Financial times

My first concept of financial independence was being able to buy a 2 liter bottle of Coke and a big bag of Cool Ranch Doritos without having to borrow from my buddy. Picking out a dozen of my favorite donuts at the local bakery and paying cold, hard cash was a privilege known to few, and I was able to pull it off on several occasions.

But times have changed since the days of the odd lawn cutting here or occasional driveway shoveling there. Federal minimum wage is now $5.15 an hour. The Department of Labor began keeping track of the minimum wage since 1938 when it was $0.25 an hour. I calculated the average inflation rate from 1938 to 2002 (as high as the online calculator would go) at 3.96% and compounded it annually at (V4*((U8-V8)*0.0396))+V4 where V4 is the minimum wage of $0.25 an hour in 1938, U8 is current year and V8 is previous year minimum wage change, and came up with some disturbing results. According to my chart, the federal minimum wage in 2004 should be $2.62. This tells me several things:

  1. My grasp of Microsoft Excel sucks in spite of the “A” I received in my microcomputer applications class last summer.
  2. Something went horribly wrong.
  3. The American public* has been theoretically overpaid by The Man for the last 66 years.
    • *This generalization excludes farmers who are the backbone of this country and rate far more money than porn stars and filthy lawyers combined.
  4. Assuming the old adage that I’m a Marine 24/7, this projected wage for 2004 is $0.13 higher than my hourly wage of $2.48 after state and federal taxes, social security, and Medicare.
    • If you mention my “health care benefits” or any other supposed financial “kickbacks” associated with military service, I will punch you in the nose. In seven years, I’ve made two unscheduled trips to the doctor that involved injury or illness. I’d gladly pay for those two trips and keep my money in my pocket, thank you very much.
    • Seriously. I’ll bludgeon you with a frozen cat if you bring it up.
  5. Assuming I work a 40 hour week, this projected wage for 2004 is $7.86 lower than my hourly wage of $10.48 after the same mandatory deductions.
    • I would literally crap my pants with joy if I only worked a 40 hour week.
  6. Math has never been my strongest subject.

I am never as aware of my financial status until tax season, where my past 12 months of scrimping, penny pinching, and frugality on only the bare necessities like cycling gear and booze seems not to have paid off. So where does all my money go? That’s a good question.

In spring of 1997 I received a class from a crusty old Master Sergeant about IRAs. He explained how I should be putting money into them and praying to God I get an average return rate of 10% until I retire or die so I wouldn’t have to live off dog food and Tang when I stopped working. My first question was why on earth I’d ever want to invest in the Irish Republican Army when everyone knew we were in the middle of a bull market and the national economy was strong. I scoffed. But the Master Sergeant wouldn’t let it go. He continued to preach about how he would have done things differently given the chance, and how even five years of lost time in investing could cost me, me of all people, thousands of dollars in the long run. I couldn’t ignore those frightening statistics any longer and jumped on the investing bandwagon four years later.

In all actuality, Master Sergeant’s advice on IRAs was the first of its kind I had ever gotten. Apparently my parents had filed the “making smart financial decisions” speech right behind the “birds and the bees” speech, and I’ll be damned if I got that one either. Thanks, but no thanks Mom and Dad. I knew I was missing the boat when even my measly 1040EZ was asking me questions about investing: how much, how often, with who and did I wear underwear. I felt a personal attack taking place lead by none other than Uncle Sam himself. Who was he to care what I did with my hard earned a paycheck? I scoffed again.

As fate would have it, another senior enlisted Marine, my company First Sergeant, was tossed haphazardly into my path. He spouted all sorts of nonsense about money market accounts, IRAs with a catchy ROTH prefix attached, and mutual funds. What funds? Money what accounts? Apparently, these were “vehicles” of investing that made more money for me if I had to let it sit somewhere. So much lingo! So many acronyms! My head was spinning. “Kohler,” First Sergeant said to me one afternoon. “If you spent half the money on investing and money magazines as you do on mountain bike magazines, you’d be a rich man right now.” The bite of my turkey sandwich slid slowly down my throat. Rich? And for simply buying investing and money magazines? Come to think of it, I hadn’t seen a whole lot of financial advice between the pages of Mountain Bike Action or even the 1996 Playmate Year in Review for that matter. I was excited to get started.

I raced to Wal-Mart and glanced sheepishly across the shiny steel racks at the dozens of investing magazines. I leafed through a handful and settled on two: Money Magazine and Kiplinger’s, a name highly recommended but one I could barely pronounce. No cartoons. No action photography. No centerfolds. It looked dismal, but if First Sergeant said these would make me rich, so be it. I grabbed the latest Playmate Review and Bike Magazine’s Photo Annual to round things out and sauntered to the check out counter with my head held high. After all, I was a well-versed man in finance, sports,
and women. I stepped back into the daylight with a newfound grip on the world around me. The key to the financial independence I was told about so many years ago was finally in my grasp, nestled comfortably in a plain brown wrapper. No, wait. That was a different key. I smiled nonetheless.

I read them constantly. Cover to cover. Inside and out. I made notes in the margins. I doodled on scratch paper. I calculated and plotted and fantasized about the untold millions I’d soon be making. I was practically above the law! I would buy whomever I wanted. The world was at my fingertips. And so, in November 2000, I invested $1000 of my reenlistment bonus in a little money market account from Virtual Bank. At 5% return, it was the highest in the nation with no fees and a springboard to checking, savings, and credit accounts of which to hold my loot.

I watched in awe as the minimum deposit required to open an account went from my measly $1000, to ten times that in a matter of months. Apparently, I had hit the window of opportunity perfectly. And then stocks began to dip. Interest rates were dropping at an alarming rate as my 5% annual return dipped to 4.75% almost overnight. I didn’t panic. After all, the national average was still in the mid 2% range and I was outperforming that by over double. But the market continued to struggle. Soon my interest rate scraped bottom and leveled off at 2.1% and my once prestigious bank dropped opening deposits to $100. With a number so low, I fully expected my financial institution to be flooded with common folk of the sort I didn’t want to be
associated with. They could be, quite possibly, in a lower tax bracket.

I wanted to run, screaming into the night shouting NO! Not my money market account! Don’t do this to me! You mustn’t! I wept. I wept for my interest rate. I wept for the economical slump. I wept for every young master of his financial destiny who, like me, was facing his first storm in the ocean of monetary independence.

Composure in times of distress is hard to find, but I knew that knowledge of the past was the one thing that could save me. Economic slump? No problem. Dropping stock prices? Not an issue. I increased my research ten fold on savvy investing techniques in bear markets and decided now was the time to jump into a ROTH IRA. All the experts pointed me in the direction of the Vanguard Total Stock Market Index (VTSMX) for new investors, so I dropped another $1000 down to open an account.

The market did no better. In less than a year my value had plummeted far below my net investment. But I held strong. I could feel the bull around the corner. I could smell his breath and feel it on my neck. I was going to beat this thing, and I didn’t need a swan dive off a ten story building on Wall Street to do it. I shuffled some more money around and began purchasing stock in the Vanguard Growth Index Fund (VIGRX) that was making leaps and bounds on Morningstar.com. It was low risk and high return, the kind of numbers I like. I split my monthly contributions 70/30 in favor if the growth fund and clicked buy BUY BUY!

The market rebounded. Where once there was red ink scattered all over My MSN Stock Quotes, was now little green arrows pointing skyward to the heavens as if acknowledging their triumphant return to prosperity and success. I was back baby, and I was back strong.

It’s a funny thing how, over six years ago, the words of an old, mostly bitter Master Sergeant in the Marine Corps still ring in my ears on a quite night. I can hear is thick, Brooklyn accent and gravely voice as he drops his chin, fixes his eye on each one of us and utters his infamous advice.

“Frozen chicken Marines. Start investing now or you’ll be eating frozen fucking chicken the rest of your life.”

Well Master Sergeant, I beat your divine 10% by 23% this year. Thanks for the tip.

– Formerly Pfc Kohler. AASBn class 5-98.

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The author.Born in the year of the Dragon, the author grudgingly accepts the fact he has too many interests and not enough time. A cyclist as long as he can remember, an avid yet inconsistent writer since age eleven, and a U.S. Marine since age twenty-one, the author also adds peak bagging, diving, snowboarding, and computers to his list of interests. Incidentally, he is aware of his inability to make a living from any but the Corps. The author accepts this as fact and remains optimistic. Feel free to drop him a line.

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