Welcome back shoppers! Here at the store we love to get to know people and hear their stories. Since you’re new here I thought it would be polite to tell you about myself (Mr. C). I’ll tell you where I went wrong and where I went right on my path towards Financial Independence. Pull up a chair, and grab yourself a beer. I’m currently enjoying a “Hazy Little Thing IPA”.
My Mother has always been unhappy with what I do. She would rather I do something nicer like be a Bricklayer.Mick Jagger
To be honest, a blue collar life was never on my radar as a kid. Becoming a bricklayer even less so. I vividly remember driving by a jobsite where a concrete block building was being put up and thinking to myself “holy shit that looks like hard work”. But life has a funny way of making a plan for you.
My path was College. Specifically Accounting. I loved the simple math of Debits and Credits. I did well in High School and even got a tiny scholarship towards my degree. But college was not for me. It turns out you need to show up for class. At that stage of my life, discipline was not my strong suit.
Mistake #1 – Not Having A Plan
It’s not surprising that college didn’t pan out for me. I didn’t know what job I was actually studying for. I didn’t connect with others on that path, and I just generally didn’t take it seriously. I was doing what I thought I was supposed to do. But I didn’t know why I was doing it. I didn’t have a “plan”. To be fair, choosing a life path is a difficult decision for an 18 year old or really anyone, but it can be so powerful when you do. In the book “7 Habits of Highly Effective People”, Steven Covey talks about “starting with the end in mind”. It seems so obvious when you hear it, but many of us (including me) never do it.
Win #1 – Finding A Role Model
The first and biggest win by far for Mr. C, was meeting Mrs. C. In the midst of my aimlessness I found someone different. She had a plan, in fact she was well on her way. Mrs. C had already completed vocational school for Dental Assistants, and was working in her field. She had her own place with a few roommates and she was hot. (Still is).
Following her example I gave trade school a try. I went from zero knowledge to landing a Union Bricklayer Apprentice job in one semester of free job training. It was an eye opening experience. I found that I liked building things, and I was pretty good at it.
Mistake #2 – Not Having A Financial Plan
In general, Union jobs pay pretty well. After a few years of on the job (paid) training, Mr. C was earning roughly 5 times the minimum wage at the time. Throw in medical insurance and a pension, and Mr. C thought he was doing just fine. But there are drawbacks to this type of career. Construction work is heavily tied to the state of the economy. When the economy is in recession it can be difficult to find work. Also the hands-on part of any construction job is better suited for a young person. While the work does keep you in shape, it also takes a toll. Repetitive movement injuries are common, and commute times can be long.
Lesson learned here is that earning a good income is not guaranteed for life. Fluctuations in the economy, changes in your health (mental and physical), and technology can all limit your ability to earn money.
If Mrs. C and I had a plan for Financial Independence early on, we could have leveraged the fact that we had good paying jobs, little debt, and loads of time to let the interest on our investments compound. We could have greatly reduced the length of our careers by living below our means and investing early and often. But we didn’t. Our Blue Collar jobs provided enough income to do so, but we just never saved early on.
I thought having a pension would take care of everything. But it doesn’t. While it is a nice benefit to have, most don’t pay out until at least 55 years of age. Mine won’t pay out fully until I’m 62. And if I want Mrs. C to receive it after I die, it will be reduced significantly. I plan to stop full time work well before 62, and having more money invested outside of a pension would make that much easier.
Someone is sitting in the shade today because someone planted a tree a long time ago.Warren Buffet
Win #2 – Live In House Flipping
One of the major benefits of learning a trade is being able to use those skills for your own projects. What you also find is that a lot of the basic skills transfer to other trades quite nicely. With that base of knowledge and a desire to learn, you can tackle most any fixer upper project on your own.
Mrs. C and I stumbled upon this benefit when we purchased our first home. The Southern California real estate market has always been pricey. To work around this problem we bought a cute little dump of a house. It really was. You could see daylight through the ceiling, and everything was original from 1946. Mrs. C saw the potential though. So we jumped in with both feet.
Over the next several years we slowly fixed and refurbished the home. Finally selling it for twice what we paid for it. A big bonus of this strategy is that you can avoid income tax on the profit up to $500,000 (married couple). We’ve repeated the Live in Flip technique several more times over the years, and the equity we’ve built should cover the cost of a home when we retire from our current jobs. Currently Bend, Oregon is our top pick.
Mistake #3 – Not Starting Sooner
Somewhere around 2012 the toll of a strenuous career became really apparent to Mrs. C and I. We had been in our jobs for more than 20 years and the thought of 20 more was not exciting. But we were no where near achieving Financial Independence. And because we were not investing regularly we missed out on a ton of potential growth. We knew if we wanted to escape full time work before normal retirement age, we would need to step things up. We had a good amount of home equity from our house flips but not so much in brokerage and retirement accounts.
Investing at any age can be beneficial to your net worth. But the real magic happens when you start early. Vanguard has a great explanation of how this works here.
Win #3 – Getting Started
The Journey to Financial Independence has been a long road for us, and we’re still not quite there. But we’ve learned a ton, and have gotten really excited about moving to a phase of life where full time work is not a requirement. Mr. C might even get to take that photography class he’s always wanted to take.
Once we got some clarity and created a plan for our future we started making some big strides towards Financial Independence.
- Downsized our home
- Mr. C moved into a supervisor position to earn more
- sold off extra vehicles
- implemented budgeting systems
- reviewed all expenses and trimmed the unnecessary ones
- started funding Roth IRA accounts
- started funding Employer 401k
- started envisioning our future on a regular basis
Seems like a lot when I look back on it, but we really just started doing one thing at a time. Just simple decisions with the intention of getting some freedom a little sooner. An earlier start would have been great, but we did eventually start. And that’s the key. The choices we’ve made should give us an extra 10 years of freedom versus not making them. We’ve gained a big chunk of our lives back, and have created more security along the way.