Thursday, January 22, 2015

Early Retirement as Self-Employment

I've been explaining the essence of Mustachianism to a lot of people recently. It was during a brunch that I recognized that the best part of Mustachianism -- not being enslaved by a 9-to-5 -- is easily attainable with a smaller amount of money. It's not about 'stashing tons of cash; it's about controlling your cash flow, as always. It means that you have enough money to pay for all of the needs and some of the wants.

Someone told me that the concept of ERE was ridiculous. "Why don't they just save up 5 years of expenses and start their own businesses?"

"Like me?"

"Yeah, like you, I guess."

In some ways, leaving my old job and starting my own company has been a very ERE move. It's a move for autonomy and not answering to a real boss.

Thing is, after you retire, you're probably still going to make money, as in MMM's Jack and Jill story.
For the first year, she is in recovery mode from putting up with 15 years of corporate work. She spends her weekdays doing projects around the house and getting back into shape, her weekends visiting her still-working friends and family, and several weeks taking a few of the trips she had been postponing. Whew, that was great. The whole $20,000 budget was spent and she earned nothing. But by spending so much of her newfound free time socializing with friends, she learned of several interesting opportunities in her dream field of being a kayak instructor. A tour company was looking to hire guides, and some paddlers were looking for lessons. Someday, she might follow up on those.
By the second year, her house is nicely fixed up and the desire to travel has been somewhat fulfilled. And since she’s an MMM reader, she is occasionally tickled with inspiration towards living a simpler and more efficient life. A few interesting ideas come up, and she tries them out:
The original $20,000 budget had assumed that she’d keep her fairly new Honda CR-V and drive it 10,000 miles per year at 25MPG. Now thanks to the Little Car article, she realizes that a Toyota Yaris is more than big enough for her, allowing her to cash out about $4000 of capital. And with some moderate hypermiling techniques, she gets over 40MPG. Also, she has started riding her bike more, reducing annual mileage. Driving costs have dropped by $2,000 per year, or 10% of her pre-retirement budget estimate.
She also decides to quit her gym membership and join a rotating workout-with-friends circle instead, loses some of her taste for gadgets or perhaps another of her more expensive hobbies the next year, and realizes that all around, she now lives on $15,000 per year.
Meanwhile, the simpler lifestyle proves energizing and frees up time. She starts kayaking more, and teaching lessons on the side. This turns into a regular class she offers through the local community college, which brings in $1250 every time she runs it. To avoid feeling like it’s a real job, she does only four sessions per year, bringing in $5000 (and netting her a nice tax deduction for any kayak equipment as well).
MMM, even before the blog got big, made money doing stuff like building wood coffins. He makes a bit off of the blog, more now probably that he has a dedicated credit card guy. He gets money off of some affiliate links, but blogging isn't really about the money for him.  He and Mrs. MM are self-employed, doing what they do.
Source: MMM

Jacob made waves by going back into the workforce, becoming a quant. He spoke in the forums about time constraints when you work a real job.
When I was RE, I observed that I would very rarely have more than 1 thing that needed more of less immediate resolution. This could be a health issue, a blog issue, a financial issue, etc. Whereas, when I'm working a job, the fire-list is usually somewhere between 3-6. I suspect this is because things get ignored for longer since few of these issues are directly work related. They get ignored mainly because work consumes, literally consumers, the majority of my energy.  
So really the beautiful part of being FI is having time affluence. A self-employed person (like me) can do things like go skiing on a Tuesday or spend 3.5 hours going for lunch in downtown Denver...and I'm not FI. Even people who are FI tend to find things that result in gainful employment. I'm simply not at the FI stage yet, less than 2 years after graduating from college. It's a question of making enough money to sustain myself, or go back to the real world with a real job.

Monday, January 12, 2015

Sheryl Sandberg and Adam Grant on Women in the Workforce

Women don't speak up. Adam Grant and Sheryl Sandberg wrote an article for the NYT about it.
We’ve both seen it happen again and again. When a woman speaks in a professional setting, she walks a tightrope. Either she’s barely heard or she’s judged as too aggressive. When a man says virtually the same thing, heads nod in appreciation for his fine idea. As a result, women often decide that saying less is more.
Dr. Adam Grant, Wharton professor
It's very difficult for women to speak up. I recognize this as someone who used to live in conference rooms. I also think that it's important that MMM and Jacob from ERE are both men. There are financially conscious women, but people are mean. I watched Mrs. MM face the onslaught when she did guest posts on the MMM blog. She wanted all of us to have civil discourse, but people were downright nasty to her. She doesn't post that often anymore, although she does have her own blog.

I like the solution that they came up with -- they have a no-interruption rule now. And it helps both genders be productive. I hope that they institute that rule in more workplaces. 

Friday, January 9, 2015

How To Build a DIY Kano Kit

I've gotten increasingly interested in the Kano, as I mentioned in my last post.

When I was doing a quick check on Kano reviews, I saw a lot of complaints about the keyboard/trackpad and about the computing power of the RPi. Because I'm definitely aware of what the Pi is and isn't, I'm not particularly worried. And getting a different keyboard is not a big deal if it ends up not working is not a big deal.

My interest was piqued by this comment on Wired.
$40 --- Raspberry Pi
$10 --- Wireless Keyboard
$5 --- RasPi Enclosure
$5 --- SD Memory Card
$5 --- HDMI cable + Power Adapter
And these sell for $150 each?
I know the Kano OS is specially designed to teach... but that seems to be a whole lot of cash for a Linux distro.
From The Guardian:
Kano OS also includes multimedia packages, plus Kano Blocks, an open source visual programming language that can output code in Python and JavaScript among other languages, and can be used for all sorts of things including game creation, plugging directly into things like Pong and Minecraft.
Because some of Kano is open source, it seemed like pretty huge markup. I thought about building a kit myself. So I went poking on NewEgg and Amazon, because I didn't want to be hugely ripped off. So here are the prices on Amazon. No guarantee that these won't change. These aren't affiliate links.
Source: Wikipedia

  1. Raspberry Pi: I'm familiar with it. The B+ costs $30, more than the $20 you'd shell out for an A+.
  2. Wireless Keyboard and Trackpad: $23.99
  3. Enclosure: $6.99
  4. SanDisk 8 GB Memory Card: $5.95
  5. HDMI: $10.99 (I'm not sure what the HDMI power adapter is, so this is my closest approximation.)
I think it comes out to $77.92 in basic components. Of course, you get a corporate discount in B2B as opposed to B2C, but that comes out close enough to $150 that I felt comfortable ordering straight from them. They have the color-coded instruction manual that crosses language barriers. They also have a support network for Kanos specifically, and I figured that having Kano OS pre-installed was worth paying the markup. They are running a business. If I was getting it for myself (why would I get an inferior machine when I'm running on a MacBook Air?), I'd probably get the parts and muddle through it myself. The point of getting the Kano, though, is having an easy-to-assemble computer kit. 

They have absurdly long lead times, though. It was telling me that if I buy one now, I'd get it mid-February. Their shipping story says that the end consumer will get it in 2-3 weeks, but that's empirically not the case. Two weeks from today would be January 24 and three weeks January 31. I'm guessing that they have a post-Christmas backlog.

I was also curious to see why they were manufacturing in China with such long lead times. Kano is based in London. It might actually make sense to manufacture in Alabama, or at least have some units Fulfilled By Amazon for faster delivery to customers. I get that their Shopify setup works, but it could be a lot faster if they wanted it to be. The Amazon fulfillment fees are cheaper (the last time I checked) than shipping commercially anyhow. Amazon gets massive discounts for volume, so they come out ahead, too. 

Tuesday, January 6, 2015

Joe and Katya Eames and CHSPE

So I saw a post on Hacker News, and it spurred a lot of thought.

First, the original post: a dad pulls his 16-year-old daughter Katya from high school to focus on programming.
Joe Eames
Source: PluralSight

Second, the cynical Hacker News comments: the gist? "How dare you!?"

I'm pro-Joe pulling his daughter from high school. I'm going through the process right now with somebody in my family. I think that her time is better spent in college than in high school, and she's a smart kid who can handle college at age 16. I want deeply for her to go into computer science/engineering (I understand that those are different things) or robotics, as I mentioned before. I think that it's best for her to do this. She'll still finish high school, and she can choose other paths. Deciding to go all-in for a year or two on coding will not seriously derail her life, and it may act as a springboard into a fulfilling career.

I'm buying her a Kano, and I sat with her when she coded an HTML/CSS webpage from scratch on Codecademy. I hope that more kids have the courage to pursue what interests them.

Monday, January 5, 2015

Inequality Graphs

I was interested by this WSJ post.

Owning Stocks and/or Business Equity

There are a lot of takeaways from the NYT article about inequality, but what I liked best was the Millionaire Next Door (MND) kind of insight: owning stock helps you.

It was astounding to me that so many people under 35 didn't directly or indirectly own any stock. Having any money in a 401k means that you would own a little that means that there's pretty low participation in my age range.

Homes and Net Worth

Other MND insight: rich people do not have all of their net worth in their homes

Spreading Poverty

I really liked looking at the graphs above. The one showing how poverty was spreading is sad.

I'm actually ok with high inequality and low poverty. Unfortunately, some of those areas have turned into low inequality, high poverty OR high inequality, high poverty areas. I recognize that the media is sensationalizing what happens with capitalism, but I do wish that someone could help people before they slide down. That's why I am on the call list at the Madison St. Vincent de Paul, which focuses on helping the poor and new arrivals in Madison.

I used to live in the most unequal city in the United States, Bloomington, IN. The measurement was deeply skewed by the number of college students with low incomes, living off of their parents. Also, the researchers considered an area "high-poverty" as soon as the poverty rate crossed 15.4%. I think that they could count an area as "distressed", but that wouldn't bring as many clicks.

Middle Income

I think it's a little absurd how low the threshold is to get into the middle income.  But also, if that's middle class income, I get more concerned about our future if the middle class has decreased dramatically in size. I did poke a little bit more to see about the middle class.

If the household has two earners making $13.82/hour, it takes ~2,250 hours of work total to get to $31,100. We're assuming they don't have kids. If there is a hollowing out of the middle class (despite how I've mixed and mashed methodologies), that would mean that two-earner households are unable to get that much work.

I don't know if that's true. I told my roommate that I'd work at Target if I needed a job. I may be college educated, but I'd rather work than starve. Madison has help wanted signs everywhere, and I noticed that Indianapolis has them, too.

I use this map a lot:

It may be about the young people, but I think that it's a snapshot of how much opportunity there is in each state. The Great Plains/Upper Midwest, VT, and NH have jobs . Worst places to get a job: CA, AZ, NM, AL, and WV. There are economic opportunities if you want to find them.

Sunday, January 4, 2015

Fertility in Japan

Subsidized Child Care

They think that the solution to their dwindling workforce is subsidized daycare for children. While it will help, it's not going to be enough to spur babymaking.

For a long time, Japanese culture has pushed moms out of the work force. When they return, rationally, they keep their income under the threshold where they'd have to pay more taxes. They are now saying that the state will find a way to help with subsidized childcare, which I called for in every nation who wants to see a higher birth rate.

Other Half

Another part of the equation is having help from the men in the family.

The company is also offering more flexibility. Kaname Utsumi, 43, the manager of a team of 15 in KDDI’s human resources department, says she was the first woman of her level to return to a management job after maternity leave, three years ago.

Her husband, who also works for the company, drops their son off at day care and sometimes picks him up. She leaves work early twice a week, at 5:30 p.m., though she says she usually puts in additional hours at home.

“It’s hard,” Ms. Utsumi said. “But when you find a job you like, you don’t want to give it up.”
Sheryl Sandberg and Anne-Marie Slaughter both have supportive husbands. Sandberg's is the CEO of SurveyMonkey, but her sister has also helped take care of her kids. It's a joint effort.
Source: BusinessInsider

Work-Life Balance

Compounding the problem, women still have a tough time getting ahead at most companies. The demands on employees for long hours and after-work socializing are still pervasive, creating a double bind for working mothers since husbands are less available for child care.
Japan needs to cut back on the long hours that people are expected to work. It's not about creating policies focused on women. It's about creating policies with better work-life balance for everyone, so that everyone can pitch in. I am also curious about whether or not the grandmothers in Japanese society are expected to help take care of the kids. At least in Vietnam and possibly China, the mom goes to work while the grandparents take care of the babies. It's weird to me that Japan doesn't have that.

More Childcare Workers

They do need to loosen the immigration restrictions. There are lots of au pairs in Europe, and I certainly think that Japan can both provide better working conditions for au pairs and utilize them. Next to them is China, which has plenty of people who would love to take care of the kids. There would be inevitable culture clashes, but it's a necessary part of the global economy. When I was in Ecuador, everyone was abuzz about the idea that you could fly to Spain and take care of an old person for 800 euros per month. In a country where many live on less than $2 per day, that's a very attractive proposition. I imagine that it would be the same for Chinese childcare workers. Japan is pretty prosperous.


It's more rational in Japan not to have kids and to minimize the number when you do. It's challenging for mothers to keep track of one kid, let alone more -- but the country needs more children.  They need to have a multifaceted approach, or they will face a dying country.

Tuesday, December 30, 2014

Buy Real Estate in Reno

It's no secret that I want my future children to attend Davidson Academy or a close equivalent. Because of that, I've resigned myself to living in Reno for a few years. For a long while, it was a very quiet place, known as a seedier Las Vegas.

That's changed. I was interested to see that Elon opened his Gigafactory in Reno, which has already started growth.

I was further interested to see that they have one of the FAA-approved drone zones. There's apparently a much friendlier environment to have capital, and Reno has the virtue of having cheap rent. SF has an environment of rapid innovation, but Reno is livable...which goes a long way. The founder of Flirtey is from Australia, and he can do incredible things, I think, with his drones.
Matt Sweeney, CEO of Flirtey
Source: GizMag

Reno is going to see a sharp upswing in a very short time. It's a good time to buy Reno's still-depressed real estate. I don't have the money to invest in real estate right now, but I did start looking into the local utility companies. The water authority is community owned, but NV Energy is a for-profit. Following the bread crumbs, it's owned by a Berkshire Hathaway holding company. I'm planning on investing in BRK.B in the next downturn. It's extremely strong now due to recent acquisitions.