Tag Archives: retirement

Call Me Captain, 2023 Edition

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I am approved for my Operator of Uninspector Passenger Vessel (OUPV) “Six Pack” captain’s license by the US Coast Guard.

I’m going to keep this short — or try to — because I’ve been working hard on getting my Great Loop blog up to date and need to spend more time doing that. I just wanted to share the news that the boat experience time, training, testing, and tedious application filing has all paid off: the US Coast Guard has approved my application for an OUPV Captain’s license. I should get the paperwork in the mail any day now and will (hopefully) have it forwarded by my house sitter before month-end.

What does this mean? It means that it’s now legal for me to take up to six passengers for hire on board my boat for tours, charters, or educational cruises. This is something I’d like to do to help me cover the cost of cruising for the next year or so along the Great Loop.

DO IT NOW Belmont Bay
Here’s my boat, Do It Now, anchored in Belmont Bay, not far from the Potomac River.

What do I have in mind? Well, I’m thinking of the following options:

  • Garmin Chartplotter and Autopilot classes. So many folks don’t understand how they can use the navigation equipment on their boats to reduce their workload and enhance safety. I’d like to show people how to use the features of this equipment while out on the water, actually crusing. I’m thinking a 4-hour course for up to two people at a time would be beneficial. I can do classes on my boat or on the student’s boat, provided the equipment is similar enough to mine.
  • Single-Handing a Small Trawler course. A lot of people seem really surprised when they realize that I’m doing the Great Loop mostly solo. They think it’s hard to single-hand a boat. The reality is that it isn’t hard at all if you know your boat and a handful of tricks to make the hard part — usually docking and anchoring — easier. I’d like to take just one person at a time on a 4 to 7 day cruise to show them what I do, let them try it for themselves, and then pretend I’m not on board while finishing up the trip.
  • Co-Captain course. Created primarily for a boat’s “first mate,” this course will cover everything the second in command needs to know to help the captain or take over for him (or her) in the event of an illness or accident. In today’s world, I expect this class to be of interest mostly to women cruising with their husbands. I’ve met too many couples on the Loop where the wife is in charge of cooking, cleaning, and tossing lines to dock hands and knows little or nothing else about operating the boat. My idea is to provide a ground up foundation of knowledge from boat operations, to trip planning, to handling emergencies. I think the second in command on any boat should be able to handle the boat when the captain needs help but the captain isn’t always the best teacher. I can be that teacher. 4 days on board should be enough to get started.

I’m also thinking about the possibility of offering 3-4 day mini cruises on the ICW to give folks a taste of what cruising is all about. Unfortunately, due to the relatively small size of my boat (and limited sleeping accommodations), it might not make for a comfortable journey folks are willing to pay for. This is something I need to explore more.

This is exactly the kind of thing I like to do: teach people something I know. I have an extensive background in training in classrooms and one-on-one, as well as charter work through my (recently sold) helicopter charter company. This should be easy for me. As usual, the hard part will be attracting potential clients. But I’m working on some ideas for that, too.

And you thought I was “retired”….

Wish me luck!

—

In case you’re wondering, the title of this post calls back to 2004 when I got my Captain’s bars to fly for Papillon at the Grand Canyon. You can read about that here.

On Home Ownership

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I become a real homeowner for the second time in my life.


I got this letter in the mail yesterday after making a final lump sum payment on what I’d always thought of as my “mortgage.” (Technically it was a land loan; I never had a mortgage on this home.)

On July 14, 2022, I officially became a mortgage-free home owner for the second time in my life. That’s the date of the letter from my bank confirming that the lump sum payment I’d sent in June had paid off the balance of my land loan.

I bought the land nearly nine years ago, the day after my divorce was finalized. It was a long story and crazy process that you can read about in a blog post I wrote about it. It wasn’t a cheap lot, but the view from those 10 acres made it worth every penny. I’m generally a debt-adverse person, so I put 50% down on it and borrowed the rest. The owner financed until I could get my paperwork in order and get a loan about a year later with Northwest Farm Credit, a company that specializes in farm loans. My lot, zoned Rural Residential, met the criteria for lending. The terms were a fixed rate for the first 7 years, adjustable annually after that, with a balloon payment at the end of 10 years.

Amortization was based on 30 years, keeping the monthly payments low; for the first 7 years, my monthly payments were just $501. I kicked in an extra $500 toward the principal every month for at least 3/4 of the months over those 7 years. The goal was to pay down the principal quickly so I wouldn’t get hit with the kind of huge balloon payment the bank estimated. When the first interest rate adjustment came, my monthly payment dropped to less than $300/month. I honestly don’t know the exact amount because I kept paying the $1001/month that I’d been paying. Now I was kicking in more than $700/month to principal only.

With my June birthday coming up, I noticed that I owed less than $12K for the property. Rather than let my regular payments pay it off in just under one more year, I decided to make the payoff a birthday present for myself. So I wrote a big check, got a $14.90 refund for my overpayment, and received the letter saying the loan was paid off.

I’m a mortgage-free home owner.

The Money Stuff

Now if all this is gibberish to you and you’ve got one of those 30-year mortgages on your place, you might want to chat with an accountant or financial advisor about the possible benefit of paying extra toward the principal on that mortgage.

I remember my first mortgage with my future wasband. It was a 30-year term because that’s all we could afford when we bought our first home. We paid what was due — on average about $1200/month — every month for 11 years. When we sold after 11 years, we’d only contributed about $16K toward the principal — that’s after paying over $158K. Where had all that extra money gone? Mortgage interest, of course. Rates were a lot higher then, but still! We had a house but very little equity in it.

I think that experience is what woke me up to the realities of mortgages and home ownership. If you have a large loan and pay it over a long period of time, you’re likely to pay a lot of money in interest without increasing your equity in the home by very much. In that case, what’s the benefit of buying over renting? When you own a home, you’re responsible maintaining and repairing it. When you rent, you’re not. And when you’re paying 90% of your monthly mortgage payment toward interest instead of principal, it’s like paying rent without the benefit of a landlord to take care of the home.

Home ownership remains a goal of many people. It’s a great goal, but it’s not achievable unless you are able to maximize your downpayment, minimize your loan term, and pay down the principal as quickly as possible. Otherwise, you’re basically paying rent to a bank with the added expense of home maintenance, repairs, and property taxes.

When my future wasband and I sold that first home and moved to a new home in Arizona, we quickly refinanced to a 15-year loan term. Sure, the payments were bigger, but each payment applied more money to the loan principal. And with the lesson learned from our first home, I (the debt-adverse person in charge of household finances) would send additional principal payments for the loan to the bank a few times a year, when there was some spare cash in the household account. By doing so, we managed to pay off the loan in just over 11 years.

And that was the first time in my life that I was a mortgage-free home owner, at the age of 50 — although I was just half owner on that particular property.

My House

My house, of course, has been paid off since it was built. Because of the construction style of my home — post and beam construction — a building loan was not possible to get. So I had to pay cash as it was built.

On May 20, 2014, I began blogging about the construction of my new home in Malaga, WA. You can read all of these posts — and see the videos that go with many them — by clicking the new home construction tag.

Yeah, that was a challenge. Fortunately, my decent income and low cost of living rose to that challenge. I was living in my 36-foot fifth wheel, the “Mobile Mansion,” on my property at the time so there was no rent to pay and that likely saved a ton of money that could go toward construction.

I had the house built in stages starting on May 20, 2014: first the building shell and then the living space upstairs. I did a lot of the interior work myself: electricity, flooring (wood laminate and tile), and deck rails/floor. I subcontracted out to a framer and plumber and insulation/drywall/painting guys. I designed a custom kitchen with granite countertops at Home Depot and let their guys install it all. I bought my appliances at a Black Friday sale and, again, let them install. The place came together bit by bit over the course of two years. I wrote a lot of checks. But in the end, it was done and it was paid for.


The Great Room in my home. I really do love it here.

The Lecture

I know that what I’ve achieved is beyond the means of many people. I don’t want to say I’m “lucky” that I could do this because I truly believe that we make (most of) our luck. (And besides, I’ve had a bit of bad luck, too.) I’m not rich, but I do know how to work for a living and manage my money.

Living within my means is step 1 — and that’s the step most folks can’t seem to manage. They buy things they don’t need or can’t afford, relying on credit cards and loans to make it happen. Soon, every penny from every paycheck is spoken for and still some of them keep buying. They live in a world of never-ending debt by making minimum payments on every debt they owe. And then they complain that they’re broke.

That’s not me. I learned my lesson about debt TWICE when I was in my twenties. The second time did the charm. Years later, I realized that the first step to financial security — especially in retirement years — is having a paid-for roof over your head. That’s what motivated me to get the house I owned with my wasband paid for. And that has definitely been on my mind over the past 10 years as I get ever closer to retirement age.

I’m 61 now and starting to think seriously about life in retirement. Getting that paid-for roof over my head was a good start on the things I need to do to achieve my retirement dreams.

"Don’t Panic!" Footnote

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I’m not the only one saying this.

A quick footnote to my “Don’t Panic!” post earlier today. I was reading the NYTimes online and stumbled upon an article by Alex Berenson titled “Those With a Sense of History May Find It’s Time to Invest.”

Not only does he refer to the tech stock bubble burst of 2000-2001 (as I do), but he claims:

Now investors have again convinced themselves that this time is different, that the credit crisis will push economies worldwide into the deepest recession since the Depression. Fear runs even deeper today than greed did a decade ago.

But in their panic, investors are ignoring 60 years of history. Since the Depression, governments have become far more aggressive about intervening when credit markets seize up or economies struggle. And those interventions have generally succeeded. The recessions since World War II, while hardly easy, have been far less painful than the Depression.

Read the article. It cites experts:

“I think in years to come — I wouldn’t say months to come — we will perceive this as being a great value-buying opportunity,” said David P. Stowell, a finance professor at Northwestern and a former managing director at JPMorgan Chase. “Two and three years from now, it will seem very smart.”

Don’t panic. It might just be the time to go bargain hunting on Wall Street.

Don’t Panic!

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Understanding how your investment transactions affect the market.

I really didn’t think a post like this was necessary, but after speaking with two different people about portfolio management in these troubled economic times, I realized that the average investor doesn’t have a clue about what a mutual fund is and how it works.

A Transfer is not Just a Transfer

Conversation One went like this:

Him: I’m thinking about transferring my Fidelity balances to bonds or t-bills.

Me: Don’t sell when the market is low.

Him: I’m not selling. Fidelity has bond and t-bill funds. I’m just transferring. When the market starts coming back, I’ll transfer back.

Conversation Two was remarkably similar:

Her: This week, I transfered all my mutual funds to a money market account.

Me: You sold your mutual funds? Now? When the market is in the toilet?

Her: No, I didn’t sell them. I just transferred them from one Putnam account to another. When the stock market starts going back up, I’ll just transfer the money back.

What followed was my attempt to explain that the “transfer” was, in reality, the sale of one mutual fund for the purchase of another. In both instances, my loved ones — yes, they are both related to me — were selling shares in a mostly stock-based mutual fund that had taken a beating with the Dow’s plunge and using the meager proceeds to invest in a different mutual fund based on less volatile (or more conservative) investment types with the same investment firm.

They didn’t see it this way because they mistakenly think that they are invested in the investment company: Fidelity, Putnam, Janus, Dreyfus, etc. They don’t understand that each mutual fund really consists of huge investments in regular publicly traded companies like GM, Washington Mutual, AIG, and countless other firms that have yet to hit the news. When they sell shares of a mutual fund that includes investments in, for example, GM, they are effectively selling GM stock. If everyone is selling, the price goes down.

Panic Feeding the Decline

Clearly, investors are the ones causing the stock market decline. Their panic sales are what’s driving down the prices, thus feeding the panic. The worse the prices get, the more people panic. Every one who cashes out — even by transferring stock based mutual funds to money market funds — is making the situation worse.

Take, for example, GM. On october 12, 2007, its shares were selling for $42.64 each. Although share prices declined slowly throughout the year, the panic of this past week really hit home. On Friday, GM shares closed at $4.89. You can see the decline in this chart:

GM.jpg

Let’s look at the reality of this. According to market valuation of GM stock, GM lost nearly 89% of its value in a year. What happened? Did a UFO hover over a few GM plants and suck them into the sky, leaving a gaping hole? Did GM inventory get spirited away by pixies in the middle of the night? Were all of GM’s cash reserves shredded for some kid’s hamster cage? Were GMs huge asset investments in equipment scrapped for their recycling value?

Of course not. GM’s company value is not just 11% of what it was this time last year. While the original stock price may have been inflated — I can’t say because I’m not an analyst and have not studied GM’s financial statements — there’s no way in hell that the company can be worth a tenth of what it was twelve months ago.

But do investors believe that GM’s total value has declined by 89% in a year? I don’t think so. I believe they’re just panicking, trying desperately to save their finances by cutting their losses. They’re running — screaming that the sky is falling — away from stocks and the declining mutual funds that are based upon their values. As a result, they’re causing much of the mayhem.

More About Mutual Funds

My personal portfolio has declined in value by at least 40% in the past year. I can’t tell you the exact amount. I haven’t looked since Monday. I’m afraid to.

My portfolio includes my retirement funds. And yes, most of them are mutual funds. Most of them were doing very well — one was posting consistent gains of 25% a year and had doubled in value in five years. Like most Americans, I’m a lazy investor. Why do all my homework to handpick investments and then watch them from day to day when an investment firm has experts who can do that for me?

But at least I have an idea of what’s in my mutual funds. Fund names often have a clue. For example an S&P 500 fund is directly tied to the securities that make up the S&P 500. If the S&P 500 goes down 5 points, so does my fund. Pretty simple, right? Another fund name might include the words “Small Market Cap.” That fund is invested in stocks of small market capitalization companies.

Let’s say, for example, that Maria’s Big Cap Fund includes investments in 10 stocks named A – J. (In reality, it would likely include investments in far more securities, but this is a simple example.) Let’s also say that 1 share of Maria’s Big Cap Fund consists of one share each of companies A – J. When I sell a share of Maria’s Big Cap Fund, I’m selling 10 shares of stock — one each in companies A – J. If I have 500 shares of Maria’s Big Cap Fund and I “transfer” my investment to Maria’s Great Money Market Fund, I’m really selling 500 shares each of companies A – J and buying the equivalent dollar value investment in a money market.

Now say that Maria’s Big Cap Fund is really popular and there are 50,000,000 shares of it held with investors. As those investors panic and “transfer” or sell their shares in Maria’s Big Cap Fund, they’re really selling lots and lots of stock. As stock is unloaded in bulk, its value decreases. As value decreases, its price goes down.

This is part of what’s making the stock market so screwed up right now.

No Loss Until Sold

But what’s worse is that many investors are unnecessarily taking losses on their investments. They bought at one price and, as prices drop, they may be selling at a lower (or much lower) price. That’s a loss.

But if they held onto their investments and didn’t sell (or “transfer”), they wouldn’t have a loss — at least not yet. Sure, it would look horrible on their account statements or in Quicken or on whatever online service they might use to track investment value. But until the stock is sold, there is no loss.

I need to say that again, in some different words for those who might not have understood the previous words:

If you do not sell your stock, you do not lose any money.

You can argue this all day long but you will not win. A loss is only on paper until the sale is made. Paper losses aren’t worth the paper they’re printed on. (Pun intended.)

Remember “Black Monday” in 1987? At the time, it was the largest one-day percentage decline in stock market history. Remember when the dot-com bubble burst? Wikipedia even has an exact date for it: March 10, 2000. How about the market right after September 11, 2001? These are just three examples of disaster in the stock market.

But guess what? In each case, the market rebounded. Sure, a bunch of companies were shaken out of existence — primarily after about 50% of the dot-com startups were revealed to be based on ideas that couldn’t generate enough revenue to warrant their market values. But the market that emerged after these disasters was stronger. Values for most “good investments” came back.

I’ve been actively investing in the stock market, through both individual stock purchases via an online brokerage firm and mutual funds. As I mentioned earlier, my entire retirement portfolio is in a variety of diversified mutual funds. I survived as an investor through the dot-com bubble burst — my investments recovered their value within two years. And I fully expect to survive as an investor from the current market madness.

Why? Because I’m not going to sell.

I’m lucky, in a way. Although I’m not a kid, I’m still 15 years away from minimum retirement age. I have time to let my portfolio recover.

Not everyone is that lucky. Some people are just getting ready to retire. Other people — like my mm and stepdad — are already retired and tapping into that investment nest egg to meet their financial needs every day. These people are pretty much screwed — unless the stock market rebounds in a hurry.

And the stock market simply won’t rebound if everyone panics and keeps selling.

The Children of Men

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Futuristic social commentary by P.D. James.

The Children of MenI just finished The Children of Men by P.D. James. James, who normally writes mysteries featuring her series detective, Adam Dalgliesh, wrote instead of a futuristic world 25 years after the birth of the last-born child. In the world of this book, there are no children, no babies, and no hope for new human life.

James paints a sad picture of that world. Schools are converted into housing for the elderly, colleges now teach courses of interest to adults who don’t have their time occupied by their offspring. Playgrounds are gone. The government is trying to centralize the population in big cities so it’s easier to provide services as the population dwindles and only a handful of elderly people are left.

[This might sound weird, but it reminded me a bit of the retirement town I live in. Of course, there are some children and young people here, but the majority of residents and voters are retired so there isn’t much emphasis on things that would benefit young people. The local school board, for example, was unable to pass a school bond in the most recent vote — people don’t want to foot the bill for education when they don’t have kids in the system. The local Center for the Arts released its 2007/2008 schedule last month, and for the first time since opening about 5 years ago, there isn’t a single family-oriented program on the schedule. Are they giving up on children here in Wickenburg?]

The book has a hero: 50-year-old Theo. Theo is first cousin of the Warden of England, Xan, a self-made dictator first elected as Prime Minister years ago. Xan makes extreme decisions that benefit the apathetic public, by enhancing safety and reducing the cost and bother of supporting the aging population. But a handful of people aren’t happy with his decisions and want to stop him. They go to Theo, hoping he can convince Xan to change things. To say much more would be a spoiler, but I will mention that there appears to be hope for the world when a woman becomes pregnant.

Netflix, Inc.Ad

I enjoyed the book’s fast pace after its initially slow start. A lot of background information was presented in the form of Theo’s personal diary before a third person narrator stepped in and picked up the story. It wasn’t a long book — I read it over a weekend — and the pages turned quickly. Now I’m waiting for the movie based on the book to appear in a Netflix envelope in my mailbox. I have a feeling that the movie will be a lot more exciting than the book, focusing on the events that occur after the pregnancy is discovered, Hollywoodized for maximum visual impact.

Did I like the book? Yes, I did. It made me think. And in today’s world of eye candy entertainment, that’s saying a lot.