Posted by Tim Stobbs on July 15, 2010
So I’ve managed to perhaps set a record for procrastination. I’ve manage to avoid setting up my company to run this blog for a very long time (for how long see the time date on this post). But I finally made myself do it, by getting a recent cheque made out to my business rather than my name ( It’s amazing how motivating a $400 cheque can be). This forced me to finally go down and setup an appointment at the bank to establish banking required for my little hobby business: Flatland Publishing Company, which by the way will own this blog just as soon as the paperwork is done.
What happened to suddenly get back to this? Well it stuck me that if I was planning on writing/publishing work when I leave my day job, why wait to start building up the business? I’m “semi-retired” from the day job anyway with my recent drop to 80% time, perhaps my long term goal shouldn’t be just a set amount of investment income per year, but rather the combination of investment and business income that exceeds my spending per year. How this would work? I don’t know yet, but I’m rolling the idea around my head.
The end result is a new focus for my energies on building my business up via several different avenues:
- Build a better blog
- Self publish a book
- Freelance writing
All of which will take some time and effort, but it will be worth it to grow my little business into something. I’m not convinced I’ll make much money at the venue, but I think breaking even is a reasonable goal for the first year. I’ll keep you all posted with its development with the odd update post on how I’m doing and the pitfall I find myself in.
Posted by Tim Stobbs on July 14, 2010
My workplace recently changed its performance management and compensation practices to a new system. Basically in the new system there are four ranks you can get related to how well you meet your goals. If you get the top rank you can get an extra one or two percent raise compared with the rank below it. What struck me about the system when discussing it with a friend is that it doesn’t provide much motivation to go the extra mile. A 1 or 2% raise likely isn’t enough compensation for the amount of work you would need to do to achieve that top rank.
For example, if you earned $80,000 a year and did an extra half an hour of work a day over a year(~ 122.5 hours) to get that top rank. A one percent raise would be an extra $800, while two percent would be $1600. That works out to $6.53 to $13.06/hour of extra work. Granted that doesn’t take into consideration any improvement in pension benefits, but even if you assume a very generous 20% bonus that still works out to $7.83 to $15.67/hour well below $40/hour the person is making on their base salary.
So overall there isn’t much motivation to go the extra mile at my day job. What this did inspire me to think about was where then would you put your extra mile to get the most bang for the time put in? This then lead me to wonder a bit more about my long term goal to do more writing when I pull leave my day job around my 45th birthday. Why should I wait to work on building that business up? Doing it now would likely pay better than the extra effort at my day job and now that I’m working 80% time I have the time to consider doing something like that.
Perhaps the solution to leaving your day job isn’t just having enough investment income that you don’t need to work, but rather having enough income from other sources that you don’t need the day job. If you like working on something else that provides a stable income why shouldn’t you consider it as part of your plan going forward? Granted in my case, income from freelance writing and/or self publishing isn’t all that regular but if you build up a business to the point where you are getting fairly regular income over the course of two years you might be able to count on a portion of it.
That way over the long haul you are basically working yourself towards a full blown semi-retired situation where yes you are working, but on something you love. The rest of your income then would come from investments. Of course there are risks to a plan like this, but frankly so is expecting you to keep your current job for income. Overall I feel having income from investments and self employment could very well be less risky than full employment with a company over the long run.
So would you try to work yourself into a semi-retired scenario or are you too attached to the idea of full blown early retirement? Myself, I’m not really sure, but I’m now thinking about it.
Posted by Tim Stobbs on March 17, 2010
A big free cash flow into the house I have to admit is very nice. Our goals seem that much closer when you are pushing through the mortgage at a break neck speed. Actually we are doing it so fast that we decided that any extra cash flow into the house would be used for fun stuff. So this has resulted with my wife is having a bit of problem, which to be honest I think most people would like to have. She has to pick a new client for the daycare where money really isn’t an issue.
Therefore as she does interviews and looks for parents that seem nice and will have a similar parenting style to our own. Yet more importantly she watches the interaction between our kids and theirs. If the kids play well together the odds of getting accepted increase hugely. Yet now she has run into a problem. She likes two families and their kids a lot, but their care requirements are different. One option is two kids three days a week, the other would be one kid for five days a week.
I think in an attempt to find some difference between the two cases we discussed the money side of the equation, which at one point I summed it up nicely “Depending on how soon you want to renovate the kitchen, you would pick one over the other.” Her response was “I don’t really care about renovating the kitchen that much. I’ve lived with it for almost four years, what’s another couple of years?” Then at that moment a thought stuck me: this is the kind of discussion you have when you are financially independent.
Our basic needs are covered and we are making fine progress to our goals so any extra money is just that extra money. If we want to do something that is nice to have, like renovate the kitchen, we can do it. Yet we also have the luxury of letting my wife choose to work less if she wants.
In the end, this just proved to me an interesting point. I think we are the right kind of people to retire early or be financially independent. We consider money in our decisions but we are not driven by it. Happiness is usually a more important factor.
Has anyone else been in this situation where you were picking a choice not really based on money for a small business? What did you choose? Perhaps you can help my wife with her decision by telling your story.