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Re: $80,000 + a Year
Old 02-03-2006, 09:33 PM   #21
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Re: $80,000 + a Year

Quote:
Originally Posted by Jarhead*
Hey, don't worry about it. Nords has called me "Blissfully Ignorant" also.

Poll on this one maybe.
I thought Nords calling me "blissfully ignorant" was a compliment, sort of a recognition of my unenlightened state of existence.

Nope, not gonna worry about it. That would interfere with my bliss....
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Re: $80,000 + a Year
Old 02-03-2006, 09:56 PM   #22
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Re: $80,000 + a Year

scoopsteve, sorry if it seems we're being rough, but it still sounds like you're hoping to go from 0 to $900k in 7 years on $80k annual contributions. It's not impossible, but it sounds like it's not something you should count on.

Also, I'm not sure you're counting inflation: inflation can eat into the value of $40k in today's dollars, so you may need more than $40k real dollars in 7 years to live like $40k in today's dollars provide, and $40k out of $900k is a tad high by many estimates.

However, socking away $80k/year is nothing to sneeze at, either. Whether or not you hit your $850k/$900k target you should have quite a bit of equity, and even if the business dries up you can continue with your job while the gains compound longer or go part-time and semi-retire drawing a smaller amount per year. Just a couple of ideas. The captial gives you flexibility and options.

It sounds like a good contingency plan, but be prepared for lesser returns and high volatility in your stated time frame for aggressive investments.
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Re: $80,000 + a Year
Old 02-04-2006, 06:44 AM   #23
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Re: $80,000 + a Year

If you really have the cash to invest, your best bet may be to fund a Defined Benefit pension plan as I assume you have few, if any other employees. The downside is that you must contribute each year. This is most likely the only way to fund that high an amount each year using pre-tax money. An additional idea I think you should consider is setting up a 401(K) for your company. Even if you only have one person (Solo 401k), you can fund $42k or so..I would do this with a Roth 401k and you can really limit your taxation in retirement..If you have the luxury of running your own small business, there is little reason to EVER pay taxes on your investments because you can now use a ROTH without income limits applying.
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Re: $80,000 + a Year
Old 02-04-2006, 10:08 AM   #24
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Re: $80,000 + a Year

Quote:
Originally Posted by REWahoo!
C'mon guys, cut scoopsteve a little slack.

I'll admit to being suspicious of his first post, but after explaining his company, he could be on the up-and-up.* Let's give him the benefit of the doubt.*

In his OP he did ask what we thought and for suggestions, but I'm not sure he was expecting Nords to complain about having to wear lead-lined underwear. * I agree that his expectation of 10%+ returns for 5-6 (7?) years is optimistic, but he did ask nice.* *

Yeah, I agree this is doable (seen it) although I never did it myself. Consider this though:

Back when I was running my little manufacturing company, it never made any money
partly because my ex. and I were living the good life and thus taking a lot out
of the business. After I converted the corp. to a small holding company
with mostly passive investments, as I recall it turned a profit for 10 years in a row.
So, ironically, when I was "busting my pick", the corp. lost money. After I shut it down
and invested the capital elsewhere, it made money every year, with almost no
effort on my part. Come to think of it, we might have hit 80K once. Made me wish that
I had bought the company and just shut it down the next day. I thought about it.

JG
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Re: $80,000 + a Year
Old 02-04-2006, 10:14 AM   #25
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Re: $80,000 + a Year

Quote:
Originally Posted by Jarhead*
Hey, don't worry about it.* Nords has called me "Blissfully Ignorant" also.

I think he likes us.

Hopefully not in a "Brokeback Mountain" sort of way.

JG
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Re: $80,000 + a Year
Old 02-04-2006, 12:33 PM   #26
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Re: $80,000 + a Year

Quote:
Originally Posted by MRGALT2U
Back when I was running my little manufacturing company, it never made any money
partly because my ex. and I were living the good life and thus taking a lot out
of the business.
If it never made money, how were you taking a lot out of the business?
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Re: $80,000 + a Year
Old 02-04-2006, 01:08 PM   #27
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Re: $80,000 + a Year

Quote:
Originally Posted by Jarhead*
Hey, don't worry about it. Nords has called me "Blissfully Ignorant" also.
I think he likes us.
Quote:
Originally Posted by REWahoo!
I thought Nords calling me "blissfully ignorant" was a compliment, sort of a recognition of my unenlightened state of existence.
Yes, there are many states of blissful ignorance and those were compliments.

For example I'm blissfully ignorant of the finer luxuries in life just as REW is blissfully ignorant of having to sweat out a couple hours in anti-Cs. But I'll never complain about that to Jarhead because he's all too familiar with living in field conditions that make my anti-Cs look like a five-star resort hotel. Although I'm sure many would debate the multiple redundancies inherent in the concepts of "Marine" and "blissfully ignorant", I'm just not gonna go there.

So I do like you guys.
Quote:
Originally Posted by MRGALT2U
Hopefully not in a "Brokeback Mountain" sort of way. JG
But not that way. Not that there's anything wrong with that, I never asked, no one ever told me, blah blah blah.

Quote:
Originally Posted by retire@40
If it never made money, how were you taking a lot out of the business?
Ah, therein lie the multiple complexities & contradictions that form the incredibly complicated and impossibly unbelievable finances of the JohnGalt Company. For someone who claims to run his financial analysis on the back of an envelope, along with his hiring, employee training, & negotiations skills, he makes Jack Welch look like Pee-Wee Herman.

So while Scoop's math may work for JohnGalt, or John's may work for Scoop, I wouldn't advise anyone else to try either of their methods at home. It's the sort of situation where I definitely prefer to remain blissfully ignorant.
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Re: $80,000 + a Year
Old 02-04-2006, 04:56 PM   #28
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Re: $80,000 + a Year

Thank you guys for all of your suggestions. It appears that maybe I was thinking about a little better returns that what I can probably expect however, by placing 80K + into these accounts each year, I feel pretty confident that we would be able to retire in the time frame set forth. I have read accounts of those that have retired at an early age with 500K in the bank, and have been fine.

The key is staying out of debt! I have asked the question of many people that live in 250K-300K homes, "Would you rather live in a 250K-300K home and stress about how you were going to make the mortgage payment each month, or live in a 100K home and do what you want? For me, I will take the 100K all day long. I feel like we are retired now as we only have a $900 a month house payment. We had been in debt for several years car payments, mortgage, credit cards etc. And once all of this debt was retired, what a feeling it is. Thanks for all of the suggestions. God Bless
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Re: $80,000 + a Year
Old 02-04-2006, 05:37 PM   #29
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Re: $80,000 + a Year

Quote:
Originally Posted by scoopsteve
...I have read accounts of those that have retired at an early age with 500K in the bank, and have been fine...
And they would be fine with that if they can earn about 7% a year and could live on about $20K a year income adjusted for inflation for the rest of their lives. Most people can't.
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Re: $80,000 + a Year
Old 02-04-2006, 09:26 PM   #30
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Re: $80,000 + a Year

Quote:
Originally Posted by retire@40
If it never made money, how were you taking a lot out of the business?
Made it up on the volume, then invested it in zero percent credit cards.
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Re: $80,000 + a Year
Old 02-05-2006, 08:47 PM   #31
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Re: $80,000 + a Year

Quote:
I have a very LARGE customer that I have been doing business with for 7+ years and is very loyal. I have worked hard to establish trust, quality products, and on-time delivery.
This sounds like a very risky business to me for two reasons: 1) you are not there to oversee the day-to-day operations--and nobody will take care of it like you would; 2) if I am reading your post correctly, you apparently only have one large customer; the rule of thumb is not to let one customer be more than 50% of your business, otherwise you are risking ruin if he leaves.

Why not do this:* take over the day-to-day operations and try to increase your client base so you won't have all your eggs in one basket, and you will make more money.* Also, pay off your house so you will be totally debt free.* That $900 a month would then be free for additional investment and you would have the security of being completely debt-free.



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Re: $80,000 + a Year
Old 02-06-2006, 02:46 PM   #32
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Re: $80,000 + a Year

Quote:
Originally Posted by retire@40
If it never made money, how were you taking a lot out of the business?
You may have missed the point. The corp. didn't make money before I shut down the manufacturing because
we were taking so much out of it. Generally in smaller
closely held (family type) businesses, the owners will
either (A) Live off the business, or (B) Leave as much as possible in the business in order to pump up the
financials for future sale.

JG
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Re: $80,000 + a Year
Old 02-06-2006, 04:32 PM   #33
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Re: $80,000 + a Year

Quote:
Originally Posted by MRGALT2U
You may have missed the point.* The corp. didn't make money before I shut down the manufacturing because
we were taking so much out of it.* Generally in smaller
closely held (family type) businesses, the owners will
either (A) Live off the business, or (B) Leave as much as possible in the business in order to pump up the
financials for future sale.
In either case, the business makes money. You either take the profits or leave them in the business.

I guess you were trying to say your business made money and you disbursed the profits to yourself instead of keeping it in the business as working capital. OK.
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Re: $80,000 + a Year
Old 02-06-2006, 05:41 PM   #34
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Re: $80,000 + a Year

Its quite possible it never made money.
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