My spreadsheet spoke to me!
A life of leisure or a financial debacle?
Did a simple Excel spreadsheet release me to a life of leisure…or cost me well in excess of $5 million dollars? After you read what I am sharing you will be able to answer that question for yourself.
20 years of retirement bliss.
On June 30, 2022 (that’s today!!), I celebrate 20 years of retirement. Yep. I submitted my retirement papers at the ripe young age of 52. Did I ever regret doing such a thing? No, I did not. Did I ever look back even once? No, I did not.
This happened to me. I did it on my own free will.
What follows is a description of events that happened to me as I prepared for retirement and after I retired. I don’t believe you will ever read a more candid documentation on this process anywhere else. This is what happened to me. I am not suggesting this idea is for you. However, I would be lying if I didn’t think most things I do are also good for other people!
As folks read along, I know there could be a case of “class envy” somewhere. I sure hope not. Class envy does not wear well on anyone. As Dizzy Dean used to say on the Saturday afternoon baseball game of the week, “It ain’t braggin’ if you did it”. I did it. I did what I am telling you about today. Anyway, who in their right mind would argue with Ol’ Diz? With this as a prelude, I invite you to sit down and take the journey with me on the road to personal freedom.
There are times when you just have to throw caution to the wind…that’s not what I did.
Did you ever have a dream where someone came to you and told you that you need to do something…something crazy. Then when you woke up that morning the first thing you did was what the dream told you to do… something crazy.
I would never do something like that. I think that kind of thinking is truly crazy. However, in my life something happened, sort of like a dream, that told me that I could and should do something crazy.
I don’t build bird houses. I build spreadsheets.
I have a brother-in-law who builds bird houses. I don’t build bird houses. But I did build a spreadsheet. For me this was the spreadsheet of all spreadsheets. What did the spreadsheet tell me?
My spreadsheet told me to quit my job! This was 20 years ago. 2002. Yes, the spreadsheet I built told me to quit my job. I was being grossly overpaid with a pay package of about $400,000 a year. This was 20 years ago. I was only 52 years old. I was in perfect health. I had a wife and I had three kids who were in various stages of college and careers. Nevertheless, the spreadsheet told me to quit my job.
These are the facts. Was Randy really crazy?
I’m going to tell you exactly what led up to this. I’ll tell you what happened afterwards. If there is a single person who reads my tale and concludes that I am bragging I will walk right up to you and tell you that you are totally missing the point. I’m just telling you about something that I did. You’ll have to decide if any aspects of my story can be a benefit to you.
I’m going to provide some specific highlights that preceded the idea of my quitting my job. I will tell you about several things that happened in my situation and you can think to yourself, “That sounds crazy!” Then you can ask these questions and more, “Was Randy crazy? What did Carol say about all of this? Did she think Randy was crazy? Are both Randy and Carol crazy?” These will be questions for you the reader to try to answer.
As Joe Friday always said, “Just the facts, ma’am”.
These are the facts. You’ll need these as background and to provide some context to my story. We were living in a 6,000 square foot home valued at more than one million dollars with a great ocean view. Nevertheless….in October, 2000 (less than two years before I retired), at the age of 50, I bought another house for $1,140,000. This wasn’t a rental home or investment. It was the site of what we expected to be our “forever” dream home.
Then I immediately went down to Walmart and bought a pickax. A pickax is about the only tool I knew how to use. I took the pickax down to the new house and started tearing it down one piece of drywall at a time.
I don’t think like most people.
Before we go much further, I will point out the obvious. I don’t really think like most people. I am NOT a conservative thinker. I am NOT talking about politics. It’s just that some people get real up tight when they consider certain behaviors. They get real conservative when they think about financial strategies and the like. I am NOT one of those people. I am told by some that I’m the most laid back person they know. I just have a very relaxed way of looking at and making future decisions.
This is what bugs me.
There are only a couple of things that bug me. These are the two that come to mind. I can’t stand listening to people who project negative future outcomes. Some 99.37% of the time the things people verbalize as negative future outcomes never come true. Secondly, I can’t stand people who are constantly complaining about this or that. I complain about just one thing. What’s that? People who are constantly complaining about this or that.
I means we.
This is important. No, you might not understand. I means we. When I use the word “I” here I mean “we” as in Carol and me. We have now been married for 50 years. We were college sweethearts. We each have our own specialties. I am always saying that I am the brains and Carol is the brawn of the family. She always corrects me by saying she is both. In reality I do the financial planning. Carol does everything, and I mean everything else. We trust each other to do what they are good at.
When I bought this relatively expensive house, I didn’t sell the house where we were living. I just spent my time tearing down the house we had just bought. Swinging that pickax all by myself was relaxing.
In the middle of this financial storm, I retired.
Then in January 2002, 14 months after we had bought our new home, I submitted my retirement papers at the age of 52. I quit my job. Once I left my job, I have never ever worked for money again.
One of my many thoughts about retirement.
Let me make a quick comment about people who “retire” and then go back to work full-time or part-time. My comment is not meant to offend anyone in any way. I think people who “retire” and then go back to work didn’t really retire. They just changed jobs! Most of the time their new job pays a lot less than the job they “retired” from. That makes zero sense to me. If I have to work, I don’t want to work for less. Remember, this is a story about what I did and how I think about this stuff. It’s not necessarily a story about what you should do…although if I were you, I would do most things the same way I did them!
Let’s make the first of a few recaps.
Let’s recap what had happened so far. I bought a house. I didn’t bother to sell my existing house. I tore the new house down one pickax swing at a time. That took some time. I flipped a coin with the guy who was going to do the final demo of the skeleton structure of the old house. I won $700 on one coin flip. I do things like that. Sometimes I win. I always call heads.
I then went about building a new house on the site of the new house that I had just bought and tore down. It took us 11 months to get the architecture plan approved and another 18 months to build the house. Got that?
I bought the new house for $1.2 million (rounded). Then I spent another $1.2 million over the space of 29 months to build a new home on the lot of the home I tore down.
We didn’t sell our old home. We tried to but we couldn’t sell it. When we finally did sell the old house, we moved into a small condo for a year. The place was so small that 80% of the space was occupied by boxes. We slept with our mattress on the floor…for a year. We know how to make sacrifices. During the midst of construction, I voluntarily quit my job. Why did I do all of these things?
Oh, one more thing. All of this happened 20 years ago. You might want to consider that when you think about the numbers I share with you. We bought a new house for $1.2 million TWENTY years ago, tore that house down and spend another $1.2 million TWENTY years ago to replace the house we had just bought. Now we had spent $2.4 million on our dream home overlooking the Pacific Ocean.
The spreadsheet of all spreadsheets.
It was the spreadsheet! The spreadsheet told me I could quit my job, buy a new house, tear down the new house, then build a new house without selling our old home and getting any money from that. Er…what if the spreadsheet was wrong? What if I had put the wrong number in the wrong column?
Oh yeah. Here’s another fact in case anyone was wondering. Carol and I never inherited a single penny from our parents. When we were married our wedding cost $500. We paid for the entire thing. We took out a bank loan for $200 to do that.
Division of responsibilities.
What was Carol saying during all of this housing turmoil? She has responsibilities in our household. I have responsibilities. I like to say that I am the brains of the operation and Carol is the brawn. It is true that Carol was the salutatorian of her high school class and graduated from college with a degree in mathematics. It is also true that I graduated in the bottom one-third of my high school class in a lower-class small town (the only “A” I ever got in high school was in PE) and dropped out of being an accounting major in college when I deemed the subject to be way too much work.
So, who really is the brains of our operation? Who is the brawn? It is likely that the answer to that question is that Carol is both.
However, when it comes to financial decisions Carol usually calmly looks up and asks, “You got this?” When I say “Yes” she goes back to whatever she is doing and we never talk about it again. Later she will ask, “Where and when do I send the check?”
Well, what CAN you do Randy?
Folks, I can build spreadsheets. I used to be able to make pina coladas. However, after I blew up the brand new blender in our Maui condo I now stick exclusively to spreadsheets. When I look at the conclusions I draw from the spreadsheets I can make decisions. I can do that.
I’m a sales guy.
In business, I was a “sales guy”. As noted in college I started out as an accounting major. After the first semester, I could easily see that accounting was going to be way too much work. I changed my major to personnel management. I learned in personnel management to be a sales guy. It was much easier being a sales guy and just schmooze people than it was taking the time to figure out and practice the two most important rules of accounting. What are those? For every credit, there must be a debit and always keep a sharp pencil.
I will also tell you that until the last year or two I always had someone else do my taxes. I created an Excel spreadsheet that replicated each and every one of the IRS forms for taxes that I was using.
My accountant gave me one of the best compliments that I have ever received. She told me, “You are the only person, who is not an engineer, that has created a spreadsheet that mirrors each and every page of the federal income tax forms that you are using.”
I was not an engineer. I never could have been an engineer. Engineering to me was like accounting. It was way too much work for the benefit I expected to receive. I was a sales guy. I was a street guy. I was a schmoozer when schmoozing needed to be done.
How about the rest of the story?
With this as background you now know just a little bit about how I came to celebrate my 20th year of retirement. However, there’s much more to the story as there always seems to be in any story I write about. I’ll tell you about that in just a moment.
The spreadsheet made me do it.
The spreadsheet told me if would be O.K. if I quit my job. Would you leave a $400,000/year job (20 years ago pay) that you could continue in for another 10-15 years just because you built a homemade spreadsheet and that spreadsheet seemed to be saying, “Randy, give ‘em those retirement papers?”
I took my first jobs…because I needed the money.
As a kid my first jobs included being an ice cream man…you remember the guy who rode around on a bike ringing bells with a freezer packed full of fudgesicles. I trimmed Christmas trees with my best friend who later married Annette Benning. Yes, I’ll drop a name or two when I can. I “mowed” weeds by hand using a scythe for three summers for the city. I worked in sludge pits at the Caterpillar Tractor Company for three summers to pay for college.
What did all of those jobs have in common? I worked them because I needed the money. Would I have done those jobs if I didn’t need the money? No. I worked to get money to buy stuff.
Honestly, my approach toward work never really changed from that first “ice cream man” job until I retired from traditional work decades later. I always worked for money.
Some people will tell you they would work at a job even if they didn’t get paid because they love it so much. I call bullshit on that. Nobody works full-time for free. Nobody likes their job so much that they would do it for free…unless they are getting a boatload of money from some other source.
The magical spreadsheet.
What was the secret(s) of this magical spreadsheet? There were really two elements that made this the “spreadsheet of a lifetime”.
Before I share this, you need to know something very important. Nothing in this message is exaggerated. If I share a number with you that is the number. If I tell you how something happened then that is how it happened. This is a no BS message.
No budget? Forget about it. You won’t have a chance.
We have used a detailed budget from pretty much day one. My magical spreadsheet included an extremely detailed household budget. This budget included every penny of expense and income that came into our household. I have a special way of capturing this into about a dozen or so expense categories. It takes me about two hours a month to get this data. I’ve been doing this since paper and pencil were available.
A single point of rate of return is beyond huge.
Secondly, the spreadsheet projected the rates of return I could expect from the assets I had. I used a simple “Monte Carlo theory” approach that is part of the Excel spreadsheet program to understand variability. I realized that the difference in just one point of return over say a million dollars invested for 20 years is HUGE. Really huge.
This was the magic.
Let me try to make this as simple as I can by way of example. Let’s say we were spending $100,000 year. I looked at each expense category and assigned an inflation number to that category. I knew that our real estate taxes, by California law, could only increase 2% a year. Electric, until we got solar many years later, might increase 5% and so on.
I then took our budget for 2002, applied the category by category inflation factors and ran future budgets out 40 years. Now I knew how much I would be spending in retirement.
On the income side I pretty much did the same thing. I knew that social security would be available about 10 years after I retired. I had a projection on how much our assets would return year by year on average into the future. I knew I could expect some stock options to vest for several years into retirement. In a nutshell I had a very good guesstimate as to how much money I would be earning for years and years to come.
Buy and hold; diversify your portfolio; go on vacation.
Now twenty years later after a retirement lifetime of buying and holding and investing in low-cost index mutual funds spread over a diversified stock and bond portfolio, I have done what I expected to do. I have matched the market. I wasn’t trying to beat the market. I only wanted to match it.
I retired twenty years ago on June 30, 2002. By October 11, 2002 my retirement portfolio was all set with Vanguard. P&G folks might be interested in this. The very first thing I did was to get rid of every share of P&G stock that I could. That strategy was rare amongst P&G people. I would never want to have as much as 5% of my net worth in the stock of just one company…no matter which company that might be. Too much risk. I’m like a baseball manager when it comes to investing. I play the percentages.
I have now had my retirement portfolio for 19 years and about 9 months. My annualized rate of return is 9.2%. I have had only one losing year in 19 years and that was during the financial crisis. Granted, the stock and bond market’s returns have been solid during the past twenty years. It looks, right now, that my FY 2021-2022 investing year is going to be a loser. No big deal. I have 19 years of a 9.2% annualized rate of return to fall back on.
Time to put up or shut up.
Now it was time to put up or shut up. This is where my less than conservative thought process would win the day…or I guess it could have lost the day…but I never considered anything less than success. I did know this. Once I left a $400,000/year job twenty years ago at age 52, it would be nearly impossible to get another job like that.
I was grossly overpaid,
You see I always worked for money. Again, no offense to anyone who might be offended by this comment…but I didn’t really like the work. I liked the money. I was overpaid by a bunch. Did I complain to anyone about that? No, I did not. Let me ask you a question. Who was the last person you know who ever admitted they were grossly overpaid?
Randy, you always knew what you wanted.
One of my best friends, a person I have known since college, has always paid me a very nice compliment. By the way, this guy is the wealthiest person that I personally know. Just about every time we get together, he will say, “Randy, you always knew exactly what you wanted. You said when you got enough money and didn’t need to work anymore you would quit…and you did. You’re the only guy I know who did that”.
Is it a good idea to invest your retirement money with friends?
I might also point out that I invested money with this friend. When I was in my 30s, he came to me with an idea. He had just spent ten years being a craps dealer in Las Vegas. He and his wife were moving into the real estate development business. Their first project was a small condominium development. I committed to investing $10,000 in the project. Just before the deal was set to close Jim, I’ll call him Jim because that’s his real name, came to me and said, “Another guy backed out of his $15,000 share. Do you want to take it?” Well…25 big ones when you’re in your thirties and you’ve got three kids under the age of ten is a pretty big number. I did it. Then another friend heard my story and asked what kind of “collateral” I had from my $25,000 investment. Collateral? I told him I had a canceled check!
That $25,000 investment turned into $142,000. Then we did a few more deals with similar success. About 20 years ago, about the time I was retiring, Jim came to me with a credit/debit card new business idea. Did I want to invest? I didn’t know much about the business but we had always done well in the past. When I was thirty $25,000 was a big number. When I was sixty $500,000 was a big number!
Jim and I were college fraternity brothers. We’ve done a lot together. We’ve done our share of gambling in Las Vegas, his home. I went there on business every month for a year back in the 70s. We would pool our funds. I would play blackjack from about 6 p.m. to midnight. Jim chatted up the cocktail waitresses. We both did what we were best at. Then we would split our winnings and eat pancakes and laugh about life until three o’clock in the morning several days in a row. I feel personally responsible for some of his divorces! The flying flower pot from the second-floor deck story is a classic. He ain’t married to that one anymore. But he is pictured above with the BEST one. Sorry. I think I have digressed.
I can’t afford to lose $500,000.
I told Jim that I couldn’t afford to lose a half million dollars at this stage in my life. I was quitting my high-paying job. I was tearing down a $1.2 million dollar house with a pick ax and I couldn’t sell the one-million dollar house I was already living in. Jim understood. He told me that if the company ever went upside down, he would pay back my $500,000 out of his personal funds. Well, that’s what he told me.
I lost $500,000…at least for a while.
The company did go belly up. Out of business. No money left for the investors. I can’t believe how many people cast a wary eye when I told them Jim had promised to pay me the 500 grand out of his personal funds if the company didn’t make it. No one ever told me to my face they thought that was a crock but I know they thought it.
My magical spreadsheet had not anticipated my losing $500,000 with this investment. By this time, I was retired and there was no way for me to earn that money back. Although it took some time, Jim gave me every last penny of that $500,000. Folks, that’s a GOOD friend, isn’t it?
Not bad for free, huh?
We’re getting toward the end of the story. Enjoying it so far? Not bad for a FREE newsletter, huh?
Did I leave four million on the table? Doesn’t matter. I didn’t need it.
It is true that had I worked another ten years and still retired at a pretty young age of 62, I could have earned another four or five million dollars. But to do that I would have had to work for it. I didn’t need the money.
When predicting the future, you don’t have to be perfect.
I DID retire at 52. My magical spreadsheet worked just like it was built to work. My expenses have increased with inflation pretty much as I had expected.
Some expenses actually went down. We put solar panels on our house. That saves $6,000/year. I refinanced our mortgage six or eight times since I retired. Now our interest rate for the next 10 years is just 2.25%. I borrow as much as I can on houses and cars knowing I can earn much more with that money investing it rather than building equity.
Frankly, I am utterly shocked at how much money banks will loan me when I haven’t worked in 20 years! Are they friggin’ crazy? This is where my more “liberal” (zero to do with political liberals) investing/decision-making process wins the day.
Our home has appreciated wildly. That home we bought for $1.2 million…that we tore down…and built a new home for another $1.2 million is now worth nearly six million dollars. We bought our very first home in Arizona for $40,000. We struggled to save $8,000 for a down payment. Now our home is worth 150 times more than a home we could barely afford when we were “kids”. Folks, the future is truly difficult to predict…unless you have a magical spreadsheet.
Now for the really important crescendo.
I want to share something else that is as important and maybe more important that anything you’ve read about so far. This is REALLY important. If you have to come back and read this section a time or two…don’t worry. No one will know.
I hope everyone reading this gets to a point in their lives where they no longer have to work for money. I’m not only talking about having enough money that you don’t have to work. I’m talking about having enough money to spend like a drunken sailor on stuff you are passionate about. That kind of money.
You will get to this point if you know what to do and do it and don’t do any stupid shit. Unfortunately, most people don’t really know what to do. Even if they know WHAT to do, they might not have the discipline to DO it. If I didn’t know what to do, I would simply find someone who DID know what to do and hitch my wagon to their star.
How will you know you are at that point? The point where you no longer need to work for money? Your magical spreadsheet will tell you! Don’t know how to build these spreadsheets? Find someone who does and hitch your wagon to their star.
By the way, please don’t ask me to send you my magical spreadsheet. I can’t do it. My spreadsheet is so uniquely customized it wouldn’t do you any good.
I taught myself.
You should also know that I have never paid a financial advisor a nickel for investment advice or anything to manage our assets. I knew I could do it myself. If you’re interested in knowing how I did it just click this link:
Randy’s Financial Plan of a Lifetime
Here it comes. Don’t miss it.
I told you this is just about the most important section of this message. Here it comes. Don’t miss it.
When your magical spreadsheet tells you that your assets and other income will meet and exceed all of your expenses for the rest of your life…that’s great news. You don’t have to work for money ever again.
Decision time. No…really important decisions need to be made at this point.
What then? You have a big decision to make. What will you do with your time if you don’t work? I can’t stand the idea of someone telling me that if they didn’t “work” they wouldn’t know what to do with their time. Oh my.
I am retired from Procter & Gamble a huge Fortune 50 company. Above is my official 20-year retirement photo. Having stable, high-paying lifelong employment is a major key to retiring early. I had that.
So, when the spreadsheet tells you that you no longer have to work for money here’s the key question that needs answering. What now?
I had options.
I could have stayed with P&G. That would have been an excellent idea if working for P&G was the #1 thing I wanted to do out of the nearly infinitesimal number of things I could have done with the rest of my life. It was not.
There were other things I might have liked to have done that really weren’t available to me. I always wanted to be a dairy farmer or a country music singer or an NBA player. Nope, all out of the question once I no longer had to work for money.
I still had a lot of choices. I could go back to work for somebody at a much lower-paying job. No. I could sleep in every day and watch TV. No. I could work at McDonald’s. No, at least not for more than about three days. What could I do?
I made my decisions.
I chose to travel. I’m pretty sure I travel more than anyone you know. I’m not talking about taking a three-week vacation twice a year. To some that is travel but not to me.
I chose to travel the world. I tied in my love for auto racing with my love for travel and my love for just figuring out how to get from point A to point B. This passion has taken me to nearly 100 countries. I travel away from home about 50% of the year. The logistics of what I do is very similar to that magical spreadsheet I created.
I’ve been doing this for 20 years. Carol travels about 80 nights a year. People think she doesn’t travel much because I travel 175-200 nights a year. How many spouses, who are really homebodies at heart, travel 80 nights a year? Almost none?
When I was working, I traveled about two nights a week or 100 nights a year. Now in retirement, I am gone on my own just about the same number of nights in retirement without Carol as when I was working during my 30-year business career. Not much change there.
Lucky? No. Fortunate? Yes! I can go with fortunate.
Some might say I have been lucky. I don’t think of any of this as having anything to do with luck at all. I say we have been fortunate. We have been blessed with good health. We have been blessed with being able to make good decisions.
We don’t do crazy shit but we don’t live in our basement either. By way of example, I have traveled more than 300 nights since Covid began in March 2020. I wasn’t going to waste 2-3 years of my retirement life staying at home. Carol has been right by my side for much of that travel.
We have reached the end…of the first 20 years.
We’re at the end of this message. I hope you were exposed to some new ideas. I had a plan. I prepared that plan until it was time to pull the trigger in 2002. Then I have continued to work that plan for the past 20 years.
These are the two things you really need to know.
You really only need to know two things. At what point will you have enough money that you no longer have to work for money ever again? Next, when you reach that stage what WILL you do with the rest of your life? You get to choose. Remember, when you reach this point in life you won’t have to work for money so you can do just about anything you can imagine.
I am 100% confident that life doesn’t owe me anything. If I get hit by a bus tomorrow, I had 20 great years of retirement. Don’t get me wrong. I don’t want to get hit by a bus. Who does? I would love to have 40 years of retirement. It’s just that I’m so far ahead of the curve at this point that I’m playing with house money now.
I realize the way I think about things is not going to change the way just about every person reading this thinks about things. I’m good with that.
The oldsters have made their bed so to speak. The youngsters might have a chance to repeat the general parts of my plan. However, time waits on no one. To accomplish what I did requires a plan and an ability to work the plan to get the results.
Don’t forget. I means we.
There is no end point…there is no station…you will reach the station in good time.
I will leave you with this. I read something decades ago that has stuck with me in everything I do. I know I will never reach a time when if this happens or that happens, I will have maxed out and met every goal I ever wanted to achieve. There is no “station”.
The Station
Every year, I re-read this wonderful poem by Robert Hastings – a reminder that the joy of life is the journey and not the destination.
Tucked away in our subconscious minds is an idyllic vision. We see ourselves on a long, long trip that almost spans the continent. We’re traveling by passenger train, and out the windows we drink in the passing scene of cars on nearby highways, of children waving at a crossing, of cattle grazing on a distant hillside, of smoke pouring from a power plant, of row upon row of corn and wheat, of flatlands and valleys, of mountains and rolling hills, of biting winter and blazing summer and cavorting spring and docile fall.
But uppermost in our minds is the final destination. On a certain day at a certain hour, we will pull into the station. There will be bands playing, and flags waving. And once we get there so many wonderful dreams will come true. So many wishes will be fulfilled and so many pieces of our lives finally will be neatly fitted together like a completed jigsaw puzzle. How restlessly we pace the aisles, damning the minutes for loitering … waiting, waiting, waiting, for the station.
However, sooner or later we must realize there is no one station, no one place to arrive at once and for all. The true joy of life is the trip. The station is only a dream. It constantly outdistances us.
“When we reach the station that will be it!” we cry. Translated it means, “When I’m 18, that will be it! When I buy a new 450 SL Mercedes Benz, that will be it! When I put the last kid through college, that will be it! When I have paid off the mortgage, that will be it! When I win a promotion, that will be it! When I reach the age of retirement, that will be it! I shall live happily ever after!”
Unfortunately, once we get it, then it disappears. The station somehow hides itself at the end of an endless track
Relish the moment” is a good motto, especially when coupled with Psalm 118:24: “This is the day which the Lord hath made; we will rejoice and be glad in it.” It isn’t the burdens of today that drive men mad. Rather, it is regret over yesterday or fear of tomorrow. Regret and fear are twin thieves who would rob us of today.
So, stop pacing the aisles and counting the miles. Instead, climb more mountains, eat more ice cream, go barefoot oftener, swim more rivers, watch more sunsets, laugh more and cry less. Life must be lived as we go along. The station will come soon enough.