Retreat Run Away To Valhalla

Retreat! Retreat! Run away! Run Away – at least for a day. I, gasp!, took another day off. In the balancing of life and money, bare necessities necessitate working seven days a week. I’m known for my endurance (marathons, cross-continent bicycle rides, etc.) but I am also human. Logic dictates working every day until my finances have recovered sufficiently to take regular days off. I’m not there yet, but the realities of being human mean eventually needing to step back, even to the point of running away. I ran away to my mountains for a day and a night. And learned a lot about my fears, anxieties, and joys. Thank you, Valhalla.

Like many people I know, I work every day. It isn’t through choice. Working every day is required to pay every bill, even for someone with fewer and smaller bills as my frugal self. This year is far better than the last two years. I have just enough work to pay all of my regular bills thanks to four main clients, several short-term projects, and my regular classes, books, and photos. Add them all up and they just make enough to pay for the essentials, except taxes. Got to find a way to pay the government too.

The irony is that I am a strong proponent of balancing work and lifeDream. Invest. Live.. The universe presents us with lessons, sometimes rather forcefully, that expose our assumptions. Balancing work and life in today’s society is something that we’re only beginning to accept within social circles. Many people are working hard to keep the right job and the right car and the right house while doing the right things, except that they weren’t the ones that defined what was right. Tackle that, identify your personal values, live to them, and challenge convention with a life much better lived.

The reality for many people in situations like mine exposes the limits of that assumption. Implicit within the idea of balancing work with life is the assumption that work is producing more money than necessary. With 1/6th of Americans in poverty, there is sufficient proof that many people’s jobs aren’t producing more than enough money. Working every day isn’t a choice made to afford luxuries. Working every day is a necessity measured in balancing necessities.

As much as some think they’ve heard my litany of bodily aches, I can assure you that no one has heard the complete list. I only dare myself to list it to myself every few months. One reason I don’t concentrate on my aches is that I know that most of them are stress-related. The pain in my neck will be relieved when I relieve the ache in my assets.

Three days ago the aches ganged up. Sleep went away. My ability to concentrate pulled back from hours to dozens of minutes. I needed a break. With a little warning, but not much, I told all of my current clients that I was taking a day off. Nice folks all, they were encouraging.

The weather was right. My deck and fence were finally fixed. I had a slight backlog in hours. I committed myself to going on an overnight hike.

Taking a day off to go hiking sounds frugal, but it is expensive. As us work-everyday people know, a day off is not like what regular employees experience. A day off is a day without pay. The hike would cost me a day or more that must be made up with more work some other time. A hike also costs gas (~$40), food (~$20), ferry tickets for us islanders (~$20), trail pass (~$10), and the inevitable gear replacement (~$15 for a lost lens cap + ~ $15 in replacing snacks that became rodent chow). Even if I wasn’t losing a day’s pay, the hike would cost more than a day’s wages. And yet I knew I must go.

The cost and my anxieties were on my mind from the start. The price of gas, the age of my truck and its shocks and tires, encouraged me to drive slowly and carefully; ignoring the rest of mainland frenetic traffic. The trailhead is up a logging road, that was in the worst shape I’ve ever seen it. I know it well because I used it frequently when I was writing Twelve Months at Lake Valhalla.valhalla cover As I pointed out in the book, when stresses and anxieties arise, familiarity soothes. I was heading back to a familiar place.

Everything was fine. No breakdowns. As I got out of the truck I prepared myself for the inevitable climb with the sweating and heavy breathing. Yes, I love Nature. But, I was worried. I spend so much time in front of the computer that I was sure I was out of shape. My heart hasn’t felt happy on the days with contentious negotiations. If I didn’t keep my concentration up, my body might fall down. The wilderness is a bad place for bad things to happen. I know; I’ve had to assist in a few search and rescues just because I was in the vicinity.

Skip ahead to the top of the climb and meet my surprise. I wasn’t even sweating. My breathing was better than usual. My chest felt relaxed. My hips and back weren’t complaining. My headache was gone. I felt light, happy, and content.

DSC_4994I was in wilderness. I was in the wild, where even the trail crews can’t use powertools. I was in the wild where there are lions and tigers and bears, oh my. Or, at least there are bears (probably black), cougar (which have stalked me), and the most dangerous of all – rodents who pester and eat camp food. I was in the wild where there are rockslides, forest fires, falling trees, and hazards enough to limit human expansion until the last few thousand years. I was in wilderness and felt better than I’d felt in years, since the last time I went on a hike.
I carried my basics: shelter, clothing, food, medical supplies, and assorted gadgets; all of which fit in a pack I carried on my back. DSC_4972 The anxieties were gone. The aches and pains and anxieties that fatigued me to the point of escape were the result of trying to meet society’s basics of a house, its systems, taxes, utilities, transportation, and the list of bills most of us are familiar with. We’ve made an unbalanced trade some time ago. Originally, we left the wilderness and developed technologies to civilize our world and ease our lives, but which separated us from nature. Yet, we also developed expectations within that society, while reducing wilderness to pockets that must be legally preserved and only visited temporarily.

Fantasies of living in a cabin in the woods or on an isolated island remain fantasies because those lifestyles cost money for the land at least. Of course, maybe I’ll win the lottery.

Realties exist though, that I am reminded are healthy. I lived a life that had me backpacking three weekends out of every four, while maintaining a regular job, while maintaining a house. I know now that this retreat has run me back into something I want and need to do. I have a refreshed goal of finding that balance, financially, mentally, and emotionally. I’m glad I ran away.


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ASTY Refuses To Be Boring

Stocks only return 5%-10% per year. Investing is boring. Timing is everything. I’ll agree with that last one. I intended to not mention ASTY again until my semi-annual portfolio review at the end of the year. So much for those plans. ASTY took the pop that I talked about last time, which was on top of a pop I talked about previously, and popped the top off both of those. Evidently, the stock ASTY doesn’t know that the company it is based on, Asterias, hasn’t changed significantly in the last two weeks. At one point today ASTY was up 359% from its recent low. I almost sold. Timing got in the way. That’s probably okay.

Four days ago I wrote, “My position was up over 200%. I could sell half, take out my original investment, and let the profits be pure.” I wrote about deciding to hang in there for the long term as I usually do. Selling half would let me do that with half of my position; but that position was the smallest in my portfolio. I didn’t want to invest too much time or emotional energy into deciding whether to sell or not. But, I tasked myself as usual and asked what would be a high enough price to pull out my investments while leaving a large enough position. I settled on a roughly four-fold increase and set my expectations to act on that within a few years.

The universe laughs at our plans. Investors can design intricate stratagems, but reality trumps everything. The day I published my post, ASTY went up to 6. The trading day after that, it climbed to 7. This morning it started with a jump by gapping up, and climbed past 8 as I had breakfast. My silly thought experiment of a four-fold increase was no longer a far-off calculation. It was something to calculate now. Ah, but I am a rational human being and decided to ponder the exact number as I drove to work. If it exceeded that number when I got there, I’d put in a Stop Loss order for a quarter of my shares.

Ha! the universe said. When I got in the truck, ASTY was above 8. As I drove in, I realized that approximately $8.80 would meet my criteria. As I got to my office (a co-works space in downtown Langley), I fired up my laptop, saw a blip above 9, arranged the rest of my nomadic workspace, poured my cup of tea, and saw that the stock had dropped to $8.60. I trusted the number I’d estimated, and waited for a possible rebound. It came and went while I dealt with my first client. Through the rest of the day it dropped as if it was bouncing down stairs, then plunged to below 7 and dribbled around in the mid-sixes for the rest of the day.

Who says investing is dull?

It is a good thing that I understand my risk tolerance, know the folly of definite plans, and have confidence in my overall strategy of investingDream. Invest. Live. in the company more than the stock. The stock dribbled along above 6. I bought it below 3. A 10% return on a $3 purchase would take seven years to reach $6. The stock’s performance is exceeding my goal. I haven’t optimized my portfolio, but at least that stock is exceeding the market averages.

Investing in startups involves a lot of guesses masquerading as analyses. Startup biotechs can range from below $100,000,000 to almost a billion; yet no one knows the answer until the FDA approves the treatment and the company begins treating patients and getting paid. Hindsight is perfect, and it is too easy to beat yourself up over missed opportunities. If only I’d . . .

I intended to take the night off. I’ve been working seven days a week with one day off every two months for the last year or so. I’m about due. But I wanted to write this post and pass along this example of real life investing: the possibilities, the realities, the utility of engaging somewhat emotionally to maintain interest, but not equating performance with personal judgment. Investing is a tool within a personal finance kit. So are minimizing expenses, maximizing income, and appreciating time. Investing is important. If you are invested at all, congratulations. You’ve enabled opportunity. If you’re doing the work yourself, congratulations again. You’re developing the skills that are useful for a lifetime and applying them to goals you, not some stranger, define. If you are regularly tending your investments, commend yourself for responsible behaviour and the chance to do better than average. If, however, your investments become a reason to judge yourself; step back and remember that they are only a tool and can never be more important than your self.

I picked a number, the market met it, but the time wasn’t right. That’s does not mean I should stare at the screen watching every pixel change waiting for the prime moment. It means I had a good idea, and almost had good timing. Next time it might work out. If this is the only opportunity to sell ASTY at $8.80 then I should get out of the stock now; but there’s no way to know that. And, of course, I am holding the stock because I suspect that a company that can regrow spinal cords will probably have a stock worth much higher than $8.80.

These last few days of ASTY also remind me of the possibility and reality of stocks in small companies. They don’t tend to creep up. They tend to sit nearly dormant, treated with dismissal and derision, until they produce something that is recognized as impressive and profitable. The kind of action ASTY just went through may be mimicked several times as the company matures. The same is true of others that I hold: AMSC, GERN, GIG, and MVIS.

The ability of simple things being recognized for their true worth is enticing and exciting, whether that is in stocks, world-changing discoveries and inventions, or in relationships. It is one reason I know that life refuses to be boring.

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ASTY Pops Its Pop

So much for conventional wisdom. Sometimes stuff just happens. A couple of posts ago I wrote about a biotech company that was spun off to concentrate on developing stem cell treatments. ASTY Spins Off and Up. I like their story, and the treatment’s potential, so I bought in for my usual long ride of ups and downs as a company matures. My most recent post was about Adaptable Patience, the idea that “Patience is a virtue. Work brings rewards. Do both and get more than either can provide.” I wrote about work, but the concept applies to investing too. This week ASTY did something completely different. Good.

For those who are new to the blog, welcome to my investment strategy. It isn’t anything new. Long Term Buy and Hold, LTBH, is common enough; but many would say to belongs in a far away time when what a company did was more important than how its stock moved. Find a company that is possibly selling for less than it is worth, buy some, hold on as market irrationality bumps it up and down, and then sell the stock after the company is successful and the stock is in such demand that it is overvalued. Pick your own variant, but I check value based on “Present Value of Future Revenues Discounted for Risk”. Want to know more? I describe it in my book, Dream. Invest. Live.Dream. Invest. Live.

A little company like Asterias, working on a highly technical treatment, that has to meet FDA approval for a critical condition can expect to take years, sometimes a decade to succeed. I bought after a pop, figured I’d add more later if funds became available. And just added it to my watch screens so I could monitor it the way I monitor all of my stocks, casually.

Well, this was fun. The stock popped a bit more from where I bought it, then dropped back and settled out as I expected. The good news was that it was still above my purchase price. Yay! Okay, time for the boring decade, eh? No. Two boring days, yes; then two days of climb and climb. Since I bought it, ASTY is up over 200%. Annualized that is a hilarious 7,000+% return, which is down from the ridiculous 11,000% return that was extrapolated from a few hours instead of a few days. But hey, I won’t get in its way.

Conventional wisdom is that stocks, on average, return about 7%-10% per year. Averaged out across the market and across the decades that is true. Averages aren’t individuals. If they were, then we’d all be about half woman and half man.

Day traders live off volatility like ASTY’s, though they may prefer a lot more noise and less straightline climbs. There are investors who, very prudently and wisely, make 10%, sell, and walk away to try again. Do that once a year with every stock in your portfolio and your portfolio will beat the average return. Day traders take that logic and try to do it on smaller percentages far more often. At that frequency, the trading becomes tied to the stock price and disassociated with the company. Whether the company is doing anything constructive is immaterial.

I buy stock in small companies, ideally hold them until they become profitable, sell the stock, and then start the cycle over again. To some, my style is speculating because the companies rarely have financial data to analyze, which means estimates (guesses) must be made. To day traders, my style is investing at such a mind-numbingly dull level that they consider it worthless. Within the last few years, as financial institutions are driven by algorithms more than by any notion of service (as long it was profitable), the concept of considering the company is claimed to be anachronistic. When I hear two such divergent opinions about something I am doing, I figure I’m probably standing in just about the right spot.

Today, Friday, September 5, 2014, I thought about selling some of my ASTY. My position was up over 200%. I could sell half, take out my original investment, and let the profits be pure. If I had done so with DNDN or AMSC a few years ago, I might be debt-free now. Many of my friends wonder why I don’t. The reason reaches back into that idea of patience, and also back into my experience.

I’m commonly asked what was my biggest investing mistake. Was it not selling DNDN at $55? Was it riding IRIDF down until it went bankrupt? Was it any of the several times I’ve lost tens of thousands of dollars? Nope. (You knew I was going to say that, didn’t you?) My biggest mistakes all had the same thing in common; I didn’t trust my analyses, responded to fear or peer pressure, and sold too early. The most I ever lost on a bad stock was probably about $100,000. The most I ever lost by selling a stock in a good company was about ten times that. By selling early I’ve missed out on several million dollars.

Investing for the long term is not easy. Being distracted by hourly, daily, or quarterly moves is, however, very easy. The pace of life has sped up to the point that anyone checking data back across a decade is considered silly. I’ve been investing since before 1980. I’ve tracked my data through most of that history, which covers booms, busts, recessions, and the Recession. My recent results are dismal. Yet, the logic remains and the overall data are encouraging.

Asterias is so new that there is very little to learn about it. Investors, or speculators, are in the guessing phase trying to figure out whether the technology has a reasonable chance of succeeding, how much money the company can make, and what are appropriate valuations for now and that eventual then. I counseled myself on the long wait, and I continue to believe that is appropriate – for me. Evidently, about two days ago, some portion of the investment community decided that this was the time to move and buy at prices above what I paid. I don’t know if they are day traders (though they don’t seem to be acting that way), or shorts covering their positions (though the stock has been public for so little time that I doubt they could build big positions), or individual investors buying in because they are champions of stem cell treatments (which I’ve seen happen with ASTM and STEM), or maybe some professionals did some analyses during that two day lull and were willing to buy in at almost any price (maybe, but who knows.)

My opinion of Asterias hasn’t changed since that previous post. There’s been no news or data so there’s no reason to change my opinion. I’m not planning on selling. I’m glad I bought. And, as I repeat the phrase that is frequently a sign of a pleasant investing experience, “I wish I had bought more.” All the more reason to maintain that patience, and keep working.

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Adaptable Patience

Patience and the pace of life are heading in opposite directions. Patience is a virtue, but it doesn’t get much of an opportunity for practice. The only thing that’s constant is change, and that’s accelerating. Wisdom advises us to slow down. Modern pressures implore us to speed up. I’m working both ends, marveling as they drift apart, and wondering if my arms will be long enough to keep it all together. Only slowing down or only speeding up are extremes, and extremes miss advantages.

I’m a bit of an endurance guy. Look at my books and my projects. They involve multi-year efforts or endeavours that require persistence more than speed. The title of my first book, Just Keep PedalingJust Keep Pedaling, is as much about bicycling across America as it is about my personal philosophy. Lots of people walk, hike, bike, or ski faster than me – for the first few miles. I don’t speed up, usually, but I am evidently reasonably good at finding my pace and then maintaining it for a long time.

I am also known for adapting to change. I’m not a gadget freak, but I try to keep aware of new technologies, scientific progress, and philosophical insights. Maybe that comes from helping engineer airplanes, rockets, and satellites that hadn’t flown before. (Though few of the designs rarely launched. Sigh.) I judge ideas on criteria of science, math, finance, and a bit of sociology. It is why I was an early adopter of digital photography, 3-D printing, web sites, social media, blogging, self-publishing; and look forward to applications of graphene, quantum entanglement, and machine consciousness – based on particular assumptions.

Within the last two years my finances have begun to recover. Clients have arrived just often enough that projects, social media campaigns, strategic business decisions, and artists asking for production assistance have helped me pay my bills, keep my house, and begin to pay down my debt.

Entrepreneurs are known for hustling, always active, using every minute of the day, hopefully reaching a time when they can take time, but having very little free time at the start. I’ve been in that mode for over three years, ever since my Triple Whammy. Seven day work weeks have a tendency to make the calendar spread into a long line of days rather than blocks of weeks and months.

One client’s major project is probably coming to a close this fall. Working yourself out of a job is a sign of success in many industries. Success or no, it means my bills will be in need of another major project soon. (Though, windfalls happen, eh?) My client was concerned because they are very aware of my financial situation. I surprised them and me by not being as worried.

Within the last few months I’ve witnessed a trend. Both within my business, and within my friends’ businesses, there is a resurgence of activity. Projects are being proposed, and the conversations are more pragmatic than philosophical. People want to get things done and they’re tired of waiting. For the last few years, a lot of plans were dammed up waiting for better weather. A confident stock market, a possibly improving real estate market (depending on your location, location, location), an improving employment market all mean people are more secure and willing to embark on new ventures. Money is beginning to flow, through here on the island it is only an energetic trickle.

I’ve also noticed that many of the contacts being made aren’t new. They are the contacts that were made over the last few years when people met and planned and postponed for lack of funds, but had developed relationships and learned each others’ strengths. I can readily think of four projects beginning to stir that have hinted I may be called to help that have all lain dormant for too long. I don’t know if they will find the funds and the will to commit to their projects and my assistance, but the odds improve with every person I’ve talked with, listened to, and kept in confidence.

Considering how many people I know that have been hustling for the last few years, it is encouraging to realize that the adaptability they’ve displayed has gotten them through tough times, and the patience they’ve had for projects may now begin to pay, interest accumulated. Even better is the possibility that the adaptability and patience we’ve displayed will pay in a better life and a better world.

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ASTY Spins Off And Up

I got something for nothing, at least according to my bookkeeping of my portfolio. One stock, GERN, spun off another stock, ASTY; which didn’t seem to cost anything and almost makes my portfolio look like it is more diversified. Yes. No. Well, no wonder it is hard keeping track of investments when management dives into mergers, acquisitions, or spinoffs. Regardless, the move inspired me to buy a few more shares to tidy up the numbers, which surreptitiously resulted in a 60% return within a few days. Keep up that pace  and it will return something like an 11,000%. Fantastic. Let’s get real. I’ve seen similar deals. Let’s see how this one plays out.

Geron is one of the few stocks I own because a friend suggested it. Back in 1999, I had just retired (evidently temporarily) and so had a friend (more successfully from what I gather). We got together for regular lunches until our post-corporate lifestyles diverged as they were released from their old constraints. I spent more time outdoors. He spent more time in politics, quite effectively managing the power behind the power. In one of our last lunches he described a company that was so leading edge that few investors would consider it, but based on technologies that he and I recognized as based on solid data and logic. If they succeeded, their technologies would cure or alleviate many of aging’s ills, and many that afflicted young people too. It was time for a bit more risk in my portfolio, so I bought a small position in GERN.

Geron’s business was based on technical terms that have too many syllables for the evening news: nuclear transfer, telomerase, and stem cells. That last one, stem cells, doesn’t have many syllables but it certainly generated a lot of words, many of which were spoken from ignorance and fear. The simpler way of describing their business was that those three technologies would be used for cloning replacement organs, convincing cancer cells to turn off in some while convincing other cells to continue living despite auto-immune responses, and that last one would let the body repair itself. Stem cells are so controversial because they can do so much and use terms that are used elsewhere with different connotations causing great confusion and igniting passionate defenses, even when they are unnecessary.

Those treatments sounded so useful that I suspected they’d also cost a lot; so, I bought more shares which might appreciate enough to afford the treatments. That was about 15 years ago. Geron’s clinical trials have been difficult. The treatments are controversial, and the FDA is known for being stricter, more cautious, and taking longer when dealing with new technologies – regardless of the patients. Geron’s stem cell trial was cautious, only involved a few people, and conducted as quietly as most trials. The results weren’t conclusive enough and the trial was put aside. The cloning was also put aside, probably because the company’s progress was taking too long and costing too much so they had to concentrate on fewer treatments and trials. The telomerase trial was halted as well, and only recently re-initiated.

Effectively, Geron’s diversified approach was winnowed down to one set of trials. They picked the telomerase trial, and used the stem cell intellectual property as a source of cash via a deal that spun off the treatment into a new company, Asterias, and a new trading symbol, ASTY. GERN shareholders now became shareholders of ASTY. (At least that happened for me. I hear some got cash.) A few weeks ago the shares showed up in my portfolio. I found that out a few days ago. Maybe a letter got lost in my recently bizarre mail traffic.

I noticed the shares because I noticed the news. Asterias was re-initiating the Geron trial, but was going to apply the treatment to patients who were more in need, in doses that were much higher, and with more people. This is not some insignificant condition they are working on. The treatment aims to help people with major spinal cord injuries, the sort of people who can benefit greatly if they can regrow major nerves. I know they say they’ll look for increased motor function in fingers and toes, but I’d be amazed if they and the patients weren’t also hoping for movement in arms and legs. Or, maybe I’m just an optimist.

Stock spinoffs usually involve some ratio of one stock based on the value of the other. I ended up with some small prime number of shares. It is silly, but that looked untidy and was too small a number to effect my finances; so I bought enough shares to make a round number, but not enough to pay for a treatment. My finances haven’t recovered enough for that.

Their announcement of the new trial popped the stock a bit just before I bought, but I am a fan of LTBH (Long Term Buy and Hold) and estimated a much higher eventual value. Word of the stock spread more slowly than usual, but met interested investors who drove the stock up again the next day. And again. Hence, my 60% return in a few days.

I’m not extrapolating out to 11,000% within a year. That would exceed my mortgage debt, but it would also exceed credibility. Trial data takes long to accumulate, is kept secret, and will probably require another phase or two prior to the company applying for FDA approval. Years can go by. And yet, the market is irrational and can have incredible reactions to incredible results.

MicroVision (MVIS) spun off Lumera (LMRA) which was merged and acquired or taken over by GigOptix which then became GGOX and now GIG, all based on a simple and ingenious technology for electro-optical switches. No FDA. No public controversy. No risk to patients. No great expectations. Much lower cost to implement. That was over 8 years ago. Only within the last year or so have LMRA’s technologies become products making profit. And yet, they are making more profit than all of MVIS.

Real Goods Solar (RGSE) has swept into and out of Gaiam (GAIA), changing character a bit along the way, working within an impressive industry, yet failing to reliably make money, and recently being heavily discounted by the market.

Barnes and Noble bookstores spun off, hoping to make money from the dotcom boom. Despite being in the same business as amazon, they never attained the same premium pricing for their stock.

Spinoffs are not always good. They aren’t always bad. Management supposedly does them in the best interests of the company, but that can never be truly judged because the comparison of not having done the spinoff is moot.

I wish Geron didn’t have to spin off the stem cell technology to raise money, but if that money means the telomerase trials succeed and patients, the company, and the shareholders benefit, then great. I’m glad that the spinoff also means the stem cell trials continue, rather than languishing awaiting the conclusion of the telomerase trials. Two patient populations, two companies, and some shareholders like me may benefit. One of the pains of investing in biotechs is learning about patients who need the treatment, and then watching as the treatment is put aside because there isn’t enough money to find out if it would make their lives more livable. At least in Geron’s and Asterias’ case, we’ll have a chance to find out. Hmm, an 11,000% return would cure some of my other ills.

PS Investor Village has been nice enough to initiate a discussion board for ASTY.

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Every Day Realities

As my dad put it, as of tomorrow, he’s going on 89. Today was his 88th birthday. I do like the way he looks ahead. And, I’m amazed at what he had to do to get here. Hard work has always been a reality for the majority of the population, unless you believe the anthropologist’s tales of pre-civilization subsistence living. (Really, only three hours a day?) For most people, hard work is a necessity, not a choice; because, when you’ve decreased expenses far enough the only way to go forward is to increase income. Time is money, so spend time making more money – even if it takes every day.

Take your monthly expenses, divide by 30, and get the amount of money you have to make every day. Remember, taxes are an expense too; even if they are only paid annually. $1,000 per month is about $33 per day, and is only half of the poverty level. $2,000 a month is about $66 per day, just about exactly the poverty level for a family of four, and works out to about $8 per hour – after taxes. It doesn’t take much of a mortgage to get to $3,000 per month which is roughly $100 per day – a rate that some folks make in an hour, including me when I get to charge full rate for consulting. Have anything go wrong with health, a house, or a car, and the annual, monthly, daily, and hourly expenses rise quickly.

The essence of personal finance is; “Spend less than you make. Invest the rest.” If you are able to do that, and are actually doing it, congratulate yourself. You are definitely headed in the right direction.

Considering that the median net worth in the US is less than $20,000 when housing prices are ignored (which is easy to do now because the market is so uncertain), there are a lot of people who haven’t had much to invest. As of 2012, one-sixth of Americans live in poverty and the majority of Americans will spend some time in poverty even if they aren’t there now.

It seems that it should be easy to stay above that poverty line, make more than enough every day, and eventually accumulate far more than one year’s expenses.

Of course, millions of people are making more than enough. Many are making just as much, and only need to change their spending habits to decrease expenses and increase investments – no job change required. Yet, there are millions that, despite low unemployment, can’t make enough or are close enough to the edge that they experience that perpetual anxiety of imminent loss.

The inescapable reality is math. Working every day is unsustainable. My Rule of 7 suggests I should work every day based on my net worth, but eventually I have to take a day off. Maybe next week. That should be my fifth day off this year, just about one every other month. Taking more time off makes a lot of sense. Productivity rises. Health improves. Stress is relieved. A sense of life returns. Yet, math remains. For anyone trying to make enough, working five days a week instead of seven means having to make 40% more on each of those five days. 7/5 = 140%. Have you asked for a 40% raise lately?

My situation is improving, as long as I work as hard as I have been. A few more consulting hours, sustained book and art sales, and a speaking event every month can relieve a lot of financial stress.

Others are working their way there, but as Bagpiper Don posted;
Feel like you’re working so hard you’ve become INSANE?
Give your “MY GHOD I’M FLIPPIN’ NUTZ!” battle-cry of a near-crazy person here.

He has one business (music), and is starting another one (biscotti – site under construction), and probably hasn’t had a day off in a long time. The easiest way to tell the days of the week is probably by the health inspector’s office hours. If they’re open, it must not be the weekend. Biscotti is coming soon. (Got a gluten-free version?)

Another friend has a business called Savvy Caddy Wallets (go to his site for details). Good products are not enough. Cash flow must be managed. Inventions must be pursued. Fellow inventors must be advised, especially if they recognize the value of his experience. Alan and his wallets can’t take a day off, unless the cash flow improves, venues open up, or the next invention comes to market ahead of schedule.

Both of these entrepreneurs could use some venture capital.

I’m amazed that my dad managed to maintain a similar pace for decades. My parents raised three sons, got us all through college with good degrees, and at least in my case sent me off into the world without a debt – except for the feeling of never being able to pay them back for the good things they did for me. Dad worked six days a week, and for years worked more than one job. Driving truck for a while, then managing a small oil depot, and even running a service station. I didn’t see much of him except on Sundays. Mom worked too, tending disabled kids and eventually establishing an ambulance service (volunteer, I believe.)

It wasn’t easy then. It isn’t easy now. But somehow we survive. And I suspect that part of the secret is every day meeting those every day realities; “Spend less than you make. Invest the rest.” And then, regardless of the math, take some time off and remember to live.

Happy Birthday, Dad – and thanks.

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Freelance Life

I freelance and I work with others. That’s sounds contradictory, and that’s okay. My business is ideally in consulting, which is very collaborative and fascinating; but circumstances and opportunities mean I am freelancing as much as I am consulting and as much as I am doing other things. What do I do? A little bit of a lot of things. Why do I do it? Because I must. Why do they do it? They’re in the same situation. Who are they? They are the workforce of the new economy, and a group of us work from the same office, a co-work space in downtown Langley. It wasn’t conventional, is becoming more common, and is redefining work and finances.

My business is nothing new. Several years ago, back when I was temporarily semi-retired, I started up Trimbath Creative Enterprises to manage the books I’ve written, the photosFeathered I sell, and the occasional consulting or teaching gig. I hoped to be fully retired, but I knew nothing is guaranteed and a bit of preparation made for a better backup plan. Besides, retired or not, making a few extra dollars is handy. Most of you know the story: Triple Whammy, fighting to keep my home, building my business, and recently arriving at a modified mortgageI think.

My passion is for people and ideas, so of course I enjoy consulting. Consulting though, is not ideal for steady income and quieting the concerns of mortgage companies. As it turns out, spreading the word about consulting has led to my role as project manager for a virtual museum, which oddly inspired the role as Information Manager for New Road Map, which is extra inspiration to help folks with the social media campaigns and self-publishing projects. It is a varied existence, and an example of the new way of work for many people.

Today I worked from home. That is much easier now that the threat of foreclosure has dramatically diminished. (Believe it or not, that story continues.) In sprints of an hour or two I’ve written supplemental material for a magazine, worked on the museum, disseminated frugality news, researched aerospace electronics, and wrote an article about real estate. I’m looking forward to hearing back from the three local businesses that are working on their plans, and two manuscripts I’ll get to proofread. The IRS has a pesky little box asking for the purpose of the business. One word does not suffice unless it is survival.

No, I didn’t work from my pajamas. But no, I also didn’t have to put on a suit and tie, and I didn’t have to commute more than twelve feet. It has been a gorgeous summer day. I’ve looked at it frequently, though my stiff neck suggests I stared at the computer far more. The only interruptions have been self-induced. I’ve only had a conversation with one person today, a neighbor whose house is unfortunately up for sale. Except for him (and a person asking for directions) every contact has been through email, Facebook, and Twitter. A wide array of verbal communication skills don’t get used.

I also work from my office. Well, it isn’t my office; it is a co-work space where there are five chairs, windows, a long counter around the edge of the room, and anywhere from none, to one, to the rare event of too many of us sharing a space. In general though, there are more chairs than people and a fair amount of silence. Co-work spaces are becoming more common because more people are working as I do: a variety of tasks, none of which require constant personal contact, many of which are remote, all of which benefit greatly from good Internet service and a lack of espresso machine noise. Most of the time we are heads down, bowing to our laptops, usually with earbuds in, making little noises as we unconsciously shift in our seats or sip from our cups.

There’s very little need for anything else in the room. We’re over a breakfast and lunch restaurant, The Braeburn, that tempts us with wafts of bacon in the morning. Half the windows face Useless Bay Coffee Company, which catches our attention with the aroma of coffee beans roasting onsite. Out the other windows is South Whidbey Commons, which is run by and for the local students, which also means it has a livelier vibe as school lets out.

Office view
Those of us using Langley Coworks don’t just sit there and ignore each other. Inevitably, people take breaks, commiserate, organize happy hours, and generally be social humans; something that is harder to do if working at home alone. There’s also the shared venting when someone loses a file, a client or customer does something bizarre, or a deal falls through. The good news is that deals also arise. Innovation and networking commence. That article about real estate that I mentioned above is the result of one of the folks needing some help as his workload increases. I now have a gig writing for Curbed Seattle. It’s conceivable that person A could be helping person B who is helping person C who is helping person A.

Coworks are for digital nomads, a population that is growing. It is also a population that no longer has to live where the cost of living is high. Places like Whidbey Island are a mix of expensive and affordable. It is easy to imagine a house with my view on the mainland costing at least a hundred thousand more. At the same time, small towns need new people. There’s even a kickstarter campaign to draw more digital nomads to Whidbey, Why Not Whidbey? The same idea can work for lots of places, freshening populations that are in the midst of generational shifts.

Our society will always have people in farming, medicine, the basic hands-on services required by civilized life. Increasingly though, the single careers that shaped our cities are shifting as multiple jobs and geographies become disconnected. Old rules don’t necessarily apply. At the co-works, we dress on the casual side of office casual; which is handy because all of us except one bicycle commute on occasion. The only person that doesn’t is the only person whose work is tied to the island, the co-manager Christina Moats. She’s proof that there will always be people tied to an area and for a good reason; she’s a real estate agent.

It has been a long day, as are most while I recover from my financial upset. As I typed this post though, I was reminded of why I also like working from home. The view from my house as the sun set. No commute. And a glass of wine, readily at hand after I hit Publish. That certainly is not the way my days ended when I worked from a cubicle. Welcome to slice of a newer and freer life. DSC_4923

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Mortgage Farce

Work with me people. We’ve got to find the funny in this. I know it’s there, but I’m looking at it from the inside. Did you think my mortgage modification was official? So did I. Evidently, it is somewhat up for debate. If we don’t find ways to laugh at trauma, the trauma wins. No. I won’t give it that much power, because persistence can succeed regardless. So, okay, a drink beside and partly inside me, let me tell you about yet another bizarre episode in my mortgage modification history; an episode that caught me by surprise.

Mel Brooks said it well, “Tragedy is when I cut my finger. Comedy is when you fall into an open sewer and die.” In my opinion, the wise man will know that cutting a finger could also be funny from the right perspective.

Today I received an “EXTREMELY URGENT – PRIORITY OVERNIGHT” package. Evidently, the folks on the mortgage side of my bills didn’t like the way the paperwork was filled out. The part they didn’t like was the part that they approved of when I talked to them prior to submitting it. Whether through a quirk of MS Word formatting or different standards in different states, according to a local Notary Public there was no way to legally notarize the documentDSCN5350 while also meeting the mortgage servicer’s specified instructions. I’ll spare you the details, but simply putting signatures and seals on paper has been more of a disruption than almost any other detail in this process.

That summary is the long answer compared to my reaction. WHAT?!?!?! I’ve already got the signed document from the mediator. The mortgage statements are coming in the mail the way they’re supposed to. My business is doing well enough to pay me well enough to pay the bills. I even fixed the fence. What do you mean when you say the agreement that was agreed upon is no longer agreed upon? If we agree to a new agreement, why should I think that agreement will mean anything?DSC_4910

The Trimbath Sanguinity slipped away for an hour or so. One of my closest friends can attest to that. I called him up to vent, he said one small innocuous phrase that hit a nerve, and I become downright boisterous in my response. It wouldn’t surprise me it feathers were ruffled on rudely awoken neighborhood owls.  In retrospect, I think I managed to unleash a heavy dose of anger without using a bit of profanity. Hey, I might have enough vocabulary to become a writer yet!

If you want to laugh at something, step back from it. I was livid. My friends were sympathetically angry. A few steps further back and there will only be shrugs. Take enough steps away (without running into or falling off something) and imagine what an alien would think. Okay, we can’t do that; but imagine trying to explain that the agreement involves pieces of paper stained with ink, and that even though all of the documents were signed and stamped, the precise location of the signatures and stamps makes a difference even when everyone said it was okay the way it was.

“So, you each make squiggles that represent yourself. Why not?
“But one person uses a stamp instead of a squiggle and that is more important. If you say so.
“And you all agreed that one of the squiggles could be shifted because the various instructions for the locations of the squiggles are mutually exclusive. Sounds reasonable.
“Which was good because it meant other squiggles could be made on other pieces of paper that meant that everyone agreed. Good.
“Until a month or so later someone else points out that one of the squiggles isn’t where they expected it to be, so start over. Really? Does the rest of your planet work this way? Good. You’ll be easy to take over.

Ah, what would Robin Williams do with such good material? His riff on golf is a great example on how a different perspective changes the entire view.

Robin has been on my mind. Mentioning him creates a sobering moment, and also inspires an insight. I’m known for being generally upbeat despite momentary upsets like today. I avoided writing about Robin’s death partly because so many were doing a better job, partly because I’d just written about another impressive  person’s death, and partly because I know too many people who find themselves in tortuous episodes because of finances or family. I’ll try to bring this back around to the funny by the end, but stay with me for a bit. Opening the letter kicked off an anxiety attack. They’ve been far too common over the last few years. Heart rate up. Breathing quickens. Sweat arrives. Muscles tighten, and may not loosen for days, or ever. Others I know have experienced worse. It is easy to imagine such a reaction becoming an overreaction. It isn’t polite to mention, and I won’t name names, but too many people I know understand Robin’s choice and struggle though the cause was different. The consequences of financial upheavals aren’t just houses and dollars. Up through 2012, more than 10,000 suicides can be attributed to the recession. That is more than the US casualties in Iraq and Afghanistan combined. (And I am amazed at the non-US deaths.) Another reason I didn’t write about Robin’s death is because, as someone else said, if we are going to focus on the celebrity we should focus on all such people equally. There are too many to write about.

Sad. And yet, I am that much more determined to find the sunshine.

Something else I noticed when I started watching the lists of Robin Williams’ videos was how little I’ve laughed lately. I laugh, and I mean it; but, I’ve also been so busy working to navigate my financial turmoil that I rarely have time to watch or read a comedy. I watched Robin and I laughed. I laughed with abandon. For those few moments, I felt better, much better. I felt my body chemistry change. I felt muscles shake then loosen. I found myself in the moment, not worrying about whether I was using this moment to its maximum financial benefit. The life of a billable consultant involves intense scrutiny of thoughts and actions throughout the day. Laughter broke past the details to the shock and surprise that touched my soul, and reminded me it was there.

Sanguinity can be based on keeping sight of hope, which is valuable and necessary; especially when dealing with bureacracy. Realizing how much of the world is just a cosmic farce may just be one key step towards wisdom – as long as you laugh along the way.

Photo on 2014-08-20 at 19.07 #2

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Recovering My Fence

It is August and summer. Time to fix fences broken in December and winter – in 2011. Personal economic recoveries only happen overnight with a different kind of windfall. I believe in such things, and hoped my friend’s news of inheriting $2,501,981.89 wasn’t a scam or a bit of spam. Alas. Recoveries happen, but rarely return to exactly where they started. The stock markets hit new highs. Unemployment has dropped. Interest rates remain low. I have a new fence that isn’t as nice as the one that fell, but it may be good enough to keep out the deer. I celebrated.

December 2011. The NASDAQ was just coming back up through 2,500 after bottoming below 1,500. The S&P 500 was rising past 1,200 after bottoming below 800. Unemployment was at 8.5%. Yay! We were three years past the drop, had a long way to go, and it was taking too long. I was searching for a job, selling off my savings, and scrambling for business. And then the winter wind caught a source of spring flowers and tore down my fence. The cute, rapacious deer walked through the new entrance and enjoyed feasting on my garden. The government couldn’t decide whether to spend money or not on its own programs, unless it was for “defense”. I knew I couldn’t fix the fence because I could barely afford – well – anything.

This series of posts are about my personal financial recovery, the messy phase of a person’s life that is usually avoided in stories because it isn’t the readily recognized events like finding a job or getting a new mortgage. And yet, the smaller, more subtle events sometimes invoke the strongest feelings and the biggest celebrations.

We’re in a messy part of our recovery. The NASDAQ is over 4,400. The S&P plays with 2,000. Unemployment is down to an almost reasonable 6.2%. Interest rates are so low that my modified mortgage is at 2% capped at just over 4%. The messy part is that the markets are up, but not for all stocks. If you’re one of the unemployed the unemployment rate is 100%; and many who are unemployed aren’t even counted because they’ve been out of a job for too long. Interest rates are low, but gas prices suggest an inflation rate of 4.5%, not 2.1%. I do seem to recall a time when corn cost $1/10 ears rather than $5/3 ears.

Fixing my fence was not the top priority for my house, except that it was the biggest project I could accomplish for the least money. The old fence was the standard of suburbia: 4×4 posts, 2×4 beams, a nearly solid wall of thin wooden slats. Very stout and opaque, when built right. For some reason, when the fence company built it for the previous owner, they didn’t actually nail in the beams. Probably a cost savings, or a profit improvement, or a mistake. Hey, mistakes happen. When I was unsure about keeping the house I was very unsure about fixing the fence. Now that I get to keep the house I have a much greater incentive to protect my garden, and especially my fruit trees from the cute, rapacious deer. A new full fence cost too much; but, 16 feet of wire deer fencing, some metal posts, and some cast-off wood lattice replaces very stout and opaque with hopefully stout enough and obscured enough to discourage four legged marauders. DSC_4910

Fixing the fence kicked off more of a celebration than getting the documentation for the mortgage modification. The paperwork is more important, but the fence is tangible and hopefully means I’ll get more apples and figs (and maybe raspberries from an offered transplant). This year I managed to harvest two apples and six figs. The deer got a lot more than that. And I didn’t hear them say thank you. Since the fence is up I even find myself visiting it late at night to prove that the plants are safe, except from the birds, bunnies, slugs, and snails.

Our economic recovery seems to be messy, too.
Budgets are still based on ideologies instead of practicalities. The banks are still too big to fail. Long term sustainable energy and food production continue to battle with short term extraction and manipulation.
Communities and local governments are ignoring archaic arguments and making necessary changes. People are borrowing from and lending to other people, rather than banks. Eating local is passing from fashion and fad into obvious and ubiquitous.

If we get a bit of good luck, we may find that we eventually evolve into the next phase past recovery, a sustainable future. It is the apocaloptimist in me. I suspect that, as we do, the things we celebrate will seem simple and secondary; yet, a long term sustainable recovery is built from such steps. Let’s celebrate those parts of the journey, rather than waiting for some phenomenal future event.

The plant I’d allowed to dry out, so it would be easier to move if I had to give up my house, responded with a few shoots as soon as I watered it. Now, a month and many waterings later, it grows towards the window in full growth regardless of the past, reaching for a future it is creating, fenced or not. DSC_4914

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My Money And My Life – Reminiscence

It is a big task, and no one else can do it for me. As I’ve mentioned before, now that I have a modified mortgage and a clearer quantification of my finances, I intend to step through the Nine Step Program that helped me retire the first time, back in 1998. It took time then. It will take time now. It was worth it then. It should be worth it now. But, oh, I avoid diving back into the task. Memories remind me that the costs preceded the benefits. Nothing new about that.

Most people spend more time deciding where to go on their honeymoon than they do on how to support themselves financially. Imagine how lives would change if the same effort put into planning weddings went into planning retirements. Both involve major commitments and responsibilities, yet the wedding is ephemeral (though hopefully the marriage isn’t.) Financial planning is unfashionable, seen as a chore, and avoided by most; yet its consequences last a lifetime, marriage or no.

There’s a good chance my first retirement would’ve happened without referring to a program. I’ve always lived frugally. When I made more than I spent, the excess went into diversified stock portfolios. As my net worth increased, my cost of living barely budged – though the ski trips got longer and nicer. The program, however, provided a structure and an authority that provided me with confidence that I was doing the right things and confirmed the timeline. Want details? (Go check out my book, Dream. Invest. Live.)

Most of you readers have noticed that I am no longer retired and am not financially independent. Plans, even financial plans based on mathematics, are also based on assumptions. Bad things happen to people and to assumptions. (Triple Whammies happen.)

Before I launch back into the Program developed by Joe Dominguez, I’ve decided to check my memory of the process by recounting a synopsis I can check against later. The first time through I followed Your Money or Your Life, which has Joe’s Program at its core, wrapped around by Vicki Robin’s impressive narrative. This time I’ll be working from the Guide that is the official repository of the Program, currently stewarded by the New Road Map Foundation, which Vicki also helped initiate.

Skip the Nine Steps. I haven’t memorized them. What I do recall is:

  • Add up every bit of income I ever earned.
  • Inventory everything I own. Touch each item. Itemize it. Record it. Give it a value of what it cost new, what it could sell for at a garage sale, and what it would take to replace it.
  • Calculate my net worth.
  • Compare the income and net worth to see what’s come into my life versus what is left.
  • Calculate my true hourly rate; not what I am paid, but what I am paid minus necessary expenses and divided by the total time it takes to earn my income. Work at improving that number because time is precious and the time spent earning money should be minimized so that money doesn’t interfere with life.
  • Start tracking my expenses, all of them; ideally, down to the penny; realistically to a loser standard as the engineer in me accepts another definition of “enough.”
  • Begin monthly assessments of my expenses measured against my implicit values. Did I receive value for the money and equivalent life hours expended? Emphasize the positive. Decrease the negative.
  • Start tracking my assets, liabilities, and net worth, aiming for the “crossover point” where reliable passive income exceeds expected expenses. (Here’s where I deviated from the Program, but that rationalization / explanation has taken and will take thousands of words. I even wrote a book about it. Nudge.)

Hey, that’s almost like nine steps. Maybe I remember more than I give myself credit for.

The main thing I remember, and the main reason I haven’t begun, is that the first steps are the hardest. Emotionally, it can be tough looking back on a life that has generated hundreds of thousands or more than a million dollars, and then comparing it to a net worth that is less than the price of a new car. The other major task is the inventory. I’m a minimalist, and even I will have to spend days to actually touch and catalog everything I own. One consequence is that a lot of decluttering happens naturally; especially, when boxes closed for years are finally opened again.

The majority of the steps are not as intimidating. One consequence of stepping through the Program is a dramatic diminishment of the emotional judgments that go with money. The net worth of my soul has little to do with the net worth of my wallet. Tracking income, expenses, assets, and liabilities comes naturally for me. Tracking my finances is the same as tracking a company’s finances; which also means the investing part comes more naturally for me than for others.

Having been through the Program once, and having invaluable life experiences since then, I am sure this next iteration will be different. The prime rate in 1998 was 7.75%. Now, it is 3.25% (though the Fed Funds rate is less than 1% as are many savings accounts.) The Internet Bubble had yet to arrive and pop. 9/11 was three years away. And adding the entire list of significant history would take too long and make me feel too old. And yes, I am about two decades older.

Financial planning is important as long as we live in a society that operates based on finances. We all feel it, yet few deal with it. You are welcome to follow along as I step through my plan again, this time less innocent, but also with fewer resources. My personal strategy and the Program’s strategy haven’t changed. Let’s see how much the world has changed.

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