Saturday, May 16, 2020

Patience and the Blah

We're in a pandemic. We're also in minimum a recession, perhaps a depression. On top of all that I'm processing a breakup, a pay-cut and turning 34. Thankfully I started therapy back in February.
View from my balcony this morning.
I took vacation this past week, and I spent some of the time basically in a state of "blah" like my mind wasn't really actively working that hard. I just completed my portion of a big project at work that we've spent months working on, and I needed a break. But a break can be uncomfortable.

Meaning, when I go to sleep at night I am alone, and when I wake up I am alone. I spent four days this week in the mountains, attempted four mountains and summitted three, all alone. When I think about work, I know I'm at a startup, and I'm super happy we've made it as far as we have. The progress we have made in the last year is tremendous! Yet when we have a pay-cut because there is uncertainty about having enough money to support operations, I'm worried about the next hard conversation, will there be layoffs or even worse? Most likely not, we have such great talent that getting aquihired seems to me the worst case scenario. Of course, that doesn't include any effects from the pandemic. And on the dating side we've now been broken up longer than we actually dated. The whole relationship kind of blindsided me. Yes it was mostly what I was looking for but now that it ended, I again ask God, "What are you trying to teach me?! What is your plan for my life?! I'm 34!"

Point being, this is a time, in my life, and many other's I suppose, where I'm being required to have patience, more that I care to have. With all of the restrictions, I can't just go out to a bar with a friend and hang out and talk and empathize, so I'm spending time in a blah state of mind, not processing things as quickly as I used to pre-pandemic. But it's 57F and sunny with no wind right now and I'm very thankful to live in this expensive apartment with a great view and plenty of space as I spend so much time home alone. It will be very interesting to see how the world is in a few years, will we all be more patient and caring towards each other, or fearful and mistrusting? I suppose some will go one way and others the other way. Years ago my dad talking about people that lived through the Great Depression tended to fall into two groups financially speaking, those with lots of fear for the future who pinched pennies, and those that lived for today. I think we'll see the same, financial independence will probably become more popular, and so will partying like it's the last party you will ever get to go to. I don't know. But those that survive the pandemic will get to find out.

Wednesday, May 13, 2020

What's the value in one ounce?

I'm in the market for a set of hiking poles. I have adjustable ski poles, which work great, but they aren't super light or very compact, measuring about 2.5 feet long when collapsed. Comparing non-adjustable poles there is a set of the aluminum poles at 12.5 ounces for $75, and essentially the same pair in carbon fiber at 10 ounces for $128. Over $50 to save 2.5 ounces!? There is a saying in bicycling that the cheapest pound to save is the pound around your midsection. Meaning, most of us could put in a few weeks of moderate workouts and eat a few salads to lose a single pound instead of spend another $1000 on carbon fiber bicycle accessories.

Back to the trekking pole discussion, the vast majority of the time, I don't see a need for trekking poles. In general I do for heavy packs or long easy snow stretches, where the slope is too low for an ice axe but you want something to keep balance and distribute the weight. However, in my ankle recovery, I've found I'm a bit more wobbly in some other scenarios too, in particular crossing logs over creeks. I've seen people fall in before and the past year I've had a few missteps and gotten a foot full of water more than once. As I learned on my recently little trek into the Chicago basin, especially with early season conditions, where you are wearing running or approach shoes, but spending a lot of time on snow, having some poles can be very nice.

I ended up buying the aluminum ones. You'll probably see them in a picture eventually. They haven't shipped yet.

Saturday, May 9, 2020

How to Cope when Life Feels Hopeless

Well, one friend had a bit of a suicidal moment a few weeks ago, many have been laid off or furloughed and many, like myself now, have had pay cuts. Strangely I don't personally know anyone that has the Covid-19 coronavirus, but friends of friends do, and even some people that have some say over me financially.  So I was asked not long ago how do I cope, how have I coped with difficult times. Let me tell you, my life hasn't been all roses, but I have lots of strategies, although not all are available to everyone.
  • Take a walk. It's simple and even in this pandemic you can probably find a place to do it while avoiding other people. I recommend finding the most expensive neighborhood you can around you and walking around their streets or sidewalks. The houses are usually so spaced out, and police often cruise through those neighborhoods that you're likely to be alone.
  • Go for a run or a bicycle ride. When I hit the lowest point in October 2010, living in my parents basement, on a $500 a month bail out fund, massively in debt, exercise was one of the main ways that I kept myself motivated. It paid off as I had a good spring racing season in 2011.
  • Talk about it with someone. I currently am seeing a therapist weekly for video chats. Also, family and friends works too. It's nice to articulate your particular stresses with others, misery loves company, and no one is alone in this.
  • Don't talk about it. To be honest, sometimes you just won't want to talk about it or think about it, and that's okay too. Moderation is good.
  • Play some video games. I have an old Play Station 1 from like 1996, I won it in a contest and I didn't even know what it was at the time. In the fall of 2010 I spent dozens of hours playing Command and Conquer. In the winter of 2010 when I lived with some friends I played Call of Duty and Forza while my three roommates worked and after I had applied for all of the new jobs every morning.
  • Watch some movies. For me Forrest Gump is my go to cry movie, and sometimes you just need a good cry. Or maybe Star Wars or Indian Jones or Back to the Future are the kind of out there adventures you need to transport you away from not knowing if you will be able to pay all of your bills in June. 
  • Apply for a job. When I was unemployed, simply applying for a job, any job, gave me a little boost of energy that maybe this would be the one. Maybe this would be what got me back on my feet financially, and give me a purpose. 
  • Read about the Great Depression or the Plague in the 1300s or other terrible historical event. For all of those difficult times, your ancestors survived and you are here now. Both Kohler and Railway Motors during the Great Depression had so little work but such commitment to their employees that they reduced the assembly line workers down to one day a week, that's a 80% pay cut from working a standard five days a week, let alone overtime on weekends. Yet, for many people or families that might be enough to keep a roof over their heads or some food on the table. Speaking for myself, I could survive on an 80% pay cut. I'd definitely need to find a cheaper place to live, and cut out lots of spending and saving, but it's possible. I just ran the numbers, I could take about a 50% pay cut and still live where I live. But when you think about a 50% pay cut, you can save a lot of jobs with that kind of drastic cut. Plus, some people might go find work elsewhere to return to their normal salaries, which further reduces a company's expenses.
  • Save money like next month you will end up out of work for a year. If you haven't been doing this the last ten years then you kind of missed the boat, but assuming you survive the pandemic, you'll get another shot at it. For myself, the last nine years I've saved a lot of money. Not as much as I could have, because I went to Mt. Everest twice, just bought a BMW, have gone skiing plenty, have a carbon fiber road bicycle, and spent plenty on smaller climbing trips. However, as I wrote in my recent Emergency Fund (Advanced Edition) I've been building up little pockets of financial resources for the scenario that I get laid off next week, every week for the last nine years. I think this whole pandemic is going to drive my generation to try and achieve financial independence even faster than the Great Recession did. I'm definitely not financially independent, but I'm in such a strong position compared to 2010 that if my life would revert to 2010, things got really bad in this country.
  • Get a $4 coffee. For me coffee shops are one of the luxuries in my life. It used to be going to the coffee shop and doing something on my laptop for an hour or two, but now it's just to pick up the coffee (and maybe sit in one of the outside chairs actually). This process or act did a number of things for me. It tastes good! And it costs a fraction of the cost of going to a fancy restaurant. It gave me a place to blog or apply for jobs, where as sometimes at home I can get distracted by TV or movies. Paying that little bit of money helps me feel like a contributing member of society. I'm helping keep that barista employed. Finally it's a little routine out of the house. When I was unemployed, just like during stay at home orders in this pandemic, I had nowhere to go, and going out for a $4 coffee gave me a little place to go that I could mostly afford. 
  • Work on a side project. You know what I'm talking about, that business idea that will probably never go anywhere, or that home improvement project or car repair you've been delaying. It will give you something productive to work on, and you'll feel better about making progress after it's done. In fact, I was doing a little mentoring, and Janzen Gear might not be dead after all...
Okay, that's all I have for today, I'm going to go bicycle a bit.

Monday, May 4, 2020

How Bad Will the Pandemic get in the USA?

Apparently you can publish papers based on statistical models of how bad you think a pandemic is going to be. That's just plain stupid. So I'm going to do a little of my own math and predictions for the Coronavirus Pandemic of 2020.

100,000 USA deaths by May 19th. 

I arrived at that on May 1st by estimating about 1900 Covid-19 deaths a day until we reach 100,000, and that's 19 more days from the 1st. I estimated 1900 deaths a day based on recent deaths of 2200-2400, and a general down trend in cases and deaths over the last two weeks, but a very minor one. I think deaths could be under 1000 per day by May 19th, but as long as we're seeing 25,000+ new cases per day, we're going to keep seeing a lot of deaths.

Second point, the University of Washington IHME predictions are terrible! Why? Because they've been screwing up Colorado Covid-19 deaths since March. We haven't had any zero death days since mid-March, but there are four days with zeros. This is simple data entry to feed the models. How are they getting this wrong? In short, their models are so broken they have basically no validity.
Example 2 for IHME: We're going to have over 120,000 Covid-19 deaths in the United States, but the upper bound of the model is 115,000 or so, with a median prediction that we are going to pass this week.

Final question, how many deaths will we see in the United States and world wide before this is over? I'm not sure, I think it will be on the scale of World War 2, but I'll leave that for another post.

Saturday, May 2, 2020

Emergency Fund (Advanced Edition)

If you read the experts they will talk about saving $1,000 first and then saving 3-6+ months of expenses in a savings account in case you are unemployed or have a medical emergency or maybe pandemic emergency. That's nice. It's simple and easy to understand, but there are probably many more tools at your disposal if you are facing a long stretch without income. So, I thought I might as well run through my personal list of ways you can survive in a financial emergency.
  1. First the savings account emergency fund itself. I only have about two months of expenses in mine at the moment. I had about four months but I dumped a bunch of money into the stock market in March. I really do think three months of expenses is a good baseline for most people. That's enough time to figure out things in an emergency. You can pay the next month of rent and bills without a worry, and figure out unemployment or usually find a new job.
  2. Introductory 0% interest rate credit cards, might not be high on anyone's list, but most have 12-15 month time frames where you only have to pay something like $30 a month, and if you are confident that in 12 months you will be back on your feet, it's a great way to save actual cash. I speak from experience here, I maxed out three credit cards in 2010. While I got killed on the interest later in 2010 and 2011, I paid two of them off in 2011 within months of starting working. Although I did live in my parents basement the first three months of work, so my expenses were super low. This essentially allows you to cut your cash flow expenses temporarily to basically just rent, health insurance, and various cell phone and utility bills. You have to pay it all back eventually, but it might save you from getting evicted, and it can definitely put food on the table and gas in the tank.
  3. Brokerage investment account is where I would turn next. Mine is not so big, about three months of expenses, but I could sell those stocks and again be able to pay rent. I realize that relatively few of my friends have brokerage accounts or know how to use them, but again, this is the advanced emergency fund blog post.
  4. Sell a car. I have two cars, one worth about one month and the other about two months of expenses. If things got bad, simply sell one. In fact, I'm actually thinking about selling one anyway.
  5. Take out cash from my whole life insurance policy. I know I know, whole life insurance is a terrible "product" but I have a policy anyway. I bought it because I had student loans at the time and it always pays out, whether I died the month after I started, today, or in 60 years, it will pay out more nominally than I put in. Plus, with my expeditions and flying airplanes, seems like a reasonable thing to have. Not everything does that. It has a small cash value, again about two months of expenses if I took it all out. 
  6. Take out my Roth IRA contributions. This is a tough one, only for dire emergencies. I used to contribute quite a bit to my Roth 401k at my old job and rolled it into my Roth IRA, plus I make regular Roth IRA contributions. I don't actually know how much I have in contributions, but it's somewhere over a year of expenses I believe. 
For me that's it. There are many smaller things like bicycles and climbing and skiing equipment I could sell too, but all of those together are maybe a little more than a month of expenses. Frankly, if it came to withdrawing from my Roth IRA, things are pretty bad, but that's part of the beauty of the Roth IRA, it's perfect as a backup emergency fund for when things get really bad. Similarly, a whole life insurance policy is stupid financially, but in a financial emergency it might be able to keep me afloat.

I realize that all of these options might not be available to many people and that I am fortunate to have these six levers to pull. Because of what I went through in 2010, I have offensively invested and saved and defensively built up my financial options so that when I am presented with that kind of financial difficulty like I went through in 2010, I'll be able to handle it without overdrawing checking accounts, like I did in 2010. Hopefully you are employed during this difficult time, but if you aren't, hopefully you can exercise some of these options to keep yourself afloat.