Month: March 2019

In my career I worked with a lot of engineers and also with a lot of hourly blue-collar technical workers. The engineers I knew made from $60,000 to $1.5 Million, with most clustered way closer to the lower end of that range.  Only my boss’s boss made the $1.5 Million, and another small handful of the higher paid engineers like me eventually made it up into the multiple six figure range, though most topped out in the $100-150k range by the end of their careers. The hourly workers started for around $40,000 but within a few years could be making over $100k if they worked significant amounts of overtime.  However, that was as high as they could go in that job, there are only so many hours in the day you can work if you are getting paid by the hour. 

So, at any given time a lot of my younger engineers and some of the older ones actually made less than some of the hourly guys they helped to run the plant efficiently.  And that was appropriate, the higher paid hourly guys had a wealth of knowledge they had gained both by experience and intensive on the job training and they earned their pay. I sometimes pondered who had the better deal, the non-degreed hourly worker, who could usually totally forget about the plant during his off hours or me, an engineer, who sometimes carried the worries and problems of the plant home with me.  We’d see that dynamic play out in the hourly workers as well.  We promoted from within whenever we could so it was possible for an hourly worker to move into a salaried management position, even up into a corporate officer’s position without a college degree of any kind.  In fact, I watched two of my hourly friends do just that and they earned far more than $100k in their VP jobs.  But to get there they had to work their way through several lower and middle management jobs that paid only slightly better, if any, than their old hourly ones and I think they suffered more stress in the management roles where there was no union protection against being fired. 

It wasn’t unusual for hourly employees to turn down “promotions” to managerial jobs because there was little or no extra pay and zero overtime pay.  In spite of no overtime pay there was plenty of mandatory overtime work required when there were problems.  And when you work in a chemical plant that runs 24x7x365 hours per year, including every holiday, there are always problems resulting in people being called in to do extra work.  Hourly workers could at least soften the pain of being called to work on their days off by the fact that they received 50% higher than normal pay but salaried workers got no extra pay for extra work on their days off.  In theory there was some compensation built into the salaried workers’ pay to account for overtime but in practice almost nobody thought it was sufficient compared to the number of extra hours worked.

 With the uncertainty and probable higher stress, why would any hourly worker take a salaried job?  I think there are two main reasons.  One, a natural desire to achieve as much as you can.  Leading a team brings a different kind of growth and experience versus being one of the ones being led.  And secondly, moving into a salaried management position can be a first step in a longer path of promotions and increased compensation.  My two friends who ultimately became corporate officers were eventually compensated with stock bonuses and large annual bonuses that brought their total compensation to a level much higher than their previous hourly jobs.    It is a common debate at most plants in the chemical and refining world as to whether staying as a highly paid hourly worker isn’t preferable to moving into a salaried position with more potential future growth.  It is a tough decision to make because usually there is no second chance to choose again.  Just last year I met an hourly union worker at a plant in Texas that made $185,000 that year and had not made less than $140,000 in each of the previous two years.  That’s a lot of money!  But I also have met people who promoted from hourly jobs to salaried ones and ended up multimillionaires due to their rising to the top of their companies. 

 I knew two guys who wrestled with this very decision, decided differently, and had very different outcomes.  Donnie was a process operator.  His job was to control a complex set of equipment through a computer control system to make the most amount of product possible, safely and with the least input of energy and raw materials.  He had only completed a high school degree but he was very intelligent, had studied with diligence on the job and was a talented operator. He worked overtime when it was available and made right at one hundred thousand dollars a year, in today’s dollars.   Bob, Big Bob we called him, because he was six foot five inches tall and well over 300 lbs, was likewise a high school graduate and a very intelligent operator.  Donnie and Bob had one other thing in common that was unique to the two of them.  Both of them had finished over three years of college in engineering but for their own reasons had dropped out prior to graduation.  And both had wondered for years if it made sense to go back to school and finish up their degrees. 

As it turned out one of them, Donnie, decided to do that.  He returned to college and a year later he obtained his chemical engineering degree and went to work for another chemical company.  But Bob considered the cost, and although he was only one semester away from completing his electrical engineering degree, he decided to stay in his hourly position.  Both paths were open to both men and one took chose to return to college and the other stayed in his hourly job.  So, how do you think their careers worked out? 

These are real people, people I worked with for many years and I can vouch for this story. The results were somewhat surprising to me.  Donnie, when he earned his chemical engineering degree, applied for work at our company. At that time, we did not have an opening and, frankly, his technical skills did not impress us when we interviewed him.  There were a lot of jobs available and he easily found a position somewhere else.  We kept in touch for years and I followed his career until we saw the sad news that he had died unexpectedly.  I never tried to ascertain his actual compensation but I hired enough engineers to know what the kinds of positions he held paid, and I’d say he ended up making in the low one hundred thousand range.  Good money but not much higher than he would have made staying in the hourly operator position and probably less than had he promoted up into management.

Big Bob kept his hourly job and in time he did promote to a first line salaried supervisor position.  And he was a very good manager.  Over time he was given more responsibility, more promotions, and he and I basically rose up in the ranks together.  When they eventually split our company into a manufacturing division and a transportation one. I ran the plant and he ran everything else.  His pay was in the multiple six figure range even though he never finished his college degree.

So why did his career go so much further than Donnie’s?  The short answer is that Bob was a better leader and manager and offered more value.  Donnie had the technical degree but his soft skills were not as good as Bob’s. That isn’t a severe criticism of Donnie, Bob was truly exceptional.  Also, Donnie started over at the midpoint of his career and that left him less time to move up. In addition, I would guess that engineering students that leave college during their final year do so because they have realized they are not a great fit with engineering. Either the technical demands of their courses exceed their ability or it just does not interest them.  In either case it does not bode well for a top tier engineering career.

If you stay as a technical person and are judged to have median technical skills, which is where Donnie was, your engineering pay will cap just like an hourly operator’s pay.  Your market value will just stop growing and so will your paycheck.   But, if you keep rising in responsibility like Bob, which in most cases means management, the sky is the limit.  Bob and I had hundreds of people we were responsible for so our pay was a small thing to our CEO. If we could get better performance out of our teams then the CEO was happy to pay us for that.  In a way moving up the management ladder is a way of decoupling your pay from the number of hours you work because you are leveraging the efforts of your entire team.  If you can get the team to perform 1% better and your team is hundreds of employees then that’s a lot of return to your shareholders and is likely to come back to you as far more than a 1% raise.  I know it did for both Bob and me.

What’s the point of this true parable from my past?  There are several, I think.  First, make career decisions carefully.  Both Donnie and Bob were proficient at what they were doing as hourly operators but maybe not cut out to excel at engineering.    Going into any job that you’ll never be better than average at is a bad choice in my opinion.  If engineering doesn’t light you up and get you excited, then don’t try to be an engineer.  I have to think that if engineering had excited them, they would not have dropped out of college prior to graduating, in the first place.  However, working in the plant did light up Bob, and he was a joy to work with for all those around him.  And that made him a great leader, which propelled him to a great career.  A career that far outshined what he could have accomplished as an “average” electrical engineer.      

With Donnie the situation might be more complex.  I do not think his plant job satisfied him but he also would not have been a great management candidate, because he did not demonstrate Bob’s leadership ability. Maybe he really did enjoy his engineering career, even if it went along an average-ish path.  Or perhaps there was a third choice he should have gone toward.  It is impossible to know since his path was cut tragically short.

I’m not trying to impart great wisdom here, only to say that in Bob’s case the lack of a college degree cost him nothing, in my opinion.  He had a great career both in terms of compensation and job satisfaction.   In Donnie’s case I think going back and completing his degree was an accomplishment he was proud of but I’m not sure he enjoyed his career any more than he did being an hourly operator.  The lesson I’m sure of though, is that both of them made a conscious decision about finishing up their education.  And maybe the lesson is simply, do not just drift.  If there is a decision you know you should make, then think it through and make it.  Even if the decision ends up being to just stay where you are and grow where you are already planted. 

What about you, have you had friends who left their secure jobs to do something difficult or risky? 

Or do you know people, maybe you, who contemplated making a drastic detour to finish college or start up a new venture but decided it wasn’t what you wanted to do.

Did it work out awesomely like Bob’s choice not to finish college? 

Or did it work out more, meh, like Donnie’s where there is satisfaction with finishing but maybe still failing to find that dream job they were looking for?

As Usual if you don’t see the comment box just click on the title at the beginning of the post!

Ok, enough with the suspense, it is off roading. You may not even know what that is, so let me tell you about it. First, my wife and I love the outdoors. We enjoy extreme hiking. If you do not know what that is, it is hiking where there are no trails or only barely trails, but lots of cliffs, thorny vines, water crossings and terrain that can kill you if you make a misstep. And we are runners. We have run many marathons and go on runs with friends several days a week. We both play tennis and are very competitive for our age. Our favorite vacations, whether in the US or overseas involve hiking outdoors. We are skiers, though she stays within her skills and I push the envelope some on the slopes. Basically we are outdoors and fitness types. So how did driving a high powered side by side ATV become a favorite hobby? Above is a picture of our RZR still on the trailer in our driveway, just back from having gone off roading in north eastern Tennessee.

It happened kind of by accident. As a former hunter I had owned a few four wheelers in my life, the kind of ATV you ride like a four wheeled motor cycle. And on a trip back from hiking the high desserts in Utah we stopped in Moab and rented a side by side all terrain vehicle and drove in the world famous off road park there. It looked like a Jeep but was much smaller and had no windows or roof, totally open to the weather. It was a huge kick! It felt terrifying but the machine could scale rock slopes like a mountain goat and it was actually quite safe and just a whole lot of fun. We were strapped in with shoulder harnesses and protected by an elaborate roll bar cage. It combined the speed of downhill skiing with the terrain of extreme hiking and we enjoyed it a lot. It isn’t totally unlike riding on horseback as far as being able to go where there are no roads but without the extreme burden of care that comes with a owning a horse.

Since we were close to early retirement and had quite a bit of excess funding above what we needed we bought our own Polaris RZR about a year before I retired, a very sporty off road vehicle. Power steering, bucket seats and shoulder harnesses so that even if you run into something or off of something you are not likely to get hurt. It cost us about $15,000 with a trailer to pull it on and we’ve been riding off road several times a year ever since. We ride alone and with others we’ve met who enjoy the sport. Arkansas has some of the premier places to ride in the country but we’ve been as far west as Colorado and just got back from riding (and hiking) in eastern Tennessee.

I know some natural purists do not appreciate the noise and dust associated with off road vehicles but their use is strictly limited to areas that are maintained and groomed for off roading, almost like ski resorts, and the negative impact on wildlife is not significant since vehicle use is restricted to marked trails just as is other traffic. In Tennessee the elk barely even bothered to look at us when we stopped on the trail to take photos of them. The vast majority of woods and forests are exempted from vehicular traffic and the amount open for off road use is relatively insignificant and is not in areas containing endangered species. While I love long hikes in pristine and silent woodlands I also love driving technically challenging trails in our ATV. It is just a different sport, and we enjoy them both. I do not see a conflict, personally. But then, back in my hunting days, I saw no conflict between being a hunter and also an avid nature observer. There are plenty of people who cannot reconcile those two hobbies either and I wouldn’t try to change anyone’s mind on how they view humans and outdoor wilderness recreation.

That said, it is an exciting sport that combines both speed and skill, offering many chances to stop and hike to waterfalls, overlooks and even elk viewing towers. You can carry more gear than you can hiking and noon time stops by rushing creeks or mountain overlooks for a picnic lunch are mandatory. Another advantage is that after a few days of extreme hiking our “senior” legs are begging for a little less strenuous activity and while it has plenty of thrills, the work required to drive off road is mostly mental. With power steering and an engine there isn’t much physical effort unless you get stuck and have to winch your way out.

Is it for everybody? Heavens no. It absolutely terrifies many and others just don’t like noisy or gasoline powered sports. Plus you have to have a high tolerance for getting muddy and dusty. And I mean muddier and dustier than you’ve ever thought about. But if you think it might be something you’d like to try then the best way to do that is to rent a Polaris RZR or a Can-Am or an Arctic Cat or Honda or Kawasaki or any of the other side by side sports off road vehicles. Most areas that have trails that are legal for ATV’s have rental shops nearby and there isn’t much of a learning curve to driving a rig. If you can drive a car you are more than capable of driving off road. Just go slow and be careful while you are getting a feel for things and obey all trail traffic rules. Helmets are advisable, but not always required. Who knows, you might really like it. Used rigs can be bought for a fraction of what we paid for ours new, but even done as inexpensively as possible it probably doesn’t meet anybody’s idea of a frugal hobby. We only took it up once we were well past financial independence and it represents an insignificant part of our annual expenses. But international travel, another hobby of ours, is also quite expensive, but worth it in our opinion.

It is also a very social sport with many people meeting on the trails and campgrounds forming friendships for life and joining up to ride together year after year. We have met some great people that way. And if we ever do have grandkids we’ll be trading our two seater in for a four or six seat model because the trails are full of extended families camping and riding together.

So have you ever ridden off road?

Do you think it is possible to reconcile hiking and off roading as mutually enjoyable sports?

As always, please comment in the comment box or, if you don’t see one just click on the title of the post and it should take you there.

There are hundreds of talented bloggers in this space that can tell you dozens of variations on how you can become Financially Independent before you reach conventional retirement age.  I can tell you the short version in one sentence.  Spend much less than you earn, invest the balance in your own choice of stocks, bonds, real estate or your own business until your mix of investments provides you more than enough to live the way you want.  And enough so you can live that way without having to work a full time job.  And while that requires time and discipline and usually saying “no” to yourself fairly often, the math is indisputable.  As long as you have a reasonable income and do not get viciously sideswiped by Murphy it is pretty much a lock.  

That’s what my wife and I did and we did it with three kids and a single income. Admittedly it was a pretty nice income, but not a huge one.  And while I did not retire much earlier than most, I could have. But I was just having too much fun at my job.  And judging from the number of people who self report their amazing progress towards financial independence, the plan seems to work for a wide range of incomes and family situations.  In fact, I think getting enough money to retire early is not the hard part, it is the easy part. 

The hard part is…what comes next?  I know this, because I spent about two years in a job I was falling out of love with, paralyzed by not knowing who I would be if I quit.  I was the classic big fish in a small pond.  I ran the largest employer in my town, one of a handful that large in our entire state. Everyone knew my name in my town, in my state capital and to a small extent I was even known in Washington D.C.  I was on television, in the newspapers and on YouTube.  But all of that was because of my job.  I was a personality because I was the face of a well known regional corporation.  I was treated better than others by my barber, my doctor, police officers, senators, governors and other business leaders. I had a few billionaires on my contact list and they’d take my calls. 

If I let my passport expire I could have a new one the next day just by making a call.  I did not go out of my way to try to use the notoriety to my advantage but you don’t have to, it just happens.  It is the essence of privilege, that it runs in the background, like some amazing app that removes everyday friction from your life.   I  received nice gifts, free invitations to cool events, seats in football luxury boxes and  people would answer my phone calls, or call me back in five minutes. It was not celebrity status, I was not famous by any stretch, but I had just enough of something like it to realize it made almost everything in my life easier and better.  And I will admit it, I did not want to give that up.  Why would anyone want to give up that kind of treatment? 

Now that was me, and your world might look different.  If you are not surgically attached to your career like I was then leaving it behind may not induce that much fear.  But even so you still spend most of your time working.  Most of your social interaction is while you are at work and it is likely that many of your friends work there as well.  You know people are going to ask you that question, “What do you do?” because that’s what we ask everyone when we meet them for the first time.  And if you retire you will not have an easy answer.  If you retire young then you will really confuse everyone.  Half will think you were a secret trust fund baby and the other half will figure you are growing marijuana in your backyard.

I did not have as big an issue with retiring early in this regard as most do.  And that was because, along with the local celebrity status, came the idea that I must be making millions in my job.  In fact I was well paid, but on the low end for the position I held, because  I worked for a  family owned company for most of my career.  The stock options and huge corporate bonus structure common in upper management today  just did not exist at private companies like it did when we sold to a Fortune 500 firm.  I’m not complaining, I chose to stay there because I loved it and it paid me more than I actually needed. I had to save fairly aggressively to become financially independent, but so do all but a few people. But because of my job everyone thought I was rich, including my truly filthy rich friends.  All that to say that it wasn’t unusual for “rich” people to retire early and our part of the state has a lot of rich people who no longer work due to the presence of large oil fields.  So most people probably wondered why I worked even as long as I did since I was undoubtably sitting on huge piles of money.

The benefits work brings are status, pay checks, health insurance, friends and a structured way to spend your time.  Retiring means you lose all of that.  No more paychecks until you get old enough for Social Security, or perhaps a pension.  No insurance of any kind unless you pay for it.  You lose most of your work friends, trust me that you’ll be lucky to keep even a couple of them.  But the real biggie is you lose that structured way to spend your time.  That probably sounds great to you now if you are in a job you do not love.  But there is security in the familiar, even if the alarm early Monday morning makes you grimace you still get up with a plan.  It is not a plan of your own making but it is a plan to do just what you’ve done for the last 51 Monday’s in a row, go to work.  As hard as it is to feel that concept from where you are sitting right now, it is real.  When the alarm stops going off and you wake up with nothing you have to do it can feel even worse than your old workday Monday morning.

Engineers plan, it is one of the main parts of almost every one of our job descriptions, planning.  And from early in my career I had been making plans for retirement and for keeping my marriage strong.  My wife and I cultivated shared active hobbies, things like tennis, running, hiking, fishing and a half dozen more.   I also had studied my dad’s retirement and the fact that he got great pleasure from working part time into his 70’s.  In fact the income he brought in after he retired allowed a guy who never got close to making six figures to become a millionaire and to be able to watch his portfolio grow until the day he died.  When my company sold to a large Fortune 500 corporation I knew I might lose my job, in fact I expected to.  Usually my level of upper management was swept away and replaced with “their people”.  As fate would have it the people running the new company were old friends of mine and I was spared, in fact I was promoted.  But I did not know that at the time we were sold. I had two pretty fun years with the new guys and enjoyed the extra financial perks that came from stock awards and bigger bonuses but the extreme management style started to wear on me. The fact that I realized I was past needing any more of their money finally sunk in, so I pulled the trigger on retirement in spite of my fears of becoming someone else without my title and my position.

And my plans have worked out well for the first three years of my retirement.  Because I stepped straight into a consulting agreement with several large companies in my region I kept some of my public image and many of my business and political contacts even though I only work a day or two a week. I don’t have all the perks of my previous life but I still have most of them and can gradually slide toward being totally unemployed at some future date at my own pace.  I also make, on an hourly basis, about the same amount I made during my highest earning year, though the work I do now is low stress and enjoyable.  My wife and I spend more time on all of our hobbies.  We just got back home this Saturday morning after a seven mile run together with several other friends. She’s headed across the state later today to play on a tennis team and I’m typing my blog.  This last week we hiked, visited the Grand Canyon of South Arkansas (very top secret, you won’t even find it on the internet!), played pickle ball and tennis several times and I squeezed in a couple of days of lobbying at the state capital where the legislature is in session. 

I spend a lot of time chairing a college board and a charitable foundation board, both of which do great life changing work and the combination of paid work, non paid volunteer work, active hobbies, blogging and keeping track of our three grown and out of town kids leaves me and my wife pleasantly busy but with as much down time as we want.  Sometimes I think there is maybe one more thing I need to find to round things out or that maybe I should replace my side gigs with something more important but I’ve got the rest of my life to figure that out.  Our finances are on autopilot, the consulting pays all our bills so we just let our portfolio reinvest itself and grow.

In short, the planning paid off, it is all working just the way I hoped it would.  But what would life have looked like now if I had failed to plan?  Financially would I be happy if I had not saved enough to know that I’ll only need a mathematically sound withdrawal rate to support my lifestyle if I stop earning completely? If I had not invested years in the volunteer work I’m doing could I have stepped into those positions after retirement?  If my wife and I had not run thousands of miles together over the last decades and hit millions of tennis shots  since college would we be fit enough to do the extreme hiking we do and competitive enough to play on tennis teams with people twenty years younger? If we had not invested the time and required the accountability we did with our three now grown kids would they all be the self sufficient and fiscally sound adults they are today or would we still be having to help support them? It occurs to me that I love my life, to a large extent, because I built a life I love. 

It bothers me that so many people in this space talk about their jobs like prisoners talk about their incarceration.  They seem motivated solely by the desire to escape.  But escape to what?  I fear that the reason they hate their jobs isn’t just about their jobs but it is about their not knowing how to design a life that they enjoy.  The job becomes an easy excuse for the real problem, the fact that their life has no meaning to them because they haven’t taken any steps to make it meaningful.  Somehow they make the intuitive leap to thinking that if they just escape from the tyranny of work they’ll be happy.  To me that’s crazy thinking.  You better figure out how to be happy at work and happy with your life now and then plan your post work years.  Plan them to contain more of the best parts of your current life and plan them to avoid most of the worst parts.  I started developing non-core work skills thirty years ago that now make my side gigs possible.  I started running over two decades ago, and played tennis and fished my entire life.  I’ve been doing my volunteer work for twenty years and now am an integral part of both organizations.  I can’t imagine what waking up on day one of retirement without any idea of what I need in my life to be happy and fulfilled.  I am glad that is not how my retirement started, and I hope you take steps to plan your retirement starting today. 

What about you, if you are retired did you plan your next life or did you just plan to wing it? 

Are you still years, or decades away from retiring?  If so what planning are you doing? 

As usual, to leave a comment just use the comment box or click on the title of this post.