Who Am I To Give Financial Advice?

Within my new blogging and Twitter persona, Money Mensch, I have been reading and following dozens of financial bloggers.  This is not anything new to me, as I have been reading and following many financial writers ranging from the frugal mom bloggers to the Tony Robbinses and the Dave Ramseys of the genre.

So when I came across a blog post titled something like “Who Am I to Give Financial Advice?” last week while perusing my Twitter feed, I had to read it and it got me thinking.  I believe that it was by one of the money-related Twitter accounts that I follow, but I could not locate it again.  I should have at least “liked” it, so I would be able to find it again.

But that is beside the point.

It got me wondering who, exactly, I am that someone unknown to me should read my posts and any unsolicited advice that I dispense.  After all, I do not make six figures or more per month or year with my online activities.  If I clear $50 in a month with my eBook sales, I am quite pleased although far from satisfied with myself, thinking that it should be $500 or $5,000.  I have yet to earn a dollar from this blog, as Google has only two days ago deemed it worthy to qualify for AdSense.

I have also just come to realize that there are nearly as many money bloggers as there are stars in the sky or grains of sand on the beach.  There may come a time when anyone and everyone who has ever been given, begged, borrowed, stolen or made a buck will blog about that buck.  You could never read everything that they (or perhaps I should say we) all write and even if you did, you would be reading similar advice over and over again with little variety.  It all boils down to increasing your income, spending less of it, stocking it away regularly or a combination of those.

Boom!  You have just read the combined blogging, writing and speaking efforts of millions: increase your income through side gigs or the Internet or otherwise, spend less than you currently do and my favorite advice of all: Pay Yourself First.

But who am I to tell you what to do with your money?   More accurately, who the (bleep!) am I to tell you or anybody?

Well, who I am is a middle aged middle class man who has lived his 4.7 decades in the Midwest, all in the Chicago area with the exception of four-and-a-half years attending the UW.

I married my college sweetheart in June of 1996 and we have a nineteen-year-old son in college and a fourteen-year-old daughter completing her freshman year of high school.  We have a Morkie, who is often the most-loved member of the family by the four of us.

I have been an economic development professional since fall of 2000.  Prior to that, I spent nearly eight years as a probation officer, as detailed in my eBook The P.O.

What I am not is a successful business owner, speaker, blogger or writer who has hit it big online.

One of the bloggers that I follow, Millennial Money Man, made more last month online than I earn in a year and posted the results.  While I admire the Millennial Money Man, Bobby Hoyt, and find the post interesting, I am not sure that I would share that information online if I made that much moolah with my writing.  Then again, perhaps I would.  You have to be damned proud of your accomplishment of making more than most people earn in a year just by sharing financial information on a blog.

According to most articles about how much money you should have saved by a certain age in order to retire, I am woefully behind.  According to this month’s Kiplinger’s, a guy like me who makes $108K at his job should have over $600,000 saved by the age of fifty.  That amounts to six times my annual salary.

 

Considering that less than ten years ago, my wife and I had two young children, she was a stay-at-home Mom, I was earning about $70,000 in the costly suburbs of Chicago, it is a wonder that we were able to continue providing food and shelter for our family, let alone setting seven thousand or more aside for retirement savings.  I did contribute seven grand or more per year to our children’s college accounts back then, thus making a conscious decision to prioritize those accounts over my own or my wife’s retirement accounts.  I wrongly figured that my and her retirement was just a dream anyway and that if I kept working hard at my job, that my pension payment would sustain us in our Golden Years.

I can pretty much assure you that barring a huge amount of success with an eCommerce site that I have been mulling over for the past few months, I will most likely fall about half a million dollars short of the six hundred grand that I should have safely parked in index funds and bonds awaiting my comfortable retirement.

As a Gen Xer, I fall more in line with the average retirement savings balance of just $35,000, according to recent data from Allianz. Incidentally, that's the same level millennials have achieved.

Most of the other more reliable websites than Allianz, like CNBC, claim that us Gen Xers have double that amount, around $70,000.  Credit Donkey and RothIRA.com have the total around 70K, as well.  If that is the case, then I am way behind in my contributions.*

Another thing that I am not, or more precisely I should say that my family is not, is frugal.  I certainly admire frugality and sometimes wonder where my family’s financial position would be if we cut the cable cord, snipped more coupons, ate out less and went camping instead of staying on Disney World grounds so many times.  Undoubtedly, we would have more in our savings than we currently do. 

Horse riding lessons are not cheap.

However, as our lifestyle has continued to inflate and we have been able to send our kids for private music lessons, tennis lessons, swimming lessons, horse riding lessons for our daughter, private college for our son, we have made the acquaintance of many families that spend far more than we do. 

The fact that we do not own a second home or time share, travel to Hawaii over spring break, purchase new cars for every family member, live in a large home and purchase the latest version of the iPhone every year makes us appear quite frugal in comparison.

I earn a decent living, but with my wife working only extremely part-time, we cannot possibly keep up with the Joneses who we associate with.  Besides the other fathers having higher-paying professions than I do, many of their wives work in comparable positions or as nurses and teachers.  Enough to pay for nice homes, new cars, vacations, iPhones and regular grocery shopping trips to Whole Foods.

So who am I to dispense financial advice?  Wouldn’t you rather read the advice from an attorney who makes half a million per, invests wisely and has a much higher standard of living than I do?  Perhaps you would and perhaps you would not.

If you are what I call a regular person, a guy or gal with a stressful job, trying hard to do your best in a harsh economic world, pay your kids’ college expenses, keep your debts low and stash away some for your retirement, I am not a bad guy to read.  That is what I have been doing and will continue to do, all while seeking to supplement my income online and start taking concrete steps to start an ecommerce site by the end of this year.

Now that you may have some second thoughts about reading my financial musings, I will now detail why you should read my thoughts beyond this post.

Let us project into the future, say 2025, seven years from now.

Should I succeed in remaining gainfully employed in my current position or a similar Illinois municipal economic development position in the area with similar pay, I should be able to pull the government flag at the end of that year provided that I have other sources of income lined up.

The most obvious one for a guy with my skill set is to head up a public/private economic development partnership.  As local governments cut back and as more business-minded folks take over the country, State and local governments, the trend will be for there to be less of us municipal employees tasked with economic development and more public/private partnerships. 

I am friendly with several people who head such organizations, and the unfortunate thing about their positions is that they spend about a third of their time trying to raise funds to keep their operation going, another third of their time kissing the derrieres of the Board members who fund their operations, and the remaining third of their time tending to actual economic development projects.

When they do succeed in attracting a new project, they typically have to bring them into their host communities to negotiate incentives, permitting etc. 

As a long-time government employed economic developer for the past seventeen years, I prefer the model in which I work, but concede that by late 2025, there will be far fewer of us and far more economic developers employed in the private sector.  I intend to be one of those, whether it is on a year-to-year contract, a four-year contract that rides with a particular mayor, or permanently hired until fired or resigned.

That is, if the entire profession is not run by algorithms and robots by then.

The sweet part of it is, like two guys that I know who have retired from jobs like mine, I should be collecting $6,500 to $6,700 on the first of every month from IMRF.  Do not hate me – I would have to eat shit daily at work for nearly eight more years to attain that amount, which I consider almost enough to get by, but not enough to thrive, especially considering what insurance coverage and our medications will likely run at that time.

Which brings me to the point (finally).

By that time, I intend to have multiple streams of income, as the most famous gurus recommend as well as the newest Mommy bloggers.

I already receive paltry Amazon payments ranging from two to a hundred bucks per month from sales of my two current eBooks, The P.O. and NewYear, New You.  Even when only two bucks gets deposited into my account from a lone three dollar sale in a month, I like that two dollars a lot.  I imagine someone buying it on the other side of the country or another country altogether during the five to six hours that I sleep any given night.

To build up some wealth, you need to make some money while you sleep, right?  So say the gurus and so says the Money Mensch.

I do not own any income properties at all, but may end up owning one.  I am a gun-shy investor who always feels that the timing is wrong.  During the depths of the Recession, there were many cheap foreclosures in our neighborhood.  I would see the signs of marginal bottom-feeding realtors in the front yards, would look up the homes on Homepath, Homesteps or Foreclosure.com, and then make a case to my wife to purchase it.

Since my continued employment was often tenuous throughout those years, I agreed with her that it would not do us much good for me to purchase another house when we sometimes had trouble affording the upkeep of the one that we live in.  It was and still is hard for me to argue with that logic.

Had I known the future, which I still do not, and knew for certain that I would remain gainfully employed throughout 2008 until the present, I likely would have purchased one of these homes.  As the old saying goes, Hindsight is 20/20.

So what happened?

Mostly Polish contractors purchased the dozen or so bank-owned properties on our block, rehabbed the homes themselves, and now rent them out for $1,600 to $1,800 per month.  In one case, the contractor lives in a house very near ours, having upgraded the home meticulously and now has a baby with his young wife.  They nod friendly to me and say hi when I walk my own baby around the neighborhood (my baby is a Morkie who will be nine years old in April).

Alas, I have never invested in an income property, but have bought and sold several REITs including New York Mortgage Trust, REM and Two Harbors.  I collected dividends on those three, sold them at very modest profits and do not currently own any.  I am stuck with shares of Annally, which spits out $60 worth of dividends every quarter, the only dividends that I do not reinvest and have cashed out and spent to date.

I never say never, so I have started looking around at small foreclosed condo units again where I could start very small and if the shit hits the fan could sell rather quickly without sustaining much of a loss.

Blogs like mine with growing readership are supposed to make the bloggers some scratch.  To date, I have not made anything but just recently signed up for AdSense on the Money Mensch.  I do not expect to quit my job and rake in the cash with this, but I do anticipate making a few extra bucks here and there.  I would never endorse something that I do not use or buy myself, so if I succeed in putting ads for things like Vanguard, T. Rowe Price, Illinois Bright Start, Subaru, Jersey Mike’s, Dairy Queen, Great Clips, Portillo’s, Lou Malnati’s, Mariano’s, Trader Joe’s and other businesses that my family frequents regularly on as advertisements, it sure would not hurt if I could profit some from it.

I would like to earn additional income from this well before 2025.

My biggest potential source of income is an ecommerce site that I have been investigating.  Again, due to my conservative nature, risk aversion and lack of technological savvy, it has been slow going.  For reasons that are difficult for me to explain, I would like to launch this business with the proceeds from eBook sales.

In other words, I do not want to pay for a domain name, web hosting, website design, an LLC name and the like out of our typical cash flow.

I know, I know.  Money is fungible.  It really is.  If I spend $500 next month on the domain name, web hosting and the LLC, it is really no different than some portion of money that I pay for our mortgage, utilities, investments, car payment, groceries and college tuition.

If I reported spending $12,000 instead of $11,500 next month, who really cares?  I know that you don’t.

It is just that, even though I may send over $1,000 to my family’s investments every month, I am not as comfortable shelling out that same $1,000 toward launching an ecommerce business.  I certainly realize that the $1,000 investment may someday parlay itself into tens or hundreds of thousands of dollars or perhaps even more, yet I still lack the confidence that it would be anything more than a dormant website prone to hackers.

We shall see.

I have a crude plan to repackage many more money-related blog posts that I have written here and on Middle Class Guy and put another eBook on the market in late March.  Should I succeed in selling a decent amount of copies, or even five, I would feel a little better about taking that risk.

Pick your cliché: Nothing lost, nothing gained; Every failure is a step toward success; Failure is success if we learn from it; and The greatest glory in living lies not in never failing, but in rising every time we fall.

I have not truly put myself out there for anything too risky, so if I completely flop with this plan, I can always regroup and either try, try again or revert back to working at the grindstone for another eight years while making a few extra shekels here and there with eBooks and AdSense.

I should mention another reason why you should read my financial musings.

I actually saved over $200,000 for my children’s college accounts, all the while working modestly-paying jobs and most of the time with a stay-at-home wife.  Had you told me that I could save that amount about sixteen years ago when my son was three and before we even had a daughter, I would have called you nuts.  But, lo and behold, I have saved that amount and a little more to help my two children obtain their undergraduate degrees without taking on crushing debt.  

Not that I have any time to reflect back or gloat about it, since I currently pay our son’s college $2,500 per month and have many tens of thousands to go on his education.  Our daughter is still a high school freshman, so in less than four more years I will be shelling out the big bucks for her, too.

Now that I think about it, I currently pay more to our son’s college every year than I earned my first few years of being a P.O.  Had you told me twenty years ago that I would be sending $2,500 per month to my son’s college on top of about six thousand in additional expenses per month and yet still investing, I would have thought that I would be a rich man today.

But that is not so.

What I am is a hard-working family man.  I strive to be a great husband, father, son and brother.  Lots of money or not, I want to be considered a Mensch, even by those who have not heard the word or know what it means.  I have a stressful job and a tight family budget, but am used to it and have had both for quite a few years.

I am always willing to share what I have learned and experienced, many times the hard way so that perhaps someday you may benefit from it although you really do not know who I am.

Excuse me while I go to my IRA account with T. Rowe Price and Pay Myself First. 

In the not-too-distant future, I hope to write and speak to you from a position of having achieved greater success.

*Note: Although I am still thirty thousand away from matching the Generation X average of $70,000 in my IRA,  I have contributed to a nearly fully-funded pension fund, IMRF, for nearly twenty-five years.  I'm not saying that I don't need to fund my IRA, just saying that my annual pension statement estimates that an annuity equaling $6,600 per month for twenty years is valued at @ $1.6 million