Patience Persistence Politeness (Part I)

I am (almost) finished with two experiences that were unnecessarily unpleasant and time consuming. I have been examining my performance and the results I obtained, hoping that I can come up with some lessons learned that I could share with others who find themselves entangled in similar quagmires. Both of these adventures started in early July, but weren’t resolved until late September.

Because our neighborhood seems to experience more than its share of power outages, three years ago, I bought a generator. Now, I will have power when the power goes out. I bought a big one that runs off our natural gas line. Power, or no power, I wanted to be able to run the air conditioner during our hot South Carolina summers.

One night in early July, we suffered three power losses in less than one hour. Twice my generator cycled on and off as it should. The last time it didn’t. During an extended phone call to the individual who installed and maintained the generator, we determined that the problem was the transfer switch. We also discovered a temporary manual solution that gave me power until the technician could come out the next morning.

After a thorough investigation, the electrician determined that the coil, an electromagnet that threw the transfer switch back to line power when power was restored, burned out and needed a replacement part.

A replacement part was ordered.

After a week passed, I checked in with the contractor. He told me four to six weeks.

After almost six weeks passed, I called again. This individual said he would check into it. A few minutes later he sent me a text message. I am not certain what was said in that phone call, but the man who installed and maintained my generator told me to find someone else to repair my generator. He was through dealing with that particular manufacturer. He suggested another company that might do the work. I checked out that recommendation with someone of my age who used to be in the business. My friend said he knew about that company, giving me a go ahead to work with what we will call Company II.

Company II sent out a junior technician who consulted over the phone with a senior technician, troubleshooting the problem just like I did with the individual who sold me the generator. He reached the same conclusion, a burned-out coil. He went back to his shop to order the part. About a week passed. I called the parts expediter. She told me four to six weeks. This is not what I wanted to hear. I was also given the choice of ordering a part for a total cost, including installation, of a bit under $2,000, or replacing the entire unit for a little over $2,000. I chose replacing the entire box and everything in it. Although I wasn’t happy with the price, at this point I just wanted my problem to disappear.

I came up with the bright idea of calling the manufacturer’s customer service line. In my nine years’ experience in American factories, I was familiar with calls from customers looking for some kind of odd ball part. Often, we could find one in a warehouse, somewhere in the supply chain, or on the shelf of another dealer. The conversation with this office lasted for 45 minutes. First the representative collected a great deal of information, consulted with the “team,” then collected some more information, and had another consultation with the team, before telling me they couldn’t do anything to help me. This exercise in futility ended with a conversation with a rude supervisor, who basically told me to go pound sand. I hung up the phone on him. This is something I have only done on two occasions that I can remember. Usually, I am not that rude.

At the time, I was juggling a number of problems. I was not a happy camper, so I wrote what might best be described as a controlled outburst of seething anger that I mailed to the president of the firm that manufactured the generator and the transfer switch. After a week, or so, passed, I received a phone call from an anxious engineer in their technical support office who wanted to know every detail of my problem and my experience with customer service. He told me Company II was in their system and that my problem would be fixed. After another week, or two, passed. I received a second call from the engineer. Company II was not in their system and so was not authorized to fix the problem. He told me I would hear from Company III who was an authorized dealer. Actually, a few minutes before receiving this phone call, I had already talked with Company III. They bragged that they had seven switches on the shelf, but were unwilling to ship one over to Company II. I was also informed that Company II could not perform the repair if it turned out to be a warranty repair.

I called Company II, asking to cancel the order. Gracefully, they confessed they were not authorized to perform warranty repairs. During week five of the second 4 to 6-week window for delivery, my order was successfully canceled.

After a few days of rain delay, a senior technician and his apprentice arrived at my house with an entire transfer switch. They planned on taking the parts they needed out of this unit and replacing them at some later time. At this point, I should note that a transfer switch is a big steel box about 2.5 feet in length, 2 feet in width, and about six inches deep filled with electrical gizmos, wires, and circuit boards. For the third time the coil was diagnosed as the problem. When it was replaced, the switch still did not perform as it should. It turned out the circuit board that controlled the coils was the culprit. It was replaced.

Now all is well. The final repair was covered by my warranty. I would say it didn’t cost anything, but that wouldn’t be true. I had to pay the contractor who sold me the unit and Company II to incorrectly diagnose the problem, but I am happy with the outcome.

Sometimes dealing with contractors and customer service representatives turns into an extended wrestling match. When the system breaks down, the victim needs to be persistent, patient, and maybe polite, at least most of the time.

Opt In? Opt Out?

How many of you are giving nothing at all? Not to charities of your choice? Not to individuals in your community, who are not members of your family? Do you have a giving problem?

Is it sin? Should I go into full bore Old Testament prophet mode? Well, not giving isn’t really a sin. Christianity is a religion of freedom and grace. We are free to give as much, or as little of God’s money back to God, as we wish. Make no mistake, whether you are a Christian, or something else, all the wealth of this world belongs to the Lord, both the silver and the gold, as well as the cattle on a thousand hills. For some reason, God has trusted me with a portion of His wealth for some undetermined amount of time, but it isn’t mine. At some point, all of it will pass into the hands of other people, who will use it in ways I may, or may not approve. The day will come when I will need to discuss the use of these funds with my Lord. On that day, my hope is that I will hear the words, “Well done good and faithful servant.”

OK? I have found it useful to differentiate between sin and unwise behavior. All sin is unwise behavior, but not all unwise behavior rises to the level of sin. Although, I can’t think of a Scripture to support my theory, somehow the idea that not giving out of what you have received seems a little worse than unwise behavior. Of course, there are exceptions. There were years that we weren’t giving to a church, because we weren’t attending a church. There were two occasions during our marriage when we were teetering on the edge of bankruptcy. I understand there are seasons of life when any giving would be sacrificial giving that would require an inordinate amount of faith.

In this case, I want to improve your life, by raising the level of your consciousness.

An example might be what corporations have learned about participation in their 401k programs. If this benefit is offered as “Opt In,” the employee is required to go to the personnel office, listen to a sales pitch, and fill out a form. Most employees seem to try and evade such experiences. What seems to work better is “Opt Out.” If a small contribution to a 401k starts on the first day on the job and a trip to the personnel office, sales pitches, and forms are required to get out of the program, people tend to let it ride.

So, how do I get you to understand God’s program, or if you prefer the universe’s program, is “Opt Out?”

The Law of the Harvest is real. “As ye sow, so shall ye reap,” is an abundantly clear statement. There are three components to the Law of the Harvest.

1)You will harvest whatever you have planted. If you have planted corn, you will harvest corn.

2)You will harvest more than you planted, perhaps 10 fold, perhaps 30 fold, perhaps 100 fold.
3)The harvest will occur sometime in future. The timing is in the hands of the Lord of the harvest.

While discussing the Law of the Harvest with a friend, he observed that it doesn’t matter to the soil what you plant. Not to go karmic on you, but if you plant hatred and fear, you will harvest…….

Back to the 401k, as an example of the Law of the Harvest. Let’s say the company has a 100% match on the first three percent of an employee’s salary that he contributes to his 401k. That means he gets an instantaneous 100% guaranteed return on that portion of his investment. Try to beat that rate of return. Let’s assume 6.5%, the low end of the range termed Siegel’s Constant for after tax and inflation return on U.S. equities. The first dollar that new employee contributes to his 401k will likely be somewhere around $13 in thirty years.

Although we are now living in a different Covenant than the Law of Moses, the tithe, giving 10% of what comes into your hand is a good goal, or perhaps you might discover it is a good starting point, for giving back to your community and your world.

Don’t believe me. Try an experiment. Set a goal in your own heart that someday you want to give at least 10% of your income to organizations who will make the world a better place, or to individuals who are in need. Whatever you are giving today, negotiate a larger number with God, or even with your own conscience. Commit to giving more for a year. Then look at the results. If you are in a better place, commit to giving a little more. If not, you can ignore this blog post.

Due to my experiences in the Charismatic Renewal, I hesitate to believe that I am ever “hearing from God,” but as time goes on, I am becoming more convinced that if you want to attract blessings into your life, become a blessing to others. Of course, this principle isn’t limited to money, but it seems like a good place to begin. Start where you are. If you are giving nothing, don’t expect to reach 10% today, or tomorrow. Just commit to increasing that number, as the Lord provides.

From personal experience, I haven’t yet been able to out give God.

A Visionary Living in the Material World

I am reading the biography of Steve Jobs by Walter Isaacson, so far an excellent read. People who knew Steve Jobs and worked closely with him all report that he had a weird ability to, in their words, “Warp reality,” with his words and enthusiasm. He had the power to call those things which are not, as though they were.

It didn’t always work, even with a faith in himself that would match Abraham’s faith in God, Jobs still experienced some world class failures. He was deservedly fired by the company he founded. Some of his creations such as the Lisa and NeXT computers were technological and financial disasters.

Yet he persevered. In the book Isaacson states, "Jobs quoted the hockey star Wayne Gretzky's maxim, "Skate where the puck's going, not where it's been." He continued to revolutionize consumer products with the high-performance iMac. He changed the music world forever with the iPod and iTunes. We still don’t know the end results his greatest creation, the iPhone, will have on the world, but a product that he said people didn’t know they needed because it didn’t exist, seems to be changing everything.

What about your calling makes you so excited that your words and enthusiasm would have the potential to “warp reality?” Where do you see the puck going? Where do those two lines intersect? When you find that point, when you craft that vision of the future, maybe, just maybe, you can change the world.

A.B.L. (Always Be Learning)

I just ordered a book from Amazon, Commercial Real Estate Investing for Dummies. The title pretty well sums up my lack of knowledge on the subject. Last week I was catching up with one of my old friends; they all seem pretty old these days. Since our last phone call, he invested a good portion of his “nest egg” in a small office building located near a county court house in another state. He is happy with the income his property is generating and he is looking forward to watching his investment grow in value. Our conversation peaked my interest. There are really only two ways for the average American to build wealth, the stock market, or owning income-generating rental properties. While I have read a book or two on investing in real estate, my mind always came up with frightening stories that sent me scampering back to index funds and conservative dividend paying stocks.

Closing my eyes, I envisioned buying a small two bedroom home in an undervalued lower middle class suburban neighborhood. My first tenant is a young woman attending a local Bible college. Wait! She falls in love with a biker, who transforms my investment into a crack house. During a gun fight with the local police SWAT team, my house catches on fire and burns to the ground. So far, the idea of renting office space to a couple of legal firms, seems—safer.

I want to learn more about this subject.

My whole life I have wanted to learn more about something or the other. As well as completing two bachelor’s degrees, one with a double major, I have attended 17 for credit college courses funded by my employers on my time, 10 of those classes led to my MS. I have taken a variety of life enrichment courses from calligraphy to the National Guild of Hypnotists’ certification training. In addition, I have studied subjects like investing, finance, comparative religion, Tai Chi, and even a little bit about the law on my own time and dime.

At my age, I have regrets, both for what I have done and what I have failed to do. I am not a perfect person and I don’t live in a perfect world. However, I don’t regret any of the studies I have undertaken over the course of my lifetime. Some of these undertakings, like my BS in Mechanical Engineering, changed my life in a measurable way. Some of my efforts did little but make me a more entertaining guest at the dinner table, but all of them made me a better person and allowed me to live a fuller life.

In the first five years of retirement, I have felt like I have been slipping a bit, not learning enough. I thought about this subject as I went for my morning walk on the campus of my first Alma Mater. It isn’t quite true. My wife and I lost three parents in five and a half years. I have learned a lot about wills, power of attorney, taxes, probate, advanced directives, and hospice care. Now that chapter of my life, one that we will all have to face at some point, is drawing to a close. It still might take up to a couple of years to sort out every last detail, but the heavy lifting is almost finished.

I can face the future, start learning something new about this wonderful world, a world that seems more interesting and alive than it did in the waning years of my career. Neither my body or my brain works quite as well as it once did. I can tell the difference. There was a point in my life when I didn’t tell the same funny story to the same person more than two or three times, but I am thankful to be enjoying good health in a comfortable retirement.

I may or may not ever pull the trigger on my first commercial real estate deal. While I doubt that I will ever become the strip mall king of my new home town, I may, just may, diversify my portfolio into commercial real estate, after I have learned enough about the subject to have an intelligent conversation with someone smarter and more knowledgeable than your servant, the humble author of this blog.

Always Be Learning! Never Stop!

Yes, There Are Giants In The Land

As the Children of Israel were getting close to the Promised Land, Moses sent out an exploration and evaluation team consisting of twelve spies, one representative from each tribe, to explore Canaan. He wanted an intelligence report containing information on the soil, plant life, cities, and the current inhabitants of the land.

All twelve men came back with the same report. The land was exceedingly wealthy, flowing with milk and honey. They brought back a bunch of grapes that was so large it took two men to carry it, as well as samples of other high quality produce. However, they also saw large fortified cities and the giants who lived in those towns.

Two of the spies, Joshua and Caleb, thought that the Children of Israel would be well able to conquer the land. In fact, Caleb silenced the listening crowd when he said, "We should go up and take possession of the land, for we can certainly do it." Unfortunately, the other ten reported that the land was dangerous, that if they attacked, the land would devour the living. When describing the giants, they said, "We seemed like grasshoppers in our own eyes and we looked the same to them."

That night, after listening to the reports, the members of the community cried, wept, and complained. They were ready for a recall election to get rid of Moses and Aaron, so they could choose a new leader to take them back to slavery and Egypt, believing it a better option than dying in the wilderness, or getting annihilated by giants in Canaan.

So, there you have it.

At times in our life, we are called upon to choose to take on the role of a faith filled spy, a spy filled with doubt and fear, or just an innocent bystander who has to make a decision, "What report should I believe?" It isn't just about invasion planning. This story can find application in many of the important issues of life. Since this is a personal financial blog, consider any given economic situation. The facts can usually be sorted out from the speculations of the pundits. The interest rates, the gyrations of the stock market, the numbers of unemployed, housing sales, tax rates, and similar such information are the report of what was seen in the land.

Now what are you going to do with that information? Are you going to counsel others that, yes, there are some giants in that land, whoppin' big ones, and they live in strong fortified towers? I don't know about your city, but in my city, it seems that banks, insurance companies, and hospital systems own the largest, strongest fortifications. However, no matter what is happening, even during the worst day of the Great Depression, somebody was making money. Are you going to be like Caleb and say, "We can do it."

Or, are you going to report, "The little guy doesn't have a chance. The game is crooked. You can't find a decent job." In the glorious days after the end of World War II when the United States had the only industrial infrastructure that hadn't been bombed into rubble, there were losers, failures, and derelicts who had given up on life.

Most of time, you won't be one of the spies, someone who has actually seen the Promised Land of someone's successful marriage, a man with only a high school diploma, Bill Gates comes to mind, who is a wealthy businessman, or a formerly fat guy who just finished his third marathon, with your own eyes. You will just be one of the Children of Israel listening to the evening news or surfing the Internet out of boredom.

Be careful what you choose to believe. Be careful what words you choose to repeat. The ten men who spread a bad report were cut down by a plague and died before the Lord. The rest of the nation, excluding Joshua and Caleb, were condemned to continue wandering about in the wilderness for another forty years, until all of those who had seen the miracles performed by God on their behalf in Egypt and the desert, yet believed the bad report, were dead.

Of all those present, including Moses and Aaron, only the two, Joshua and Caleb, made it into the Promised Land. My prayer is that you will be one of those who makes it-to whatever financial freedom means to you.

The Ten Roads to Riches

I think I have read most of the personal finance books worth reading that can be found at our little local library. However, I am always on the lookout for anything new that comes through the door. When I found The Ten Roads to Riches written by Ken Fisher on the recent arrivals shelf, I gave it the once over. To tell the truth I was suspicious. Ken Fisher runs an investment service that is heavily advertised on TV and the Internet. I suspected it would be a thinly disguised sales pitch, but it looked interesting enough to make it home with me.

I was pleasantly surprised to discover it was actually a well written, humorous exploration of nine different ways to become seriously wealthy and one way to financial freedom that was unlikely to make you a member of the Forbes 400, but highly likely to allow you to live a comfortable retirement and leave a legacy to your children. The author includes not only stories about those who have succeeded, but tales of failure that ended up in bankruptcy court or jail.

"Don't you know that a man being rich is like a girl being pretty? You wouldn't marry a girl just because she's pretty, but my goodness, doesn't it help?"
Marilyn Monroe

Thus, the author begins his chapter on how to marry money. Not only is Cinderella looking for a well healed prince charming, but men, like John McCain and John Kerry, can play at that game as well as the gals. It turns out that in today's world, both men and women are calculating the financial condition of potential mates as an important component to increase the potential for future marital bliss. With a sometimes-wry sense of humor that can become a bit tongue in cheek, the author explores the complexity of state divorce laws and the importance of prenuptial agreements, especially in community property states. As in every chapter, the author supplies a short bibliography of recommended texts on the subject. From my knowledge of books that appear on these lists that I have actual read, the bibliographies alone are probably worth the price of a used copy of this book. He ends all his chapters with a brief guide summarizing the contents of that chapter. He begins The Guide to Marrying well with, "Jane Austen told us it is a truth universally acknowledged that a single man in possession of a good fortune must be in need of a wife." Then lists some must dos, like working (or playing) in places where you are most likely to come in contact with rich singles and don't do anything stupid that will land you on the short end of the stick in divorce court.

In the chapter on Inventing Income, using creativity to earn money, the author explores a number of topics, including one that is of interest to me, Writing for Dollars. As a writer, the author recommends choosing another vocation if you want to become wealthy. Even if you grab the brass ring and make the New York Times Bestseller List, as he did, you will not earn enough to become wealthy. His most successful book generated $400,000 in royalties, enough to fund a very comfortable lifestyle for a year or two, but hardly enough to become a billionaire. Taking two examples of spectacularly successful authors, Stephen King and JK Rowling, Fisher sadly concludes that unless your deathless prose can be converted into a two hour movie, it is unlikely you will ever earn enough at your craft to become rich. If you must write, Fisher suggests that you always think, lunch boxes and action figures. A cheap lunch box sells for $5.00. The same box painted with the images of Harry Potter and his magical world can go for $25.00. Every time one of these items is sold, JK gets to dip her beak. That, Fisher concludes is where one can find riches in writing.

The final chapter, The Road More Traveled, covers pretty much the same topics as this blog and a host of classic texts on the subject. Although, the author would recommend keeping a much higher percentage of my liquid net worth in stocks and mutual funds than the amount that would allow me to sleep soundly at night, but if you want to retire with a couple of million in the bank (no-at your broker or his investment service) this is an option that is available to many Americans.

His summary Guide to Saving and Investing:

1)Get a decent job paying a good wage
2) Figure out how much you want/need to achieve your goal
3) Calculate what you need to save each month
4) Now save
5) Make your money work

Of course, the chapter itself explores all these topics in detail that pretty easy to understand. Even when the math might seem a bit obscure to those who didn't have four years of math in high school, the author does a pretty good job of explaining what the formulas actually mean.

All in all, a fun entertaining book that contains enough nuggets of wisdom and paths for the curious to explore, to more than justify the time I spent reading it. I might even buy a copy-if I can get it cheap.

Because! There Will Be a Tomorrow

Not too long ago, I was pitching the Charitable Remainder Trust (CRT) to a close friend whom I thought might benefit from understanding such a tax avoidance option. In simple terms, the money in your 401(k) has never felt the icy breath of the tax man. The initial deposits from your paycheck, matching money from your employer, interest, dividends, and capital gains have all been growing in a tax free greenhouse. They will remain tax free until you begin to withdraw these funds. Then you will be taxed at whatever rate is appropriate, given your income in retirement. In my particular case, I don't intend to use these funds unless it becomes absolutely necessary. Instead, I plan on allowing the CRT that will contain these funds to start after my death. Then until my wife passes away, she will draw 5% per year from these funds. After her death, my heir will draw 5% per year for the next twenty years. Then all remaining funds, and there should be plenty in the CRT managers are even halfway prudent, will go, tax free, to the charities specified by me. In summary, I hope to leave my wife with an increase to the guaranteed portion of her income in my absence, plan for the retirement of someone from the next generation, and still be a blessing in this unhappy world, long after I have left it.

My friend chuckled, observing that I must know a lot about the future. I assured him that I didn't have a clue about the future, but it was my duty to prepare for the future to the best of my abilities, given the information that I currently possess. He bought that argument and the conversation passed on to other subjects.

Tomorrow will come, if not for you, for someone whom you love.

Which brings us to the wild gyrations of a stock market that lost over 10% of its value in a just a few days, then started climbing again as if that was nothing unusual. The market will go up. The market will go down. The problem is I don't know what is going to happen or when it is going to happen. If I knew these things, I would be placing a large bet on next year's Super Bowl, on the day when I knew I would be getting the best odds.

There are signs that have proven meaningful over more than a century, like the Shiller PE Ratio.

Current Shiller PE Ratio: 33.06 +0.01 (0.03%)

4:00 pm EST, Fri Feb 16
Mean: 16.83
Median: 16.15
Min: 4.78 (Dec 1920)
Max: 44.19 (Dec 1999)

Today, that historic index is in nosebleed territory, screaming that the market is overvalued. At the end of the day, buying shares in a company is nothing more than buying shares in an imaginary future. Will Coca Cola still be selling bottled sugar water or some other nonalcoholic beverages in tomorrow's thirsty world? Will they still be paying their shareholders a respectable dividend? Do you want a piece of that action? What are you willing to pay to play in that game?

What is different today? The world's central banks from the Federal Reserve, to the European Central Bank, to the People's Bank of China have been dumping unprecedented amounts of funny money into the world economy. All that money has to go somewhere, so why not the stock market and real estate? In London, there are whole neighborhoods of highly desirable houses that are mostly empty. They have been purchased by foreign syndicates and shell companies as an investment. Not many people who actually work in London could afford to live in one of these houses, so they sit there, unused, but going up in value. Insanity! But if you are an older Englishman who has owned and lived in one of these houses for a long time, you will be enjoying a luxurious retirement in the suburbs after you sell your home. One man mentioned in this report, traded his small apartment in London for a large farm in the countryside. He was an amoral stockbroker, who didn't much like the man he had become or the life he was living. Now, he earns his daily bread writing about the machinations of dubious characters who live and work in the London financial district.

Because we don't know what the future will hold, it is very important to have a contract with yourself. My contract tells me I should hold about half my money in shares of conservative dividend paying companies and low cost stock or hybrid mutual funds. I should never invest too much in any one company (5%?), or sector (15%?). I have been burned by holding too much in energy stocks when the price of oil took a nosedive. I have also learned that I should stay away from technology stocks, as I tend to fall in love with the technology, rather than the business plan and management of the company producing the technology.

If I am true to my contract, my net worth will increase slowly when the market is headed up, but when it goes down 40%, as it did in 2008, my net worth only drops 20%, and I will have free cash to buy undervalued shares, when everyone else is selling, terrified they will lose everything. This seems to be the best plan I can come up with for a couple still in the early years of retirement with our lifestyle, guaranteed income (pension and Social Security), and investments. Am I right? Who knows? I don't know what the future will hold, I can only make prudent, educated guesses based on the best information I can find.

The rest of it, like the life and death of your humble blogger, lies in the hands of God.