Friday, November 1st , 2013,
1:30 P.M. Walnut Creek, California. Although I was laid off at 9:00 AM, it’s already late due to the crappy mid-day service provided by BART, America’s most antiquated commuter train system.
Still reeling with the initial shock of being laid off, the first thing I did when I got home that day was sit down at the computer. I wasn’t sure exactly why. It just seemed like the right thing to do.
Already living a relatively thrifty life in preparation for early retirement, I found it difficult to find immediate cutbacks. Instead I looked at the mortgage balance.*
*Footnote: Diane is Chinese. In Chinese culture one never shares financial information, even with relatives. So I can’t share the number but let’s say we still owed 65.25% of the loan.
The original plan was to pay off the entire house before selling and retiring. We’d been actively pre-paying at the rate of $800 every paycheck. Not too shabby but hard to continue on one paycheck. One way to encourage an early retirement is take a 15 year mortgage. You never miss the extra cash and the amount of interest saved is astounding. At the rate of $20,800 annually we were on track for a 2018 payoff.
After some quick calculations, I decided to move on. Before Diane even came home I decided I’d better start cancelling all those unnecessary subscriptions. I called the Sirius/XM customer service line and explained my situation. Desperately attempting to keep customers, they offered an opportunity to cancel my service and subsequently re-sign up. This made me eligible for the Starter Package and six months of free service. Good start.
Feeling satisfied, I dialed Comcast to complain about my $166.13 monthly bill which offered only limited HD channels, no premium, no phone and high-speed internet. Yes, I’m aware that the Internet generation never pays for cable, has no landline and only watches what they can stream from Hulu, Netflix or some other newfangled service du-jour.
I like network TV, local news channels and Comcast Sports. Ownership of local sports changes so often it’s hard to keep track. It appears that Universal now owns almost every sports network in America, has the rights to the Olympics until the next millennium, and even controls the shit nobody cares about like English Premier League Soccer.
I also watch “Antenna TV” every night, a catchy phrase for the channel showing classic comedies like Barney Miller, All in the Family and The Honeymooners.
The point is Comcast also likes to keep their customers, knowing that their primary target audience for cable is either living on social security, watching the group movie at the local Assisted Care Home or too stubborn to get with the times (that would be me). After only three recordings and about two minutes on hold, the friendly customer agent explained my options in her best broken English. Similar to satellite radio, I was somehow eligible for the “Starter Package” even though I’d had the same service for seven years. They lowered my bill to $132.50 and ensured me the rate was good for an entire year.
I moved onto Spotify, the last of my self-indulgent premium subscription services. Discovering that companies founded after 2005 don’t employ humans, I felt disappointed. Clicking around every possible link for over an hour I found a myriad of offers, most of which I didn’t understand. None of them led to a lower price. I therefore decided that I can’t work out without music anyway and my Sony Walkman wouldn’t look too hip in front of the hot moms that exercise at the gym on weekdays. $9.99 a month would stay in the new budget somehow.
Feeling partially vindicated I started examining the toughest unnecessary expense yet.
I hate to think of myself as a typical consumer brainwashed by corporate America but ever since the first Starbucks opened its doors right at the corner of my commuter bus stop way back in 1991, I’ve been addicted. Mind you I only drink coffee and the occasional unsweetened iced green tea with light ice. Even so, like every early retirement page tells you, if you add it all up , it’s excessive and ridiculous.
But nothing gives me the same mental boost as my Grande Pike with “no room”.*
*Sidenote: Has anyone noticed that even when you tell them no room for cream they still pour $1.95 worth of coffee and charge you $2.10?
I am one of the few who actually buy coffee beans at the store with some misguided notion that it’s fresher than what Costco sells. So I started out skipping the extra coffee and dealing with only one cup at my new wake up time of whenever. That didn’t last long. Then by chance I discovered that along with chocolate milk, research shows that coffee is one of the best things to have for cell replacement after a heavy weight training session. More on my newfound gym life later. Meanwhile, suffice it to say that Starbucks will not lose my business now or when we get to Malaysia.
Having exhausted the immediate opportunities for drastic cost saving measures I went back to the finances. Reexamining the mortgage, current investments, savings account, CD’s, emergency cash and Canadian retirement plans that belong to my wife, I decided that working at a job you hate for over 30 years is not so bad if it’s given you some small advantage over the years. Ours is my understanding of asset allocation, the single most important part of investing regardless of anything you’ve ever heard from Yahoo Finance, CNBC or any other “financial expert”. You can read about it here on one of my favorite early retirement bogs
Every weekend, I balance our investments to the penny. I study the graphs and trends to make sure the plan I’ve developed is somewhat in line with our goals. Diane calls this “being anal”. I don’t care. Accounting for every dollar, I also know every single investment. Checking credit card balances and banking statements several times each week is part of the plan and should be for everyone.
Although still angry at the asshole company that shall stay nameless for eliminating their most efficient employee, I took a deep breath and realized that I was now a House Husband. My job was reduced to maintaining the yard, dusting, sweeping, and vacuuming. Among other chores. This job is not the same as a “stay at home” father. We have no kids. Keeping yourself occupied and mentally sharp while your wife is off to work every day is harder than you might expect.
The financial aspect of a layoff is obviously the most pressing issue. Living on one paycheck is daunting especially if you are like most middle class Americans who live above their means, keep little or no emergency funds, neglect maximizing their 401k plans, never take advantage of prepayment options and carry a balance on their credit cards. Satisfied we’d be fine, I still worried a bit.
I’ve had over 15 full-time jobs in the financial services industry. They all came fairly easy even though I have no college degree and limited spreadsheet knowledge. I also never learned Power Point, don’t give public speeches well, rarely work overtime and usually take little incentive to advance my career. In other words, a perfect peon candidate for grunt work that most others don’t want to do. I bullshit my way through every interview and my writing skills allow me to update my résumé in 15 minutes and make it shine with “accomplishments”.
But that was in the pre-recession days before the New Economy. We even left America for six years of Western Canadian living where I only worked half the time due to limited opportunities. I was able to return to the Bay Area years later and bullshit my way into three jobs in the course of two years.
Then came September 15th, 2007, the financial industry’s 9/11.
Lehman filed for bankruptcy. The credit markets froze for a week; equities plummeted; bonds sunk equally fast. The largest decline in most people’s lifetime began. And the US economy changed forever.
It has still not returned to what it was despite the 500% increase since the market’s bottom. (This is the topic of another post and don’t get me started on how disconnected the government is from the real world)
Timing is everything in life. The Company that shall remain nameless hired me on that very day. I may have been the very last employee to sneak into the financial services industry before the impending doom and gloom, layoffs, budget cuts and misery that continues today in the Greedy Bastard Industry that started it all.
And like always, my timing was good. I managed to land in a company with generous benefits that included a well diversified 401k plan, an annual bonus, a profit-sharing contribution to the retirement plan and best of all, a defined benefit pension fully paid for by the company with a vesting requirement of five calendar years. I made it by the skin of my balls. They also offered a tax deferred option to buy a week of vacation time which entitled me to a full month.
We used the much of the time to research expat destinations for retirement. The gallery below shows seven places we visited in the last decade.
Even though I’ve been an underachiever when it comes to my career, I learned in 1983 that Wall Street and the financial services industry has little to do with formal education. Many of the most successful traders couldn’t explain the difference between a stock and a bond. It’s about schmoozing, bullshitting, making contacts and being able to live with yourself when you become part of the 1 percent despite humble roots.
Although I could never be one of the greedy traders and never wanted to manage anyone’s money besides my own, I learned to befriend the right people, listen to what they say, keep abreast of market trends and benefit from having inside knowledge that can only come from working in the Evil industry.
I’ve returned about an 8.2% yield since 1997, the year Diane and I began combining our money. You’d be hard pressed to find an investment adviser that can beat that over 15 years. My strategy is simple:
Always stay invested and use “dollar cost-averaging” (invest regularly, taking advantage of the ups and downs). Devise a plan. Stick to it. Live below your means. And when you get kicked out on your ass thanks to the very industry that’s kept you employed for 30 years, don’t bother going back. Just retire. If you’re not a total financial novice, try this blog for some great suggestions on investing for retirement.
We could probably stay in the USA if we chose to rent in a cheaper state. But with quality housing in a developed nation at 1/3 the cost and first world healthcare that runs about 300 times cheaper than Obamacare, why not try a new experience?
Our chosen destination is Penang. Malaysia offers an awesome social visit pass called the MM2H (Malaysia my Second Home). It’s similar to a visa but designed for middle class retirees with some money that don’t want to work. In fact, they prohibit employment except for a few limited cases. You need to deposit $150,000 Malaysian Ringgits (MYR), equal to about $43,000 to qualify. The funds are held in escrow in a local bank and earn interest at prevailing rates. The age requirement is 50 years old or the deposit amount doubles. Another requirement is showing current income of about $3,500 per month on the application.
Translation: Although I felt relieved to skip the 4:30 AM morning commute on Monday morning (and forever), Diane would need to keep working at least through my 50th birthday (4/15/2015). And I’d have to learn how to become a House Husband. This is easier said than done for many. Americans are very defined by their work.
I didn’t think about the 501 days that I’d be “semi-retired” in Walnut Creek, California or how I’d occupy the time. Instead I started dinner like a good house husband.