Category: General

As I spoken about before, I’m an engineer in the supply chain field. My primary role is to design warehouse operations and equipment, so that the operation can operate as efficiently as possible and be successful. In order to do this, I need to continue to learn new methods of work, as well as work to better understand existing equipment and work methods.

As part of that, I took a trip the first half of this week to a racking manufacturer in Wisconsin.  This company takes spools of steel in long runs and bends them into rectangular tubes (after which they weld them). From there they either punch holes at regular intervals (for uprights) or weld hangers on the end of these rectangular lengths (for horizontal beams).

Once this is done, the run them through an oven to burn off the impurities, let it cool a bit, and then powder coat/paint them prior to running them through an oven again (to set the paint). Once that is done, they stack them up and prepare them for shipment.

These are the storage systems that we are all used to seeing in the big box stores, Ikea, and many retail establishments. They can be setup to hold cases below and full pallets of merchandise above. Depending on how you want to set it up, they can be very complicated, or very simple.

The operation we visited had two sides, one that had been in operation for 30 years, and one recent addition with more modern equipment (5 years). What was fascinating was that the basic processes were the same, but the more modern operation had only 40% of the workers. A lot more of the work (especially the welding) was being done by robots and more of the product movement was done by overhead conveyors and automation.

As an engineer, watching this manufacturing operation, where raw materials come in and finished goods go out, is thrilling for an engineer. I could tour sites like this all day.

So what do you do to keep yourself “up to date” in your profession?

 

Mr. 39 Months

There has been a great deal of conversation and writing on the new tax bill, and its effect on individuals and families. Some have spoken about it being as consequential as the 1986 tax reform bill (which dramatically changed the tax landscape right as I was graduating from college). I wanted to take the time to discuss some key points, and then to provide some links for deeper analysis if folks are interested in “getting in the weeds”

The biggest part of this tax reform, in my opinion, was the dropping of the business tax rate from 35% to 21%. While this won’t affect folks in the FIRE community directly (for the most part) it will have a dramatic effect on the country and its business climate. States in the US have been dropping their own business taxes for the last decade, in an attempt to be more competitive and to bring businesses into their states. Now the US federal government has clued in that its 35% rate (vs a typical 20% rate for most of the developed world) has been seriously impeding the maintenance of business in the US.

What this will do, in my opinion, is lead to more business and job growth in the US, as companies evaluate their costs to offshore (cheaper labor, more transportation expense, higher inventories due to longer lead times, etc.) versus keeping some or all of the business in the US. I’m in the logistics industry, and I know the cost of shipping stuff by boat from China/Vietnam/Europe – and it is significant. If you live outside the US, be prepared for your companies to get additional business pressure due to this.

For folks in the FIRE community working on hitting their goal, this should translate eventually into higher wages and benefits, as companies grow, and the competition for labor (especially skilled labor) increases. I’m already seeing this in the logistics industry, and typical warehouse workers & forklift operators have seen their starting wages rise by 20% over the last 2 years. Competition for these folks is tight, especially in key markets (So. Cal, Northeast PA, etc.)

For individuals, the rates for FIRE folks have remained at 10% for the first bit of money, but the individual rates have dropped 2% – 3% for all levels beyond that. It should result in some tax savings. One of the key items is the increase of the standard deduction to $24,000 for couples, with the exclusion of the individual deduction. This will dramatically change how some folks do their taxes, specifically those who itemize.

• For those families in the lowest income level (under $44,050) the 10% rate didn’t go down, but the standard deduction raise to $24K may cut their taxes somewhat.
• For the next level, those married couples claiming income up to $96,400, the 15% rate dropped to 12%, so there are savings there.
• Those with higher income levels saw reductions of 2% – 4% in their tax rates.

The cap/elimination of some property tax deductions, state income tax and mortgage will cause a lot of heartburn in high-tax/high cost-of-living states (CA, NJ, NY, and Northeast US). I live in New Jersey, and it looks like it will definitely cause issues here. Still, the folks affected by this are the typical big-house/expensive car kind of people, not the FIRE-type of folks who want to save money and get out of the rat race.

For Mrs. 39 Months and I, our deductions for next year (including the soon-to-be-extinct personal exemption) look like they were going to be around $23K, so the $24K standard deduction appears to be where we would end up, saving us a little. The reduction in rates looks like it will save us $2K – $3K a year i total taxes.

If you’d like to see how it might affect you, there is a good Tax reform calculator at CalcXML. 

Some further analysis:

1. Go Curry Cracker: Good general analysis
2. Nerd’s Eye View: Great In-depth analysis
3. Physician on Fire: How self-employed are affected:

So what are your thoughts on the new tax reform, and how will it affect you?

 

Mr. 39 Months

For some folks, our work requires us to travel, either by car or by plane, to other parts of the country, where we perform our job duties. This travel can be both a pain and an additional source of income. I wanted to discuss some of the financial advantages of corporate travel, and how someone seeking financial independence can benefit from it.

Extra Salary

For the corporate world, travel is seen as a burden, something which has to be done, but which causes a hardship on the employee. Many folks have spouses or significant others, children, pets, etc. These have to be taken care of while the worker is “on the road,” which causes stress and problems for the worker. Because of this, companies are willing to pay extra for workers who are “willing to travel” and this can be quite lucrative.

I knew two engineers who graduated the same year, same school, and same degree. One got a job as an engineer locally, and was offered $50K/year + benefits. The other got a job with a consulting firm that required 90% travel – so they offered her $70K/year + benefits, and she got to take advantage of all the “travel hacking” that you have seen in the FIRE community. A 40% bonus just because, at 22, she got to enjoy all sorts of travel throughout the US.

Extra Income

Often you get the opportunity to gain extra income while traveling. This primarily is done by being offered a stipend for travel. Companies use stipends because it is easier to budget for travel that way. An example would be a food stipend, where, instead of you submitting receipts from restaurants, the company just gives you an amount of money each day to pay for your food – for example, $45/day. If you stay at a hotel that serves breakfast and eat/drink reasonably, you can pocket the remaining money as extra income.

I’ve seen companies pay for just the airline travel, and put in a stipend for the hotel, food, car, etc. Since a lot of travel is done by corporate execs, these stipends can be rather large, because the execs don’t want to stay at a Motel 6. You can take full advantage of this and make some dough.

Another form of extra income is the auto mileage. Most companies have a standard rate per mile that they will pay you for business travel, to cover fuel and maintenance of your car. This is based on an average mid-size car, with average gas mileage and maintenance costs. If you have a more fuel-efficient car (like most FIRE folks who judge purchases on things like that) or a car with less maintenance costs (maybe you do some of it yourself to save $) you can book some significant extra income from a company’s mileage reimbursement

Reduced Expenses

This is the area where you can get real “bang” for your travels. By taking time to be somewhere else, somewhere that a company is paying you to be, you can significantly reduce your expenses – all money that goes tax free to your bottom line. Some examples:

• Home: If you travel extensively and are single, then there is no reason to get a large place to live, or buy expensive items for it – You won’t be there most of the time! Get a smaller place, furnish it sufficiently to take care of your needs, and pocket that money for the next several years. Keep the heat/AC turned down as well.
• Auto: Instead of having to pay for fuel, tolls and maintenance to commute to/from work, your car sits and doesn’t cost you this. Maybe you don’t even need a car at all, and can just get by with Uber/Lyft and a bike?
• Food: For periods of time, the food is on the company, so you can save on your food bill.
• Entertainment: Again, your company is paying for you to be at another place, so you aren’t spending money on a lot of entertainment options during the week

All of these are ways to drop money into your FIRE accounts and get there earlier than expected.

Negatives of business travel

The reason that companies pay more for folks who travel is because it does suck at times. Sitting in airports or driving long distances, being away from family, strange hotels, strange food, etc. This can all wear on a person over time and that is why many folks do it for short “spurts” of a few years, and then move to a job with less or no travel. This is especially prevalent when someone wants to start a family. I have a peer who consulted for 4 years, and did 95% travel. Woke up early Monday morning, kissed his wife, on the road Mon-Fri, and got back late Friday night. He joked that he was a “weekend husband.” He finally joined my company when they wanted to have kids, and now travels about 25% = 30%. They just had their second child and are much happier.

I always told my students when I was counselling them on a job search to put “willing to travel” on the bottom of their resume. If you are young and want to make some money fast, consider extensive travel. Even if it isn’t for you, take the opportunity to do some travel for your company and pocket some additional funds to help you on your way to financial independence.

 

Any good road stories out there?

 

Mr. 39 Months

Actually, Mrs. 39 Months and I have taken a week off to visit North Carolina.

She is attending a Dulcimer conference, and I am scouting out potential sites to move to after we hit our FI goals. Geoarbitrage, baby!

This is Chimney rock, NC – quite a hike to get up and out there.

This is Hendersonville NC, a nice town with a thriving downtown and lots of shops, coffee houses and restaurants. Potential new home?

Hope everyone is enjoying the fall weather.

Mr 39 Months

Its been a topic of discussion among the folks I talk with, and its a real cause for concern among many people.

This article goes over some good steps you can use to help remove/reduce the potential for loss. It pretty much breaks it down into:

1. Finding out if your information was exposed
2. Getting a free year of credit monitoring (but be careful & read the fine print. You may be giving up your right to sue Equifax)
3. Check your credit reports often (you can check each of the three sites – Equifax, Experian and TransUnion once a year for free).
4. Consider placing a credit freeze on your files
5. Or consider placing a fraud alert on your files
6. File your taxes early (so frauds can’t cheat you out of your money)

No matter what, keep an eye out for thieves on the net. They’re out there, and its just smart financial sense to be ready for them.

Mr. 39 Months

 

There has been some discussion on the internet this last week about the positive effects on the country’s GDP after a Hurricane hits a particular area. The activity that GDP measures (rebuilding, supplies, etc.) get a “boost” of spending when a site is rebuilding, but the GDP measure (which many folks use as shorthand for the economy) isn’t really built to measure this sort of thing.

The Econoproph wrote, back in 2011 (after Hurricane Irene): What will show up in GDP measures after the natural disaster is a perverse reaction in the months after the disaster.  This comes because of the re-building activity that comes after the disaster.  Repairing buildings, cleaning up, rebuilding all require paid services, building supplies, labor, etc.  These transactions will show up in GDP measures in the months/quarters after the disaster as an slight increase in total GDP.  But it’s a deceptive increase in total GDP because we aren’t really significantly better off.  We’re just getting back to the condition before the disaster.  GDP counts the fixing, but not the damage done.  This is why we sometimes hear commentators say that a “disaster is good for the economy”.  It isn’t really.  It’s good for GDP, but that’s not a perfect measure of the economy.  The mistaken idea that damage or disasters are good for the economy is what economists call the Fallacy of the Broken Window. It was first explained by Frederic Bastiat.

 All this activity is doing is getting us back to “0”, which isn’t that helpful. It would actually be more helpful if we had spent the funds on hurricane damage preventive measures in the years prior to. One just has to look at New Orleans (which saw a massive rebuilding since Katrina – but which has leveled off). It hasn’t really recovered to where it was, and it has lost a decade of potential growth while rebuilding.

One other part that will affect the GDP is the price of oil and gasoline in the country. As we work to get Houston back on-line (and potentially other areas depending on the Hurricane season this year), folks have already seen the price of gas go up 20% or more in their local area. This will have a net drag on GDP growth, and the economy, as funds are diverted to purchase gas that could have been used elsewhere.

I’ve got family in Florida, and my prayers go out to them, and to all the other folks in TX, FL and other states affected by the Hurricanes this year.

 

Mr. 39 months

Was reading an article yesterday about an interesting stock buying strategy. Apparently when folks think the market is overheated/overpriced (like some do now), folks keep their money on the sideline in cash, and wait for the market to drop 2% – 3% in a day or two, then they rush in to buy the stocks. Just another strategy for timing the market.

The article noted that folks who have been doing this since the last time the market dipped 3% or more (2016) have  lost out on a 10% increase in the S&P500 over that time period, by just leaving their cash to the side. This further validates my thoughts (and the thoughts of most folks) that you can’t time the market – at least not in the short-term. I did do a write-up (Aug 5, 2017) on Ben Stein/Phil DeMuth’s thoughts on long-term trends that you can use to determine when is a good time to buy stocks vs. buying bonds/other investments.

For now, I continue to do dollar-cost averaging with my investments, putting in a high % of my take home pay into my 401K, Roth IRA and individual investments. Been doing that for years, and it has paid off even after many of the dips and crashed.

 

Anybody out there with an interesting market timing strategy?

 

Mr. 39 months

Memorial Day, originally called Decoration Day, grew out of the sacrifices of the American Civil War. It is a day of remembrance for those who have died in service of the United States of America. The first place to hold services for it are in conflict, but by the 1870s, numerous cities and towns were taking part. In 1915, after the publication of the poem “In Flanders Fields”, Moina Michael came up with the idea of using red poppies to honor those who died serving the nation during war.

 

It is estimated that over 1.8 million Americans gave their lives in the wars from the Revolution till now. Most folks celebrate this day with a BBQ with friends and family, but with little thought to its significance. For me, as an army veteran and with family who served, it bears a slightly higher significance.

 

I had three uncles on my mother’s side serve in Vietnam, and have two Brother’s-in-laws who also served (one in Vietnam). While none of them died in the war, I still honor their service. As a West Point graduate, I’ve had a few of my classmates die in combat, and I am saddened by the loss. I remember them when they were young, 18-22 year olds with all the promise and passion of youth. I remember and honor them.

 

In today’s America, there are fewer and fewer people connected to the armed services, and the people who protect us. I applaud the fact that the society, for its part, goes out of its way to acknowledge the debt and celebrate the people who do this hard work. I make every effort to thank these folks, both active and veteran, whenever I see them, and I hope you do as well.

 

Politics has always been a divisive force in America, and it often has led people to hate the soldier, even though they are doing their duty to protect all. I guess that comes from our innate dislike of a “standing army” that we inherited from our British kindred. For the longest time, America did not “go overseas to seek out dragons to slay” as John Quincy Adams said in the 1800s. It was only with Woodrow Wilson and WWI that America really began to go out in the world and make their mark.

 

I am not going to get into whether this is good or bad – again this isn’t a political blog. Just take the time to remember the folks that gave their lives so we could live in freedom on Memorial Day. That is the greatest gift you can give them and their families.

Mr. 39 months

 

Note: A “National Moment of Remembrance” resolution was passed in Dec 2000 which asks that at 3pm local time, for all Americans “To Voluntarily and informally observe in their own way a Moment of remembrance and respect, pausing from whatever they are doing for a moment of silence.

39 Months

 

Thought I would give folks a short life history, in order to give some context for my story and struggles.

I worked my butt off in High School, and managed to get accepted to West Point (the US Military Academy). By joining the military, I got my college paid for, and got a fairly good engineering degree out of it. At the end, I went straight into the combat arms (Tanks) and was deployed to Germany during the last few years of the Cold War. I actually got a tour 3 weeks after arriving on my battle position and where I probably was going to die when the Russian’s invaded.  Gotta love those crusty platoon sergeants!

I also got married to my lovely wife, Mrs. 39 months, right out of school (and we’ve been together for 31+ years).

After five years in, and a stint in Desert Storm where my tank unit fought the Republican Guard, I got out in 1991, right as the economy was going into recession. Took me about 6 months to finally find a position in warehousing in New Jersey (within 3 hours of my wife’s family) and that is where we ended up settling for the last 26+ years.

I’ve worked in warehousing since then, either in management (Supervisor, Manager, etc.) or as an engineer, designing storage and processes, etc. It’s a great industry to be in, and it’s big throughout the US and the world. I’d recommend it to anyone who wants to get started in an industry with potential growth. Let me know if you want further details.

For finances, I signed up for the 401K retirement plan at the first job I had out of the military (since I was only in 5 years, I didn’t get a military pension), but I only put in for the matching amount. After about 9 years, I hadn’t accumulated that much – and then the 2000 crash hit.

Suddenly I was 36 years old, and realized how little I had set aside for retirement. At my wife’s new job (she’d had it for 3 years) the company had been putting 10% of her salary away, and she had almost as much as I had accumulated over 9 years (with the crash taken into account). Needed to get started!

I bounced my 401K percentage up to 10% of my salary in 2001, and by 2003 I was maxing it out. I got a promotion the following year, and dumped all that money into both of our Roth IRAs. So by age 40, I finally was on track with maxing out our tax advantaged accounts. It sucks that I had lost all those years of accumulation, though!

I also started doing a lot of reading (Dave Ramsey, Millionaire Next Door, etc.) which helped to further motivate me.

Over the last 10+ years, we’ve managed to continue to fully fund my 401K and our Roth IRAs, pay down all our debt, and finally pay off the house in 2015 (Yeah!). So we’re debt free and heading for the finishing line in 39 months.

Now we have to start working on what our life will be like when we achieve financial freedom?

 

Mr. 39 Months