Burn Out-Finances Longest intro in History?

[Rambler]

Ready_yesterday, you are not. Gonna put it point blank. You are not gonna make it to the end with 500k plus SS at 62. Nor with 850k. You mention all the things you can give up...please know that it will be harder than you imagine. The people who can make it with those amounts do not have the lifestyle you have had, nor the 900k home you have had. Since this is California, I would not expect prop 13 to protect you forever, and heathcare costs alone, incl insurance, should be expected to eat up 150k plus or minus between the ages of 56-65.

Now, let me ask a few questions: 1) who is the CEO/president/chairman?
2) if that is you, do you determine the salary of the other partners?
3) do you have regular Board meetings?
4) if the CEO is you, why haven't you already hired someone to train up to take your place? Do you require all other shareholders' approval to hire?
5) if you are not the CEO, why not? I would suggest demanding that role, since you are the main player in the company. You have a lot of leverage here in my opinion. You can demand the role, since it appears no one else can do it.
6) I believe you mentioned the other shareholders were taking 100k salaries for 1-2 hours per day. Is that really salary? Or is that profit distribution? I think it would be appropriate to separate salary and profit distribution from each other if you have not done that, because it sounds like you are doing an awful lot of the work for just a little more than what the others are taking for their meager inputs.

I believe that you can do better for yourself by shaping up the business and prepping it for the future than by focusing on retirement. By doing so, you would be able to sell the business and retire, or not sell the business, contribute an hour or two per day, and semi-retire. Here's what I would do:

1) demand the CEO role if you don't already have it. Get appropriate decision making authority along with it.
2) convert to a c-corp.
3) clearly separate dividend distribution from salaries for shareholder input.
4) document everything
5) hire and train someone to replace yourself and begin the preparations to step back
6) in two years, you then have some options: promote your successor to non-shareholding president, and step back yourself, either to simply board member , or chairman, contribute a little of your time to the company to collect a salary, plus dividends. OR, sell the entire company.

Without doing some of this prep work, you will stay in a limbo of sorts, and again in my view, will not be able to really retire comfortably with the kind of savings you say you will have. You will also put the livelihoods of the 10-12 employees you have in jeopardy, as without you the company will likely go belly up. As you are an s-corp, you will also likely have some personal liabilities associated with a "belly-up" situation as well (check with your lawyer), that would further jeopardize your intended retirement.

The source of my suggestions are my own experience, having acquired more than 15 companies for my megacorp over the years, and turning away hundreds (who like yours, needed succession plans and structure to really make them work) followed by 13 years as divisional CEO of said megacorp.

In a nutshell, if you shape up the business, the avenue to retirement will be more likely to open up for you. You will need more Botox in the meantime.

Good luck

R

 

[Meadbh]

Memo to the OP:

You have just gotten some very sound (free) consulting advice from Rambler, who knows what he is talking about. Take the advice.

 

[Accidental Retiree]

Savings are only at 80,000 right now because I just used 140,000 and paid down my huge mortgage to get a rate half of what I was paying before, on an interest only mortgage. This change is saving me 1000 a month and at last I am paying down principle again.
I contribute a 22,500 a year in a 401K (244,000 balance).


My goal is to retire in 2 years. I would like to sell one of the rental properties I earn about 1,500.00—2000.00 on average per month on this one- (sometimes as much as 3500.00 as it is a vacation rental )--but the upkeep is close to 1000.00 a month (mortgage, management, taxes, supplies, upkeep and update ...not to mention the stress—it's mostly the stress which I am trying to mimimize).


In a good market, if I can sell I may be able to clear 300,000 (actually in a good market 400,000 but I am trying to not be overly optomistic) and either pay down the mortgage or invest that money into something else (input is welcome).
It pays for itself but that's not enough when the stress is taken into consideration.


If I sell and pay down the mortgage with I hope, another low rate around 3--(i know this must happen soon) , our entire remaining mortgage payment of appx 300,000 could, at least, partially be paid by the rental of the other property that we will keep. It brings in appx 1000—1500 per month and costs appx 800.00 per month in mortgage, management, taxes and supplies. Leaving at least 800 to pay towards a 1500.00 (appx) mortgage payment. Much less stress with this property so we will keep it and use it part of the year in our ER

I like having cash on hand, but my financial advisor likes 6 months in my hand and the rest in stocks. My savings account of course, pays next to nothing in interest.

I use 1500.00 a month from the rentals to pay half of that.
We have a 500 a month HOA, my home is worth about 900,000.00 and I have no desire to sell it. I have lived here 20 years and pay next to nothing in taxes thanks to Californias prop 13. If we downsized to something half the price this home is worth we would pay twice what we pay now in taxes if we stay in California, which is where we want to stay. I bought my house for 195,000 and my property taxes remain low.

Since you want to RE, here are some thoughts about your real estate:

You bought your home 20 years ago for $195k, dumped $140k to paying it down, could put another $300k into it, and still have $300k owing on it. If I interpret the above info correctly, the home you live in is pretty heavily mortgaged.

I wonder whether you have considered also selling that 2nd out-of-state rental property so that you can pay off (?) the mortgage on the house you live in?

You live in California. When you're retired, just about every day is a vacation. Or so I have found.

As one esteemed forum member wrote in another thread, when you like the place you live and you're content, it's less important to get away.

If you need to go to that out-of-state location, then rent a place. Even if it's Hawaii!

 

[rodi]

Since you want to RE, here are some thoughts about your real estate:

You bought your home 20 years ago for $195k, dumped $140k to paying it down, could put another $300k into it, and still have $300k owing on it. If I interpret the above info correctly, the home you live in is pretty heavily mortgaged.

I agree. It sounds like there's been a lot of equity extraction. So that has also added to the spending over the last 20 years.

I'll assume the refi that required $140k input, was to get you under Jumbo limits. That means your current mortgage is $417k or slightly less.

Since it's 20 years old - I'll hope you don't have Mello Roos on top of the HOA.
That's another budget killer.

Rambler gave you some great advise on how to deal with the corporate issues. But if you're serious about retirement, with your current assets, you'll need to stem the spending and pay down the debt.

 

[ready yesterday]

Whew what a wake up call. And a lot of info.
I am going to have to digest, and of course it would take me all day to answer all of the questions. I did end up calling in with 'the flu' today.
About the house--yes it was refinanced twice to add two properties on to it, and once years ago to take advantage of a lower rate. Does anyone remember when a home loan was 19%? (1989) or 8 (1993) Or 12% wtih 5% down(1995) and that was the status quo? so the high morgage 620,000 carries all three properties at bit over 3%. Half of mortage is paid by rental cash, so out of pocket is not very high.
1500, my paycheck 1500 from rentals. (all figures are appx)
The home I live in is worth about 900,000, one rental is worth about 425,000-450,000 an the other somewhere between 300,000 and 400,000. So a 3000.00 payment on that much real estate does not seem like much to me. The maintenace issues, payemnts and stress is what I am tired of. I could sell both and have zero mortgage, but I like one of the properties very much, enough to want to ER to at least part of the year.

My partners get close to 100,000 salary and I get close to140,000 salary. Plus distribution , which is equal.
Someone said that I should renegotiate in two years. That is what I will do as I am locked nto what I have now (and that was one hell of a three weeks to negotiate with my partners over this increase in salary a year and a half ago). they were determined to keep ALL of us at the same lower salary and keep our distiburions high.. I did threaten to walk, but I did not want to do that. I knew i was not ready financially and as someone over 50 wtih a very specific skill set and not much more, I doubted that I would find other work in my field.
A lawyer would represent only me in this matter. something I don't look forward to for one second. Just fnding the correct paper work is daunting.
making someone a new CEO would not solve my problem in the end, as CEO is simpley a title that came with my job. It won't solve the 'skill' that is needed and that I provide
I am sorry that I cannot be specific in wha my business does or provides. there are few companies that do what we do,and a google search, while we dont come up first, we do come up fairlly soon, and now that i have outed my partners and the way that I see them, I am uncomfortable saying much more. Who knows, they could be planning an ER too and end up right here.

It was not long ago, in the broke years, that both my husband and I lived on a combined income of 60,000 dollars, in almost the exact same circumstances. The only big difference is now our house is no longer falling apart, and I drive a better car and spend more frivilous cash.

Now iI will go back in depth and weigh my options. I put a LOT on this table here and did not think i would get this much advice. It's helped me quite a bit (and only one person told me to suck it up o) )

As an emloyee it was always easy to ask for a raise, but as a business owners who started a company with friends, well, the circumstances and emotional aspects are QUITE different. I don't recommend it without the iron clad contract and all the other things I was warned to do, and ignored. "but these are my FRIENDS" i said over and over and over.

I have made much more money as an owner than if i would have remained an employee somewhere, so for that I am thankful. but the stress seems to be unlimited. thanks for the input. i better get to work on figuring out work.

 

[Milton]

If you are as important to the business as you say you are then you have enormous leverage and should be able to use it to make your partners do their share and give you a break. Methinks you actually enjoy the situation you are in.

+1. Either that or this entire thread is a troll.

If the o/p is in fact the outside face and active manager of the company, it doesn't seem plausible that she would tolerate being pushed around by absentee silent partners.

I also don't understand how a person with a relatively high income would have such low savings. Or how the o/p can confirm that the business is a C-corp and then a couple of posts later say that it is an S-corp: it can't be both.

If the o/p is on the level, I suggest that she review the corporate documents to see if they include a shotgun clause. The latter would allow her to buy out her partners, or trigger a buyout at that same price. Personally I suspect that the value of the business is quite low, as it seems to be little more than a personal services business operated by the o/p, with little or no significant goodwill or hard assets.

 

[ready yesterday]

Ok if you kill this thread as a troll, have at it. Give me about 10 minutes. I am trying almost saved all of helpful info I need from thiose who gave it.
My savings are low because I poured about 100,000 into my house over the last three 140,000 to pay down a mortgage.....but i guess you missed that. Maybe you also missed that a few years ago I did not make much money at all.

I also pulled out my tax docs in the middle of the night so see we were an s corp and not a c corp..did you note the hard gulp of embarrassment?..I even alluded to the fact that I could be wrong earlier in thentread. I have also admitted that I suck at business. And last night I started looking at the difference between a c corp and as s corp. I don't handle the business....and I am sure I am not alone in the world in making mistakes along the way. I don't know whatever else I can offer.
If the mods was to pull this I am fine with it. Although there may be others like me, who could benefit. I have found nothing online like this and maybe it would help other in the same sort of position, starting a small company with friends or relatives, that went sour.

 

[REWahoo]

I'm relatively sure Milton has no moderator function on his keyboard and lacks the ability to kill this thread...

 

[Milton]

I never suggested that the thread be locked, let alone removed. Maybe it is a troll, maybe not; but I don't see anything offensive or otherwise objectionable here.

A couple more thoughts:

Early Retirees inspire me and I thought I could be one years ago, until-a family illness took most of my would be inheritance.

If I am reading this correctly, you were counting on an inheritance to fund your retirement. That is a dream, not a plan.

Even in my own company, my own partners who outnumber me have shot down any thoughts of more than 2 weeks vacation a year. It would not be a “good example” for our employees, who also max out at 2.

Two weeks annual vacation is fine for junior employees, but not for those with a few years seniority. The example your partners want to promote is consistent with a sweatshop image. Do you believe that helps the business to attract and retain efficient, creative, hardworking employees? If not, as the CEO you should change the policy immediately.

 

[Meadbh]

I don't handle the business.....

......and therein lies the problem.

 

[ready yesterday]

Milton--a family illness took that inheritance about 20 years ago--i led with that statement. My fathers illnees went through hundreds of thousands of dollars in medical bills and bad decisions. So yes, when I was in my 20's i thought i would be an ER--i fact as a teenager i knew that I did not want to work until i was 65. but that pipe dream died a long time ago. I have worked daily since I was 16. Not high paying jobs, but I was never povery sticken. things were usually TIGHT and even when the company started, I did not trust the cash coming in. I thought it would dry up along with our contracts at any time.

I thought coming here, to this board was a better late than never thing to do. But you call me a troll. Nice welcome. I am BURNED OUT and I came here to see if I was alone, if anyone else had a business where they shouldered the responsibily of a company, while the partners who were there to start it, slacked off.
There was some band memeber I heard recently say something to the extent that when a band is starting out and they are all broke, nothing can tear them apart, however when there is a lot of money involved, you can breakthe same band apart with a butter knife.

In a way, that is what i was trying to do--just keep the band together, not claim more importance than the others and cause friction ( have mentioned that we were freinds, correct?) This is where it has got me. I have learned a lot along the way (re: never do this again) and learned a lot more in the last day here.

 

[pb4uski]

Late to the party but perhaps that is just as well. You're the face of the company and putting in much more effort than your partners, and basically you split things equally other than the additional $40k of salary that you get. Sounds outrageous to me. Your partners are taking advantage of you and you are letting them do it.

I agree with others that you should consult with a lawyer to see what can be done now or at times in the future. You will only get what you insist on and you need to be willing to walk and start out on your own if they won't be reasonable.

No matter what find a high deductible health insurance plan ASAP for DH so if something happens to him it won't wipe out your family's finances.

 

[Milton]

I thought coming here, to this board was a better late than never thing to do. But you call me a troll. Nice welcome.

You seem quick to take offence and infer things that haven't actually been said. That doesn't bother me - it's only an on-line discussion board - but perhaps this tendency is what is holding you back from engaging constructively with your partners and working towards some sort of resolution.

I'd suggest that some honest dialogue would be worth a try before "lawyering up".

 

[ready yesterday]

+1. Either that or this entire thread is a troll.

If the o/p is in fact the outside face and active manager of the company, it doesn't seem plausible that she would tolerate being pushed around by absentee silent partners.

I also don't understand how a person with a relatively high income would have such low savings. Or how the o/p can confirm that the business is a C-corp and then a couple of posts later say that it is an S-corp: it can't be both.

If the o/p is on the level, I suggest that she review the corporate documents to see if they include a shotgun clause. The latter would allow her to buy out her partners, or trigger a buyout at that same price. Personally I suspect that the value of the business is quite low, as it seems to be little more than a personal services business operated by the o/p, with little or no significant goodwill or hard assets.

you did not call me a troll here?

 

[Milton]

I'm not up for an argument. My posts speak for themselves.

If my past suggestions don't assist you, feel free to ignore them. I have no skin in the game, and will not be commenting further.

 

[ready yesterday]

Thank you and thank you to all of the info I have recieved on this thread.. thorugh the ups and downs, the twists and turns, the name calling such that i am weak, i am too nice, I am a pushover I am defensive--amaybe I am all of these and maybe I am much more.

I am stressed to the gills and I am sorry in a way that I dumped all of my problems on you. In doing that however, instead of just laying out my financial stats, I have recieved much more input than "you cannot retire in two years" Instead, I got a few nice plans of action which I appreciate. I am already trying to track down all of the paperwork from the company, in my posession and not in my possesion and that's at least, a start.

 

[CDN_47]

As I move up the Corporate Ladder, I've had to take a long hard look at my work-life-balance. I had the opportunity to attend one of Dave Schrader's Leadership courses which discussed work-life-balance in detail. It was a real eye opener for me. If you're feeling overworked, and stressed, you might want to consider looking into this. One of the books we had to read, which I'd recommend, was called:

The Power of Full Engagement: Managing Energy, Not Time, Is the Key to High Performance and Personal Renewal

Jim Loehr (Author), Tony Schwartz (Author)

 

[JoeWras]

In a way, that is what i was trying to do--just keep the band together, not claim more importance than the others and cause friction ( have mentioned that we were freinds, correct?) This is where it has got me. I have learned a lot along the way (re: never do this again) and learned a lot more in the last day here.

ready: I know you are keeping the details of your business private. That's fine.

The funny thing is as you've been describing things, I figured you might actually be in a band. Your dysfunctional arrangement with your former friends/partners sounds like so many rock bands.

No good information here in my post, just an observation. Sounds like your business isn't a band... But man, you sound like one.

 

[brewer12345]

RY, ignore Milton. [mod edit]

I think you know what you have to do:

- get health insurance for your DW
- consult a good lawyer
- use your inherent leverage with your partners to extract cash and work out an exit strategy
- Clean up your affairs to reduce stress (sell rental properties)

I would add one more suggestion: I think you would benefit from some time with a counselor. You obviously have an overload of stress and are going through a big transition and you need someone (other than the likes of Milton) to talk to.

Good luck!

 

[ERD50]

+1. Either that or this entire thread is a troll.

you did not call me a troll here?

ready yesterday - please realize that many of the FIRE or near FIRE people on this forum got to this state by being skeptical. Don't take any offense, it just comes with the territory.

Your story is unusual, and I'll admit it smelled a little funny to me, but seeing your follow up posts, I have no doubt you are legit.

But don't dismiss what Milton has to say. I think maybe he isn't fully grasping that someone can be very good at a task, but (as you have acknowledged), be very bad at the business end in some ways. I think that is not uncommon at all.

Regarding not being able to take more than two weeks vacation - I'm guessing that since you say you are the 'face' of the company, that you need to be there for the place to run, and if you take 6 weeks, they would have to lay the other workers off for those added 4 weeks? I can see how that would be a problem.

But as others have said - what would they do if you needed to take a month or more off? Health issue, personal issue? It does seem odd that they would allow themselves to be open to this risk. I think that is a clue as to how to move forward.

RY, ignore Milton.

See, so many differing opinions here! Take it all in, use what is helpful.

Good luck - ERD50

 

[ready yesterday]

Wish I knew how to do the multi quote thing, but <grin> don't need to put one more thing on my plate. Obviously--lol

Joe, if i sang for you you would realize that we are not a band, but we are as disfunctional as one, for sure.

and ERD that is exactly the point that I have taken so long to make, I am VERY good at my task (my job) and have let others work the business end because I have never been a business person.

And ERD yes, the company has run without me on vacation and of course on sick days, but a long or short sabbatical, I am sure that my own company and our contractors would be very very unhappy. I think i would also be in breech of contract with many of them. I have two years to figure it out.

But, Van Halen survived without David Lee Roth. ) Maybe anything is possible.

 

[daylatedollarshort]

Good luck, R-Y. The thing I sense from your posts is that you are focused on urgent matters, but put off matters that are important but non-urgent, - things involving admin and long term planning work. Maybe some time management materials would be helpful? Brian Tracy has a book called Eat That Frog, where he recommends people tackle the most important but probably least enjoyable tasks first each day and get them out of the way. You could set aside an hour or two each day first thing and work down a prioritized lists of things you know now you need to do: health insurance for DH, a more equitable partnership agreement, your personal retirement plan / spreadsheet, etc.

 

[ready yesterday]

Thanks DLDS, it's true that I realize I have so many things to prioritize. in trying to keep up with this thread today, AND take care of the just search for the paperwork I need, this was long, but productive day. And about half of those project have been begun. Eat the Frog is about the best title I have ever heard.

While re-pouring over this thread for info I may have missed first time around, was a comment that we might be running a sweat shop, since our employees maxed out at 2 weeks vacation.

In defense of my company None of our employees have 5 years senority, which is the bar we set for an extra week of vacation.

our employees do have flexible schedules and can take time off usually at the drop of a hat or two.

You can thank me for deleting the four paragraphs on how we treat employees, which is, in short(er than it was going to be), quite well.

 

[growing_older]

My partners get close to 100,000 salary and I get close to140,000 salary. Plus distribution , which is equal.

I cannot stress enough how crazy this arrangement is. Sure years ago the partners all contributed an equal (but relatively small) amount of money. Since then, OP has worked 60 hours a week and partners have worked 10. OP should be getting 3/4 of the value of the business (or possibly more as the sole face and performer of personal services the business seems to be based on) but seems to be collecting only slightly more than a equal share.

The partners are on a gravy train, at OPs expense. I don't see what's to lose by risking the ire of partners. They've ripped you off for years. How can they do worse than continue to take advantage?

 

[Meadbh]

I cannot stress enough how crazy this arrangement is. Sure years ago the partners all contributed an equal (but relatively small) amount of money. Since then, OP has worked 60 hours a week and partners have worked 10. OP should be getting 3/4 of the value of the business (or possibly more as the sole face and performer of personal services the business seems to be based on) but seems to be collecting only slightly more than a equal share.

The partners are on a gravy train, at OPs expense. I don't see what's to lose by risking the ire of partners. They've ripped you off for years. How can they do worse than continue to take advantage?

I agree. If the OP is providing some type of unique personal service then it should be possible to pay for the business support services on an as needed basis.