Flagging in FIRE

Financially independent, retired early (FIRE) folks — and frugal, Mustachian types in general — can seem almost irritatingly consistent, unwavering, and diligent. We keep our eyes on the prize, never purchase anything and, even when spending a fraction of the norm, tirelessly look for frugal life hacks: for ways to optimize spending, savings, energy usage. Worst of all, we make it look easy.

Except it’s not, always, and many of us don’t. We get lazy, we fall off the bandwagon, we let things slide. Here is a recent case in point from my quarterly review of our spending, just in case anyone on the Internet thinks I’m perfect (unlikely).

Wanton Eating Out

Did you think I was careful with food and grocery spending?

Because we managed to spend $5,113 on groceries, dining out, and wine in three months. Looks like some of us have been celebrating early retirement a little too much.

Some of this is because my family visited, a rare occasion, with multiple family members in town at the same time from different locations. It was a logistical triumph. Sweet Huz and I, being the rich people we are, paid for a few group dinners for seven people with wine (probably $1,500 of that $5,113 total) and filled the larder with groceries for that many during the visit (another $200) and rented a mini van to haul everyone up and down Highway One ($400 + $100 fuel). I can’t think of a better occasion for which to do so. No regrets.

But take away the special occasion, $1,700 family vacation food bill, and that still leaves over $1,000 month on food spending. For two adults.

Hell. No. The frugal hammer is coming down on that.

Typically, I’ve trained a close eye on our dining out spending. We go to bars and have alcohol with dinners out on very rare occasion, which keeps the tabs down. We almost always bring half a meal home as leftovers.

But living in cities makes consistent behavior difficult sometimes. The San Francisco Bay Area has a lot of good food in it. (Much of it is cheap, at least. Pupusas pupusas pupusas. I love pupusas.) And, now that we’re FIRE and at home a lot, going out with friends is one of the main ways we get out of the house and see other people. It’s wonderful, because our friends are actually friends again (no longer replaced by coworkers standing in for real, unfettered, truly social time). It’s a lot less wonderful on the pocket book.

Dormant, Not Dead

The nice thing about generally good habits is that they don’t go anywhere. All of my now effortless home cooking and meal planning habits (i.e. staring at ingredients we already have, looking up the one we have the most of in the Joy of Cooking index, and figuring out what to make with it, improvising based on the other ingredients) I developed over 20 years of saving money like a crazy person are still there, and kick back into action instantly.

Today was almond flour pancakes and will be tamale pie for dinner. Yesterday was broccoli and cheese quiche for breakfast and quinoa salad for lunch (Costco organic quinoa, tossed with whatever cut up vegetables are on hand, a little salt, and a sprinkling of olive oil and lemon juice), with leftover chicken soup for dinner (with Joy of Cooking dumplings).

This week will be a lot more of the same.

We’ll probably allow ourselves one lunch and one dinner out per week, but even that will be a huge improvement over $1,000+/month food spending.

 

Bait and Pitched

There is a Silicon Valley thing that has happened several times, to both Dear Husband (DH) and me, since we left the tech industry. It needed to happen a few times before we realized we had a behavioral pattern rather than a series of isolated incidents.

It goes like this.

DH: I’m going to have a beer with John tonight.
Evie: Oh, hey, that’s awesome. He was a pretty cool guy when you worked together, if I recall.
DH: Yeah, yeah he was. Never fully bought in to the bullshit, smart guy. We’ve only had beers a couple of times since I left Former Tech Employer, and he left a few months ago, so it will be nice to catch up.

Two hours later…

Text from DH: Beers with John was just a fucking job offer. Irrationally angry.

Bait and pitched. Again.

It’s reasonable to ask “What’s so bad about a job offer?” especially if you could use a job yourself. My husband recognizes this, which is why he chose “irrationally angry.” Who could rightfully be angry about a job offer?

But my husband’s anger is completely justified, and that’s not just my wifely bias talking. There’s a lot more to the bait and pitch than a job offer. Deception, manipulation, and exploitation are (like so many things in these here Valley parts) key to the execution of a bait and pitch.

The bait and pitch may even indicate that, for a significant part of the population at least, there is no such thing as friendship here, that all is business, and that the social activities that used to strengthen friendships are all part of one big, ceaseless networking event.

Let’s examine the key elements of the bait and pitch. I will use two proper nouns, The Pitcher (to refer to the person doing the pitching) and The Mark (to demarcate the unwitting recipient of the bait and pitch).

The Elements of Deception

First, we’ll look at the bait part, where there are several deceptive elements at play.

The Invitation – The invitation to the bait and pitch must be as brief and stripped down as possible, such as a text asking only “Beers on Wednesday?” Any more than that and The Pitcher risks tipping his hand.

The invitation has a few other implementation details.

It That Shall Not Be Named – Absolutely no mention of or allusion to the pitch, as such, can be made in advance. The Pitcher cannot, for instance, drop a line like “I can’t wait to tell you what I’m working on.” The jig is up.

They Who Shall Not Be Named – Likewise, The Pitcher cannot mention other people to whom he has recently spoken. The Pitcher cannot say “I talked to Joe and he said…” The can of worms is open now!

Does Joe have skills similar to those of The Mark? If so, “I talked to Joe” may mean Joe was already bait and pitched. If so, what did Joe say? Does Joe want to work with The Pitcher again and, if so, did Joe recommend that The Pitcher pitch The Mark? Or is Joe actually Judas, not wanting to touch The Pitcher’s hot mess of a start-up with a 10-foot pole, and thus throwing The Mark under the bus to get pitched in a desperate bid to free himself from his own bait and pitch? If Joe “helps” The Pitcher, maybe The Pitcher will leave him alone.

An equally loud death knell will toll from the mention of any additional person who might show up for the bait and pitch event, AKA beers:

The Pitcher: Beers on Wednesday?
The Mark: Sure. Cerverceria at 6?
The Pitcher: Works. Eric may join.

Nope.

Social Media Shhh – No social media may allude to the subject of the bait and pitch, i.e. The Pitcher’s Current Endeavor. No Twitter snippet, no LinkedIn one-liner, no Facebook Intro or About section should reference What The Pitcher Is Working On.

For maximal deception, The Pitcher’s former employer should still be listed as the most recent employment item. However much The Pitcher might be tempted, he should not allow so much as a “Looking for my next thing” and certainly nothing so brash as “Founder at Hopefully Lucky Labs.” You’ve gotta know when to hold ’em.

Wherefore this sneakiness, this furtive slippery?

An unhealthy preoccupation with stealth mode contributes to bait-and-pitch behavior. The preoccupation with stealth mode itself depends on massive ego, optimism, and a failure to comprehend probability and likelihood of success (or, even in the case of “success,” failure to comprehend the many ways in which VC success does not trickle down or equate to founder success in any meaningful way. You didn’t really agree to pay anybody out at 1.5x, did you?).

Why, you might well wonder, can’t the invitation be honest, something more like “I started a company and really need some help. Beers on Wednesday?”

Because the bait and pitch requires breach of trust. Otherwise, it’s just a pitch, and that required no cunning or clever turns of phrase from The Pitcher, who needs to believe he is capable of the Feats Of Great Salesmanship on which his new company depends for fundraising, hiring, and otherwise snowing people into doing things that are not in their own best interest.

The Pitcher deliberately exploits friendship, or at least the appearance of it. The Pitcher knows The Mark wants to socialize and is unlikely to want to talk about work. The Pitcher has discerned this from Facebook posts that indicate The Mark is living it up, and may even be in the position in which he need never work again. The Mark has no incentive to work for The Pitcher. The world is The Mark’s oyster, full of hobbies, ample sleep, and sunshine, and The Pitcher can scarcely compete with that.

And The Pitcher knows it, which means there is resentment involved, a resentment that makes it somewhat easier for The Pitcher to rationalize and justify his forthcoming bait-and-pitch behavior.

The Pitcher, perhaps, rues the day when he decided to start his own company, because that’s just what you do with your Facebook or Google money. The Pitcher, too, would like hobbies, ample sleep, and sunshine, but he took the path more traveled. Worse, he also took other people’s money, and now a teeny tiny part of The Pitcher wants to take that now tanned, healthier, rosier engineer and sit his ass down in front of a screen so he can crank out some code to help The Pitcher make more money, so he can make a better choice next time. Next time, he will choose hobbies, ample sleep, and sunshine. Next time.

The Pitcher needs The Mark’s skills and does not appreciate this fact. This prevents The Pitcher from just acting like a human being, and a friend: The Pitcher is now a hiring manager, desperate for engineering help like all the other hiring managers.

But the Pitcher doesn’t have much to offer: a fair-to-middling salary, the knowledge that The Mark will need to agree to accept at least some of that compensation in the form of stock options that, like most stock options in history, will almost certainly amount to nothing (or, worse than that, to an AMT tax bill of tens or hundreds of thousands of dollars on exercise). The Mark is too smart. He will never agree to this.

And yet, The Pitcher persists. Perhaps it is all he knows to do. Go big or go home. If you’re not growing, you’re gone.

Dread is not lost on The Pitcher. He knows it’s probably all for naught, quite likely doomed from the start. But he has to tick that box, show the Board he’s trying, much like the unemployed person showing they sent some applications out.

But what nags at The Pitcher, while he waits with a beer for The Mark to appear, his colleagues waiting for The Pitcher’s text to make their entry and pile on to the bait and pitch, is the faint thought that if the bait and pitch is doomed to failure, his endeavor might well be, too. The bait and pitch points out that the magical, pie-in-the-sky thinking and hope The Pitcher is applying to The Mark may be the same he’s applying to his start-up, and that could be very bad, indeed.

It’s too bad he can’t have beers with a friend, and talk about it. He has a lot on his mind these days.

The Proof In the Panama Papers Pudding

No one has ever accused me of being an optimist or a utopian thinker. I have a bleak view of the world. But perhaps a bleak view is required in order to be able find hope in revelations as dark as those in the Panama Papers.

I find hope in the Panama Papers. Their contents prove that things our leaders dismiss as impossible are, indeed, quite possible, and that the money exists to pay for them. They illustrate why society cannot, and should not, rely on personal morals and intrinsic motivation to do the right thing, and that policies and systems must ensure people do the right thing. A few more charitable donations from Bill Gates and yours truly will not, cannot fix systems that legally enable systemic greed and exploitation of the planet and its people.

The Panama Papers are not the only — or primary — source of my hope. I believe that the agony we’re currently experiencing is a necessary part of a global awakening (of which the Panama Papers are but one part). Even I, the Eastern European harbinger of doom, see changes that give me a weak feeling of optimism. I know that:

  • People can and do choose to have less even when they could have more.
  • People can and do know when they have enough and feel genuine contentment, the state of genuinely not wanting more.
  • Many people do not require very much at all to feel contentment.
  • People give away things they do not need (Freecycle), which is not the same thing as “participating in the sharing economy” (Uber).
  • Minimalism is popular.
  • People can distinguish between access and ownership (the difference between needing to drive sometimes via a car share program and owning a car; the creation of libraries for not just books but tools, seeds, and other items).
  • People want other people to have just as much as, if not more than, they do, and to get it with less suffering and effort. I do not deserve more than anyone else just because I worked hard. Most everyone on earth works hard, after all. I want everyone to have clean water from a faucet; a well made house they own free and clear; enough healthy, delicious, pesticide-free food to eat; more time to spend with their families; as much sleep as they want; time for hobbies; and time be a citizen.

Some consider such views dangerous. Our political and economic systems depend on a belief that these things are not true, on a belief that other people do not deserve what we have, on a belief that we must always want more.

But that is not how I feel. And, by the looks of it, not how a lot of other people feel.

At risk of sounding grandiose, this is why it is important for people who are FIRE, who no longer have to work, to describe what life looks like from the other side. When we do, we have all of the necessary pieces required for a vision of what our future looks like.

The world feels like it is falling apart right now because, well, it literally is (climate change, poisoned water, dying bees, the sixth mass extinction), and because we know we can’t stop it, but also because we don’t yet have a clear vision of what will replace our current mess. We need the latter so that we can create something to fill the big, black void of a scary, post-climate world.

I think we have all of the pieces we need in order to begin to more explicitly articulate not just a vision for a new way of living, but also how it might work, mechanically:

  • We have the first piece — what life looks like with enough (non-consumerist/minimalist/thinking folks).
  • We have the second piece, what life looks like without having to work (the voices of FIRE, moneyless world, homesteady-independent, and frugal folk of all kind)
  • And now we have the third piece, the Panama Papers, which quantitatively prove that global society can afford a more FIRE-like life — in the form of universal basic income, say — for everyone, today.

Lest I sound like John Lennon (and if so, great), the Panama Papers prove that the U.S., at least, can afford a basic income for all. By some estimates, $20 trillion of money is missing from the world economy (entirely possible, given that the U.S. alone loses up to $100 billion every year due to corporations stashing their money in the Cayman Islands, Bermuda, and in Panama).

This is more than enough money for the 7.4 billion people on earth to have universal basic income, today.

Those trillions are our transition money, and our world needs it. We all need the time and mental space to slow down and figure out what a world not based on shopping and infinite consumption from a finite planet looks like.

It is OK to admit we tried something, that it did not work, and that it’s time to try something different. That’s what compels us to change our lives. The Panama Papers show we’ve been played for suckers, and we need to change some laws and systems in order to change the global society that is the sum of our lives.

And it’s important for FIRE people to speak up and serve as living proof of what people who do not have to work actually do with our time. Politicians (and especially the right-wing news and radio folks) make all sorts of wild claims about why we need to work (we need money to live, yes, but work is not the only way to obtain money) and the horrible things that will befall society if we stop working, but only the self-sufficient, FIRE and moneyless world folks really know.

We know that, even in our 30s, life without a job is not scary or bad, but wonderful. We know we’re happier and healthier. (Health insurance companies ought to support the idea of basic income most of all.) We don’t lay about drunk and smoking marijuana all day. We get plenty of sleep, sunshine, and fresh air. We’re making things because we can, for free. We’re writing and creating and pursuing other intellectual pursuits. We’re taking care of each other – elderly family, friends’ kids — for free.

No one can tell me this is not true because I know they’d be lying. This is what I do, it’s much the same thing that other FIRE people do, and I have every real, observable reason to believe it’s what a lot of people would do if they, like me, had enough money to live on without needing a job.

This is why I know that universal basic income would be as life and world changing as FIRE has been for me. Why shouldn’t it be?

And we know we can afford it.

How the Democratic Establishment Lost Michigan

Dear Democratic Party Establishment,

Though you scarce deserve it, I’m going to explain why Hillary Clinton lost in Michigan and why I don’t expect you’ll do well in the Midwest. Your quantitative polling methods might benefit from some qualitative, ethnographic research. Here are some observations from my home state, where I still spend a great deal of time.

Executive Summary
The Democratic Party is blissfully unaware of, and thus does not sufficiently account for, the deep pain, sorrow, loss, and shame endemic to Michigan and the Midwest. The good people of Michigan are a grieving people. They have been kicked when they’re down for decades (at least six). Establishment Democrats are blind to this, which is precisely the problem when it comes to your winning votes.

Deeds, not words, matter, and there has been too vast a gulf between Democratic words and deeds for too long. The Democratic Party is in the middle of a class war it was hoping might go away if it were only ignored. That has not worked.

The good people of Michigan have nothing left to lose. This is when people are most dangerous: when they have nothing left and are not afraid, not even afraid to die (almost looking forward to it) because the worst has already happened. Their children have moved away, for better jobs needed to support their parents. Wall St. stole their homes, fraudulently (it’s not as if they could produce the mortgage note or authentic documents that proved ownership, after all). If they’ve managed to keep their homes, many of those are worth less than they paid for them in the 1960s and 1970s. They’ve lost their life savings in pension funds. Most recently, their family members in Flint have been literally poisoned by the governor and state.

They have nothing left.

But back to you.

1. You do not understand the multi-generational economic horror that Bill Clinton’s NAFTA and WTO policies hath wrought.
The promised benefits (better, “knowledge worker” jobs, education, training) never materialized, and you did nothing to help people when they didn’t. In the Midwest, Bill Clinton was called the “outsourcer-in-chief.”

Outsourcing one US job causes generations of financial distress. The family bloodline is cut off, left to die on the vine: A married couple supporting two to four parents (and possibly a few grandparents and/or siblings, too), paying off student loan debt, who must save for their own retirement (no pensions), cannot also afford to have children of their own. Many adults in Michigan have no familial future, the very reason their ancestors immigrated to the US in the first place. The family dream of three, four, five generations is now dead. That’s a lot to swallow, and more than some people can emotionally bear.

2. Our reliance on China is a bigger and more emotional issue than you realize. Conservatives and Democrats alike are very, very angry — seething angry — that a Communist, selectively-aborting, high-infanticide entity holds our debt, and thus that we depend on a place with values so different from ours. Put more simply: This is pure evil. Bill Clinton forced us into a deal with the devil, so we could have… cheap clothing. We’ll burn in hell for this.

Many Catholics, for example, were traditionally Union Democrats, heavy on the social justice and very engaged in Dorothy Day’s Catholic worker movement. For many of the same, underlying reasons — that all human life is inherently valuable, including the lives of slave workers and the poor — they’re pro-life. They despise Bill Clinton — who tried to persuade Congress to admit China to the WTO — for making them put their money in China’s human rights violating hands. They’re not thrilled about Democrats being pro-choice, but most recognize that even abortion is different here than in China (far more rare, far less easy, not taken as lightly), and they recognize our infanticide and “disappeared baby” rates are far, far lower than in China.

3. You failed to pass true, single-payer healthcare when the Democratic Party controlled the presidency and both houses, in the first two years of Obama’s first term. As a result, people believe you never wanted (and don’t want) single-payer healthcare in the first place. You appear no different than Republicans when it comes to being influenced by for-profit insurance companies. At worst, you’re liars. At best, your party can’t get its shit together to act effectively.

This doesn’t include all of the family members who died and/or were bankrupted for decades because they either couldn’t afford or didn’t qualify for health insurance. There is so much grief you do not see, so much death for which you bear some responsibility. So many parents who died, so many babies, so many grandparents who said “Let me go. At least then you’ll get the life insurance policy. I’m worth more dead than alive.”

It’s a lot to bear.

4. You failed to break up the big banks and put criminal bankers and traders in jail. Because of this, our financial system remains dangerously unstable. There’s another big crash coming, we all know it (all the devils are here, again), because Obama and you mainstream Democrats failed to make the necessary structural changes to stop it. And this goes back to Bill Clinton, who repealed Glass-Steagall. However unintentionally, his deeds laid the groundwork for banks stealing people’s houses and pensions, outright.

The housing crash was not only a matter of unpaid, predatory mortgages, though of course it was that. Banks foreclosed on houses for which they could not prove ownership, for which they did not hold the mortgage note. And they got off scot free, on your watch. People were made homeless. Can you comprehend this? Homeless. It’s one thing when you can’t pay your mortgage and lose your house, but entirely another when your government, and your Democratic president, allows the bank to take it from you.

Do you know, or care, that Detroit has 250,000 fewer people in it now than it did in 2008, and that this is why? The New York Times can write whatever they’d like about a few artists moving in. The Detroit I remember from my childhood had a lot more people in it, and was much nicer.

Related to this, low-to-zero interest rates on safe cash savings mean that you force people — whether a pension fund manager or a personal investor — to invest in the markets, as that’s the only hope of them earning any money on their savings. And, through fraud, outright theft, and lack of regulation, people’s life earnings were stolen. Detroit city worker pensions were cut to pay Wall St.

My librarian aunt and two uncles (fireman and water department pipe man, respectively) had to pay for the sins of wealthy Wall St. traders. You cannot grasp our rage.

You will not win until bankers and traders are punished and put in prison.

5. You failed to act to improve national and Midwest infrastructure when the Democratic Party controlled the presidency and both houses, in the first two years of Obama’s first term. Sure, we can now blame Congress for a lot of things, like not creating an entity similar to the Civilian Conservation Corps that would give people — especially those with manufacturing and infrastructure skills (welders, pipe fitters, and so on) — good jobs. But you had the chance to do it, and you failed.

You do not understand the deep shame and low quality of life from living with poor infrastructure, because you don’t have to. How do you think teachers and students feel when urine slides down the walls at their Detroit public school, when moldy food is served, when you breathe damp and moldy air all day, every day… and then people proceed to slam you for having low test scores? Kick them while they’re down. How do you think people feel when there are better roads and plumbing in second and third world countries than people have in Flint? Shame. They feel shame.


6. You have not called for Governor Rick Snyder’s head, or at the very least his resignation.
The man is responsible for killing and poisoning people, for ruining untold numbers of lives, and there he sits in his protected roost, rubbing the noses of the lead-poisoned people of Flint in his insolence and arrogance. He dines in Ann Arbor while children carry bottled water home from pick-up points.

7. You waffle on fracking in a region where Ohio residents now feel more earthquakes than I do in California.
I don’t think you realize, tangibly, what that is like, for someone to go — in a single lifetime — from living on stable ground, the kind that enables you to build Chicago skyscrapers and use brick construction — to shaking, malleable, unsafe quarters. People’s very moorings are gone, their homes — their entire regions — suddenly dangerous. Their groundwater is being contaminated and poisoned because another corporation just had to get richer at the expense of everyone else, and the Democratic establishment permitted it.

This is not the half of it but, hopefully, at least makes you aware that there is some Versailles-level shit afoot in Michigan.

And we know how that turned out.

Our Accidental Business

I didn’t expect FIRE (financially independent, retired early) to involve the incredible bureaucracy of a business bank account or paid use of Freshbooks (at least, not for a year or two), but here we are. It seems Sweet Husband and I own and operate our own business. Didn’t see that coming!

Lest you think we’ve fallen from the FIRE wagon and been knocked about the head, we haven’t. I’m working 40-50 hours/month for the foreseeable (not counting hobbies that bring in fun/side income) and Sweet Husband is working about 15-20 hours/week for a few months. Altogether, this brings in about $7-$10k/month.

This means we’ll not be touching our savings (and will in fact be adding to them), but that we also need to account for this income and our expenses in a sane way. Though being FIRE and in business may seem conceptually at odds, it is financially advantageous for us for tax reasons, and it may be for you as well.

Liar! You said you retired at 38!

One of my goals is to never have a job interview or annual review again, but that is not the same thing as never doing any paid work ever again. The point of achieving FIRE is having the freedom to do as much or as little work as you want, of the type you like, because you don’t have to.

Sweet Husband and I each quit our corporate tech jobs in mid 2015, hit the road, kicked back, and relaxed. The business happened accidentally. (I realize I sound like one of those women who “wasn’t trying, but also wasn’t not trying” to get pregnant when, bam, of course she does and seems shocked. Forgive.) Not soon after we quit, each of us was offered — through referral, with zero effort — very brief consulting gigs (one month of part-time work and a few days of full-time work). This created just over $8k of 2015 self-employment income, and we incurred some expenses (flights, software, etc.).

Then, a few days before Christmas, I got a consulting inquiry from someone I helped for free a couple of years ago. (By the way, self-employed folks: I was shocked at how many inquiries I received in the week between Christmas and New Year. It seems mid and upper-level management folks are working but have time to think and plan without everyone else around. That planning involved lining up contractors for the new year.) The same thing happened to Sweet Husband.

I’m now making as much in 40 hours per month as I did in three weeks at my old tech job, my client is a dream, and we get loads of business deductions on top of it.

Allow me a petty moment: Suck it, Silicon Valley.

Anyway, voila, we’re retired and we have a business. I spoke with our tax accountant and it’s too advantageous to not bother doing.

It’s not really THAT weird…

Owning a business is in line with the rest of our FIRE behavior, though: if something helps us preserve and keep our FIRE lifestyle and more of our money, it’s something we should at consider. That’s how we got to FIRE in the first place: by questioning everything, including our own ideas and assumptions, and doing lots of research.

It’s also a lot more fun to start a business when it doesn’t have to be successful or make any money!

Financial Advantages of Business Ownership in FIRE

The ever-optimizing FIRE folks are probably well aware of this, but just in case this might be helpful to someone…

1. Our health insurance premiums are deductible because we’re self-employed, even though they are not a qualified business expense. The only catch is that our business has to have some profit in order to take this deduction. Even just a teeny bit of profit will do, and we can adjust our business expenses to make that possible.

We qualify for the premium deduction whether or not we qualify for the federal subsidy that reduces monthly premiums (by subsidizing F**KING insurance companies, thus giving them zero incentive to lower costs, but I digress). This deduction is one way for us to recover some of the $635/month we spend on healthcare premiums for the two of us.

We also have an HSA health plan, so we can put over $6k year into that. Health Savings Accounts (HSAs) are different than Flexible Spending Accounts (FSAs), but this has nothing to do with the fact that we’re self-employed: an HSA is just a nice way to reduce your AGI, something many FIRE folks may not need to worry about if they are truly not working at all.

2. We can deduct home office space even on our paid off house. A home office deduction will offset our (high in California) property taxes. It’s a myth that without a mortgage, and thus mortgage interest, you can’t claim and benefit from home office space.

And there’s even better news for people who follow Mustachian values on home size: a small home helps maximize your home office deduction, because your home office is a larger proportion of a smaller house, than it would be of a larger house. The home office deduction is calculated as either a percentage of rooms or total square footage. The legal (tax assessor) square footage of our house is 866 sq ft. and our home office is 130 sq ft. of that, or a bit over 15%. Our tax accountant said most folks only get 4-5% because their houses are so huge, that the office alone is a much smaller percentage.

Finally, a reward for minimalist living from mainstream society (or at least the IRS).

3. Other stuff we’re paying for anyway becomes tax deductible. A percentage of all of our utilities and home maintenance, our Internet bill, software like Dropbox, professional topic books from Amazon, our mobile phone bills, a percentage of our homeowners, earthquake, and auto insurance, our umbrella liability policy… These are all legitimate business expenses.

We obtained an EIN and are opening a separate bank account using the EIN, to be more formal with the IRS. Qualified business expenses will then be paid using the debit or credit card associated with the business bank account. It should make things neater for us and our tax accountant.

That’s after we finally have a business bank account, which is the stuff of Kafka nightmares. I’ll write more on the hell of all this in a later post but, should you need an idea for a start-up that will make a lot of money in the meantime, you should make it easy and fast to open and use a business bank account, because it’s still 1979 in that area of the business world. Even the places that appear to do it well, like Spark by Capital One, don’t. Now go out and get yourself some VC money!

 

The Gloom

One of my favorite films (and books) is Night Watch. I wonder if I find its Eastern European mythology so appealing because I am that, and it recalls the tales my great grandmother told me, in her heavy accent and perpetual house dress and bright, tomato laden goulash simmering in a big black pot on her stove, me seated at a table in the window nook. Some were very dark fairy tales that would not, in America at least, be considered “child friendly.” I loved them, and I wish I better remembered them.

In Night Watch, there is place called The Gloom (in the film, at least; in the book, it is The Twilight). This is, however, one of those situations in which English doesn’t have a concept that exactly matches the Russian one. In Russian, sȕmrāk (Cyrillic су̏мра̄к) is not really twilight; it is not that in-between time between day and night, but a time much closer to darkness. Technically speaking, the nearest match (and, I think, preferred translation) in English is “dusk.”

On the other hand, I think “The Gloom” best captures and communicates the place, much more so than “The Dusk,” so it is my preferred term. The Gloom is another plane of existence, a magical realm and a sort of underworld that overlaps, or runs parallel to, ours. In appearance, The Gloom resembles the real world. It does not look like a fairy land, but is more like a mystical reflection of the real world.

In Night Watch, there are two groups of human beings with supernatural powers, all of whom are called Others. Others are born, not made. The Gloom gives Others their supernatural powers but also feeds off of their life force, making it dangerous to stay in The Gloom for too long. An Other can be totally consumed by The Gloom, never to be able to return to the real world. There are Dark Others and the Light Others, and it is the aura of The Other at the time they first entered The Gloom that determined whether they became a Dark or Light Other (a combination of soul, fate and feelings). Emotions have color in The Gloom (the aforementioned aura), which allows the emotional state of The Other to be read while there. The Night Watch polices the Dark Others and the Day Watch polices the Light Others.

An important point is that it is hard for Others to see, while in The Gloom. They can see, but things are indistinct. In the film, the Others squint a lot, and appear to be moving through murky fog.

There is a lot more to it than this, but you get the idea. The Gloom is the only metaphor I can think of to express what the past eight to nine months (since table flipping and leaving my tech job in June 2015) have felt like, and where I have been.

And now, begging your pardon, I will proceed to beat you over the head with this unfamiliar metaphor.

It wasn’t depression — not even close. I simply was not in the real world anymore (or at least, was not treated like it sometimes), insofar as my “real world” was greatly defined as being a “productive member of society,” where I took the form of a “woman in tech.” No one else had a slot for me, nor did I have one for myself.

I never belonged in that real world. I was always an Other, literally, as a woman and as the daughter of immigrants with a hodgepodge cultural framework. My soul never fit in these profit-at-all-costs, at-will-employment, sexist, racist tech companies, either, though it took me a long time to admit that.

In Night Watch, the Light Others have empathy and believe they have a duty to help the weak and the helpless. They recharge with emotions from others like joy. The Dark Others, as you might guess, have no morals, do whatever they want, and do not care about consequences. They recharge with pain and anger.

I felt like a Light Other who worked for Dark Others. In the Night Watch (and other Eastern European mythologies in general), the world keeps going due to a truce (or balance of power) between Light and Dark. The corporate world had many more Dark Others than Light, or perhaps the Light Others were afraid to declare themselves.

After I left, I no longer knew where I was. I rambled around outside, in beautiful places, but did not feel present. The world looked the same, but I felt alongside it, ever so slightly offset and elsewhere. I found it difficult to see. I ran on the beach and did not notice the temperature, or my breathing, or that a cold incoming tide was washing over my feet. I could see my breath in cold air, see my feet cause water to splash, but it was as if I were watching it happen to someone else. If there were birds, I did not hear them. (Sometimes, for a few seconds, I would hear them, and I would marvel at the fact that they must have been there the whole time. Then they were gone again.)

If it sounds like narcissism, perhaps it was, but I wasn’t actually thinking about myself, or much of anything. But, ever so slowly, something was happening to me. Every few months, my joy, my happiness, my light would grow. Of course I would rather stay in The Gloom. At the same time, to do so felt a bit dangerous, like a temporary mental slip that might become permanent. In late November, looking back, I think some part of me was probably trying to leave.

A couple of weeks ago, all of a sudden and without any effort or intention on my part, I crossed out of The Gloom. In a split second, in a single moment, I was back. It was January 8, in the late afternoon, and I came to in my living room during the gloaming. The similarity in words — the difference of a single letter — is not lost on me. The gloaming is that beautiful, golden, warm time of late afternoon and early sunset, when everything is buttery and glorious and burnished to bronze, and it’s the perfect time to take a photo, and all you can think of is that light.

But I will keep it. I inhabit a very different real world than the one I left, but it is real nonetheless. A balance has been restored. The world may be an absolute mess, and I fear the Dark Others are winning for the moment, but I am no longer surrounded by them day in and day out, and their creating anger and pain with which to feed and enrich themselves.

The Gloam, I’ll stay in.

 

Of Hoarding and Hindrance

It’s fitting that “misfortune” is a synonym for “burden.” It aptly communicates the fact — if indirectly — that the acquisition of too much stuff is a hindrance, that spending money on things you don’t need is the opposite of “fortune,” one’s position in life as determined by wealth.

It’s because of stuff that my dad isn’t in the financial position he could be. The sooner you incorporate Mustachian principles into your life, the better off you’ll be. Allow my dad to illustrate.

I am visiting my dad for the holidays and very much feeling the burden of his accumulated stuff. I have taken it upon myself to clean out at least part of my father’s basement, one large area of which has become “hoarder house lite.” When I noticed this during an earlier visit I was horrified, yelled and said the basement looked like the place where they found Saddam Hussein, and generally behaved in ways not recommended by the therapists on the Hoarders TV show.

But it worked. Not long after, my dad cleaned out most of one bedroom that had been filled with loosely piled crap. He painted the bathroom. He repaired, sanded and refinished a front entry way. He has moved some things out of the packed basement, which is large, the entire footprint of the house and garage.

But the scale of what remains is overwhelming. Taking entire SUV loads of stuff to Goodwill appears not to have made a dent.

“Herculean task” is another synonym for burden. So are “weary load” and “thorn in one’s side.”

Selfishly, perhaps, I do not want to deal with a more serious hoarding situation down the road. I want to stop it in its tracks. During my visits, I soldier on: one bookshelf at a time, one drawer at a time, one closet at a time.

It’s just sad. Pitiful. My dad could easily have a paid-off house and a lot more savings, if not for all this. I point out his mistakes not to cut him down, but to illustrate how a series of “normal consumer” choices add up to prevent not only early retirement, but a good retirement at typical retirement age.

Mistake #1: Lack of Strategic Thinking
My dad may not have spent much compared to many people (which is not a good baseline to use, anyway) and can be incredibly frugal, but he has never thought strategically about his spending or his goals. According to both of my parents, they never even discussed retirement.

Like all of us, my dad has personality traits that get in the way of success if we fail to recognize and change them. My dad is bullheaded, stubborn, convinced of his rightness and defensive. He is not a curious person: He doesn't ask people about their lives in conversation but talks a lot about his. He believes he already knows everything, which got in the way of him obtaining any education beyond (and even in) high school: the teacher was always stupid or did something that annoyed him, and so on. These characteristics mean that he did not examine his behavior, and was not open to behavior change that might have helped him manage, save and use money more effectively.

Mistake #2: Not Paying Off the House
Dad’s house should be paid off by now. Without being all that frugal, dad could have easily made double mortgage payments every single month, or at least every other month, for most of his working life. If he’d made just one or two extra payments/year, his 30-year mortgage would have been a 20-year one and would be gone by now.

Dad is a recently retired factory worker with no pension. He relies completely on Social Security (SS). He has a little over $100k in retirement savings and about $20k in cash savings. Though it sounds precarious, none of this is actually problematic, despite the talking heads who panic and foretell starvation for those who live on Social Security alone.

Dad’s monthly Social Security payment is $2,000. His house payment, which includes his property tax, is $450/month. His health insurance is less than $200/month and he starts Medicare next month anyway, so that ~$200 will be freed up. This gives my dad $1,500/month for utilities, groceries, and everything else. Since his car is paid off, he should be able to save money from his Social Security payment.

My parents divorced during my first year of college, so my dad bought a new house in 1995. It cost $112,000 and he put 20% ($22,300) down, leaving a balance of $89,700. Of his monthly $450 mortgage and property tax payment, $190 of it is taxes and $260 is the house portion ($3,120/year for the non-taxes portion).

This means that, even while living on Social Security, my dad could afford to make an extra mortgage payment every month.

Most years, my dad made $40-$60k/year, depending on overtime. He had no required child support or alimony to pay after his divorce. My parents split amicably, I was 18 and my brother not far from it, and they worked it out between themselves just fine. Neither of my parents gave us a penny for college (which we expected and think is the right thing to do), so dad had none of those expenses, either. He did not buy us any cars or pay for car insurance, textbooks, room and board, utilities — nada.

I can’t figure out how he managed not to pay off his house during the past 20 years. It certainly didn’t go to cash savings. He has no fancy cars, no second property, no boat, no expensive hobby (or any hobby at all), and he hates travel. He has not improved anything about the house since he bought it, save for the kitchen floor, paint in two rooms, and one new dishwasher.

It’s a strange feeling to be surrounded by rooms of junk yet asking “Where did all the money go?” The answer is right in front of your eyes, but somehow seems impossible. Could all of this have cost… that?

Mistake #3: The High Cost of Junk
Though it’s difficult for me to believe, money can apparently be frittered away. Where has dad’s money gone?

Some items are easy to identify. He has four motorcycles, for example, only one of which he actually rides, only two of which are in working order, and three of which he promises to sell, year after year. Each motorcycle was bought used but still cost between $1,200-$4,500.

Dad has also bought quite a few parts for these over the years, many of which I find as I dig through the basement midden. When operational, each motorcycle requires a license plate and associated registration and renewal fees, as well as insurance. Insurance is eye-wateringly expensive in Michigan because it is a no-fault state.

The motorcycles alone may be the difference between a paid-off house and not. Each bike is six months to two years of extra mortgage payments, to say nothing of the parts and associated operation costs.

Dad also likes guns and has an arsenal of them, though he hardly ever goes to a range to actually shoot them. He does not hunt and never has. He also buys ammunition for various guns. These, too, are some of the difference between a paid off house and not. Dad tells me each of his guns cost between $100-$900, which adds up to several thousand dollars ($5,500-$7,500 to the best of my calculations).

Each gun is at least one extra mortgage payment, some of them several.

Dad also has nice power tools that he does not use at all: a wood jointer and planer (about $3,000 based on an online search), an $800 table saw, and a few other things.

I’ve found some unworn, brand new clothes (including a $200 Filson sweater I gave him for Christmas years ago… glad I bothered), though there are not many of these items.

The point is not what Dad spent his money on, but that he spent his money on things he admits he does not use at all and has not touched in years. Two motorcycles don’t work and can’t be ridden. The guns aren’t shot. Ammunition sits unused (possibly a good thing). It’s totally wasted money.

Mistake #4: Lack of Will
Dad says it “sure would be nice” to have a paid off house, as if mortgage payments come from the sky or happen magically for other people. When I tell him what we did in order to pay off our house, however, he balks. Sometimes he tells us not to be cheap.

He’s simply not willing to do it. This is the hardest part for me to watch and accept.

He complains about the high cost of utility bills but “doesn’t like the look of” LEDs, and leaves a light on in the basement all the time. I can hardly believe the latter, coming from the man who taxed my brother and me $.25 EVERY TIME we walked out of a room and left a light on.

He insists on keeping a land line phone, a noisy interruption I haven’t had in my life for a decade and do not miss. “It’s only $30/month,” he says.

Dad complains about the “high cost of decent food.” There is a massive, south facing back yard with no shade behind his house. The lot size is just under 10,000 sq ft. and the house is 1200 of those. Is he growing more than a few tomato plants? Nope.

He goes on and on about how he needs to get in shape. Will he ride his 10-speed bike anywhere, or walk the two blocks (literally, two short blocks) to his girlfriend’s house? Nope. This is the man who, when he was laid off, would ride his bike to hand deliver a bill payment rather than spend $.25 for a stamp.

And before you say “But he lives in a suburb,” yes, he does. But he lives in an older, 1950s suburb immediately adjacent to Detroit. There are great mom-and-pop businesses within 1/4 mile of his house, which I walk to when we’re here but to which everyone else drives. There’s a wonderful old-school Italian bakery, multiple drugstores and restaurants, and even a new brewery, coffee shop and pilates studio. Most of the time, dad doesn’t need a car any more than I do in San Francisco… and it’s flat here!

Dad lacks the will to change and, at his age, probably isn’t going to. I don’t like to mention lack of will because I sound like some GOP bootstraps person, but it’s true.

The Surprising De-Hoarding Strategy that Worked

I cannot believe I’m typing this, but… I have learned something valuable from watching Hoarders. Yesterday, dad was getting a little anxious about the number of old books I had boxed up to give away. None of these books have been touched (literally, have not moved from their shelf positions in the basement) in over 20 years. I said, “They’re just going to the staging area, the review pile, before we move them up to the garage and then into the car for Goodwill.” The knowledge of a review pile and “staging area” assuaged a lot of his anxiety.

But THE winning strategy for my gun-toting, NRA-magazine-reading dad was taxes. He came to it himself: “If YOU take this to Goodwill, you get the tax write-off and can screw the IRS!” Never mind that charitable deductions are perfectly legal and an IRS-approved item. Set your rational, fact-loving thoughts aside for the moment. Dad believes he’s “screwing the government” and that’s what matters. That belief will get stuff out of the house, so that’s what I went with.

Hey, whatever works.