When we last left our budding early retiree wannabe, he was just a few years out of college clawing out from under student loan, car, and mortgage debt. Will he ever be able to recover from early financial missteps? Will he learn to use that brain for something besides remembering obscure Seinfeld and Fight Club quotes?
Let’s find out
The snow was coming down harder, 12 inches so far and no sign of stopping.
The storm had come in ahead of schedule, and my coworkers and I were stuck at the office. News footage showed a never ending stream of cars stuck in ditches and horrific looking accidents
A friend had tried to leave earlier in the day and decided to turn around before even leaving the parking lot. It looked like we might be stuck here awhile
By 9 pm the snow had slowed, a total of 18 inches dumped on the region. Although the plows would continue to operate through the night, the main roadways were cleared and salted
Fueled by a late dinner of soda and vending machine snacks, I braved the drive home
My “normal” 30-40 minute drive took 90 minutes. The snow plow had done a wonderful job cleaning off the street, by depositing 4 feet of hard packed ice at the end of my driveway. 3 hours of chipping and shoveling and freezing and swearing later, I finally broke through enough to get my car off the street
It was then and there that I swore I would never again live in a snowy climate. Sadly, this was the only long lasting impression
Time to Move On
The following spring we received our bonus checks at work, a very generous 0.46% of pay.
At the same time, the job market for Engineers was heating up. This was 2000 after all, and the Internet companies in the Bay Area were paying outrageous salaries for people with experience. I had worked 8 years over the last 4 without taking a single vacation, so experience I had
To attract college graduates, our company was offering generous salaries. Even though I had been promoted and had respectable raises, these young punk kids were making up to 50% more than me. I talked with my manager. “Sorry, there is nothing we can do about it right now”
Consistent with previous behavior, my last day was on a Friday and I started a new job in a new city on Monday
Moving to Seattle
I turned down a couple job offers from California based companies. The cost of living was too high and taxes were insane. Even with a big increase in pay I would still lose on the deal
Instead I accepted an offer in the Seattle area, with a sign on bonus and a much higher salary of $85k.
During the interview, HR asked me what I was currently earning. I lied shamelessly
Dishonest? Certainly. Unethical? Maybe. Fair? Absolutely
The job also came with a great moving package, which included reimbursement of realtor fees to buy and sell a house (a mixed blessing)
The house sold quickly. To get exact numbers, I checked the property sale history on Zillow
April 1998: I bought it for $159,500
August 2000: I sold it for $178,000
Sept 2002: Sold for $210,000
2006: New Siding and Roof
2007: Kitchen updated
2008: New Carpet in Family Room and Basement
Sept 2008: Sold for $257,000
Dec 2013: Sold for $178,000 ($129k in 2000 Dollars)
So much for Real Estate being a good investment. Although I walked away from the closing with a check for ~$20k, real profit was close to $0. When factoring in the cost of commute and cost of rent close to work, the price of a lawn mower and ladder, lost weekends… I definitely lost overall (But not as bad as the person that bought this property in 2008)
The cost of living in Seattle was much higher than in the Midwest. With the allure of work paying realtor fees, I went house hunting and bought almost exactly the same house. It had the same number of bedrooms, the same square footage, and the same commute time… the main difference was the price of $292,500
Closing on my old house was on a Friday. I closed on the new house on Monday. To avoid PMI, I put down 20% which was every penny I had. I used credit cards to pay for food and gas until the first paycheck came in
Even at the closing, I knew I didn’t want the house. The momentum just carried everything, myself included.
Despite the higher pay, it seemed I had less money overall. The mortgage payment was much bigger. Food cost more. Many of my coworkers had made big bucks in stock options years earlier, and had more expensive lifestyles. Lunches out were a regular thing, and I did my best to fit in and build relationships
(I too had some shiny new stock options. 5 years later I was able to sell them for $3,000. $2,000, after taxes)
5 years out of college and things were looking pretty good. I was making a good income. My student loans were now paid off. I used the extra cash flow to max out the 401k.
Net worth broke $100k
And then BAM! The Internet bubble burst and my 401k value plummeted. Housing prices stagnated and two houses in my neighborhood went into foreclosure
And then BAM! The Big D cut net worth in half, and then some
I had married a girl I met in college. It was one of those things that… just happened. It was by far the most toxic self-defeating thing I’ve ever done
She was a few years older and all of her friends were getting married. She kept asking. And pressing. And arguing. And manipulating
Pressed into a corner, I exclaimed, “If we do get married, will you at least shut the f#$k up about it?!”
Yeah, we were off to a good start.
In one of our highlights, I had come home from college one night late after finishing up a lab and lab report. I was exhausted, and couldn’t keep my eyes open. She wanted to fight about something, anything
“I’m sorry, I can’t do this right now,” I slurred, as I lay down on the bed
Next thing I knew she was standing on the bed and kicking me in the head. Good times
Looking back, I don’t even recognize that young boy that was afraid of arguments, wanted to please everybody, and didn’t know how to say No. It takes two, and I was clearly nowhere near the Prince Charming that I am today
Sometime after we had gone our separate ways but before the State had finalized everything, I woke up one morning to find her standing in my bedroom and staring at me. She wanted money.
When I said no, she freaked out and started screaming and slamming doors. She knocked a big hole in a wall. Then she dialed 911 and said I was attacking her
The cops arrived, veins popping out of their necks in a rage. I was physically restrained in a not very friendly fashion. An hour of intense interrogation later, expressions of sympathy appeared on their faces. “I’m really sorry, if you want to press charges we can arrest her.” I changed the locks later that day
A few months later after everything was legally official, she called asking for money. Over the past few months she had spent everything, which was at least 2x what I had spent even while continuing to pay a mortgage on a house worth less than when I had bought it. I said no, and what followed was the longest stream of obscenities and threats one is ever likely to hear
Which reminds me of a good bad joke:
“Do you know why divorce is expensive?”
“Because it is worth it!”
I don’t wish divorce on anybody. It was an expensive life lesson, but much cheaper than staying married
(Winnie wants to send out a message to the past, “Thanks for setting the bar low”)
So there I was, 27 years old… emotionally damaged with a house I didn’t want and couldn’t sell, no cash, and few options
During times like these, it is probably not necessary to mention that work performance wasn’t at an all time high. I received an out of cycle evaluation from my manager, the first formal step in termination of employment. Per the terms of our employment agreement, if I was fired I would have to return the sign on bonus. Bankruptcy appeared to be in the near future
Could things get worse?
Come back next time for Episode 3 when our young naive aspiring early retiree hires a financial adviser