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Financial Freedom: Work

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This is the third post in a series about aspiring to Bumhood—that is, achieving financial freedom so you can get off the day-job treadmill and gain control over the way you spend your life. Today let’s talk about gainful employment.

One of my editors at Arizona Highways told me about the anguish he felt during a three- or four-month period of unemployment after he’d been laid off a job. His wife earned a good salary, so it wasn’t that they didn’t have enough to live on. But he felt devalued as a human being. The words he used—I remember them to this day—were “If you don’t have a job, you’re nothing.”

Well, no.

Paid work exists for one reason and one reason only: to put food on the table and a roof over your head. You are not your job!

Some of us feel a calling for certain kinds of work. From the time I was about six years old, I wanted to be an academic, for example (having no clue what that really meant); my ex- always wanted to be a lawyer. Many of these callings are none too profitable: teaching, for example, is poorly paid in relation to the actual number of hours a good teacher puts into the job, and I don’t imagine many clergy or social workers earn much. Some of us still have no idea what we want to do when we grow up, and so have to take whatever job comes along.

Truth to tell, unless we fall into a large inheritance or win the lottery, to achieve financial independence most of us will have to pass part of our adult lives in a day job. We need to earn enough to provide for our children and to establish our own permanent financial security. This will likely entail holding a job for at least 15 or 20 years while at the same time practicing some basic money management.

So…what to do to make a living? Whatever brings in some cash.

Do you need to earn a six-figure income to break free from wage slavery? I don’t think so. Certainly SDXB did not: he was a reporter, and although The Arizona Republic paid a decent wage compared to other publications in this right-to-work state, it still wasn’t great. The period in which he made good pay as a freelance PR man was brief, during the bubble that occurred right before the savings and loan crash, which led to a recession almost on a par with the one we’re seeing now. But he did have an income, and by dint of frugal living and steady investment, he managed to step off the treadmill at 47.

Similarly, the Adirondack Chimney Sweep passed most of his adult life in modestly paid work, but because he lived within his means and had built a small sideline, when the city offered him a buyout long before he’d reached retirement age, he was in a position to accept. A friend of mine cleaned carpets for a living. He retired a millionaire, gave the business to his son, built a beautiful house in the woods, and went fishing.

I believe if you live sensibly, stay out of debt, save regularly, and invest your savings, you can build financial freedom no matter what you earn. I know a corporate lawyer who earns a fine income, but because he never put a high priority on managing his money, he’s still trudging to an office every day—and he’ll be 70 next fall. Others who have held lower-paying jobs as teachers, tradesmen, nurses, or, like my father, merchant seamen have been able to quit working altogether or to start new careers that pay less or interest them more.

There are three tricks to converting a job, any job, into financial independence:

1. Live below your means.
2. Develop more than one income stream.
3. Save and invest all funds not needed to cover living expenses.

Living below your means is going “live within your means” one better: the trick here is to stay out of debt and to live sensibly enough that you don’t spend all your income. Then use your unspent income to build savings. If you have a 401(k) or 403(b) to which your employer is contributing, be sure to take advantage of that. But save more, above and beyond pre-tax contributions from your salary.

As part of his strategy to quit his job at the earliest possible moment, my father never went into debt. Any debt. All the time I was growing up, we lived in rentals. He didn’t buy a house until he had the cash to pay for it in full. Now…he had some ugly reasons for this that had nothing to do with personal finance—I’m not giving his bigoted thinking enough credit to describe it here, except to say it was a symptom of the times in which he grew up—but the practical effect was that all the money that might have gone into house maintenance and mortgage insurance went into his savings, which he invested for the long term. The less debt you carry, so-called “good” debt included, the more you can save.

From my own experience, I can see that having a side income stream is crucial, especially if your day job is modestly paid. Teaching on the side allowed me to pay off the second mortgage on my home a year before the Great Desert University canned me. And, when my beloved employer kindly delivered six months’ notice that my office was to be shut down and I and all my staff thrown into the street, I landed a noonlighting job that allowed me to rack up a $10,000 cushion. It will keep the wolf from the door during this difficult 2010, when Social Security rules will bar me from earning more than a subsistence wage.

I feel extremely lucky (or maybe smart?) that over the years I’ve developed more than one set of marketable skills: I write, I edit, and I teach. Today the three of those allow me to earn salaried income and self-employed income: blogging, freelance editing, and part-time teaching in the community colleges. These will carry me over the period required for my investments to recover the $180,000 lost in the crash of the Bush economy.

At this point, I’m free of the day job, light part-time work will support me without having to draw down my savings, and I have enough independent income to deal with the other baleful result of the late, great economic mirage, an upside-down mortgage on a house my son and I mistakenly thought had fallen in value as far as it would fall at the time we bought it.

Things could be better: to be fully confident of having enough to carry me through old age, I would have preferred to work, save, and invest for another five or six years. But because I’ve lived below my means, invested everything in sight, and cranked extra money on the side, I’m far better off than most single women my age, and I’m clearly in a position to enjoy life without ever having to take on another full-time job.

Financial Freedom

• An Overview
• Education
• Work
• Debt
• The health insurance hurdle
The roof over your head

All Alone and Amok in the Kitchen

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It’s Saturday night and a great deal of work has been done: Blog post written; a jungle of obscure paperwork shoveled off desk, dining-room table, kitchen counter and into wastebaskets or file folders; furniture dusted; floors vacuumed, then floors dustmopped, then floors steam-cleaned; bathrooms cleaned; jeans ironed (yeah…, I know!); stained clothing destained and laundered; dog hair shaken out of bedding; bed made; dog, terrorized by vacuum cleaner and floor steamer, lured back into the house and fed; Mrs. Micah’s miracles observed in awe from afar…ahhh, it’s gone on and on.

So here I am in glorious solitude and ravenous.

The other day I picked up a bag of wild-caught mahi-mahi at the Costco, and that’s what I’ve been craving all through the past workful few hours. Scrounged in the fridge, the freezer, and the backyard: found a little basil, a little tomato, a pile of rice, a bag of peas, a container of blackberries, and w00t! a lifetime supply of pitted kalamati olives. Here’s what came down:

Greek-style Hawaian Fish Filet for One:

You need:

one piece of fish, defrosted
a handful of fresh basil, chopped
one large tomato or about three or four Campari tomatoes, coarsely cut up
about a half-dozen pitted kalamati olives, coarsely chopped
sprinkling of feta cheese

1 cup uncooked converted rice
2 1/2 cups water
butter

frozen peas
more butter

Put the rice on to cook: bring the water to a boil; then add the rice and turn the heat to medium-low. Allow to simmer about 20 minutes, or until the water is absorbed. Then add a blob of butter, enough to make you happy.

Meanwhile,  preheat the oven to 420 or 425 degrees.

Toss the chopped tomato, basil, and olives together. If desired, sprinkle a small amount of salt over this and mix in; but remember that the olives and the feta are salty and so take it easy with this!

Place the fish filet on a baking pan (lazy housecleaners should line the pan with aluminum foil or baking parchment).

Smother the fish with the tomato-olive mix.

Sprinkle some feta cheese over the top. Drizzle some olive oil—about a tablespoon or two—over the entire affair.

Place the fish in the oven and allow to cook until gently done through. No need to overcook.

As the fish comes close to being done, zap the peas and butter in the microwave for about a minute (or less, depending on amount) to defrost and warm.

Arrange these wonderful things attractively on a plate, take to the dinner table, and enjoy!

After gorging on this, prepare dessert:

Incredibly Bad for You Blackberry Delight

a handful of fresh blackberries
turbinado sugar
heavy cream
nutmeg

Place blackberries in a small bowl. Sprinkle crunchy sugar (turbinado sugar) over the top. Pour a generous amount of heavy cream over this. Sprinkle more crunchy sugar over the top, and then sprinkle some nutmeg on top of that. Serve with whatever remains of the wine in your glass or, if you must, a cup of tea or coffee.

Salut!

Thank You, Mrs. Micah!

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Again!

This afternoon Mrs. Micah spent half her day migrating The Copyeditor’s Desk from WordPress.com, whose proprietors had noticed that, yea verily, it’s a commercial site in violation of their ToS and so taken it off the air, over to Bluehost, present home of Funny about Money.

She accomplished this in a few hours, in contrast to the horrific project presented by the migration of FaM, a two-year-old site with endless graphics and more than daily postings and bastardizations of code from iLife, Word, and WordPress.

Even though the new Copyeditor’s Desk site uses WordPress’s White as Milk blogging template, it’s set up to mimic a business website. Click on the “Articles on Editing and Publishing” link at the bottom of the front page and you’ll access what really are posts of general interest to writers and editors.

Speaking of Mrs. M’s many talents, have you read her amazing post on 2009 tax deductions at her PF blog, Finance for a Freelance Life? This is one of the best articles I’ve ever seen on a personal finance blog.

We debated whether to monetize the Copyeditor’s Desk. I didn’t want ads on the front page, and Mrs. Micah thought it would be unproductive to confine advertising to the posts. Given that my hands and Tina’s are full with trying to cobble together our respective livings from innumerable sources, we know neither of us is likely to write daily posts for CE Desk to make it operate as a full-fledged blog. So, we decided to leave it unmonetized for the time being.

At any rate, it gives us a URL to add to our e-mail signatures and business cards.

So…you’re a writer? Remember…

Every writer needs an editor!

Kitchens

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Frugal Scholar is doing an interesting series about her experiences remodeling a kitchen on a budget. I love it! I seem to have spent my entire life remodeling houses, and so I’ve developed some strong opinions on the subject. Frugal proves how brilliant she is by happening to agree, more or less, with those ideas.

Kitchens and bathrooms are just about the most expensive remodeling jobs you can do, short of ripping off and replacing a shake roof. Much of it is stuff you can’t easily do yourself: plumbing (especially having to move plumbing!), wiring, gas connections in ancient houses.

Over the course of years, I’ve learned a number of things that help a little to keep costs under control:

• If cabinetry is functional, consider painting instead of replacing.

• It’s a lot cheaper to have a skilled finish carpenter build a few cabinet doors with glass in them than it is to replace the cabinetry in your kitchen because you think you’d like glazed doors in some wall cabinets.

• Sometimes less is more. If you have storage space in the garage or another room, or if you can bring yourself to get rid of stuff you don’t use much, you can open up a kitchen by removing certain cabinets altogether.

• Don’t run with the herd. Just because something is radically popular and every designer in sight is using it (think avocado green appliances…think black granite countertops) doesn’t mean it’s especially desirable.

• Try to build and design with materials and colors that will be timeless. Avoid products and colors that are currently “hot.” Something that’s stylish now is likely to cause future visitors to sniff, “Oh, she did that in 2010!” A dated kitchen can make it hard to sell a house, or to get the full price you think it’s worth.

• Hire licensed and bonded contractors. Let me say that again: hire licensed and bonded contractors! Even if Joe Handyman does a decent job, a kitchen or bathroom that is not to code may have to be rebuilt before the house can be sold.

• That said, one surprising job can be done by a good handyman or a strong, handy homeowner: installation of ready-made or custom-sized cabinets. If you’re buying cabinets from Lowe’s or Home Depot, check around. Many handymen will underprice the big-box stores’ installation fees, and the job is not at all complicated.

• Get bids. Get lots of bids. It never ceases to amaze me how widely fees vary for plumbers, carpenters, tile-layers, painters, and electricians.

• It may be worth paying to join Angie’s List for a year, if it’s available in your area. I found several excellent craftsmen through this site, including the Adirondack Chimney Sweep. Be aware, however, that many of the recommendations are redundant, and there’s nothing to stop a craftsman from putting all his friends and relatives up to sending in ecstatic (and phony) reports. Get real-world references, too.

• Pay to get mid- to top-of-the-line appliances, but pay for function, not style. Prefer mechanical controls to electronic, because the latter break sooner and are more expensive to repair. A repairman told me that the cost of appliances no longer relates to their quality or longevity: he said that all kitchen and laundry appliances are now engineered to last no longer than about seven years. Thus it doesn’t make sense to pay extra for fancy gear, which likely will say good-bye long before you sell the house. This is especially annoying if you’ve bought a stove or refrigerator because it’s the height of fashion; in seven years, that style will no longer be in production and the replacement won’t go with your carefully crafted design.

• Check Craig’s List and estate sales for building materials and late-model used appliances. The washer and dryer we bought off Craig’s list for M’hijito’s house are higher quality than the ones I bought for myself new, and they’re still running fine. At an estate sale, I scored over 1,000 red bricks for about 10 cents apiece, far less than I would have paid at the brickyard or Home Depot.

• If you actually cook (rather than microwave or reheat) and your house has gas heat but an electric stove, consider springing for the cost of having a gas line run into the kitchen. Gas is so far superior to electric—especially to those obnoxious glass-topped things—that there’s no comparison.

• Once you have gas in the kitchen, there’s little reason other than ego gratification to buy an expensive eight-burner heavy-duty Viking chef’s stove. Any stove will do the job just fine. Take a look at the ordinary stoves and stovetops at Sears, Lowes, and Home Depot. They cost enough to prove to the world that you’re not headed for the poorhouse, but they won’t take so much of your money that you’ll end up feeling foolish.

• If the house has a built-in oven plus a stovetop, leave the electric oven and convert only the stovetop to gas. Electric ovens work as well as gas for their purpose; it’s the stovetop burners that really matter.

• Keep every warranty that comes with every item you buy.

The last remodel job I did was at M’hijito’s, a 1951 brick cottage that ultimately required us to gut it out and rebuild everything. It was very expensive. Even though we cut every corner we could think of, we spent over $35,000, all told, on the interior (kitchen, two bathrooms, installation of antique doors and French doors, saltillo flooring throughout, window treatments, paint). That doesn’t count the roof or the new air conditioner. Or the landscaping.

Our biggest mistake was hiring a handyman who was not licensed and bonded. We came across him when he was working on the house next door, and the owner recommended  him highly. He was doing essentially the same work we wanted done, so we imagined he could or would do the same for us. It was a huge mistake. We were very lucky he didn’t do serious structural damage when he cut large holes in a bearing wall to install the French doors. So far, that seems to have gone all right, but other jobs he did really need to be taken out and redone. Ultimately, because he was very slow and took on other work in the middle of the job he was doing for us, leaving us high and dry for days and even weeks at a time, we had to fire him and find someone else to finish the work. That was quite the little headache!

If I had it to do over, I would buy the cabinetry at Ikea or Lowe’s rather than Home Depot. Ikea cabinetry is problematic because the doors do not join the way American cabinet doors do, so you can see the shelves through the crack where the doors come together, and because the system used to attach them to the wall is idiosyncratic. You need to get a workman who knows how to install them, or else you have to be very clever and very patient at handyman work yourself. I’d never buy cabinets at Home Depot again: sales staff were slow, difficult to deal with, and on two occasions downright rude not only to us but to fellow staffers, and the cheaply built products came missing parts—two cabinets still don’t have all their shelves.

All in all, the remodel job on the downtown house produced a very nice place to live—pleasant enough that if M’hijito has to move while the recession is still on, I would cheerfully sell my place and move into that house. But it’s worth noting that after the remodel job I did on my last house, the reason I bought my present home is that the previous owners did all the remodeling…

The joy of installing new plumbing in old houses

Typhoon! Are you insured?

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Head for the bunkers! Batten down the hatches!!

The local Play-Nooz is having a field day with today’s rainstorm. Now we’re being told there’s a tornado watch in effect until 10:00 p.m. HO-lee mackerel!

Well, when you go to the National Oceanic and Atmospheric Association’s weather watch pages, you indeed find notice of a hazard…in the low to moderate range. Probability of a serious tornado: oh, maybe 5 percent.

LOL! Brings to mind the time the local TV stations told us a typhoon was bearing down on us. Right out of a sapphire-blue sky…

We do occasionally get some pretty spectacular cyclonic winds. If you’ve been reading this blog for a while, you may recall the grand storms of the summer before last, which hit the central historic district hard and flattened a beautiful old downtown home.

Because houses here by and large are cheaply built, it doesn’t take a tornado to wreak serious havoc. A few years ago one of my students was put out of her home with her family—husband, two small children, mother-in-law—when a fairly ordinary thunderstorm took ahold of the  central air-conditioning unit and ripped it right out of the roof. Subsequent rainshowers poured  in through the hole, destroying most of the house’s furnishings and interior.

But genuine, certifiable twisters are rare as hen’s teeth. About 25 or 30 years ago, one did touch down in central Phoenix—right on top of a friend’s veterinary practice. It effectively leveled the building. The insurance company tried to deny that the destruction was caused by a true tornado. When that detail came out in a newspaper report (in those days, we had reporters who worked for a newspaper that reported news, quaintly enough), someone who lived in the area came forward with a photo of the thing. It was undeniably a tornado, headed straight for the Alta Vista Veterinary Hospital.

So, it’s a good idea to be insured for any eventuality, even if the risk seems remote.

And in getting coverage, it’s important to understand what specific events your policy covers. Some homeowner’s insurance, for example, requires extra coverage for events like hurricanes, floods, or earthquakes, either as a rider or in a separate policy. And you should be sure that you understand whether your policy covers replacement costs (the cost of buying new stuff to replace things that have been ruined) or actual cash value (the amount you could have gotten on Craig’s list for your moth-eaten sofa and your ten-year-old TV).

As I was writing this, La Maya called to say her sister was on the phone from Yarnell: the arroyo behind the house is running, big-time, and the water is halfway up the slope to the back door. They’re packing now, in case they have to evacuate. La Maya, who owns the house and rents it to her sister and BIL, said she felt very glad that she had  just sent in the $800 premium for the extra flood insurance.

Pay the insurance bill and pass the ammunition!

Classic Arizona Road in Rain

Yes, Virginia, it does snow in Arizona.

Images: Tornado in Central Oklahoma, May 3, 1999. NOAA. Public Domain.
Arizona road and snow at Mormon Lake: Not so much…


Weather

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So…do you risk your life, limb, and (even more precious) your beloved wheels for two hundred bucks?

Raining here. Raining, raining, and raining. It’s almost 8:00 a.m. but the skies are no brighter than the dusk of predawn. The pool water is up to the coping. If it rains steadily for another two days, as predicted, the pool may overflow. Make that will overflow, if we get the prognosticated five to ten inches of rain. No sign yet, mercifully, of the 50-mile-an-hour winds that were supposed to accompany this storm.

One of my client editors expects her page proofs back by tomorrow at the latest, a very easy job for which she will pay a couple hundred bucks. I just finished reading them about 5:00 this morning. Tomorrow I have to teach, 12 miles in the opposite direction of her office, which at the outset is far enough, thank you, from my house. I really, really, really do not want to drive from north Phoenix to central Scottsdale through a downpour over roads that flood in a light sprinkle.

You understand: it doesn’t rain in Arizona (right?), and so we don’t build roads to accommodate water falling out of the sky. We don’t teach motorists to drive in falling water, either.

So high is the hysteria level over this freshet that the police sent out a warning to the city’s neighborhood associations, asking people to stay off the streets or, if they must go out, for godsake to hang up the phone and drive.

Cassie the Corgi, being a smart little dog, feels utterly abhorred by the prospect of going out in the rain to do her doggy duty. When the downpour let up briefly about 4:30 this morning, I decided to take the opportunity to let her into the backyard and wring her out. She decided otherwise. Had to put on her leash and collar and literally drag her out the door.

At any rate, Cassie and the human, in addition to being without visible means of support, have also about run out of food. I put off buying groceries until after the AMEX cycle closed yesterday, so as to put off having to pay until this time next month, when a little money should have arrived in the checking account.

So, in addition to needing to make a run on Scottsdale by way of garnering some of that little money, I also need to stop by a Costco for a major shop on the way home. There’s one more or less on the way. Only one saving grace to that prospect: the store will prob’ly be almost free of crowds.

Yes. Fifty mile-per-hour winds, with gusts to 65. Doesn’t that sound like a balmy breeze? Don’t count on it, though: if we were going to have that kind of weather, it would have blown into town by now. It sounds like more stupid media hype.

You can’t believe much that you hear on the local Play-Nooz. Stürm und drang is the stuff of ad sales, and so the pretend reporters exaggerate every weather report to the point of outright falsehood. Two or three years ago, one TV news operation actually exclaimed that a “typhoon” (i kid you not!) was headed our way!

Typhoon…heeeee!

The day of the typhoon dawned clear, blue, and still. And it stayed that way.

Of course this is terribly dangerous for public safety, because having gotten all worked up for nothing time after time, now no one takes anything they hear on the news seriously. When a real storm comes in, nobody pays the slightest bit of attention, and so the Highway Patrol gets to launch searches for motorists who set off across logging roads as powerful snowstorms roll in and the local cops get to haul people and their cars out of flooded arroyos.

{sigh} I guess I’m not really undecided. I need the money at the earliest possible moment. I can’t afford to piss off that editor by missing a deadline. I’ve got to make a Costco run. And given a choice between charging off to Scottsdale in the rain today and charging off to Scottsdale from North Phoenix in the rain tomorrow after spending half the day in front of classrooms, I suppose today is the lesser of two evils.