Become An Owner Instead of a Worker


When we’re young, we trade our health for money.  We work long hours.  We lift heavy things and wear down our tendons. We spend hours typing or doing other repetitive motions that cause carpal tunnel syndrome.  We spend hours on our feet and wear down the disks in our backs and develop heel spurs.

We trade this wonderful gift of youth and health that we’ve been given, the ability to keep pushing it for may hours, to bounce back when we fall down and heal fast when we get cut, for cash by working way too many hours.  We go in before dawn and leave after dark, never getting out to see the sun and the woods and the oceans.  We work hard to go on a vacation, which is then rushed and filled with work thoughts and emails back to the office the whole time.  We buy large, beautiful homes that we spend all of our free time maintaining and cleaning when we aren’t working to pay the mortgage.  We buy things on credit and then spend a quarter to half of our time working to pay interest payments.

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While we’re young we can make extra money by just pushing it a little harder.  We can make that car payment if we work overtime on weekends so we can drive that shiny new car to work and have it sit in the parking lot all day, slowly decaying away.   We can take on that second job and get all of the cable packages and five different web streaming services.  We can keep buying clothes to impress people we don’t like and buying all of the latest gadgets to look good for people we don’t even know.

When we get old, we trade our money for health.  Any money we’ve saved up through those long hours of work goes to treatments, surgeries, and drugs to reduce the pain our weary bodies feel.  We spend money to try to have the ability to walk and run and jump and heal like we did so easily while we were young.  We get surgeries to be able to walk after long hours of carrying heavy loads have destroyed our knees.  We buy prescriptions to lower our blood pressure after years of sitting idle at a desk, eating poorly, and letting our health decay.

Stop.  Stop today.  Stop right this minute and change your life.

Become an owner instead of a worker.  Instead of getting that new car, drive your old one for a few more years and send those car payments you would have made into a stock mutual fund and become an owner in a group of companies.  Buy a smaller house for cash and invest the money you save on interest.  Stop buying things to impress people and just buy what you need so that you can spend time with your family who don’t care what the label on your blouse or jeans says.

Start building a portfolio so that you will be getting dividend payments and capital gains instead of paying interest payments and penalties.  Let others work for you so that you don’t need to work those extra hours.  Expand your lifestyle by waiting a little while to buy things, instead investing the money in mutual funds, then using the distributions from those mutual funds to add to your income.  Direct some of that money back into buy more mutual funds, and your income will expand on its own.

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Everybody can become an owner.  You can start a mutual fund account with Schwab for only $1.  You can start investing through Vanguard funds for only $3,000 ($1,000 if you start a retirement account).  Start an account and start sending a little of your paycheck in each month to build your wealth.  Own things.  Build things.  Stop just using all of your effort to generate entropy.  Stop having your money flow into your back account through direct deposit and then back out again to bills through auto pay without your even seeing it.

The next SmallIvy book, Cash Flow Your Way to Wealth, will be coming out in about a month.  It gives the game plan to go from worker to owner.  Subscribe to this blog to make sure you get your copy when the time comes and don’t miss out.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

How to Save for Retirement with Coffee



Coffee drinks are all the rage ever since Starbucks expanded to every corner and convinced everyone that they should pay $6.00 for a cup of coffee on the way into work.  Being a graduate of UC Berkeley, which I consider to be the center of the coffee-house universe, I can’t stand Starbucks.  You see, a coffee-house is supposed to be an experience.  You go and order coffee drinks made with machinery that you could not afford to possess, get served in fancy glasses and cups, and then sit for an hour or two, sipping your beverage and pondering life.  You can also get together with friends and relax on a nice couch and play a board game or two over a latte and scones.    When Starbucks came along, they doubled the price you would normally pay for coffee, plus everything was suddenly served in paper cups instead of a real glass or mug.  Now the experience is like going and paying for a movie, only to be handed a DVD to take home and watch.  Totally missing the point!  (Starbucks likes to think of themselves as environmental, but now thanks to their influence instead of people reusing glasses and mugs each time they get a cup, everyone is getting a paper cup, a cardboard wrapper so they don’t burn their hands, and a plastic lid.  Not very green!)

Still, everyone around me seems to be stopping off at Starbucks on their way into work.  I’ve also started to see people with bottles of Starbucks iced coffee in the refrigerator or at their desk.  At least in this case Starbucks put the drinks in a nice bottle.  I’m surprised they don’t come in a plastic soda bottle, given how much Starbucks degraded the coffee shop experience.

  

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That got me thinking.  Here is a great way that people could save a lot of money, perhaps so that they could start to contribute to a retirement account, with very little if any sacrifice on their part.  Let’s say you drink 2-3 of those Starbucks iced coffees per day.  The Starbucks website lists their suggested retail price at $4.99 to $5.99 for a pack of four.  That’s about  $3-$4.50 per day if you drink 2-3 of them.  If you do this each work week, that’s $720-$1,080 in coffee per year.  Invested in growth stocks, getting 12% per year from age 22 to age 70, that’s between $1.5 M and $2.3 M for retirement.  (You can check my numbers in the investment calculator here, and play around with your own numbers of you like.  Note the most amazing thing about that calculation is that you only contribute something like $32,000 yourself – it is investing and compounding that takes care of the rest!)

But wait – what about your coffee fix?  Well, those bottles are totally washable and reusable.  Start off by buying a couple of 4-packs, then save and wash out the bottles.  You could even use the dishwasher if you’re lazy.  Then, get some good coffee (check out some of the selections below if you wish).  You can get something like 50 cups of coffee from each pound of coffee, so with a quality coffee selling for about $10 per pound, you can make about 50 iced coffee bottles for about 20 cents each from a pound of coffee beans.

 

The recipe would be something like:

  • While still hot, dissolve 1/2 cup sugar in 4 cups of coffee.  If desired, add a flavoring.
  • Once cool, in a pitcher, add 1 cup milk, or half milk and half cream, and mix.
  • Divide between 4 cleaned bottles, using a funnel.  Add milk to fill bottles as desired.
  • Cap and store in the refrigerator until ready to take to work or drink at home.

Note you could make 8 cups of coffee and make eight bottles by doubling the recipe, or even make more at the start of the week if desired to save time later in the week.  The cost for everything will be something like $0.30-$0.40, depending on whether you use only milk or milk and cream, how strong you make the coffee, and how much sugar you add.  You could also make it lower calorie by using skim milk and less sugar.

      

So there you have it.  You can save for retirement, still have your coffee, and even reduce the amount of waste you generate by reusing bottles over-and-over.  You can have better coffee, be able to reduce the calories you’re consuming if desired, or even make it especially decadent by using more cream and extra sugar and flavorings if desired for a special treat now and then.  It’s really a win-win for everyone except perhaps Starbucks.  If you feel bad for them, you could use Starbucks coffee beans.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

A Failure of Government and the United Airlines Passenger Debacle


There is probably few people who haven’t seen the absurd video of the passenger being forcibly dragged off of a United Airlines flight.  Obviously this was a grave public relations error by United Airlines, and I hope the man in the video gets a lot of money from them.  In business, you put the customer first.  Bumping passengers from the plane so that four employees could take the flight was, in a word, stupid.  United could have:

  1.  Not overbooked the flight.
  2. Offered more money for people to volunteer to wait for the next one. (Someone would have volunteered if enough money were offered.)
  3. In the worst case, rent a car and have your employees drive the four hours to Louisville for the flight the next day.  As it was, they probably took longer to get there than they would have driving.

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The truth is, however, that scene could have been any of the major airlines.  They all overbook, and they all force people to miss their flight if they cannot get volunteers.  United was just the lucky ones who had the right combination of a clueless flight crew, a frustrated passenger, and an over-the-top group of security guards.

         

The real issue isn’t the airlines (or it isn’t just the airlines).  The issue is that the airlines have an effective monopoly on air travel, or at least there is little enough competition that an airline can say, “Gee, I should charge $50 to check a bag,” and there aren’t isn’t enough choice for passengers to tell them where they can stick their baggage fees.  This is one instance where government regulation is needed since there is not enough room for enough competitors to make free enterprise work.  There are only so many spots at the airports, and the air traffic control systems can only handle so many planes, and it is so expensive to start an airline that few people can do so.  This means there is not enough competition, so the airlines can basically abuse customers all they want, because “Where you gonna go?”

Here is where government should be stepping in to protect the consumers.   You would think that the government would be making sure the paying customers, many of whom have very little choice but to fly occasionally, were protected from price gouging and abuse.  They are falling down on their duty, and in many cases making things worse.   Why are airlines able to charge big fees for bags, or food on the plane, or even the ability to have enough leg room to avoid dying of a blood clot?  And why are they allowed to put so many seats on the planes and make it so uncomfortable?  Why are airport food prices so high, and why are they able to charge so much for things like water when every passenger is forced to buy water and drinks since they cannot bring them through security?  Given the monopoly airlines and vendors at the airports have, where is the government regulation protecting the citizens – the ones who elected them?  Instead, governments are conspiring with the airlines and vendors to get more money from the passengers in the form of taxes and fees.

Think of what had happened to that man before the video you saw, as happens to everyone foolish enough to take a flight:

  1.  He left home early, worried that he might hit traffic and be late to check in.  If he was late, he would miss his flight and lose his money.
  2. Once he got to the parking lot, he needed to wind all around to get into the lot, then drag his bags to a shuttle.  Hopefully the shuttle wasn’t full when it got to his stop.  No one helped him drag his bags up the stairs onto the bus, and everyone was impatient with him.
  3. When he got to the terminal, he had to drag his bags down, walk who knows how far into the building, and then drag his bags all along the concourse to the line for his airline.
  4. He had to wait, perhaps a half hour, for a kiosk to open up.  He then had to drag out his itinerary, figure out where the confirmation number was, pull out a credit card to verify his identity, and check himself in.  If he forgot something of had to wait in line too long, he might miss his flight.

                            

5.  After checking in, he had to wait for the airline attendant to print his luggage tags and give them to him.  He probably received no greeting.  He had to worry that his bags weighed too much, or he’d pay a $100 fee, plus he had to pay $50 per bag regardless.  When the airline rep was done, if he was lucky, she dropped the bags, face down so that things in the pouches got smashed, on a conveyor behind her.  If not, he had to drag his bags to another line and wait for them to be inspected by TSA.  He had to wonder as he left them if they would actually make it on the plane.

6.  After checking in the bags, he had to find the security lines for his gate.  He probably got no directions to the gate from the check-in counter and had to look all over his boarding pass to figure out which gate was his.  If he messed up, he would miss his flight.

7.  Once in the security lines, he probably had to wait 20 minutes to reach the first TSA agent, who probably gruffly asked for his ID and looked at him like he was a serial killer.  He may have gotten a nice greeting (the first ones are usually the most professional), but he would be made to feel that if he was lucky and did everything right, he would be allowed to proceed.  Otherwise, he would miss his flight.

8.  After getting his ID checked, he would then wait in an even longer line, wondering if he was going to make it to the gate on time or miss his flight.  Finally he would be told by an agent yelling to the crown that he needed to take off his shoes, belt, hats, coats, and empty his pockets entirely.  He would then need to put his wallet, passport, and everything else of value into the x-ray machine , wondering if someone would steal it on the other side before he got a chance to get to it since his stuff might get through before he cleared the scanners.  He probably hoped that he had not lost his ID in the rush and confusion.

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9.  After waiting for the people in front of him, and having to walk where lots of people who didn’t think to wear socks had trod just before him, an agent would then motion for him to enter the scanner where he would be forced to assume the surrender position – hands up, palms out — while his naked body was revealed to a total stranger in the other room.

10.  If anything was detected in his pockets, or if he was just lucky number 22, he would be made to go to a little cubicle, where he would be patted down all over his body, including his private parts.  Through the whole, humiliating experience, he would be wondering if he would miss his flight.

11.  After finally getting through security and struggling to get dressed again, he would need to stop by a shop to get some water since he couldn’t carry any through.  Rather than paying the $1 or so as he would have seen outside of the airport, the price would be $4 per bottle.  The government has done nothing to protect him from this price gouging.  Instead, the city and state government have probably set the rents really high, basically making the vendor charge a huge price for water.  He is captive in the airport, so he has no choice but to pay the price or go thirsty.

12.  At the gate, he would be required to wait for the flight to board, probably not told that there was a delay until the time at which he was to board had long passed.  If he were late, he’d miss the flight and lose his money.  If the plane was late, too bad.

13.  During boarding, he would need to wait while all of the more important people boarded the plane.  He would finally have his section called, need to wait in a long line to get through the doors, then wait in an even longer line as people slowly pushed their way past the folks in 1st class who were getting their first drinks, and make his way slowly back into the cattle section as people fought to get their bags stowed.  He probably didn’t have any room over his seat for his bag by the time he got there since someone sitting behind him took the space for one of her large bags.

14.  Finally, after all of this, he made his way into his tiny seat with no leg room that was just big enough to wedge himself into.

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Then, he is told he would need to leave so that the airline could have some of their employees fly.  Where is the government to:

  1.   Make parking rates reasonable.
  2.  Prevent baggage fees and other price-gouging fees.
  3.  Provide a smooth, friendly, courteous screening process.
  4. Ensure prices for concessions are reasonable, given the monopoly they have created (or maybe require the airlines give you a $0.25 bottle of water after you’ve paid $400 for a flight).
  5.  Prevent airlines from kicking you off of the plane after you have paid for your ticket and shown up on time.

Where government regulation is needed, they have failed miserably.

What do you think?  Please leave a comment.

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.