Financial Independence Update

I just celebrated my 6 year anniversary with Rexall, coming into the homestretch of my financial independence goal. Prior to being an employee, I’d done 2 years of contract work for them so 8 years of total service. This means that Rexall has been a part of my life longer than my fiancé and high school tenure combined.

These days, I find that I am no longer as integrally focused on my retirement date. This is because I no longer despise my job. I’ve modified my work environment to suit my needs. I have limited my workweek to the minimum required for full-time status.  I’ve found a workplace that is low volume and minimized my commute.  I’ve established positive relationships with my coworkers.  Quitting would mean losing my health / dental / pension benefits and would likely lead to boredom, especially during the winter months.  And by voraciously reading the blogs of other early retirees, I’ve learned that boredom and disillusionment are salient post-retirement.

In summation, I’m not quitting. However, my current job will likely be my last in retail pharmacy. For starters, retail operations of all stripes are struggling to remain viable. Cash strapped governments are looking to reduce expenditures on generic drugs. And fresh pharmacy graduates are flooding the market. Knowing all of this, I’ve made the decision to just stay on until I am fired.

Financial Samurai first discussed how it makes more financial sense to get laid off than quit.  Waiting to get laid off means that I can coast by with minimum stress, banking an extra $8,000/month towards my FI nest egg.  When I am ultimately fired, I can realistically expect about 12 months of severance pay based on my 8 years of service (1.5 months per year of service or $110,000). Once my severance runs out, I’ll likely be entitled to a maximum of 38 weeks of Employment Insurance benefits ($543 per week, total ~$20,000).  There is no reason to walk away from a job I enjoy and simultaneously leave $130,000 on the table.

I’ve also taken to reading my company benefits handbook. My insurance covers laser vision correction! (goodbye nerdy eyeglasses!) And physio exercises! (hello 6 pack!) And my massages! And orthopedic shoes for those 12 hour shifts! I can even get $700 for a TENS machine in case my back acts up. I should probably get my teeth checked and stock up on my prescription retinoid cream while I’m still covered. So in summation, I’ll be mooching off my employee perks a little longer.

Financial Facelift

My friend, Eric, got me started on the path to financial independence back in 2009.  By encouraging me to learn about and manage my own investments, he empowered me to take control of my financial future.  Recently I was presented with an opportunity to have him evaluate my finances and provide some helpful tips, so naturally I took it. It’s really time to do away with the social taboo of discussing finances with friends #zerofucksgiven. 

Here’s what I asked:

Yes, this is what I figure: I only work Tuesday, Thursday and Saturday. My commute is 15km (no highways) and my store is relatively low volume. I am almost embarrassed by my lack of ambition, but I am so complacent right now. Working 3 days per week, with a short commute whilst earning over $75k/year seems to be the perfect recipe for happiness. Last night, I had a former Rexall head office employee come into my store to fill a prescription. He was recently fired and stated that “they are literally going from department to department to get rid of people” since the Mckesson takeover. Hopefully they plan to clear-cut head office (they can start with my regional :D) and add more frontline staff. I could never understand how Rexall had to cut minimum wage earning cashiers and technicians, but had ample resources for an ever increasing pool of managers to manage managers. I’m sure it’s no coincidence that we have had conference calls each day this week, as head office workers scramble to prove their worth to the company.

I suppose I could sell my properties, but I like real estate as a productive asset class. Unlike gold which has to be sold to realize a profit, I can collect rent for the rest of my life and still own the underlying (inflation-tracking) asset. The CAP rates make no sense at current valuations (and thus, I refuse to buy anything at these prices), but I am still reluctant to sell. Of course Garth, as a financial advisor, will tell everyone to sell real estate and pay him 1-2%/year to invest the proceeds. But does it make sense to sell real estate at it’s highest level ever to buy into a stock market at it’s highest level ever? I began investing in 2009 so I have yet to experience any major crashes, but I would feel especially horrible if I invested everything right before the next crash. I also think this is also why real estate prices stubbornly high. My store is located in Islington Village, close to the Kingsway and Princess Gardens, areas where house prices have skyrocketed. However, whenever I ask my patients (usually in their 60s and 70s with $2-5 million homes) why they don’t cash out, they always ask “and go where?”. They like their home / neighbourhood and do not want to move to some hillbilly town just to pad their investment portfolios (although doing so would be a boon for the realtors and/or Garth).

Since you were the first person to ever talk to me about investing, and you’re exceptionally savvy, perhaps you can offer your take on my finances: I currently own 3 properties (a condo downtown that my parents gifted me, my townhouse in Oakville and my house in Hamilton). I own the condo outright, but the Oakville townhouse has a mortgage of $72k and the Hamilton house has a mortgage of $154k. Between my RRSP / TFSA / Rexall pension / nonregistered account, I have about $600k invested. My mortgages are currently at ~2% so I haven’t been rushing to pay them down. I have zero interest in buying more real estate so I have been trying to build up my investment portfolio. I figure that if I have $750k invested + rental income, I can reasonably expect to have $60k-70k/year in passive income. This will be vital as pharmacy will continue it’s rapid decline in coming years. Does this make sense? Should I do as Garth advises and borrow against my properties to invest? And if so, what should I invest in? Everything seems to be expensive right now :S

And Eric’s response:

I am glad to hear that McKesson is cleaning house at Rexall. All of those managers deserve to be promptly dismissed and shown no mercy in the process. I hope that McKesson employs a ruthless scorched-earth policy as it purges the Rexall head office and that the freshly unemployed managers have lots of time to reflect on what they did to the front-line store level employees under the old regime.

I think that you have struck the ideal balance between work hours and salary. Consider that I have to work 5 days a week (66% more days) and commute 30 km each way to earn only a little more. And if I factor in income taxes then I am in fact earning very little for all of those extra work days. Like you I feel that I lack ambition. I no longer see the point of trying to earn more money when doing so will make no difference to my ability to ever own a home in this city where the cost of detached homes are continuing to increase by $706 every 24 hours. All that I would accomplish by working harder and earning more would be to increase the tax revenues of our governments who would then use the additional money that I have provided to them to enact policies that will serve only to make my life even more difficult (such as by sponsoring more refugees to further increase the GTA’s exploding population which will only make my shelter more unaffordable and my commute longer). I would rather deprive the government of that additional revenue and use my resulting extra spare time on activities that benefit me psychologically and physically such as cycling, skiing, canoe tripping or simply reading and relaxing. Also, although working harder might allow me to grow my assets faster those assets could one day be seized by creditors, lost in an acrimonious divorce, handed over to a stranger for compensatory damages following a court order or simply lost due to my own poor investment decisions or market conditions that are outside of my control. On the other hand no one can take from me the benefit that I derive by engaging in recreational activities that I enjoy. No future spouse, creditor or litigator can ever seize the health benefits that the exercise confers on me or the joy that I may have experienced by choosing to work less and pursue those activities. Money, on the other hand, can be fleeting.

It is good that you have come to me for financial advice instead of e-mailing Garth. Because, as you know, he would have started off his blog post by publicly and colourfully ridiculing your e-mail and then arrogantly suggesting that you liquidate all of your real estate holdings to hand that money over to him where he will gladly manage it in exchange for 1% of its value annually.

I agree that everything seems overpriced right now (as everything has seemed for a few years now). GTA real estate appears to be overvalued. But the stock markets have also been on a 9 year bull run and seem due to correct or crash with P/E ratios stretched as they are. Meanwhile fixed income assets are yielding very little and are barely keeping pace with inflation. I think that these distortions are due to the unprecedentedly loose monetary policies that we have had since the financial crisis of 2008. So what to do?

I guess my suggestion would be to be diversified since no one can ever know what lies around the corner. Why not simply keep the three investment properties but gradually become more diversified by not adding any more properties and instead growing your financial assets while including a fixed-income component (GICs or bonds). I agree that it does not make sense to liquidate your rental properties as doing so would cause you to incur large transaction costs (real estate agent commission etc…) and would trigger massive capital gains taxes that would only leave you with less capital to invest in other things. Perhaps you could instead funnel your rental income into a diversified portfolio such that over time you are more balanced and less heavily invested in residential GTA real estate as a percentage of your net worth. I think that would be a sensible approach.

As for paying down the mortgages, I would be tempted to do that if it was me. Sure the mortgage rate might only be 2% (for now) while stocks are rising at 20% per year and doing so will cause you to be even more heavily invested in real estate as a percentage of your assets, but paying down the mortgages will reduce your risk and will provide you with a guaranteed 2% return. If the real estate market / rental markets do collapse (as Garth suggests) then having the mortgages paid off will allow you to fare better than your competing landlords who are no doubt heavily leveraged. In such a situation, you could maintain a profitable rental operation at significantly lower rental rates if you had no mortgage while your competitors would be forced to sell their money-losing leveraged rental properties at fire sale prices. Being conservative as I am I would definitely not leverage up more in an attempt to possibly make more money.

But remember that the fruits of your labour can be taken from you by others. So above all, try to enjoy yourself 🙂

Dating in your 30s

I recently read the book, Dataclysm.  Being the narcissistic opportunist that I am, I’d likely picked up the book to size up my own worth in the dating market.  The author, Christian Rudder, had previously endeared himself to me on his OKTrends blog whilst summarizing online dating response rates.  The following chart, in particular, painted a rosy picture of my prospects:

reply-by-race-female

My takeaways from that chart are 1) Middle Eastern women are universally desirable but 2) we have the least amount of success with white and Pacific Islander males (and with that, my lifelong dream of finding a Tongan man was dashed).  Luckily, I don’t have to subject myself to online dating because I’ve already found my perfect match.  But as an interesting thought experiment, let’s consider how a newly single 32 year old female would do in the dating market.  Like, say… Scarlett Johansson. How might she fair in the rough-and-tumble world of online dating, given that she is over 30 and lacks the added benefit of being Middle Eastern?

Popular dogma suggests that dating as a 30-something year old woman would be tough. One must compete with younger women for an already diminished pool of suitable bachelors.  Plus, the synergy of technology and hook up culture have led to myriad of dating sites and apps, offering a never ending trove of romantic possibility for men.  On the other hand, older women must have some dating options given that Sex and the City had enough story lines for 6 seasons and one feature length movie.  And that was before Bumble.

So let’s see what Dataclysm has to say about female attractiveness through the years:

age

Ouch.  Apart from a few dalliances in their 40s, men overwhelmingly prefer coeds.  Scarlett might as well put on her flannel pajamas and dig into the Haagen Dazs because it appears her best years are behind her.  I mean, how could anyone refute Christian Rudder, with his dating site and bestselling book and ample data?

Oh, I know.  I could offer my anecdotal experience.  As a “post-wall” 32 year old female, in the past workweek, I’ve received a box of Godiva chocolates, a bottle of wine, and a painting.  I’ve been asked out twice and have had a few stammering men pay me compliments.  Here’s what I haven’t received: dick pics, booty calls, or thoughtless “hey” messages from OkCupid man-babies who can’t shell out $30/month to join Match.com.  So even overlooking the sampling bias of extrapolating OKCupid data to the entire population, I wouldn’t feel too sorry for Scarlett Johansson.  What we lose in quantity, we certainly make up for in quality.

Boxing Day Musings

Yesterday, I spent a few hours completing my financial projections for 2017. It’s all tucked away in a tedious little spreadsheet on my Google Drive account. For nerds like me, examining the minutiae of my personal finances is super fun and exciting, but I won’t belabor the details here. The takeaway message was the following: In 2017, investment income will account for fully 47% of my take-home. This is exciting prospect for me because I hate my job. And chances are, you do too.  I mean, my job is 3rd on Canada’s Best Jobs 2016 list and pays 6-figures yet I’m still miserable, so what hope does the average worker have? Luckily, there’s a light at the end of the tunnel. With a few minor tweaks and by continuing to save my pennies, by 2018, 56% of my take-home income will come from investments. And once my investment income surpasses my net employment income, I can officially consider myself financially independent.

There are a few caveats that I should make mention of. Employment offers benefits besides the income stream. My employer covers my health and dental costs, provides a defined contribution pension plan and working provides structure for my day. Prior to my employers latest round of cost cutting, I actually enjoyed my work. I was able to interact with like-minded colleagues and provide a valuable service for my patients. I had a leisurely 20 minute commute and a 33 hour per week schedule that was blissfully light. Despite all of these perks, the lack of autonomy, rampant micromanagement and quotas imposed made my job nearly impossible. With a recent change of ownership, I’m optimistic that the Stalin-esque atmosphere will ease and I can get back to doing my job. But if not, I can just hang in there for another year whilst crossing days off my calendar, prisoner-style.

Despite my saving goals for this year, I am also planning to increase my charitable giving and continuing to allow myself a great deal of leisure time. Reaching financial independence will mean nothing without the people and experiences that make life worth living.

love

People like these cupcakes who are truly priceless ❤

Making Changes

Every birthday I tend to receive well wishes from a few friends I’ve lost contact with over the years. Recently, an elementary school friend reached out to me. I responded and we began a conversation that made me regret not maintaining our friendship. Trisha and I had met in grade 1 and been thick as thieves until our tween years. When my family moved away, we’d maintained sporadic contact but most recently, we’d gone ten years without speaking. Surely, her and I could disprove Robert Frost by demonstrating the staying power of our golden union. With my leave from work, I figured I’d use my free time to resurrect our former friendship.

Our polite email exchange culminated in an afternoon date at a dimly lit coffee shop. I dressed casually and rushed over when I spotted her seated at a table in the corner. We hugged and exchanged pleasantries, and I asked what she’d been up to. She jumped right into the details, telling me about her abusive ex-boyfriend / children’s father and how they’d broken up when his devotion to alcoholism trumped his family. She’d noticed the signs since her mother has been a lifelong alcoholic. Her sister had had similar man problems, bearing 4 kids with 3 fathers. Her current relationship has been her longest yet, probably because her suitor has been incarcerated for the past 7 years and only sees her for conjugal visits. When I asked what he had done, she sheepishly replied that he’d shot someone, who’d later died (aka MURDER). Her brother was doing well these days, having kicked his crack habit. A friend had crashed her car whilst driving without a license, another friend’s crazy GF is harassing her on Facebook, etc, etc, etc… This went on for two straight hours. I could hardly keep the story straight because it was so convoluted with all of the boyfriends, lovers, illegitimate children, stepparents, and accompanying drama. I coyly mumbled words of affirmation or incredulity throughout, glancing around to see if any eavesdroppers were as offended as I by her liberal use of the f-word.

After we’d parted ways, the glum realization set in that there would not be any future coffee dates with Trisha. Somewhere along the way, she and I had outgrown each other. But perhaps that’s how things are supposed to be. I certainly don’t read the books I read in elementary school or wear the same clothes I wore in middle school. Why would I expect a friendship that began when I was 6 or the career path that I chose at 18 to be relevant today. Yet, so many of our bad decisions stem from inertia. We keep toxic friends, remain in unfulfilling relationships, hold onto losing investments and maintain habits that keep us trapped and miserable. By pointedly asking myself “knowing what I know now, would I choose this person as a friend / take this job / buy this investment / commit to this relationship?”, I can shed light on the path that fits.

Even more importantly, the company that I keep and vocation that I choose today will shape the future me. I definitely don’t want to feel like I’ve wasted away the years with nothing to show for them.  I want to take chances, travel the world, live wholeheartedly, embrace the future and find everlasting love.  I want to dye my hair every color of the rainbow, I want to swim in every ocean, I want to step foot on every continent, I want to connect with the world and live life in a real and genuine way.

Last Ever Complain-y Work Post

Don’t be the miserable fat housewife with no way out. Always look and feel your best. – The Betches (I Had a Nice Time & Other Lies)

What an insightful and timely quote. None of us (employees, wives, girlfriends, etc) should ever be so lulled into a false sense of security that we become the miserable fat housewife. The MFH defers all decision making to her husband / employer / baby daddy. The MFH hasn’t held a job or read a book since the Reagan administration. The MFH believes in fairy tales where princes will backstop your horrible financial decisions and employers will provide defined benefit pensions. This simply doesn’t happen (caveat Kate Middleton: mind you, the only female who would be saved by a prince is the one least likely to require rescue).  Given this, I try to look, feel and behave in a manner befitting of my caliber.

Occasionally, some misguided soul will underestimate what I’m capable of.  In these rare instances, I try to incorporate a jujitsu-like approach to use their momentum against them. Given my elephantine memory and prodigious grudge-harboring ability, I’ll store the insult in some hidden pocket of my cerebral cortex. While there, it can unconsciously shape my behavior and / or be trumped out during confrontations and intense psychotherapy sessions.

A prime example would be my employer’s “beatings will continue until morale improves” management strategy. Last year, I was slaving 13 hours per day in a high volume store, giving roughly 40 flu shots daily, in addition to my regular script count and medication reviews. Sometime near Christmas, I received a call from our regional manager informing me that our store failed to reach our quarterly targets. Incorporating the highly versatile “negging” management technique, she went on to say that in the ENTIRE HISTORY of my store, they had NEVER failed to reach targets until I began working there. She neglected to mention that the store was undergoing renovation, most of our support staff had left and our most experienced tech was on family leave.  On a daily basis, the pharmacy was as chaotic as Hiroshima in 1945.   Luckily for me, she continued, she’d “really gone to bat” for me and “pushed her higher ups” to secure me a bonus of ~$700. She paused, surely awaiting my eager expression of gratitude. Her enthusiasm was met with my flat, Daria-esque monotone. daria

Life Lesson: if you can start your career at 24, build up a net worth of $1.5 million in 7 years, creating passive cashflow of ~50k/year, you can do easier things like finding another job.  Don’t let toxic managers induce workplace Stockholm Syndrome.

 

 

The Joy of Burnout

So I gave up.

There was only so much disrespect, fear mongering and micromanagement I could take. Once all autonomy and professionalism had been stripped, I was left on a pharmacy assembly line that harbored resentment among coworkers and increased risk of error. Our pharmacy assistant hours had been eliminated, leaving me to work alone for 12 hours a day. I would receive, enter, fill, verify, dispense and counsel prescriptions without an extra set of eyes to check my work. I would forego bathroom and lunch breaks and was hypoglycemic by 3 pm, with half of the day left to go. Not having an assistant also meant I would lift heavy totes, stock shelves and empty garbage pails, leaving me with excruciating back pain. My days were broken down into a series of quotas to maximize profits, with management constantly demanding more flu shots, med checks and professional services be billed. The amount of work that had to be crammed into 12 hours often required an extra hour of volunteering each night, giving my employer the unique classification of being a for-profit company that also moonlighted as a charity. My workplace had been so bastardized that I could hardly recognize it.

So I relayed all of this information to my shrink and he instructed me to take a few weeks off. And just like that, I felt like a great weight had been lifted from my shoulders.  Before I could celebrate, my anxiety caught up to me. Without work to constantly complain about, what would I do? My toxic work environment had long been the focus of my life, but I could no longer use it as excuse to put off living.  I have the next 3 weeks to test drive the FI-lifestyle. I have ample time and no work obligations to tie me down. I’m guessing the next 3 weeks will guide the trajectory of my life when I escape the rat race for good.