Month: November 2018

Tell me if you have heard this before.  “In the old days jobs were different. My grandfather could count on working for one company his whole life and then retire with a gold watch and a fat pension.”  Of course you have, it is a common narrative to explain why Boomers, Gen X and the Millennial crowd are all struggling with ever being able to retire.  And it is true to some extent but you might be surprised to know that even as early as 1950, the height of the pension era, only about half of the private sector employees in the United States were covered by pension plans.  But half is still a lot higher than the 14% of private sector employees who have access to a defined benefit pension now.

 

And that is a big change.  My dad, a member of the Greatest Generation, and my mom, a public school teacher were both covered by pensions.  And it really mattered.  In fact, even when they were running up bills as high as $8,000 per month at the nursing home they were still seeing their net worth go up each month due to their pension and investment income.  It was an amazing deal to keep getting paid after you stopped working, plus they also got Social Security.  Wouldn’t that be great?  Well, suck it up Buttercup, odds are you aren’t getting anything like that from an employer when you leave the company.  Neither am I.   And that’s one big fat change in what it means to be an employee.  But wait, there’s more!

 

In addition to pretty much zero benefits from your employer after you retire there is also a change in the employer/employee contract while you are working that has just as big an impact on life.  And this one is much more subtle than losing a pension plan.  It is a little hard to define, but as a guy who worked at one company for well over thirty years before slightly early retiring, I’ve seen some stuff and I think I have a handle on this.  So please bear with me.  When I started working at the chemical plant as an intern I was adopted by several experienced mentors.  I did not have to seek them out, they saw bringing the next generation into the “family” as part of their job description.  They invited me to their houses to eat, they even put my girlfriend up at their place when she came to visit me.  It was very much a family.  We all went to each other’s weddings and funerals.  If somebody had a house fire we took up a collection and people reached deep to make it meaningful.  If you were moving to a new apartment you had more offers to help than you could use.

 

 I remember being told that the reason they were very picky in who got hired was that they felt that they had to be sure you were someone everyone liked, because firing people was not an option.  And they did not want to hire some dead weight or someone who was a jerk because they’d be a dead weight jerk for forty years before they could get rid of them.  I’m serious about this, firing people was not an option, it was a last resort that was only available if someone was stealing or careless about the safety of others.  If they were just lazy or untalented, they were not at any risk of being terminated.  I’m not saying this was a good system, I’m just saying that was how work was back in the day.

 

 

It was a family model. Think about it, you do not get to pick family.  If you have a child, that kid is yours no matter how he or she turns out a few years later.  And if your uncle is a cretin, he is still your uncle and will still be there for Thanksgiving.  That’s what our company was like.  And it shaped everything we did.  We stretched ridiculously around the unmotivated or incapable employees to make sure the work got done in spite of their lack of productivity.  And the family model got abused over time.  Once someone figured out they were not going to go any higher in the organization or see much higher pay they often just started mailing it in.  About the worst they could expect was a stern talking to but everyone knew, we did not fire people.  On the plus side, if you got sick the company would go to crazy lengths to preserve your job and the owners would even write personal checks to help you pay your bills while you were off work.  As a junior employee, just one unknown worker out of hundreds, I remember the top guy in our company giving me a toaster oven when I got married.  I was probably six levels below the man, I’m not sure even how he knew I was getting married but I suspect he did that for every employee.  And it felt good to be noticed.  I would have done anything for him after that, not for a toaster but for the recognition and the feeling of belonging that came with it.

 

And we had parties all the time.  The big boss would rent a local restaurant at least once a month and the drinks and the steaks flowed like water.  There were cook outs and departmental get togethers, just like one giant family staying in touch with each other. I am struggling to convey how this felt because things are so different now.  Maybe the best way to say it is when I got up on Monday morning to go into work, I was happy to be going there.  I loved my weekends too, but I did not see going into the plant on Monday as a chore.  It was more like going to see family.

 

Things were like that for a very long time. I guess the family feel of work waned slightly over time but not greatly.   Things stayed warm and fuzzy at work until late in my career when “it” happened.  Our owners sold us to a Fortune 500 corporation and it changed our world. I went along as part of the sale, it was actually part of the contract.  By that time, I was the senior guy and they did not want to lose the institutional knowledge I carried.  I was actually pretty excited at first, because the pay got better and there were added bonuses like compensation tied to the price of our stock. When that stock took off like a skyrocket, we had a lot of happy employees who saw their compensation double overnight.  But it was not all good, because the world of publicly traded companies did not follow the old family model.  They had a new paradigm, I call it the professional team model.  In a family think about how loyalty runs. Blood is thicker than water, even siblings that don’t get along have each other’s back if an outsider pushes them around. You stick by family because you are stuck with them, they stay your family forever. But not so with the professional team model.

 

I like football so let me use the New Orleans Saints as an example.  They are a great team, they win more than they lose but who do you think the New Orleans Saints owners and management is loyal to?  They are loyal to Drew Brees, arguably one of the all-time great quarterbacks in football, aren’t they?  No, they aren’t.  The day Brees is no longer the best quarterback they can put on the field he’s history.

 

Management is loyal to the team, not the players.  They treat the players great as long as they are on the team but the second they feel like they can replace a player with a better one they will.  And then that replaced player, well, he’s basically dead to them.  And I’m not picking on the Saints, I could have picked any professional or college sports team in the country in any sport.  Teams are only loyal to the team, not to the individual players, if they lose a step.  And that’s not illogical, teams are about winning and you can’t win if you carry a bunch of worn out has-beens on your team.  It makes perfect sense.  And it is what most modern Fortune 500 corporations use now as their model.   Hire the best you can and weed out inferior talent constantly.  And it works for them, usually.  Having a bunch of Drew Brees types at your company is going to make you money.  As for the people that get cast aside?  Those people aren’t your problem any more, they are no longer on the team, so they no longer matter.

 

I’m not going to weigh in on the morality of the family model versus the team model of business.  There are pluses and minuses to both.  I enjoyed being part of a family company more but I made a more money working when we switched to a team model.  I also fired more people in my first year on the “team” than I fired in thirty years of being part of the “family”.  And that part was awful, but I did it so I have to take responsibility for it.  I do think it helps explain why the millennial generation generally views the corporate world with distaste and explains a lot of the impetus behind the FIRE movement.  I never considered trying to get out of my family style corporation as early as possible.  It was a warm, safe and entertaining place where I felt at home.  But after a couple of years in the team style company I was ready to go.  I did not like the fact that I was only worth what I offered the company today.  No matter how well I had done yesterday, only today mattered.  I will give the team model credit for my slightly early retirement.  If we had stayed a part of the family model I would probably still be happily working and would have missed the last three years of my retired life which I now know to be much better!

 

If you are part of the 9 to 5 world, or have been, does your company feel like a family or a professional sports team? 

 

If you are a “senior” member of the workforce have you seen a transition from being part of a family to something that has lost most of its loyalty to you as a worker? 

 

If you’d like to make a comment please just click on the title of this post!

Once in awhile you just have to go first class!  Of course, there are a lot of If’s attached to that. If you can afford it, if it is worth it and for some people…if you are debt free, if you are financially independent and if you are no longer part of the 9 to 5 world because you saved enough to purchase your freedom.  I can check all of those boxes and so can seven of my favorite friends, so when one of them texted an invitation to me and to the other six about spending a weekend in New Orleans to enjoy the haute cuisine and also one of the premier NFL matchups of the year (Saints vs Rams), I said sure!

 

What does a weekend for eight in New Orleans cost?  Well the 8 game tickets were $3,050 for Bunker Club 40 yard line lower deck seating.  It is unbelievable how big those NFL guys are when you see them up close!   The hotel bill was $2,800.  That’s only half of what it could have been because we always room two together to add to the camaraderie of our sports outings. Food was a biggie, because you know it is New Orleans and the Redfish Grille and Court of Two Sisters aren’t budget restaurants.  All in eats and drinks ran about $4,300 for the weekend.  Transport, since we are within driving range was about $1,600 for the four vehicles involved.  Miscellaneous shopping was around $800.  That adds up to $12,550 or about $1,570 each, for a football weekend.

 

The better part of two grand is a lot of money for a 3 hour football game and a couple of days walking around the French Quarter.  On the other hand, it is an insignificant part of my world at this point in my financial journey.  And for the others it is merely pocket change.  The group included three former CEO’s of large corporations, a surgeon, the owner of a large company, a wealthy accountant, a former C-suite executive of a Fortune 500 and me.  While I have a reasonable amount of assets by most people’s standards, I cannot measure up to any of them financially.  But these are warm, wonderful guys and they treat me just like they treat each other, with the same razor sharp wit and sarcasm you’d expect from any group of close friends.

 

We all match the image of the old American dream, each of us started in modest circumstances and each of us have become financially independent as a result of our careers, no trust fund babies in the group.  In my case my dad was middle class and I worked my way up in the corporate world because I was the rare engineer that could also write and speak well before groups.  The former CEO’s were born in Podunk little towns and worked hauling hay or on the docks.   One even obtained his law degree in night school while working a full-time job. The trucking company owner worked with his dad to build a profitable operation out of nothing.  The doctor got his medical degree courtesy of the Army and served our country for many years in return.

 

In the conversations over the weekend I noticed a few things that were common traits.  Reading was one, we all were voracious readers of non-fiction.  Another was fitness, everyone was a gym rat to some extent, except for me and I am a runner and tennis player.  Strong family ties were another common trait.  Even though not every marriage had worked out they were great fathers and very committed to their kids and spouses.  Adventure travel was a common theme. Most of us enjoyed  hiking,  mountain trekking, running or cycling and had traveled more of the world than average, although I was bringing up the rear in that category.

 

There were differences too.  I was the only STEM guy in the group unless you count the doc. By majors we had one engineer, one lawyer, one physician, one accountant and four business majors.  Six or seven of the group were former Greeks, as in fraternity members.  Only the engineer, me, and one of the others never pledged and never wanted to. The other seven were popular kids in high school and on their school sports teams, I was a late bloomer and only found my groove once I was launched on my career.  None of them were overnight successes and none of them were millionaires in their thirties.  None of them retired early or even slightly early, except me.  For most of them work was their main hobby and it was a hobby they loved.  In spite of that all of them seemed to truly enjoy their retirement.  However, retirement for them included being on corporate boards for which they receive significant compensation as well as volunteer work.  And in my case retirement involves paid consulting a day or two a week and much non-paid volunteer work.

 

Two of them have not retired, and not surprisingly they are the two that own their own companies.  One is the surgeon who owns his own clinic and practice and one owns a trucking company and has a lot of real estate.  They both are struggling a little bit with what retirement will look like for them since they have no heir apparent to take over their business if they stop working.  The surgeon can scale back his hours, and in fact has already begun to do that but the trucking guy, that’s a harder problem to solve.  His is a business he built with his dad, and walking away from something like that is not an easy choice to make.  There are far too much blood, sweat and tears invested.

 

Are they happy?  I am, and I believe they all are.  It is a ridiculously optimistic group and for good reason.  They can base their anticipation of future joy on a lifetime of past successes.  All of them have faced tough situations but the pattern of their lives, and mine, is winning more than we lose.  And of learning from losses and getting back up and moving forward again.  We are all boomers so we share parents that were of the Greatest Generation even though they are almost all gone now. In each of our cases they patterned grit and perseverance for us and left us with family names that we dare not tarnish.

 

On the other hand, we recognize our privileges. We are white males, we had stable two parent homes and our parents paid for our college educations so we graduated debt free.  We also had outgoing personalities and lots of confidence and built networks that gave us a huge advantage over the less connected people we competed with.  Nobody feels apologetic about their success any more than those NFL players have to apologize for their incredible speed, coordination and strength.  Just like them, our success has been a combination of things we did nothing to earn along with things we worked hard to develop. All of us have a desire to see others reach their full potential and all of us volunteer in areas that help others in need.

 

It was a great football game, perhaps the game of the year in the entire 2018 NFL season to date.  Certainly, it was two of the most talented teams in football going toe to toe in a game with drama to spare.  And it turned out well for the eight of us since we live in New Orleans Saints territory!  Who dat say dey gonna beat dem Saints?  But the value of the weekend had little to do with football.  It was about the stories we told each other about our parents, our kids and ourselves.  Just as our parents have mostly passed, we are now rapidly becoming the “old guys”.  And old guys are much more reflective on the past.  I’m very happy that our reminiscing is about the good times we have had so far on this journey and the ones still ahead.  There was scarce little regret voiced about the past in spite of some divorces, spouses that died out of time and kids who are still trying to get life sorted out.  It occurred to me that these men did not spend much time worrying about things they could not change but focused on the best future they could imagine.

 

It is often said you are the average of the five people you hang around with.  I hope so, because my friends are the kind of people I want to be.  Their positive, optimistic and giving natures are good examples and they inspire me to be a better person.

 

What about you?  Do you have a group of quality friends that you want to be more like? 

 

Or are you spending more time with people who are going nowhere?   

 

If you would like to leave a comment, and please do, just click on the title of the post at the top!

My brother and I were blessed with good parents.  They had a knack for mixing just the right amount of freedom and control to guide us from childhood to becoming young adults.  They were healthy and happy and we had a calm and peaceful home, even during our teen years.  They paid for our college educations and that led to our both having good careers.  My dad was a particularly good example of financial discipline and even though he only made middle class wages as a traveling salesman for household products and then later as an insurance salesman, he became a millionaire due to diligent saving and investing.  He only owned one house and paid for cars and all our consumer goods with cash.  He paid every credit card off in full every month and while he had some nice tools and a nice fishing boat and my mom had her diamonds, they were generally quite frugal.

 

My parents liked to travel after we left the nest, at least at first.  But fate dealt them cruel blows when my mom developed a fear of travel and of strangers, perhaps a sign of early onset dementia, and my dad developed Parkinson’s.  Parkinson’s is a devastating disease which slowly but inexorably robs you of control of your body.  It was particularly ironic that it happened to him, because my dad was very health conscious.  He ate well and was slim and even got up and walked 3 miles daily in the early mornings.  Yet he was awarded the silver bullet of a terminal and incurable disease with no known cause or cure.  We watched the decline, which began slowly, limit his mobility and his ability to use the computers he so loved.  He had been a computer fan since the very first personal computers came on the market, yet eventually he could no longer type on a keyboard and was wheelchair bound.  And that brings me to the Dollar Store.

 

One of the things Parkinson’s victims have to come to terms with is a relentlessly shrinking sphere of capability. As he lost mobility he focused on the hobbies he could do while stationary.  Those were photography and computers.  He had an assortment of digital cameras and photographed waitresses, store clerks and all of the nursing home staff.  He’d then print 8 x 10 glossy portraits that he would give away.  People loved it when he’d hand them a photo of them at work. He became known as the “camera man” by the retail and food workers at the places he would frequent.  Eventually he no longer maintained the dexterity to operate cameras or to print out photos.

 

My dad was not a brilliant guy but he was creative and a good problem solver and it was no accident that the last hobby he was able to maintain was shopping at the Dollar Store. He wanted to go every week and my wife or I would take him.  He would buy toiletry items and office supplies, things he had used in his daily and working life.  He did not need them, there were piles of them in his room at the nursing home that the staff were constantly removing to make a place for his next shopping trip.  But it was a profound act of “doing something” for him.   He pointed at what he wanted as I pushed him through the store and I would put it in the cart.  And he would pay for it himself.  It was one of the few meaningful activities he could still pursue at the end.  Honestly now that he is gone, it makes me cry reliving dozens of trips like that.  It was sad and uplifting at the same time.  Sad that it was all he could do and uplifting because I got to help him do it.

 

He had lived a life most of us can only imagine.  He was a WWII disabled veteran with some serious war injuries.  He ran the radar on an aircraft carrier in the Pacific Campaign in that war while Kamikaze airplanes dove on the ship trying to sink it and submarines narrowly missed with torpedo attacks. After the war he attended and graduated from a highly rated liberal arts college on the GI bill.  He married a brilliant and beautiful lady and stayed married to her for 63 years until death stole her from him.  He worked jobs he did not particularly enjoy for fifty years to provide for his family.  He never had a cent of consumer debt, paid the house off early and became a millionaire on middle class wages.  He paid his two sons’ way through college so they could graduate with no student loans and modeled for them how to be successful with money.  He never said a mean or angry word to his wife, our mom, and always treated her with respect. Until he was unable he always opened her car door and gave her a kiss.  In a world that was very much racially divided I never heard him utter a single slur or derogatory remark about someone of another race. I never heard him speak badly about his boss, his friends or our neighbors.  I did not realize how special he was until later in life.

 

My generation of boomers is one of the first to be horribly prepared for retirement.  We started work in a world where retirement was a promised fat company pension, only to see those plans dismantled early in our working careers to be replaced by 401K’s.  In my case I had been in the work world for ten years before I even had access to a 401K and my fat pension, well, I was cashed out of that after seven years for the tidy sum of $2,000.  Like most of my fellow boomers I was positioned for disaster.  I had three kids to put through college and aging parents, a perfect sandwich of responsibilities that has wrecked many of my generation’s financial futures.  Yet I’m good, I’m fine.  My dad never needed a penny from my brother or me.  In fact, he left a million dollar legacy for each of us in spite of my parents burning through the better part of ten thousand a month for their health care the last few years of their lives.  We are supremely fortunate that he turned middle class wages into a small fortune by doing exactly what the FIRE community preaches now.  Spend less than you make and invest for growth.  It worked for him, one of the greatest generation, it worked for me and my brother, boomers, and it is working for gen Xr’s and millennials.

 

I was always proud of my dad, I knew he was a good guy, principled and dedicated to his family.  I knew without a shadow of a doubt he loved me and was proud of me.  In a lot of ways my success in business and as a parent are things I owe to him.  He taught me to naturally like other people.  To be inclined to appreciate their good points without worrying much about their flaws.  And he taught me to save and invest and to spend frugally.  But I did not realize how special he was at the time, I just thought everyone was like that, until I later realized that almost nobody is.  It was so sad to see his abilities collapse in on him as Parkinson’s took its toll on his body.  But it never conquered his will.  At the end his trips to the Dollar Store were the highlights of his week.  And while that was profoundly sad on one level I am eternally grateful that I was able to take him on those trips where he could be in charge and could do something normal, something we all take for granted.  It mattered to him, it was all he had left.  And strangely, it was enough.  I miss you Dad.