Moments of Clarity

The Middle Class Squeeze Myth

I've been an offender...I must admit.  I've said, "The Middle Class is Disappearing" and getting "Squeezed".  Intuitively, it made sense to parrot the pundits with all of the doom and gloom in the news.

Take a look however at this little video put together by the Wall Street Journal.  It stars Drew Carey and it's a fun and economically sound examination of what the Middle Class is really going through today...and how it can afford so much stuff.

This video will at least challenge your ideas about how bad off the Middle Class really is.  What is the definition of middle class anyway now? 

What seems more plausible is that the expectations of the middle class have risen so much during the last 10 years.  Not too long ago, an "average TV" for the house, maybe 27" or 32" if you were really doing well sold for $300-$600.  Now the minimum entry point is 42"inch plasma...and those have just come down to about $1k.  Regular TV? No way.  The entry point of the HD plans on any service is now about $60/month.  "But I've got the HDTV...I deserve to see the programs at their best right?

I could go on ad nauseum but think about your parents for a moment.  Mine are 57.  My family was archetypal middle class.  The first new car they bought was in 1984 (age 34).  Dad was a union butcher.  Mom stayed home.  We took a vacation every other year after about the age of 12 that usually involved driving immense distances and sleeping at rest stops.  My mom mostly cooked and eating out was a treat.

Today, it's a very different picture.  Is the Middle Class really being squeezed or is it that some just don't have more credit available to them to keep up with the Joneses?

The High Deductible Plan with a Health Savings Account (HSA)

Most folks I meet don't know the first thing about a high deductible health care plan with a Health Savings Account.  There are a few misconceptions out there too.  I'm going to share my experience with this type of health care plan.  I'm certain that I'll gloss over some details and such so please correct me if I've misstated a fact.

1. This is an individual plan.  No more "what if my company does X, Y, or Z.  It's yours.  As a self-employed person, you have complete control.  That's good.
2. A "high deductible plan" still offers good coverage for the stuff you'd expect (accidents, disease, transplants, etc.)...however you're responsible for paying more (up to your deductible amount per year) as medical issues arise.
3. Premiums for high deductible plans are often very reasonable.  I'm actually below $300 for my entire family plan now.
4. You can get a deductible as low as $3k for a family. 
5. The Health Savings Account component of this system is where you stash money to pay for bills that arise...like a visit to the doctor , a physical, a broken arm, a case of the mumps, etc.
6. The amount you put into the HSA is counted as PRE-TAX money as far as the IRS is concerned.  In other words, you put in $3k and at the end of the year, you take $3k off the top of your income as though it went into an IRA or 401K, etc.  Depending on your tax bracket...this can make the cost of this money far cheaper than $3k.
7. If you don't spend the money each year, it remains for you, earning interest and available to pay whatever medical bills you may need to pay.  The HSA is NOT like a flexible spending account  (FSA) that must be used up annually. 
8. Your deductible is the upper limit of your responsibility.  If you pay out that much, you don't pay after that threshold is reached.
9. When you visit the doctor, you don't pay a co-pay typically.  You receive a bill that is "discounted" according to the insurance rules.  Let's say an $80 doctor visit becomes $48....then you pay $48 with your HSA.
10. Your HSA typically has great options like a VISA/DEBIT card to pay on the spot for prescriptions.  If your doctor takes VISA as well, then you can send back the bill with the payment information included. 
11. If you use a company called Health Equity for your HSA account management, you'll get a whole host of great features and benefits.  These guys have really taken the HSA to the next level.  Don't short change yourself by using any old bank's HSA.  Health Equity has gotten is right.  You have complete on line management of the account.  It really puts you in control. 
12. If you do the math, a $3k deductible ($250/mo) + my premium ($300)/mo = $550/month.  If we don't visit the doctor for 3 months...my net health care cost during that quarter was $900...and I've "pocketed" $750...and that same $750 comes off the top of my income at tax time. 
13. There are certain rules that apply to these accounts and I'm pretty certain that employers cannot pay the premiums for employees...but there are ways employers can help.  Ask your attorney/tax man/financial planner/insurance agent about those.  I don't fit one of those job descriptions (thus people generally like me).

If you'd like to know more about these plans or get specific, I'll refer you to the good folks that took care of me.  If your questions are answerable by me...I'll do my best.

I highly recommend that you explore this option if you're self-employed...or looking to become self-employed.  There's NO reason to pay your $800+ per month COBRA bill while you launch your new venture...when you can take a proactive and self-directed path with your family's health care insurance needs.   

This is really the first step we can take towards some kind of re-do on the health care debacle we face now.  It puts REAL dollar amounts on services that YOU the insured SEE.  You find out that an MRI that took 30 minutes was $700...and you are going to pay $350 of that. These services don't just magically get done because you have insurance.  EVERYONE is paying for them and that's why premiums are going up at something like 12% per year! 

Take control.  Ask questions.  Do the math. 

Failure...One Step Closer To Success

I respect Mark Cuban immensely.  He gets it.  He takes risks.  He's not afraid to fail. (He's not afraid to ballroom dance). Of course the crowd might say, "Oh yeah sure...if I had a billion dollars laying around I'd take risks too".  But Cuban didn't hit the lottery or just "get lucky".  He worked hard.  Bombed.  Tried.

At the end of the day, this quote sums it up best. 

The point of all this is that it doesn't matter how many times you fail. It doesn't matter how many times you almost get it right. No one is going to know or care about your failures, and either should you. All you have to do is learn from them and those around you because...

All that matters in business is that you get it right once.

Then everyone can tell you how lucky you are.

Read this set of posts and you'll appreciate his story and see how close it is to yours.   We typically know about the one time someone got it right and assume it was "lucky".  Bad move. 

Stand Up Desk 30 Day Debrief

Midwest Stand Up Desk Command has been in place for about 30 days now.  Here's the post that contains the pics, etc.  Here are some key observations.

1. It took about 2 weeks to get used to being on my feet all day.  I don't yet have a stool to sit on throughout to mix up the day so I'm using a foot stool and a foam pad (both borrowed from the kid's playroom).  I still have somewhat fatigued legs at the end of the day...but with the triathlon training I'm doing, that must be a factor.
2. The standing position feels like I'm "Poised for action and focus" versus "Struggling to find comfort".
3. My neck, shoulders, and low back are far less stressed and I'm not in that hunched over ball of tension by the end of the day.
4. I still haven't figured out how to use the massive landscape of space I have at my disposal.  This desk is 6 feet wide and 4 feet deep.  I think today I'll begin with some brainstorming on those large flip chart deals vs. on the wall.  I can place two of them side by side.
5. The shelf under the desk houses a color laser, a multi-function, a server, a UPS, a mixer board and an external HDD.  All of that junk is out of the way yet accessible. 
6. The desk has a full width drawer that actually extends ALL 4 feet into the desk, i.e. it's cavernous.  The other 3 drawers house stationary, pens, office junk, and files. 

It has been a great switch to this model.  The old (and very nice desk) gets an occasional use when I sit down to read something.  It feels really good to sit and put my feet up in that context vs. sitting all day.

If you'd like my desk set up, you'll need a Mayline Drafting Table. (buy used, this one is 20 years old from the city of West Des Moines Public Engineering Department) and the design hasn't changed and it looks essentially new.  That's about it.  I'm now searching for the best choice on high stools.  Without going Herman Miller Aeron...I'm stuck with a few lower end choices.  More on that later.

Interview on DMWeblife Blog

I'm posting this to my site as an homage to my dad...without whom I'd probably still be standing in front of the open fridge with my mouth open quite a bit more than I do now.

http://www.dmweblife.com/2007/11/12/fivequestions-mitchell/

It's a 5 question interview I did w/the www.dmweblife.com blog. 

730 days in Iowa...Geographic Arbitrage Success

We've just eclipsed the 2 year mark here in this beautiful state.  During that time, I've been blessed with wonderful opportunities and met a fantastic group of people that have helped me shape the next chapter of my life. 

Executing my geographic arbitrage (moving from the high priced CA coast to the Midwest) has afforded me the option to explore what really matters, define what it takes to build a new infrastructure (both personally and professionally), and to dive into my "personal brand" and make some clear distinctions about it.

I cannot think of a better place than Des Moines, Iowa to live out the desire to have few hassles, no or low commute miles/minutes, no traffic, and just about everything a family could want to live and thrive. 

Thanks Iowa for a great first 2 years.

The Contraction of the Office Worker Producivity Curve

Office productivity in the cubicle world has been studied quite a bit.  The most dire predictions of "actual work done" by folks at the office will often be less than 2 hours.  The most generous are typically in the 4-5 hour range.  Here's the sample day of Jane Officeworker I've seen more than once:

Jane really doesn't get going until about 9:30AM after coffee, email, water cooler chat...then she turns off mentally at about 11:30AM planning lunch...then she suffers through post-lunch coma and conversation until about 2:30PM...then shuts down again mentally at 4:30PM to plan for the commute home. 

At best the above example is a good 4 hour day of productivity.  In doing some research on this post, I came across some excellent writings that I've linked to below. The bottom line is that I believe that the full-time office worker will become less than 20% of the workforce by 2017.

Home worker productivity can be examined with equal scrutiny.  However, I believe the net results are substantially more time spent on productive work vs. the "office inertia" of distraction and waste.  (Or are we all part of a vast conspiracy to keep up the front that we're getting things done vs. goofing off?)

A sample day for Joe average might mean rolling out of bed at 7AM and heading down to check/reply to email, read blogs, post a blog, and set up the days activities.  By 8AM, Joe has had coffee and suffered no commute stress and is more likely to begin work.  Joe may get in about 2 hours of work before the mind recharge is required.  Joe gets up at 10AM and heads to the gym.  Gasp.  He returns at 11:30AM, sucks down a sandwich and begins work again.  He gets through about 2PM before he needs to go pick up his little boy at pre-school.  He returns by 2:30PM after a quick run through the SBUX drive through.  He's back at it by 3PM.  At 5PM he's toast.  He eats with the family and spends some quality time.  After the kids go to bed at 8PM, Joe pops back into the office and checks email, he's pretty well addicted to that medium of communication but that's a different story.  He gets some key questions answered, listens to voice mail and mentally gets a grip on the day tomorrow.  He dims the light at 9PM and does whatever it is Joe does until bed time.

Some quick math nets you 8.5 hours from Joe Homeworker...even with his workout and toddler pick up during "work time".   

Am I being more generous to Joe Homeworker than Jane Officeworker...hell no. "But what about personal instant messaging and skype and twitter and (fill in the blank distraction technology).  Fine.  Subtract 2 hours from the Joe Homeworker equation, and we're still gaining an extra work day of productivity every single week!

If we look at days I'm more familiar with...there's probably 8 hours of productivity strewn about 12-14 hours of "being present".  The bottom line is that eventually, larger companies will blend more and more "homework" into their work force. It makes the workers happier and they do MORE for the same rate of pay in 100% of my experience.  I know many workers that have a "regular job" but are given the freedom to meet outside of the office, flex their schedules a bit, and you know what...they're pretty happy compared to their cubicle dwelling counterparts.

If you need to be a "watchdog" to ensure your workers are "doing"...then you've hired the wrong workers. 

Busyness vs. Burst:  Why Corporate Web Workers Look Unproductive

Why the 9 to 5 Office Worker Will Become A Thing of the Past

Triple Your Personal Productivity

Building My Rental Empire - The Truth About Foreclosures - Part III

The Offers
Two offers were submitted on properties last week.  The first one, a very nice home with minor cosmetic flaws, came back effectively about $3k less than asking price (they had just reduced the price by $3k the day before so effectively they were saying..."pay the asking price chump".)  We were told there were some pending offers or something at much higher prices than our offer...so keep it. Good luck.  This is a numbers game.

The second property, the one I believe is the better value of the two, countered and we've countered back.  I have indicated that I've made my final offer and it's about 20% off of retail.  Maybe a tick better than that but "market price" is tough to say these days.  I'm basing my numbers on current "for sale" comps and sold comps over the last 6 months.

Prices here in Des Moines have stayed very steady even with 4x the inventory on the market.  It seems though that banks are STILL not willing to move properties and are playing the waiting game.  If they don't wise up soon, I think they'll be sitting on an ever increasing inventory over the winter.  Perhaps January will be a better time.

Still looking at more properties and a few duplexes are in the works.  From a pure cash flow perspective, duplexes are looking good.  I'm generally averse to multi-family simply because of my own perception. 

Another great observation that I'm loving is that more and more people are complaining about being a landlord.  The "one bad tenant" that made them become flippers, etc. is what I'm hearing more and more.  I love that actually.  If I spend the time buying right...and renting right..I will do what others don't like.  That's usually the profit move right?  Do what others dislike.    

Brad Sugars - Consummate Salesperson

Yesterday, I spent the afternoon at a free seminar put on by Brad Sugars.   It was a great afternoon of reinforcement of key principles about creating wealth, wealth management, and education.  What I was most impressed about what that Mr. Sugars spends time acknowledging that "Getting rich requires a 10-year plan" to paraphrase.  This was the first guru that I've heard that clearly states that getting rich quick is a 10 year process of learning, making mistakes, and climbing ladders toward ultimate success and the freedom of owning businesses that run themselves, etc.

Mr. Sugars sales techniques were unbelievably effective as well.  He ended up getting about 20 people to sign up for a 3 day intensive seminar for $8k each.  Plus he sold countless book/DVD packages.  He built a compelling no risk case for attending this seminar.

All in all, if he comes back again, it's worth the afternoon to re-energize your wealth generating juices. 

The seminar was at Prairie Meadows by the way...and I'm wondering how many people went from the seminar to the gambling tables to try and make the $8k for the seminar?   

Low Post Volume...Big Opportunity

Big change in the works for me.  Lots of growth and exciting new opportunities await.  More detail as I can share.