More about my new plans...

Million Dollar Journey asked yesterday what I plan to do after my MBA, and I realized that I haven't really put very much context around this decision so it must seem a little bit random. So here's a bit more background....

I have been working in a computer related field for the past 8 years, and frankly I am feeling very burnt out by the low-level detail-oriented nature of this work. It is also very stressful because clients don't notice all the good things that are working as quickly as they notice even one thing that is not, so the ringing of my phone is not a happy sound. Putting these things together, I decided that I wanted to shift my career to a higher level, escape the evil world of details, and leave computers behind.

After much thought, I concluded that I am quite good at working with management types to explore options and determine strategies, and this is something that will clearly satisfy my objectives. So I am heading to MBA school to become a management consultant in the area of strategy. Believe it or not, this is actually a genuine career. I hope to continue as an independent consultant, although I may work for a couple years for a large consulting firm after graduation if needed to get some good experience and pay off my MBA.

The good news is that my financial position allows me some flexibility to go back to school full time. The bad news is that MBA's are very, very expensive so it kind of feels like I am cannibalizing my finances. But I have realized that a full retirement would leave me floundering a bit, so if I'm going to keep working then I need something new to do.

And that's the story in a nutshell. I don't know where I'm going to school yet - I'm actually going to visit a couple of MBA fairs in September to try to narrow down where I might apply. And there are many other details to address over the next year. But I have set my general course, and now I feel much more invigorated and enthusiastic in knowing that I am moving forward in a positive new direction!

Looking into new directions

So here's something new for me....

I've been thinking for a while about a career change, and of course there are financial consequences to such a decision. Obviously my earning ability is fairly strong now, and I would not be doing it for financial gain, so mostly the financial impact is negative.

Here are a few of the considerations:

• Going back to school - tuition, lesser or no earnings during this period
• Other training or conferences - travel costs, conference fees
• New career - lower earnings in first 1-3 years, less developed network of contacts

Looks pretty grim, doesn't it? However, it is not all bad.

I have built up a lot of momentum in my finances and I hope that I could work part time during the transition to keep the drawdown on my existing resources minimal. In fact, I hope that my net worth would continue to grow, albeit more slowly, while I was in school and starting up the new career.

And one advantage is that I am looking into another area of consulting which would be better suited for part-time work or semi-retirement. And because I have the flexibility of private consulting, I could manage the transition in whatever way I see fit. So this would move me towards some life goals even though it may postpone some financial goals.

And of course, the reason that I am considering it is that I am getting a bit tired of what I am doing, and I'm ready for a change. :)

So what do you think? Am I doing this too early? Too late? Are there other considerations that you think I am missing? Let me know...

Crap at work

Thanks to s.b. and canadian dream for their encouragement after my terrible day yesterday. Both of them pointed out that developing your interests and focus outside of work is a very good antidote for dealing with crap at work. Wise advice, indeed.

It also fits with advice that canadian dream was giving earlier about retiring happy. To put it in other words, hating work is not enough to guarantee loving retirement.

I never thought I could be one of those people with no life outside of work. I have always had lots of interests and I still do. But certainly work is interfering with those interests more and more often these days. Sometimes I have been so tired that I have wanted to leave my evenings and weekends completely free. But staying at home and doing nothing doesn't make for an enjoyable evening, and when I do this I usually end up regretting it. Actually, going to a class last night was very helpful in keeping my mind off my troubles.

I know that troubles will come, and sometimes the only thing to do is to just get through them. Life is just like retirement savings. You don't solve all your problems in one day, but if you keep doing the right things then it keeps improving little by little. And I'm not giving up!

My terrible, horrible, no good, very bad day

I had a rather crummy day at work today and when I got home all I wanted to do was escape from everything: my job, my house, my life... and anything else that could be escaped from. I hate days like this, when I feel almost ill and I can't stop thinking about what went wrong and whether I could have prevented it. In fact, it's my thoughts that I want to escape from most. I just want it all to be gone.

On days like this I really, REALLY want to stop working forever and spend my remaining days under a palm tree far away from the world. I feel like I can't handle working even one more day and the sooner I am out of it, the better. And so it is days like this that are the driving force behind my, and probably many other people's, retirement plans.

Sigh....

But I am also starting to realize that life isn't designed to be easy. There might be days like this even without work. Some days bad things will happen to good people. And smart people will do stupid things from time to time, which will occasionally come back to bite them in the rear. And this is just a part of life, no matter what.

That palm tree sure sounds good though!

Today's billable hours: 3.0
Today's contracted hours: 0.0

Do I Really Want to Retire?

An interesting discussion at Canadian Dream on Saturday led to this post on Investoid, which I really liked. He talks about gradually working less instead of completely retiring, which is something that I have started to think more and more about. As I discussed previously there are some very attractive reasons that might make me want to continue working. Additionally, many of the drawbacks of work for me come from the stress of it and the lack of time to do other (sometimes financially beneficial) things. So a reduced work schedule seems to allow me to keep much of the good while reducing the bad.

When I started this blog I knew that I wanted to reach $1 million and to work on the cash flows necessary to stop working. However, these goals are a bit vague because I haven't set dates or specifics. Essentially, I am still missing a retirement plan, or perhaps as Investoid calls it, an "anti-retirement plan". I would like to start putting such a plan together but I always hesitate over the unknowns.

I am now inspired to start the work on this plan over the next little while and see if I can come to some greater clarity in my vision of the future. This blog has been a really good tool for me to think about things more clearly and I hope that I will be able to make a great step forward by tackling this rather daunting task!

Do I want to work?

I seem to be on a break from purely financial topics for a time here to ponder some issues in a more personal way....

My life has been rather stressful in both work and personal ways over the past couple of years, and the work stress in particular serves to make me yearn ever more strongly for the day when I leave it all behind. But when I think of fully quitting, that doesn't make me happy either. There are certain parts of my work that I really like and provide me with fringe benefits including learning, socialization/teamwork, affirmation and more.

Right now I am at a point where almost everything that I am working on has been going on for 8 months or more. That means that the exciting new stuff is long gone and the "just get it done" phase is well under way. At times like this I really want out, but is retirement what I really want? When the projects are fresh and new, my outlook can be very different and work can be a lot of fun.

One of my friends has sold his business recently and is now planning to take some extended time off to pursue his main hobby. When I think of doing such a thing, I mainly imagine having too much time on my hands. And when I have time on my hands I shop. It doesn't take genius to know that not working and lots of boredom shopping is a bad combination.

So I believe that at this point in my life I still want to work, although perhaps much less than I currently am. All this work has been very good for my finances, but I believe that I have built up enough momentum that I don't need to kill myself. Now, hopefully things will slow down and allow me to test this theory. :)

Today's billable hours: 5.75
Today's contracted hours: 1.0

Value added time

These days I seem to be quite a bit busier than I would like, and that got me thinking again about what my time is worth. If I wasn't so busy, I could do a lot of things that have positive impact on either my cash flow or net worth such as:

• house fixes that take more time than material cost
• wiser shopping and eating
• organize my home and finances better to avoid stupid costs like late fees
• sell some items that are just sitting around

And these are just the broad categories. In each bullet there could be as many as 5-10 specific things I could do. Also, there could be other side effects such as:

• if I got my house fixed up I could probably rent out another room
• better eating might be healthier or inspire me to exercise :)
• when I organize or clean I often find items of value that I might have otherwise gone and bought
• getting rid of excess stuff makes me feel better about my home and more likely to continue the positive circle of doing good things to it

If I had more time I would also do more learning and volunteering. There might not be positive financial consequences to those, but sometimes life will surprise you with what you are rewarded for.

So for now, I don't have enough time to do all of these things, but I am slowly starting into the house fixes and I will make a goal to sell my old car in March. And one day, when I am able to work less, more of these options will open to make retirement financially advantageous in certain ways, perhaps offsetting some of its costs.

Today's billable hours: 5.5
Today's contracted hours: 3.0

No Such Thing as a Free Lunch

When I bought my house and told my friends and family that I was going to be renting out the basement, they all immediately starting making remarks about how good I was going to have it, having someone else pay my mortgage. Yeah, right. As anyone who has ever been a landlord knows, there is a lot more to it than just sitting back and collecting the cheques. (In fact, sometimes you don't even get to collect the cheques.) You may make some money, it's true, but you will work and suffer for it.

Today was a reminder for me of how jobs work the same way. Although I would say that I have been busy and stressed more often than not for the past couple of years, there are always some days that reach new heights (or depths). There was nothing special about today other than it seemed like everything was blowing up and I was unable to fix any of it quickly and everyone needed it IMMEDIATELY. Ack! Where's the exit?!

Anyway, without belabouring the scenario (which isn't fully resolved yet anyway), let's just say that on days like this I feel that I earn every penny of my hourly rate for the entire project. And ironically, the biggest part of that is sticking up my hand and taking the blame for whatever went wrong. So the no free lunch rule strikes again. You can make money, sometimes very good money - but you will work for it, and sometimes very painfully hard indeed.

Today's billable hours (so far): 10.75
Today's contracted hours: 1.0

Number One Goal: To work less

The past week I have wanted to stay home. It was cold and snowy outside - perfect weather for reading, sleeping or blogging or really anything that does not involve leaving the house. And I was tired. I really could have slept or lounged a few days away without any problem. But there was one problem: work.

My clients don't seem to be in tune with the rhythm of my needs for more or less busyness, and they expect me to keep showing up even when I don't want to. Each morning, I have to get up and leave the house to satisfy someone else's wants, and I do it because they pay me to. Some day I would like this to change.

In my ideal future, I would work much less but I would work. Just a little bit of work that gets busy once in a while but then settles right back down. The kind of work that allows me to leave for a few weeks of travelling or take a few days off due to snow. Enough work to pay for a few indulgences or stretch my retirement budget but not enough to feel that I have to do it.

Every night I come back home to my blog and analyze once again how soon I can retire, or how much less I can work and look forward to the day when all this comes true. A week like the past one reminds me of how much I want it. Until then, I must keep braving the cold and smiling at my clients....

Today's billable hours: 5.0
Today's contracted hours: 1.5

A Worthy Goal: Finding Lost Money II

While not tracking my time is the first and greatest sin, the second (to use the biblical phrase) is like unto it: I do not submit my invoices in a timely manner. In fact, I currently estimate that I could submit at least $7,000 of invoicing up to DECEMBER 31, 2006! Possibly more!

Are you shocked yet??

My problem is that once I am too far behind on my time recording, invoicing itself becomes a chore. And the further behind I am on invoicing the more I avoid it. And eventually I end up writing off (by virtue of never invoicing) money that I am fully entitled to! Only a crazy person would do this, right? Well, allow me to introduce myself....

So my top two income boosters for the year are obvious, and yet so difficult for me. What a ridiculous situation!

Anyway, no more bashing myself over past failures. I am going to pledge to do better. Much better. After all, this is for my retirement. My goal is to do one invoice per day until I am all caught up. Tonight I will even go one better and write up my 2007 contract and 12 monthly invoices for my fixed rate contract!

Today's billable hours: 8.5
Today's contracted hours: 0.0

A Worthy Goal: Finding Lost Money

The past year has been very busy for me business wise and I have billed very handsomely, but every time I start to do my invoicing I curse my poor record-keeping. I am positive that I lose literally thousands of dollars every year due to not invoicing all my work. If I frame that lost money in the context of my net worth and early retirement goals it looks as if I am working against myself.

Shocking? Absolutely.

So my goal starting immediately is to become a fabulous recorder of time spent working. I am going to hold myself accountable on my blog by noting every day the number of billable hours.

Today's billable hours: 5.0
Today's contracted hours: 1.0
(Contracted hours are paid by a monthly retainer, but I will make an effort to track them anyway.)

I am not going to set my sights too high by planning to track administrative time or anything else. But spending 15-30 minutes each day on time tracking should pay off for me with hundreds of dollars more each and every month. A worthy goal? Absolutely!

What is your time worth?

So what is an hour of your time truly worth? This is a good question, and one that I came across on Canadian Financial Stuff so I thought I would weigh in on this topic.

My income comes from consulting, so from that side I know exactly what an hour of my time is worth... whatever my clients will pay for it. That said, it can vary pretty widely. My rate ranges from $60 to $110 per hour depending on which client we are talking about, but my actual hourly income may be even more wide ranging because sometimes I have to write off time and sometimes I quote a project cost and get the project done faster than anticipated. So perhaps an hour of my time is worth anywhere from $5 to $200+ depending on who I am asking to pay for it.

But that is purely external. What is an hour of my time worth to me? Avoiding an unpleasant hour is worth a lot. I pay a house cleaner to come to my home once a month and even though it's expensive I feel that it is well worth it. However... I would like to make that twice a month but I feel that the expense would be too much then.

Sometimes I value my out of work time fairly cheaply, because there are a lot of time wasters that I do not pay to avoid. For example, shopping the bargain stores is definitely a time/money trade off that I make quite frequently.

And other times I seem to be unwilling to part with time that would save or make me money. For example, making an extra trip to return overdue library books, or finally getting around to submitting a rebate form. I also spend for convenience pretty often in the area of food.

So overall... I think that there is no single answer to this question. Both internally and externally there is a great deal of variation in what the evidence shows. But in thinking about this question, I have realized that there are many opportunities to value my time more highly, so perhaps I will be able to make some improvements.

And I'm going to find that rebate and submit it RIGHT NOW!