Monthly Archives: April 2015

Freedom!

Posted on by
1

“We are moving to an increasing electronic society where our movements are going to being tracked.” Mary Cummings. (35 minutes 11 seconds in the video)

I recently watched this very interesting and terrifying video on drones. My definition of a drone is anything that is flown without a person in it. This can include unmanned aerial vehicles that have people operating them or autonomous drones. A current use of drones that have operators is the military used to target opposing forces. There is a camera on the drone that allows the operator to see what the drone sees. That’s terrifying enough, but the more terrifying idea is the one shared from Mary Cummings at the start of this article. HOLY MOLY that’s terrifying!

Think of everything you’ve done in your life? Likely you’d like a few of those to be left to the past. For example, I “broke the law” the other day by jaywalking or riding my dirt bike down the road. Now you might have said “Well you should have not have done that”, solely because you don’t like it or “It’s the law”. The problem with laws is that every law, once broken, must have some consequence. In debating the legality of homosexual marriages with a friend she assured me that it was “wrong” and that she thinks it shouldn’t be legal. Her argument was that it was already illegal! That’s very small thinking. This same friend also shared with me the multiple men she had lived with and had premarital sex with, yet she was making moral argument against homosexuality! WOW. To point out to her the ridiculousness of all her arguments I said “There are places where premarital sex is punishable by death. It’s the law.” She was not phased by that and was apparently convinced that the USA had perfected laws. WHAT!

Going back to my thoughts before the rant about my friend, what things do you do that might not be completely legal? How does that make you think about what other things that are “legal” might you disagree with? One of my personal favorite debates to have with people is about smoking.

Around 31 minutes, the video shows a whole city which can be zoomed in incredibly close. You can see things as small as 6 inches and they store all that data. And that’s just now and what they are telling “the public” unclassified. Think of in the future. “They” will be able to videotape the entire earth. This will undoubtedly provide some sense of safety for many people. I cannot argue that it would definitely have helped when my dirt bike was stolen the other day. A drone would be able to show exactly what vehicle and person stole it. Then they’d be linked to current face scanning technology and find the person nearly instantaneously. That would be great except for the lack of freedom it leaves! It would assure that those in power, however they got there, would be able to wield ultimate power, based on their definitions of right and wrong. I’m sure you all will agree that most of us don’t like being directed to do anything by another person.

We are continuously moving forward at a quickening pace and there are amazing and wonderful things happening every day. We need to be vigilant though that we don’t become (more) like sheep and more controlled each day. How much does the following quote by George Orwell fit with the people you know in your life?

“Heavy physical work, the care of home and children, petty quarrels with neighbors, films, football, beer and above all, gambling filled up the horizon of their minds. To keep them in control was not difficult.” George Orwell – 1984

We must carefully guard our freedoms before we do worse than lose them, we will give them away.

Gravity Payments, $70,000 For All Employees

Posted on by
2

“What is it to you if I am generous?”- God

A link to a page to follow the Gravity Payments results of the $70,000 a year minimum wage for employees. – Added 8-29-02016

A link to a page to an update on Gravity Payment in 9-26-2019.

Dan Price (Gravity Payments CEO) On  Yang Speaks Podcast (On Youtube) Very good discussion! – Added 9-9-02020

The above quote was shared with me via a friend. There is no argument that there is income inequality in the USA. This week there was a huge story from Gravity Payments founder Dan Price that he will both slash his own salary to $70,000 and raise the minimum salary of each employee to $70,000, even the office clerk. This was happening the same week as strikes for $15/hour minimum wage by fast food worker across the country.

Gravity is not the first company to voluntarily pay their employees higher than minimum wage. QuikTrip which pays cashier’s $40,000 a year and Costco which pays its employees $44,000 a year are two other noted examples. They are also much larger than Gravity Payments as they have thousands of employees while Gravity has 120. That is not to diminish it’s accomplishments but just to highlight facts. This is a big deal!

After I read this news I was initially quite excited at the change we are seeing these days. I have been quietly debating with friends and myself the merits of a higher minimum wage. This was exactly what I wanted! People were finally able to have a comfortable living. Shortly after that I began to contemplate further. Even the “lowest paid clerk” will make $70,000, over double their current salary, earning the promised $70,000 within the next three years. How will the, currently,  higher paid personnel react? Will their salaries raise also? For example if there was a person earning $80,000 already, compared to someone earning $40,000 currently, the $80,000 earner might be a bit peeved to learn that someone’s salary has raised $30,000 while his has remained stagnant. We are not sure if that’s the case or if higher earners wages were also increased. I will speculate that they were not. I must hope that they will take it in swing. They will recognize that it is his money and they are not losing money simply because their neighbors are now making more. They also have the opportunity to leave a company that has already showed it’s a generous company, to make more money elsewhere if they can.

This reminds me of a passage from the bible.

Friend, I am not being unfair to you. Didn’t you agree to work for a denarius? Take your pay and go. I want to give the man who was hired last the same as I gave you. Don’t I have the right to do what I want with my own money? Or are you envious because I am generous?’ “So the last will be first, and the first will be last.”” (Matthew 20:1-16, NIV)

The workers who came late and worked only one hour were paid as much as the people who worked the full day. Naturally the people who worked the full day were pissed! But they were reminded that no money was taken from them.

As for the people who received the huge raises, I hope they recognize how lucky they are. I hope that they all recognize the good fortune they have been given and pass some along to others who are less fortunate than themselves.One driver for inflation, in my mind, is the excess of money in the hands of individuals. If 2 people both want a thing that is $50 and there is only one left, this will create an increased price for that part. They may end up paying $100 for something that was only worth $50 initially. To combat this price war on things, we need to focus on being less materialistic. If we become happier with what we have, then the increased salaries will be just fine. The people might spend them responsibly, paying off loans or securing a future via a larger down payment on a home or larger retirement deferrals. They would do good to reference this article about retiring a millionaire. If this creates a culture of people worrying about others happiness and their own future instead of buying more material things,  this will have been a great experiment indeed.

I have found through my own journey thus far that I was really only able to realize that I could give some away more after I realized that I had enough. It’s natural for people to seek security. If that means saving up $50,000 or $100,000 before they start donating to charities that’s fine. Another good way to give without giving money is by volunteering time. Your time is just as valuable as money. You could use your time to make money or you could give it away freely. When donating time, don’t feel bad that you aren’t donating money,and don’t let others make you feel bad you aren’t donating money either. This is one issue with our culture is we like to point out the flaws we see in others instead of pointing out the positive. I have done this above a bit, in pointing out that the higher earners could be upset, but I did that just as a thought experiment and to provide discussion that I’m sure others were thinking. When I discussed this topic with friends and they mentioned it I told them what i have written. Let’s be happy that the CEO is doing good!

I did a cost of living using this calculator and found that $70,000 in Seattle is comparable to $56,000 in my current city of Cedar Falls, Iowa. While this is still above the median USA household income, it’s not by much, and it is still $70,000.

How would you react to a situation like this?

Retire A Millionaire, The Easy Way

Posted on by
7

How to become a Millionaire in 40 easy steps. Invest $5500 a year for 40 years. Get a decent rate of return (7%). Boom. Insta-millionaire. Read below for more information!

I am not a certified financial planner. Any investments are inherently risky (although some less than others). Invest at your own risk. I just like playing with numbers and wanted to share how easy it is below.

I’ve been digging into money, specifically for retirement, for about the last 10 months. Luckily money is easy, it’s just numbers and simple math. People really make it out to be much harder than it needs to be. Let me lay out one very easy way to retire a millionaire.

While companies often have retirement accounts available weather it be a 401K for many private companies, a 403B for government or public jobs or some other type of retirement account, there is also a personal option, a Roth Saving account. This is post-tax money that you can save with the benefit that it grows tax free and you can withdraw it tax free when you retire!

For this experiment we will consider only saving in a Roth IRA as that should be available to the average American.

For 2015 the Roth IRA max contribution is $5,500. Lets assume you start investing in your Roth when you are 25. This should have given you a bit of time to pay off at least some of your college loans, your first car and maybe saved a little up for a house. It will also give you 40 years to retirement, which is a nice number to work with.

If you invest $5500 for 40 years that’s equal to $220,000! Which is a decent amount of money, but perhaps not enough to live off of. Luckily for you with compounding (at 7%/yearly, which I will justify below) with no fees, it will have grown to $1,174,853 over 40 years! You’re a millionaire! Now unfortunately there are going to be some fees. Likely you are not managing your money 100% by yourself, but you can come close using www.Vanguard.com Using this you should be able to easily obtain an expense ratio of .2% or less. An expense ratio is a simple thing that really can end up causing confusion because of how it’s reported. What an expense ratio is is a percent of money invested paid to the company managing your money. A .2% expense ratio means they will take .2% of your money a year. .2% of $100 is only $0.20 that’s why it’s much more useful to convert expense ratios to a dollar value for every $1000 invested. So a .2% expense ratio is $2 per year for each $1000 invested. Once you are a millionaire you are paying $2,000 a year just for someone to hold your money! That is why a low expense ratio is favorable. It is ok to pay this though because many places will charge you much more to manage your money! Up to 1%! That’d be $10 per $1000! So off that side track, if we assume the .2% expense ratio per year this still will leave you with $1,109,739! You’re still a millionaire! That was sure easy wasn’t it?

Now that you’re retired, you’d like to start taking that money out. This calculation is pretty easy also. You simply need to understand what the annual rate of return is, which represents how much your money is growing each year. If you want to make withdrawals to eternity you can withdraw as much as your money makes a year. You should plan to withdraw just a little less than your yearly increase, to take into account down years in the cycle, of which there will be some. Since I assumed a growth of 7% we can calculate 7% of $1,109,739 which gives $77,681. Now this seems like a LOT of money (at least to me!) but remember this is all 40 years from now money.

Of course a million dollars today is not what it was 40 years ago and a million dollars in 40 years certainly won’t be what it is today. For that we will have to do a net present value (NPV) calculation. This is a very simple calculation using the assumed inflation rate and a simple equation.

NPV = R/(1+i)^t

R = future value

i = yearly average interest rate

t = number of years

How you use this equation is simple. For our situation you are trying to find the NPV of R = $1,174,853. We are assuming i = 3.22% (justified below) and a time (t) = 40 years. Inputting these numbers yields $330,696. That’s a pretty good chunk of change in 2015 dollars. If we do the same to our yearly withdrawal we will get $77,681 (40 years from now) equal to $21,865 in 2015 dollars.

Now you might think, man that’s not a lot of money, I can’t live of $21,000 a year. But I’d argue that once you are 65 you will hopefully have paid off your house, cars, etc. Of course you will also have other expenses like medical expenses, travel or perhaps helping out a grandchild or neighbor in need. Luckily you will likely have other forms of income such as Social Security in the USA, some income from a part time job or perhaps a pension from a former job.

This was not meaning to be a comprehensive end all retirement plan! When talking about investments and a 7% return and .2 expense ratio, of course you will need to do a bit of research and work to obtain those. But it’s not hard! A great resource I’ve been utilizing is The Crazy Man In The Pink Wig. His website is a wealth of financial knowledge, given freely!

To make the intro shorter and get you quickly excited about being a millionaire I made a lot of assumptions on returns, interest and the like. I will share the resources below simply so you don’t argue with me too much on these assumptions.

One important note I left out is that the maximum yearly contribution will likely increase as time goes on. This is good for you, the investor, as it means that you will likely be able to retire with even more!

The average annual inflation rate is 3.22% obtained here.

The average S&P 500 return data from 1975 to 2014 was found here and the average was found to be 10.18% average return. I also used the average bond return rate which can be between 4%-6% found here. Using that data I assumed a rate of return of 7%.

How is your retirement looking?Millionaire

Will Trade Dirt bike For Prosperity For All

Posted on by
3

Today I had something taken from me. Well really it was taken from my father as he purchased it for me many years ago. He was more wronged than I was.
I had a 2001 Honda XR80 in the back of my truck in the parking lot where I live. It’s a small bike. Much too small for my 215 lb self. I had brought it back to Iowa to fix up so my younger brother could enjoy it as I had when I was younger.
I remember the day my dad brought it home. I don’t remember the day exactly, but I was about 12 (2001-1989) and it was a Christmas present for my brother (a year younger than I) and myself. I remember there wasn’t to much snow on the ground yet so we were able to ride it in the field. We were throwing snow everywhere! Snow rooster tails!

Eventually we bought another older (1980’s vintage) XR80 off the internet so my brother and I could ride together. I am sure we rode around quite a bit but I only distinctly remember one time. We were both going through this field with tall grass. He was off to my right. The grass was pretty tall so we couldn’t really see what was in front of our tires. He ended up hitting a stump or piece of wood that happened to be in the middle of the field. I distinctly remember looking to my right and seeing him seated on the dirt bike in a normal position, except the bike had the wheels straight up and his head was near the ground. Don’t ask me how that happened but it was there. Of course shortly after that moment in time, everything unraveled rather quickly. The bike maintained more momentum as it was heavier and went farther, which was fine as luckily it didn’t land on him. He landed on the ground and we walked the bikes home. We even had a baseball game that night. I’m pretty sure he had some memory loss from that incident.

Over the years the bike had deteriorated. I had acquired a larger CR125 and enjoyed riding that with a friend who also had a 125cc dirt bike. They are much more powerful than an 80cc. I had brought it to Iowa one time and had tried to fix it up some so my much younger brother (14 ish years younger) could ride it. It was only semi successful. It at least ran but didn’t idle good and unfortunately he never got to ride it like we had as kids.

I was home for Easter weekend, 2015 (a few days ago as I write this) and had decided it was time again to fix up the bike for perhaps another attempt to have my younger brother a dirt bike to ride. I loaded it up and drove it back to Iowa with me. I live in an apartment complex on the North West side of Cedar Falls, by all accounts one of the best parts of the Cedar Falls/Waterloo area. I came home the night of 4-8-2015 and noticed that my dirt bike was not in the back of the truck where I had left it since returning Sunday (4-5-2015). It’d been there a total of 3 days and it had been stolen. I have even left my bigger dirt bike in the back of my truck over night before. Now I’d be pretty hesitant to do that!

This is honestly one of the first acts of crime that has been perpetrated against me. I can honestly say I was pretty confused. I called the police and told them something was stolen and I was calling them because “That’s what you do when you have something stolen.” They asked me my address and sent a guy out to look at the crime scene. We didn’t find much. They even left the pretty sweet tie down’s I have in the truck? Why? Idk.

Anyway, I’ve got pretty low expectations for getting that back. I’m not really the loser here as I never paid for the bike. I sure feel bad for my father who just wanted to buy something nice for his sons all those years ago and it was well appreciated, used and loved. But now the joy that was going to go to some future kid, maybe my brother, maybe some kids I have yet to meet that I was hoping to introduce to the joys of dirt bikes, will not be realized.

What will become of that bike? What was the motive of the person who stole it? I can only hope that they stole it for a “good” reason. Were they stealing it because they can’t afford a dirt bike for their own kids? If that’s the case I wish they would have asked if they could have borrowed it instead. I have read about 90% of the way through “Operating Manual For Spaceship Earth” as of today and one sentence really resonated with me.

“It is utterly clear to me that the highest priority need of world society at the present moment is a realistic economic accounting system which will rectify, for instance, such nonsense as the fact that a top toolmaker in India, the highest paid of all craftsmen, gets only as much per month for his work in India as he could earn per day for the same work if he were employed in Detroit, Michigan.” P112 Operating Manual For Spaceship Earth”  R. Buckminster Fuller

Did the person who stole my dirt bike feel that he didn’t have any other option to get money than to steal my property? How can we rectify that?

I have yet to read this book “Abundance: The Future Is Better Than You Think” by Peter H. diamandis and Steven Kotler but from what I’ve gleaned thus far from the back cover is that they are arguing that we have the capability to fulfill everyone in this world’s basic needs through application of current technology. I agree with that assessment completely.

How to address this issue of inequality is another problem. I make more money than the average household in the USA. Because of this I am able to save for retirement, give to charity and purchase unnecessary toys and take fun trips. How to help distribute my income so that everyone can live in peace is something I’ve been trying to understand for a while. One of the issues is that we as a society have made it shameful and hard to ask for help. We value independence over just about anything. We see it as a strength not to have to ask others for help. This is good in that it does make us stronger, but it is bad when at times we do need help we are unable to ask for it. Often when we ask people do look down on us or feel pity for us. Neither of those are helpful reactions. We should work to identify why someone is in a bad situation and help them out of it, not think lowly of them for it. We’re all in this together.

Ultimately I’m upset that my dirt bike was stolen, not because of the money, but because of what it meant to me. The love and joy my father had purchasing it and giving it to his sons who were equally or more joyful at having such a fun new toy, like nothing they had had before. I guess the people who stole it decided that they needed it more than me, and it’s sad our world is like that. Please help me make the world a place where no one feels the need to steal.