Decending into the winter of 2019

The weather has turned. the light is short, the mornings cold, it's wet more than it's dry. I harvested the last of the tomatoes, ripe and green. A season has turned. A member of the family died the other day, my wife's father, a patriarch,  after 87 long years on this earth. He left modest material wealth, but had an out-sized impact on his family, among my wife of 20+ years. A transition into or out of this life is a time to reflect on temporal versus eternal values.  We are stewards in our time on earth; stewards of our relationships to others, of the material assets we acquire and cultivate, stewards of the efforts we make in shaping the world around us. When it's time to go, we don't even take the clothes on our back, rather leaving it all behind for others to carry on, to pick through, to discard. Much of the material items we collect are meaningless to the next person. A fraction become keepsakes to spouses, children and close friends. A bunch of what we have is completely replaceable, similar if not identical to something collected in the next house down the lane, and the next and the next. They are the tools and accessories of our lives, nothing more.

Financial assets can be closer to eternal, if memorialized carefully.  Wills and estates, trusts and directives can influence the world after our passing. In this case, a modest financial estate remains to K's mother to carry her forward. The investment asset allocation is diverse, with both income and growth, equities, bond funds and cash equivalents. It produces far less income than it could, looks more like an entity designed to be passed on to the next generation that used to sustain the generation that collected it. I have raised my concern about de-risking it into investments that have less reactivity to market conditions and produce more real and present cash flow. It will or will not happen, based on steps taken or not taken between the beneficiary and her children. I have said my piece.

The assets held by me and my wife are now 90% professionally managed. It was necessary, although painful to relinquish control, but now I spend more time working on other projects and less time obsessing over whether I have made mistakes in my thinking and strategy. I worried far more about what I did not know than what I knew. I am paying a good piece for the peace of mind, but the reasons for taking that step were sound.

The 72-t provision in the tax code allows one to take retirement distributions without penalty on a sustainable basis over 5 years or until after 591/2, which ever comes later. We're committed until 63 1/2. We'll receive 60k per year. it is dedicated to paying all insurance premiums, paying interest and principal on a secured line of credit, and then paying off consumer debt. At the same time, I now am employed and will be receiving pension benefits, a HSA account and the option to defer compensation if the cash flow allows. In other words, I'm back in the world of the qualified plan. That's a comforting place to be after 2 years where the tide was going out, rather than coming in.

Things are looking up on the employment front. I have been offered a very attractive 1 week/month opportunity to re-enter acute burn surgery in a "turnaround operation" in another state. I have accepted. There will be air-commuting. I just received an official offer to teach at the graduate level starting in July of next year, with the actual curriculum starting in January 2021. I have indicated interest in pursuing that position as well. I will have to drop something, as trying to do it all will have me over-subscribed, but this is akin to improving the quality of a portfolio by ranking holdings according to credit and debt ratings. I am trading lower quality activities for higher quality ones.  Quality and pay are not the same. I may accept lower pay for better work. Predictability, health benefits, retirement benefits and doing what I love the best are the markers of higher quality work. Pay is important, but secondary to those values.

I am onto a new value-generation plan with our real estate assets;  2 lots, 1 home, an unofficial accessory dwelling unit, an unofficial cottage, a yurt;  the new concept is constructing a compact residence on our second lot, moving in and then refitting the main house into 3 units; basement ADU, main floor dwelling and upstairs flat, extending over new garage.  I am guessing that would add another $500,000 in costs to the house, bringing the debt carriage slightly over a million dollars, but in return there would be 4 income producing units in addition to the main house;  cottage, ADU,  upstairs flat and second house on second lot. one could produce nearly 5k of cash flow per month without much trouble.  Carefully curated (single adults, older, stable income, quiet, etc), it could be an idyllic means to enter retirement with only modest carrying costs. We currently carry $2500 of $4000 in mortgage.  I would hope we'd carry no more absolute cost and a smaller fraction of the total, therefore adding value as renters pay down the debt. 5-10 years of that and we'd enter true retirement in a much more stable state. That's a fine vision, in my opinion, and we have the help we need to do that work; great architect in near retirement, great builder in near retirement, perfect property, house with good bones. What's not to like?

The Roth IRA is chugging along;  all dividend-growth, nothing performing at less than 10% per year and 3-4% DRIP, so the basis is expanding even as the valuations are increasing. I'd like to get back to maximizing the Roth IRA contributions as well as deferred comp, but we probably need more cash flow to do it. At this point I'm not willing to dial back my maker-lab business, which sucks cash at 6-8k/month. it's a huge drag on our spendable cash. It either has to convert to partial self support within another 6-8 months, or I'll begin to squeeze the burn rate.  As long as my health holds up, I'll be able to work at the current pace for another 5-8 years easily. that will take our son out of high school, part or completely through college and that'll be a time to consolidate assets and down-size our obligations considerably.

I'm liking the outlook, even if the economy goes south. We're in good shape to survive a down-draft at this point in time.