Ok,
Maybe someone has the answer to this. I am currently deployed to Bosnia with my reserve unit. This was a huge setback for my business but also gave some time to sort out a few things.
I’m a carpenter and not an untalented one. What escapse me is this. I can go out and sell the jobs and can do the work. I can frame, trim, install stairs and handrails as well as roof and side.But, what kills me is the retirement planning and benifits.
I’ll be returning home in march and have some options. I can stay on active duty with the national guard and take the safe approach. Or, i can make one more run at this.
Does anyone have any advice on health benefits and retirement planning? Also, I would like to hear about how some people made the transition from crafstman to businessman or a combination of the two?
Thanks, Robert
Replies
Robert there might be an echo in here. The question you seem to be asking
sounds similar to one I found myself asking just a few years ago. I still may
have not figured out the whole answer but I've made a lot of headway and learned
a lot along the way while compiling a lot of resources and advice. Off the
top of my head if you haven't already read the book that Taunton publishes
Smart
Business for Contractors: A Guide to Money and the Law by Jim
Kramon you might make that a starting point.
I think it provides a great overview
to the areas of business management that virtually all the other "How to
Run Your Own Contracting Business" books seem to ignore. For instance Chapter
9 Medical Insurance: How to Live with It is the only overview I've ever even
seen on that issue from a contractors point of view and I am sure you would
find Chapter 10 Disability: Anticipating the Solution and
Chapter 11 Retirement Planning: Never Too Early of value too.(not to mention
that the other eight proceeding chapters are good too).
I've collected some other stuff you might want to check out too that I will
see if I can pull together again and refer you too.
One issue that I found it helps to think about in planning all this however
is what kind of business are you thinking and planning to become. The issues
and costs are somewhat different for the one man solo operation as opposed
to a small to mid-sized enterprise.
You might also want to check out what they are talking about in the discussion
Employee
benefits, and industry image if you haven't seen it already, since it
seems to be along the same lines as what you are asking now.
View Image
In preparing for battle I have always found that plans are useless, but planning is indispensable.- Dwight D. Eisenhower
get an accountant..then find a financial planner.
have the financial planner tell ya how much U need to put away and where....and have the accountant help ya do it.
charge enough to do it.
people in "real jobs" with benefits and retirement aren't getting this stuff for free...and their employers aren't donating it for the good of the cause....it's simple comming off their hourly wage...on the front end.
Just charge enough to do it for yourself.
Jeff
Buck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Right on, Jeff!!
Only one correction (if it is), be sure that financial planner is a Certified Financial Planner. Their commitment to ethics is the primary difference. Their competency requirements is the next.
Retirement Planning may seem totally overwhelming. But it's a lot like some of those old story problems in school. You're given too much information. Unless one has been well schooled in the issues, irrelevent issues keep getting in the way of the important ones.
Focus on several points:
1. Pay yourself first. 10% of your income comes off the top and goes directly into your savings plan. No arguing, no complaining that you can't afford it, no excuses. FIND some way to make it work. The discipline that comes from this simple step is the foundation of your retirement plan.
2. Forget the games about what to invest in. Don't listen when your buddies are telling you some great story about some stock you've never heard about. Your saved money comes at such a high cost that you cannot afford to speculate on someone else's hunch.
3. You are really investing in Capitalism coupled with a growing population. The motivation of profit and productivity improvement is really the driver of our economy. Sure sometimes things will go to hell. But somehow, our human ingenuity always seems to prevale. When contributing to an investment device, commonly you are buying shares of something. When the price of a share declines and you are still contributing a regular fixed amount, you essentially are buying more shares when those prices are down. Eventually when the price rises, your percentage gain on those cheeply purchased shares overshadows the higher priced ones. It is these higher returns on such portions that really ends up providing the meat behind the eventual returns.
What you do have to do with your CFP is to determine an Asset Allocation model that is appropriate for your personality and your family's needs. Then continue to feed that model through good times and bad. Republicans or Democrats. War or peace. High rates or low. Besides the appropriate allocation model, the consistency of this investment program is the second most important factor in a successful plan.
When you don't have a skill or interest in developing one, it's foolish to compete against professionals in that field. I shake my head every day over someone thinking they can do better. Day trading or thinking they have better insight or a "feeling."
Today's investment vehicles (mutual funds, prepackaged portfolios, managed accounts, etc.) are designed for cruise control or autopilot type of programs - just like what you want to set up.
Of course some funds are better than the others. Your CFP can help you eliminate the trash. But after that, the previously mentioned factors (THAT ARE WITHIN YOUR CONTROL) dominate the ultimate results.
Your job is to be sure your business can continue to fund the program. Price your work correctly. Keep expenses low. Don't live outside your means. Those are the keys to success.
there is no "answer" it all comes down to comfort level... where you are and where you want to be... you can have a new car and truck every 2 years... spend every dime you make & then some... or do you "need someone to save for you"
why do people think they don't pay for their insurance and retirement when they work for someone else where it "comes with the job" or it's "matched" by the guy you work for...
life ain't "fair" fair comes to town once a year get your cotton candy then...
i started out with nothing... and seem to have most of it left
robert... i don't know how much time in service you have.. but if you are under 40 and have more than 10 years... i'd think seriously of going for your 20 and retirement benefits..
if you can stay qualified and stick it out, you 'll be pleasantly surprised at the speed with which the time will pass...contracting isn't going to go away... there is lots of work out here waiting for you..
the opportunity to get a serious retirement package that will not be taken away from you is nice to have in your corner.. it gives you a lot of confidence in how you run your contracting business...
how many years do you have in ? what's your mos ? what grade are you ? and where is your home state with the business you left behind ??Mike Smith Rhode Island : Design / Build / Repair / Restore
Robert,
Stone and Mike are all over this. It is great advice! If you stay in and get your 20, still apply the advice from Stone to establish the habit that will serve you when you get out. It will also provide you with extra savings as you head into retirement and allow you to do what you want to do.
Also, remember that investing in the stock market is just another form of gambling. You get to pick your risk level, but you aren't the house, so pick what lets you sleep at night and don't worry about buying at the bottom and selling at the top. Good luck
hi , frank, how's the sunny south..?.. our daughter has 7 " on the ground in Charlotte... we got nothing but coldMike Smith Rhode Island : Design / Build / Repair / Restore
Hey Mike. Nothin goin on here. Just cold! For a southern boy, or wanna be like me! it sucks!! Had a busy weekend with a 79th birthday party for the FIL and moving my dad from MD to VA. As usual, back to work on Monday.Frank
As much as I firmly believe in the stock market and capitalism, from a reality check point of view, it ain't the only game in town for retirement investments.
Pull the annual issues of Forbes or Fortune when they profile all these rich boys in our country. The article will show just how they came across their money. Most did so in real estate.
Investing in some form of income producing real estate is similar to investing in an SEP. (Of course there are differences, big differences, but look at the big concept here...) The capital gains that can occur when one property is sold for another can be tax-deferred such like an IRA, profit sharing plan, etc. (1031 exchange). You don't get the original tax deduction as in a SEP, but that's the same with a Roth, or nonqualified annuity. Regular contributions to such a self designed and administered real estate retirement program can be done just like a SEP. Real estate can be touched and manipulated by the investor. It's basics are easier to understand than the stock market's. In fact, there are some banks or institutions that will custody an IRA or SEP while you purchase your own real estate and tend to or improve it.
Of course, real estate is quite pricey now. Some feel it could have a correction in values. (Who knows?) On the other hand, the stock market APPEARS to be cheep.
But running both types of investment programs simultaneously will provide you with the best of both worlds.
That third class, bonds? Go ahead and do those if you want to lose money over the next couple of years. (Unless we get into a deflationary spiral like the early thirties or Japan more recently.)
For the last four years I keep telling myself Real Estate is too expensive yet what seemed too much ayear ago looks now like a bargain. I`m with you on real estate. Unlike stocks, R.E. you can see it, touch it, and generally know whats goin on with it. I bought a duplex 4 years ago and its nearly tripled in value. I should have bought 5 more! If you can deal with property management then you can`t beat the long term gains.
The point being that there are many ways to accomplish his goal.
Just do it!!!
First, thanks for all the insight. As far as investments, My brother works for one of the oldest investment firms in the country. I've never had trouble on that front. The thing that concerns me most is the whole" what will you be doing when you are 50 conversation". I Have never had a problem staying busy or making a living alone or with a helper. But, With one kid getting close to college age and the other following it has become time to move to the next level. Thats what I need to do to take care of my family. If i can't do that I need to look elsewhere.
I have a daughter born three months premature. That fact alone has made health insurance almost unobtainable for me. My wife is a full time student. Has anyone had any luck using a home builders association or small business association for a health care package. The few i have looked at provided health and life insurance as well as some kind of retirement planning. But, most were not very cost efficient.
As far as the army, I'm a ssg/e-6 with 10 years I'm also a scout . that means lots of living in the field for months at a time. Not too good for a family.
Thanks
robert... based on E6... infantry.... 10years.... you're over the hump... with lots of room for promotion and excellent prospects of making it to 20.....
if you like the life... and your family is agreeable.... i'd think seriously of staying to 20.... bet you're about 30 now... so you retire with a military pension at 40....man.. you'd have the world by the tail..
i had to make my decision at 30 , but i only had 8... and i needed military schools to stay qualified, there were a lot of RIF's, so odds were good i'd never make 20 ...
but i would say that not staying for 20 is one thing i can honestly say i regret....
now i've got almost 30 years being a contractor on my own... no health.. ( wife's job has health) no pension.... ( wife has a pension )... got a good life, a good family , nice house... but i could have the same thing if i had started at 40 AFTER the military...
you got some thinkin to do... good luck either way... and keep your head downMike Smith Rhode Island : Design / Build / Repair / Restore
hey Mike....we gotta see if Cath's new boss can do biz in your neighborhood.....
so we get these things cleared up for ya! Never too late, ya know.
Jeff
Buck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
fine... let's discuss this over dinner at outbackMike Smith Rhode Island : Design / Build / Repair / Restore
Mike,
That twenty year pension sounds good and is within reach. Because i have years in the reserves they only count for points not years so i'm looking at about 14 to go. Joined when i was 25 with some friends looking for adventure. E-8 or even E-9 is within sight. It's hardly the army it was even 5 years ago. Everything is all touchy feely and political. Not a whole lot of room for the old hard #### grunts anymore.
The real issue is what you want to do. The best days of my life were spent outside running a framing crew. Unfortunately here in eastern Pennsylvania there are too many fly by night one man bands. No insurance, Just some ryobi tools and an old station wagon. Half the day at work and half at the go-go bar. Jeff Buck is right if a man can't take care of his family working for himself then it's time to move on.
My mind is probably already made up. I just need to run it thru in my head and set up a plan to make it a real business. Even if that means giving up some of the work i love and doing some of the things i don't.
Robert
ok... sounds like you wanna come back to big px...
how about this 1 ?
willy sutton said he robbed banks because that's where the money is..
so build houses and be a builder someplace where tehy have money..
when i came into the trades here.. there was no money.. it was all patch , patch.. shuckin and grubbing...
then southern ri got discovered.. and the money moved in... same thing is happening all over the US.. apparently NOT where you came from.. so don't go back there .. go someplace where they have money and they want to hire you to build their dreams...
you talk to these guys and gals here on BT... some are working in double -wide city.. for nothing..
some are building mansions for the rich and not-so-famous.. guess which one is more fun?
Mike Smith Rhode Island : Design / Build / Repair / Restore
Mike's 100% right.
Last bout of self employment....I was doing small jobs in smaller mill towns....towns right around where I grew up. Couldn't have possible afforded insurance back then.....just made enough to get by.
This time around.....after working for a high end design/build firm.....and finding my way about an hour north......I made the contacts in the money neighborhoods and took enough pics of big money jobs to show I can work there and am worth the money.
I now work the best neighborhoods in the county...I live city center...and average just under an hours drive away to get there.
Much nicer driving to and from work daily when you're driving thru places where the beautiful people live...as opposed to driving thru the projects!
Money's a bit better too.....and the works nicer as well.
A low end cabinet from HD get's hung the same as a top of the line Kraftmaid...but for some reason.....when you're setting bottom cab's that are gonna get a granite counter top.....you leave the job feeling a bit better about life in general.
Nicer designs...nicer materials.....makes for a nicer day. Makes for nicer money too!
Jeff
Buck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Jeff
Point taken. I have in the past worked in central and northern N.J. where the average home was about $800,000. I have a great portfolio and plenty of repete customers. It's a little far but i can comute. Before leaving on this deployment about 15 months ago, the bulk of my business was installing stairs and rails for a few shops. I was busy everyday and seldom chased my money as so few people in the area were willing to try that type of work. several of those customers have called my wife to see when they can start to schedule jobs for me.
Besides a lot of hard work and the willingness to gut out the hard times, Any tips on how to build a real business instead of the one man show? I think people are more interested in using a real contractor or builder instead of the handyman. How do you sell to those who seem reluctant?
robert
Stone,
I mostly agree with you, but you have to look at the cost of being a landlord. I have had a few good experiences, but if you don't stay on top of it and you don't have a good coushion with adequate cashflow, you are going to have a hard time. As with anything, if you are willing to put forth the effort it optimizes your chances of success.
On bonds, I will have to say, the best investments I had last year were my savings bonds. Once I ran the numbers, I was totally suprised, but there ya go! Immunization programs have a certain appeal to me. You may not shoot the lights out, but you meet your obligations without the market risk.
Frank