say goodbye to that kind of income and I would agree with whoever said you may want to consider your ability to give. A buffer to get to middle age and see where the world is at that time and then if you don't need it you can start giving it away.
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As the restaurant owner, couldn't you have asked the ladies yelling and swearing to stop or leave? Someone earlier posted that you can choose who do business with. You can't, because your place is open to the general public. But maybe if the place gets a reputation as a place where you may be asked to leave if you are acting inappropriately that could help. I know it would be a fine line, and asking people to leave could generate bad press.
I was a server for many years, and it is hard. I'm in a different industry now and still feel similar. Dealing with the public is really challenging. Is there anything you could do to restore your faith in humanity? Maybe volunteer with the elderly or something once in a while, so you can remind yourself that there are good people out there?
Why are you interacting with the guests? Could you maybe shift towards back of the house activities? It would seem to me that the point a partnership is to leverage each person's strength. If your strength is not dealing with people, then maybe you would be best leveraged doing something else, but still participating in the daily running of the business.
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Slappy,
Yeah I could have said something to them but have you ever saw someone acting like an idiot and even though you could speak your mind or let them know it’s not ok the path of less damage would be let them exit quickly and not engage them and have it turn to something bigger. It was one of those situations where they were headed for the door so I just let it ride. It’s just the point other people, children, where directly beside them and people just don’t care. I have faith in humanity, just not the bottom of the barrel majority of people. I love to see people do well. It honestly makes me super happy to hear and see people doing great and being positive and driven and motivated. But for the most part the majority isn’t that way. I know there are good people, I just don’t want to be around people with no drive or ambition or purpose. And believe it or not I am the back of the house guy lol. Just occasionally I’ve gotta deal with the front of the house.
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Have you thought about a sabbatical? Tell your partner you’re burnt and need a break. Get a temp manager to handle your duties and take a 2-3 month holiday with your family or yourself. You’ve earned that. Use that to give yourself time to think and feel what it would be like to not be working. You might hate it, might love it. But you’re burnt, be in control, do whatever you need to for your mental health.