Another new guy

[accountingsucks]

In your original post you mentioned that your monthly costs are $4500 a month...you consider this frugal?

I am 30 and also mortgage free and am spending approximately $1500 a month and I don't feel like I'm lacking anything at all.

Does your wife like shopping?

[Kronk]

I re-read that myself, and was somewhat surprised at that figure myself. So I spent part of today entering recent checkbook transactions into Quickbooks.

The last three months we spent $3300/month. That includes the BMW that is $650/month and what will go away quickly once we sell the business. And we got a nibble today! Hopefully something will come of that.

However, March was closer to $6500 (including $2k worth of taxes - $1240 of that was 1% annual local income tax). In January we replaced garage doors at $2k.

I really think that once the car is off the books we'll average closer to $3k per month. I guess at the time there were a lot of one -time expenses that were cropping up. And no, my wife doesn't enjoy shopping. I really need to finish the Quickbooks analysis to see our distribution of money. $300/mo in property taxes, $300/mo for martial arts (!), probably another $300 in utilties, water, sewer, another $150 in cable, Netflix, DSL; $200/mo in health insurance (HSA) premiums; $650/mo in food; $150/mo car insurance; $150/mo in gas. Probably other categories I'm missing as well, and then there are bigger purchases that get averaged in - furniture, electronics, vacations. I honestly do believe we're frugal compared to our income.

[TargaDave]

Originally Posted by Kronk

Well, a month into ownership, the manager gave notice.

I'm a bit of a chance-taker by personality, but I think this experience is going to temper my enthusiasm for throwing large sums of money around. I'll probably still consider doing something business-wise, but I'll definitely be more cautious. Maybe in 15-20 years I'll open my own dojang if I'm still as into martial arts.

I've always felt that the value of any business is totally dependent on the key people who make it go (not always the senior people either). In our type of biz, buyers won't touch a company without the Founders and key employees signing up to stick around for at least a couple of years. I guess you normally wouldn't think of that in a Mom&Pop type business but it's probably just as important.

Sounds like your reasons for cutting the cord are good and like you say, maybe another try later in life. After my little business has run its course I'm looking at buying a small existing Mom&Pop biz in the location we want to semi-retire. Your experience has already taught me something.

[Kronk]

Well, I'm not sure how many conclusions you can really draw from our experience. I would expect that each business has its own challenges, and I wouldn't really figure that our challenges would be the same as you might find. And, no, I don't believe in this case the value of the business is dependent on the key people. The manager leaving meant DW had to spend time finding and training a replacement, who didn't end up doing as much as the original manager.

But there is a hefty component of the perceived value of the product itself. In this case, a bad employee might drive some members away, but I don't believe that has ever happened to us. It seems more to be a disinterest among the target demographic.

A franchise is easier than a solo operation. An existing business is easier than a start up. In our case, the existing franchise still equaled a heck of a lot of work.

Well, yesterday we did get a nibble. We'll be getting them to sign a nondisclosure and then we'll give them the financials next week. So hopefully something might come of it.

[Kronk]

Anyone remember me?

It really was too depressing to look at this board when our finances were going backwards. The value of the business kept dropping. And dropping. We finally sold the business as of July 1st -- we bought at $299,000 and sold two years later at $125,000. We did have positive cash flow, so at least losses were limited to the business value. There is still some mop-up work to be done, and we'll have an enormous business loss wiping out most (or maybe all) of our earned income for this year. But that chapter of our lives has mercifully come to an end (almost). It was truly a nightmare.

On to the positive side. We have zero debt. We own our roughly $400,000 house outright. We have a 2005 BMW 330i with 35,000 miles, and a 2007 Hyundai Elantra with under 1,000 miles, both free and clear.

We also have a "Sheltered Sam"-esque sliced and diced Bernstein portfolio, totaling around $250,000.

80% stocks:
Total Stock Market - 21% (mostly in an IRA)
Value Index - 20% (401k)
Small Cap Index - 12% (Roth)
Small Cap Value Index - 12% (Roth)
REIT - 10% (IRA)
International (small) - 20% (401k)
International (large) - 5% (401k)

20% bonds:
Intermediate Bond fund - 100% (401k)

We're in the process of establishing an after-tax Vanguard total stock market index account. That's where almost all of our after-tax savings will go.

Our expenses over the last 12 months were as follows on a per-monthly basis:

Automobile - $375 (Insurance, tolls, maintenance, gas)
House Expenses - $500 (Home Improvement, Insurance, Lawn Mowing, Property Taxes)
Utilities - $300 (Energy, Phone, Sewer, Trash, Water)
Food - $675 (eating out, groceries)
Health Care - $425 (HSA Health Insurance, Massage, Chiropractor, health care)
Health Clubs - $250 (Tae Kwon Do, Brazilian Jiu Jitsu, Yoga)
Other Living Expenses - $175 (Pets, Clothing, Accountant)
Entertainment - $190 (Cable, internet, magazines, Netflix, travel)
Discretionary Spending - $625 (Big ticket items, books, movies, chartible contributions, gifts)

Total: $3500/month

My gross income is around $125,000 per year. DW is looking for a new career, and might be going to get a Master's in Public Health. So we're living well below our means, though I expect expenses will be a bit higher over the next year (a few hundred per month). I'm tentatively targetting age 45 (we're both 33 now) for FIRE with $1.5 mil in today's dollars, but we'll see how things go between now and then.

[Martha]

I remember! What a relief it must be to have the business sold. You came out much better than many many people I have seen over the years who had struggling businesses. You are young and debt free, you should do just fine.

[papadad111]

Very interesting - lots of valuable learning from your experience.

Guess I am gut-less; every time i think i can take my hard earned dollars and put it into a business, I get chicken and realize that i can probably do no better than a bank cd,- at least it has limited downside and i can sleep at night.

As i hit 40, i find i am getting more and more conservative - hanging on to what i have. not wanting to lose it. Lost most of it back in 2000 and 2001 and I don't want a repeat. has taken 7 years to "recover".