And 6 days later.....he rose again.
Greetings and salutations everybody......
1st off I do apologize for not responding sooner but indeed I've been reading ALL your replies a few times a day. Between helping pregnant DW take care of our 3.5 year old cute-yet-benevolent dictator of daughter, AND the legal and mental convulsions of selling a somewhat sizable business....I just didn't have quality time to respond. All replies were thoughtful and wise and I expected nothing less....and I didn't want to reply with the canned "thanks, i'll take it under advisement".
Also feel free to Google me. I'm busy launching the Foundation for Law and Government
I gotta cook breakfast for the kid in a few minutes, so I'll reply to more posts later, but in the meantime I'd say this:
1.)NO QUESTION my spending is higher than should be. My lifestyle, is totally different than my upbringing and the only saving grace when I look in the mirror is, most of the stuff we buy has NOTHING to do with "showing off", and also that AMEX green is the only credit card ever used...paid off monthly. So, I feel I'm not the "yuppy" who has to show off Coach handbags to others. Instead, we've been very subtle, nobody would ever guess what we have...and we were content to privately enjoy the lux life. I do however plead guilty.....yeah, I just should not have been spending at this rate.
2.)The whole reason for my questions here was that I KNEW spending is too high. I am suspicious of myself....maybe I "want" to see that having $3 million, and generating $235k per year is very possible. But thus far in my life I've need been too optimistic, I've always 'aimed low' and it has served me well.....and in my guts I know that $235k yearly income....was not aiming low, it's hoping that everything goes perfect all the time which is rarely the case, especially when morons (yes, i said it) are running key components of our country and world.
3.)I'm so torn. On one hand i feel 'attached' emotionally to the business, and some of my employees. I've done very well at it...but lately things have gotten somewhat soft. I THINK I can turn it around again and do okay......but what if I can't? While it's not probable, it's POSSIBLE that things can get ugly and then....there's no $3 million, there's me leaving in disgrace and begging the bank not to come after me. My business IS instantly affected by things like oil prices, world events, etc and while there's 10 reasons I'm going to be just fine, there's 10 reasons why I won't be fine, or at best......I'll stagnate.
Socking away $3 mill I feel alleviates SOME risk in my life. It allows me to either gear down to a more realistic lifestyle and retire, OR it allows me to leverage into a higher quality business....but STILL having a nice chunk of cash left over.
4.)Nobody is right 100% of the time. The 'mentor' I refer too is very successful....he put away millions in his 30's and then started a TOTALLY new enterprise which now nets him $500k/yearly. He's a great businessman, great family man, he's now 50 and doing just fine.
He has a wealth manager he's used for 20 years. Mentor is hardly a passive investor, I'd say they work together and formulate investment plans.
He says it's not "100% certain" but he thinks 7% per year is doable. He's given me countless examples of preferred stocks, individual stocks that he's traded in and out of...and maybe the guy is just lucky. He makes 10-15% on his trades just for fun and sport. In 20 years he's average 12% returns, and when I pointed out that those were glory years for most....he points out that it wasn't all glory. The dot-com bust, and the Wall-Street bust are included in that time where he made 12% a year.
Since the 2008 bust, he's doubled his money. I talked to him the day after Lehman went down in 2007........and he told me that he sold all his stocks, and put 70% of his net worth into gold....and has held on to this day. Y'all can do the math.
But he's cautioned me that he is not retired and therefore can take chances in the market....whereas my situation will be different. He also (rightly) points out that I bask in the glory of fear, and that I'm too risk-averse and conservative for my own good. (Totally accurate)
I've been doing lots of soul searching. Lots. I'm wondering, how did a "kmart kid" raised by frugal immigrants end up "needing" $14k net monthly income to live? Why the hell do I need that much money, especially with home and cars paid off? Isn't there something wrong with that picture?
I think I could do much better alleviating waste and we've been working on that. Certainly, via looking for 'deals' I can save money here and there but the "prize" here is cutting back the lifestyle.
I'm 100% HAPPY to cut back the lifestyle if I have to. Heck during 2008 crash I started brown-bagging just to set an example at work, just out of principle.
But, I'm not sure if I can ELECT to cut back the lifestyle. This is an anonymous forum, AND there's folks here with more money than me so I'm in no way bragging. But for the last 10 years..........I've become used to not even thinking twice about money. 20k vacation? Ok, no prob. Extra cash to see a doctor? Ok. Gas and food expenses? What are those? And I was indeed adding to my savings while living like this..........so now it's a hard paradigm shift.
I do believe that "WEALTH" isn't material goods. "WEALTH" is money that works for you. I'd like to put away SOME real wealth and I see $3 mill as just that.
I'd LOOOOOOOOOOVE to retire. I think the labor force of the future will stink. The text-message-facebook generation I really don't want as employees. I'm tired of customers, I'm tired of my government telling me that I make too much money, that I don't deserve it, and that I ought to be taxed more for my success. I ALMOST pleasure myself dreaming of sending the I.R.S a note with next year's taxes saying "Instead of the normal 200k, here's 7k. I took the hint well. Enjoy your deficits on your own you putzes".
But, I still want some niceties. Eating out, vacationing, I still want some modicum of care-free finances.
So here's what I'm leaning towards....................
Make the deal, cash the $3 million. Take a short break....and then buy another similar business. With $1 million, I could indeed leverage into a similar, but higher quality business and that would yield an income of around $230k per year, after debt servicing.
So now, I'll have the income I want........but JUST in case doomsday happens, I don't come home to food stamps, I come home to a paid off house and $2 million in the bank....so I have time and money to regroup.
Trust me, I'm STILL thinking about how to pare back the lifestyle and retire....possibly delve into land lording thru college housing, net-leased properties, whatever.
But this is how I'm leaning.
I gotta go beg a 3 year old to eat an egg now. I'll write more later.
In the meantime thank you all for your replies........I agree with a majority of what you all have wrote.