Mooching to FIRE

[maddythebeagle]

I think a few folks have brought up a few examples and the recent 16-yr old living off his folks as a door to FIRE. Maybe, I am going down the wrong road. Any good ideas on ways to mooch. Having a working spouse is another one used by some on this board.  

 

[wildcat]

IMHO small biz owners can to work the system in their favor

 

[Jay_Gatsby]

IMHO small biz owners can to work the system in their favor

Very true. I don't want to hijack the thread, but I'm amazed at how much small business owners (and even people with side businesses) write off their taxes. Cars (Lexus, Mercedes, Porche) and gas, high-speed Internet access (with digital HD cable as part of the "package"), board meetings (comprised of the husband and wife)in vacation spots (Caribbean, Colorado, Napa Valley), home office (percentage of the mortgage), gym membership, gifts (business development), etc...

With all of those expenses run through a small business, it's no wonder working for yourself helps you to FIRE earlier.

 

[greg]

I think a few folks have brought up a few examples and the recent 16-yr old living off his folks as a door to FIRE. Maybe, I am going down the wrong road. Any good ideas on ways to mooch. Having a working spouse is another one used by some on this board.

How about 2-3 working spouses?

--DH

 

[retire@40]

Call it "mooching" or "playing the system" or whatever you want, but I call it playing it smart.

If someone has a great family relationship with their parents and can manage to save all the money they would have paid for rent or a mortgage, why not? In fact, that's how many families survived in the past and that's how many even survive today. Sharing not only benefits the kids, but also benefits the parents and sometimes even the grandparents if they live in a multi-family home together.

If you're REALLY smart, you could have your own business while living with your parents.

 

[wildcat]

Hey hey didn't say it was a bad move or even unethical but rather a realistic suggestion for MTB.

 

[Jay_Gatsby]

Call it "mooching" or "playing the system" or whatever you want, but I call it playing it smart.

In fact, that's how many families survived in the past and that's how many even survive today.  Sharing not only benefits the kids, but also benefits the parents and sometimes even the grandparents if they live in a multi-family home together.

Hmmm...we call it "mooching" when it's the adult children still live with their parents, but we call it "elder care" (or "good for the grandkids"/"built-in babysitter") when parents move in with their adult children?

 

[retire@40]

Hmmm...we call it "mooching" when it's the adult children still live with their parents, but we call it "elder care" (or "good for the grandkids"/"built-in babysitter") when parents move in with their adult children?

There is a danger zone too. That happens when one or more of the family members forget the opportunity they have and start taking it for granted. 

If the kid turns into a lazy bum and turns his savings opportunity into domestic welfare, that's a problem.

Likewise, if the parents become more and more demanding on their adult sons/daughters and less and less satisfied, that's a problem too.

I've seen many cases like that too, so the situation can be as good or as bad as BOTH participants make it.

 

[Jay_Gatsby]

There is a danger zone too.  That happens when one or more of the family members forget the opportunity they have and start taking it for granted. 

If the kid turns into a lazy bum and turns his savings opportunity into domestic welfare, that's a problem.

Likewise, if the parents become more and more demanding on their adult sons/daughters and less and less satisfied, that's a problem too.

I've seen many cases like that too, so the situation can be as good or as bad as BOTH participants make it.

So we ought to follow the "tough love" and "no handouts" rule? 8)

 

[Jarhead*]

Call it "mooching" or "playing the system" or whatever you want, but I call it playing it smart.

If someone has a great family relationship with their parents and can manage to save all the money they would have paid for rent or a mortgage, why not?  In fact, that's how many families survived in the past and that's how many even survive today.  Sharing not only benefits the kids, but also benefits the parents and sometimes even the grandparents if they live in a multi-family home together.

If you're REALLY smart, you could have your own business while living with your parents.

Young man, you have got a lot to learn!

Anybody care to chime in that is properly experienced in this area?

 

[SteveR]

Call it "mooching" or "playing the system" or whatever you want, but I call it playing it smart.

If someone has a great family relationship with their parents and can manage to save all the money they would have paid for rent or a mortgage, why not?  In fact, that's how many families survived in the past and that's how many even survive today.  Sharing not only benefits the kids, but also benefits the parents and sometimes even the grandparents if they live in a multi-family home together.

If you're REALLY smart, you could have your own business while living with your parents.

My grandparents had my great-grandfather living with them. They were all poor and had no choice. Years ago family had to share living accomodations due to financial need or health issues. Those are no longer primary motivators anymore.

I know several people that live with their parents. They are single and are ages 53, 55 and 60. It might work for some people but for others it won't. My kids know they can come back if the "need" to but they will have to work and pay their way. No free ride unless health issues require extraordinary need from us. We enjoy having an empty nest and not having kids around to affect our lifestyle.

If you want you kids living with you forever then go for it. 8)
I did my job and it is my time to enjoy not having them there now.

 

[Mr._johngalt]

My grandparents had my great-grandfather living with them.  They were all poor and had no choice.  Years ago family had to share living accomodations due to financial need or health issues.  Those are no longer primary motivators anymore. 

I know several people that live with their parents.  They are single and are ages 53, 55 and 60.  It might work for some people but for others it won't.  My kids know they can come back if the "need" to but they will have to work and pay their way.  No free ride unless health issues require extraordinary need from us.  We enjoy having an empty nest and not having kids around to affect our lifestyle. 

If you want you kids living with you forever then go for it.   8) 
I did my job and it is my time to enjoy not having them there now.   

My Dad told me often that he loved me and that I was welcome at any time.
But................he also said no way was I moving back in. I feel exactly the same about my kids.

JG

 

[laurence]

If you're REALLY smart, you could have your own business while living with your parents.

I had a really smart friend, his parents threw him out when they found the hydroponic pot farm in the closet.  

My Dad tried to convince every one of his kids that staying at home for 5 years after college and building up a vast sum was the way to go.  4 have not taken up the offer, the last two look doubtful, too.  A phrase about if only we knew what we know now comes to mind.

 

[maddythebeagle]

I had a really smart friend, his parents threw him out when they found the hydroponic pot farm in the closet.

I am wondering if this is what Retire@40 was thinking when he suggested combining the "living at home" and "home business"

 

[Mr._johngalt]

Young man, you have got a lot to learn!

Anybody care to chime in that is properly experienced in this area?

I am not sure I am "properly experienced" , but it makes sense to me.

JG

 

[HFWR]

I had a really smart friend, his parents threw him out when they found the hydroponic pot farm in the closet.

Bet that house had an interesting odor...  8)

 

[retire@40]

I am wondering if this is what Retire@40 was thinking when he suggested combining the "living at home" and "home business"

I thought I didn't have to qualify the business as a legal one, but next time I'll try to be more specific so there is no confusion.

Kinda reminds me of the joke about the guy who wished for a 12" penis and the genie handed him a jar containing a 12" penis.

 

[HFWR]

Or "how 'bout a little head..."

POOF!!



BOT, mooching is bad form...

 

[laurence]

I'm quite sure that wasn't what you meant.

If you can handle it, 5 years out of college back at home could equal ER, even without starting a small business. Imagine if you could put 25k a year away for 5 years, then had 30 years for it to grow. You could live just like all the other Merkins, spending every dime that came in from then on, yet still retire at 55!

 

[TargaDave]

Very true. I don't want to hijack the thread, but I'm amazed at how much small business owners (and even people with side businesses) write off their taxes. Cars (Lexus, Mercedes, Porche) and gas, high-speed Internet access (with digital HD cable as part of the "package"), board meetings (comprised of the husband and wife)in vacation spots (Caribbean, Colorado, Napa Valley), home office (percentage of the mortgage), gym membership, gifts (business development), etc...

With all of those expenses run through a small business, it's no wonder working for yourself helps you to FIRE earlier.

There is a built in downside to all that small business mooching you hear about. When an owner sells the business the buyer will negotiate based on some formula derived multiple of reported net income (cash flow). Excessive write-offs create an artificially low net, and any unreported income won't count at all since it can never be verified, and is illegal. The excessive moochers do pay a price in the end. When you also factor in the sizable risk, long hours and sleepness nights of getting a business going and stabilized (for those who don't inherit one) the mooching term applies even less.

 

[Jay_Gatsby]

When you also factor in the sizable risk, long hours and sleepness nights of getting a business going and stabilized (for those who don't inherit one) the mooching term applies even less.

None of those negatives really impact the guy who simply has a side business through which he runs various expenses -- most of which have no real practical value to the business, but only to improving his lifestyle. The average guy running an eBay reselling business, online newsletter, banner farm, etc...doesn't need any of the luxuries I mentioned (except perhaps the high speed internet, but that can be bought separately from the HD digital cable with the NFL package).

 

[retire@40]

There is a built in downside to all that small business mooching you hear about.  When an owner sells  the business  the buyer will negotiate based on some formula derived multiple of reported net income (cash flow). Excessive write-offs create an artificially  low net,  and any unreported income won't count at all since it can never be verified, and is illegal.   The excessive moochers do pay a price in the end.

Net income is not the same as cash flow. When a small business is sold, the seller usually makes known to the buyer the total material benefits he received as an owner of that business and that total benefit is used to negotiate a selling price.

 

[Mr._johngalt]

Net income is not the same as cash flow.  When a small business is sold, the seller usually makes known to the buyer the total material benefits he received as an owner of that business and that total benefit is used to negotiate a selling price.

These are called "add backs". Typically in a small business the owners either "live off" the business (basically taking everything out except
what is needed to operate), or, if they intend to sell, they might do the opposite, i.e. leave the max. in to make the balance sheet more
attractive. It won't make any difference to a savvy buyer, but
"add backs" can scare off the less sophisticated as they are more likely
to be heavily influenced by "first blush" impressions, when in reality
the balance sheet in a small business means little in terms of going forward. OTOH, if you plan to liquidate, then the balance sheet
means everything.

JG

 

[Honkie]

These are called "add backs".  Typically in a small business the owners either "live off" the business (basically taking everything out except
what is needed to operate), or, if they intend to sell, they might do the opposite, i.e. leave the max. in to make the balance sheet more
attractive.  It won't make any difference to a savvy buyer, but
"add backs" can scare off the less sophisticated as they are more likely
to be heavily influenced by "first blush" impressions, when in reality
the balance sheet in a small business means little in terms of going forward.  OTOH, if you plan to liquidate, then the balance sheet
means everything. 

JG

JG, one of the most astute, accurate and succinct posts you've made in a long time. I wish you would post in this vein more often.

 

[justin]

JG, one of the most astute, accurate and succinct posts you've made in a long time. I wish you would post in this vein more often.

I feel the same way. This post leads me to believe JG may not have been exaggerating his claims to have once been a "captain of industry".