Life decisions...

[stroker]

Gonna be an interesting year, 2018. As I did 8 years ago when I had questions about my yet-to-be born second daughter possibly being autistic I'm going to turn to my trusted friends at OC.

I turn 60 in August. My inheritance from my mom's death two Septembers ago should be out of court soon. Let's call that (barely) six digits of startup capital. My good friend from work just lost his house (don't ask) and was in the processing of moving in with me. That would be some rent money. Unfortunately he lost his job a week ago so now that's in question for the short term. He's a smart guy and I suspect he'll find something pretty quick. There are two strategic options at play.

Option #1: I'm on the hook for for roughly 70K in child support for the next 10 years. As long as I have that payment I must work full time. My ex was unemployed for six months last year and is almost certainly drowning in red ink. Her credit rating is shot and she'll never own a house or get out of credit card debt for the rest of her life at this rate. She's 50. Have not yet spoken with my attorney but I want to investigate the possibility of paying her one lump sum from the inheritance of $50K so she can kill at least one of her credit cards and then use what should would have spent on that card (mebbe two) as a replacement for my child support payment. It gives her a chance to revive her credit rating and saves me $20K over 10 years, but it halves my available capital. It leaves open the possibility of retiring "early" and then home schooling my 10 and 8 year olds for a few years. When you hit 60 you know how you start thinking about how many years you've got left... The only wrinkle in that plan is coming up with a way of paying for my diabetes medications. If I quit my job I lose my health insurance so I have to come up with something for that or wait until I can get Medicare.

Option #2 is to try to start a business. I've basically pissed my life away professionally. I spent 10 years in pizza, then 10 years in bagels, then 20 years in Customer Service for a mail order company. It's basically been a fall down the stairs since about 1997. There's a small town about 25 miles east of here where I think I can start a restaurant and have a reasonable chance of success. It's got two small colleges and I've got friends I trust to help. The plan is to leverage the inheritance into a startup then sell it at 65. If I sell the house I can plan on about $200K (or not sell the house and take a loan on it) which should be enough. However, restaurant startups are high failure rate and this is betting the money my family saved, not MY money. On a more personal level I ask myself whether that plan is me doing what I really want to do or me trying not be the family f-up.

What do I want? I want to MAKE SOMETHING. I want to be in PRODUCTION. That could be building hot rods, writing, designing games, graphic arts, whatever. I want to be autonomous. You'll note that "retiring" allows me to do that. I can probably pay medical expenses out of pocket for a lot less than starting a business but I'm so tired of being a small cog in an an ever-growing machine.

So my question to my OC friends is this... Grind out three more years of misery then ride off into the sunset of retirement, or take one more chance at the brass ring and die knowing I tried to make something out of my life...?

[SteveH]

Before you get too deep in your plans, find out if your ex will accept a lump sum payment. Her answer might shape your decision.

To evaluate how much the one time payment should be you’ll need to determine the net present value of all of your scheduled payments. I believe this calculator will help you determine the present day value of all of your future payments. https://financial-calculators.com/net-present-value-calculator. I’m not an accountant, so I may be in over my head.

[datachicane]

My advice about starting a restaurant? Don't. Just don't. Don't even think about it.

My father depends on his commercial real estate holdings for his retirement income (and, since he spends much of his time in warmer climes, I help manage them as necessary). A couple of them are restaurants. These are nice places. Over the years, we've had some of the (apparently) most successful restaurants in town as tenants- busy places, well loved. Turns out, you'd be surprised how few restaurants actually manage to pay their bills on a regular basis. It's a constant string of back taxes, missed insurance and supplier payments, deferred maintenance (how likely is a kitchen exhaust fire, anyway? Pretty dang likely, as it turns out), let alone make the rent regularly. These are the ones you'd likely drive by and think they were the very picture of success, not some dive, and it's not just one- the pattern goes on and on, for pushing 40 years now.

From the other side, coincidentally, I have several close friends who own food service businesses. One is an absolute leader in his field- regular write ups in Sunset magazine, tourists coming to town specifically to patronize his offerings, that sort of thing. He's a rarity in my experience, in that, given his background in business, he's absolutely rigorous about keeping on top of his expenses, and can tell you the exact margin on anything that ever crosses the menu. A great success, aside from the fact that he makes next to no money (nor can he pay his girlfriend/accountant for the moonlight bookkeeping gig she does for him).

Oh, yeah, and $50k isn't nearly enough startup money for a restaurant IMHO- you'll end up digging a big hole by the time you're able to keep your head above water.

[Insomniac]

I'm pretty risk adverse so I would avoid #2. Starting any business is not easy. Building it into something to sell takes a lot of time and effort. 5 years may not be enough time.

I would consider the option to be out from child support for $50k, assuming you're talking $7k/year, that's a ROI of ~8.5%.

But some advice I can provide. There is the affordable care act that can help with health insurance if you don't have other options. Depending on your state you may have a state based exchange or will need to use the national exchange. If your income is low enough, again, depending on the state, Medicaid may also be an option. So you may have more options than you think.

Think about focusing on what you said you WANT to do:


I want to MAKE SOMETHING. I want to be in PRODUCTION. That could be building hot rods, writing, designing games, graphic arts, whatever. I want to be autonomous.

Most of the things on that list you can start to do now with very little capital. Invest in yourself and do the stuff that excites you. You may turn that into a business you can sell, but don't want to sell. :)

[devilmaster]

I could easily just echo datachicane and say no. Hell no. But I'll give you my experiences and thoughts 10 years on.

You are coming at the thought of a restaurant while in financial question-ability.

When I started my restaurant, I had done my business plan, worked out as much as I could. I did the leg work. I got my lawyers and business advisors and help wherever I could find it.

Was I ready? Yes and no. I tackled hiccups on the way. Challenges that cropped up. A fire inspector about to be promoted wouldn't let me open unless I jumped through multiple hoops 'to fix' a restaurant space he signed off on three months prior as satisfactory. Then was constantly unavailable to re-inspect so that he could sign off and I could open.

I dealt with a space that I learned the hard way was inadequate and a landlord that refused to fix building issues. The place looked great but he was a commercial slumlord.

I had signed my lease in 08, 3 weeks before the economy tanked. That was unexpected but I did have a contingency built into my business plan for it. What I couldn't have expected was that with the economy tanking, 1.5 years later, to try and help jump-start the economy, governments gave my city money for roadworks. They planned out a 6 month complete street refurbishment in front, sidewalks and all. I lost any business lunch clients cause no one wanted to walk down a dirt sidewalk in high heels or dress shoes.

You may have the greatest food, and a great vision, but if you need cooks and servers, they want money... They won't see your vision nor work harder for you. They will miss work cause they got drunk, slept in, didn't feel like it, gonna have sex instead, or any other idea. You will fire and hire, find decent people and find terrible ones. Staff turnover will always be going on.

You will have no personal money. Even if you incorporate, you will need your money for the business. A slow week may mean payroll and supplies partially comes out of your pocket. The dishwasher will break. The oven will break. The AC or heater breaks. The vent hood needs cleaning. You need new pans or utensils because cooks abuse them. You need to constantly buy silverware, plates, glasses, cups. Silverware gets thrown out by accident and no one tells you. Plates and glassware get broken. The toilet backs up and no one saw it before it flooded the bathroom.

The local newspaper food writer comes in and orders the exact dish that your supplier shorted you on. (happened!) Or maybe your supplier didn't have your item and some salesman decides that another product will do just fine without asking, giving you something that changes your final product, and then you get a customer who loves the original dish, stops coming in for a while cause -you- changed their favorite dish. (happened!) Or perhaps you order catfish from a supplier, and the packer (for what ever reason) doesn't read the box and puts the catfish sysco label on a extremely well labeled box of commercial soup destined for a major chain restaurant. (happened!) How about customers who will want to talk to you because you offer a meal that is not how they would make it. (yep! she complained the cooks were lazy because we served skin on mashed taters and they didn't peel them) How about people who walk in the door, say they would love to work for you and then explain how they'll completely change your dishes and menu that you have researched and developed and stuck your business life on. (you guessed it. Didn't hire him).

Say goodbye to a personal life. I owned my business, and helped to run the business next door as a manager. For the two years mine was open - 2 years, 365 days X2, 720 days... I can count - on my fingers - the number of days I did not go to the business for something. We may have been closed christmas and boxing day, christmas day I stayed home, but boxing day I had to go in and do paperwork. How about the phone call at 430 in the morning that says someone broke in, and only got the hundred buck till float, but did a thousand dollars damage. How about the call when a drunk girl, pissed off at her loser of a boyfriend, punches out your store window in anger, breaks her hand and the glass. How about the day my gas supplier lost a bill payment I gave them and killed my gas for a morning. I had to go, pay it again, wait for the service tech to open my gas so we could open the restaurant. They finally found my original payment, credited me and some low level flunkie apologised over the phone, but I lost a morning of customers who may think I'm closed for good. How about me heading to the restaurant with specialty groceries that a supplier won't give, and I get t-boned by a kid running a stop sign.

I could go on and on and on. That was a slice of living the restaurant owner lifestyle for 2 years. Millionaires who own restaurants started talking to me because I joined the fraternity. Wont know me from Jesus now.

My folks helped with love money where they could. The demise of the restaurant helped put them in a tightened financial position for the rest of their days. My mother always worried about money from that day on till she died. I live with the thought of what I contributed to the final years.

I am trying to scare you, I'll be honest. Everyone you deal with will want -your- money, upfront and no credit.

Justin (paintergeek here) just closed his paintshop business and posted, on facebook, a unique example of what business ownership meant to decorating his home for the holidays. It is a great example of what ownership asks of your priorities and sacrifices.

If you have to ask 'do I have the financial means to do this?' then, brutally honest, you don't. You may still do it, but you're behind the 8 ball from the get go and anything that effects the bottom line is magnified.

Biscuits and Gravy survived 2 years, was breaking even at the end, and the end moment was when I asked the landlord to hold off raising the rent for 1 year. An extra hundred bucks a month. He said no. If I didn't pay it, there will always be someone else coming along to do so.

If you continue with your process on this, please do 2 things for me:

1) Put this sentence on all your work at the top. Make it into a poster on your desk wall. Remember it always - I can do everything right,
and still fail.

2) And I'm very serious about this: Before you start your business, go have a meeting or two with a bankruptcy lawyer. Learn everything you need to know about going bankrupt before you start your business. I didn't go bankrupt but there were pros and cons for it.

Hope it helps. Just being brutally honest.

[G.]

stroker,

A couple of quick notes:

Talk to your lawyer BEFORE approaching your ex-wife!
I would not even approach her with any ideas about using the inheritance for anything without legal advice first.

I'm sure that you are an awesome restaurateur. Let's just assume that it is fact - unproven fact. Don't do it.
You're too old to work 80 hours a week. :)

You have quite a few things up in the air right now.
I would advise against making ANY decisions until you can get some stuff off of your plate.
(For instance, the top 2 ways to lose a close friend - become roommates, or have money issues.) :)

[Hard Driver]

My 2 cents, which are probably worth a penny for my thoughts.

1) Your paying child support for a reason, to support a child. If you give her all the money now, and she is fiscally as bad as you say, she pays her debts (if your lucky) and your kid gets nothing. It is supposed to be for the child, and spending it over the years at least give a hope of it helping your child.

2) Put the 6 figures away in the Vanguard Index 500 fund and hope the market keeps going, or at least 80% of it, and then 20% in the Vanguard total bond fund. You think 60 is old, but if you live to 80, you will want a little money later, and interest and dividends being re-invested in funds may help provide a bit of money when you can't earn any anymore. Give a huge chunk of money away now, and you lose all the future earnings of it.

3) I've owned my own business, and there is a saying that owning your own business is the most over-rated thing. YOU get paid last. Your employees get their salary, the rent gets paid. The taxes get paid. The suppliers get paid. You get what is leftover, if any, then have to pay taxes, social security, Medicare on it, both the employer and employee part. Obviously it can be done and some people make money at it, but it is a risk and if it fails, you are broke again. And restaurants are a cash business, and if you are not on site the whole time it is open, money will disappear. That is a lot of long hours and lots of paperwork to keep from being robbed.

4) I don't know squat about your life. But those "retirement" activities need to generate money. Quitting everything that pays for sure just leaves you bleeding away your money. Don't let the inheritance burn a hole in your pocket. Those things can be done while still working. Especially if you have time to home school your kids... Send your kids to school and use that time to pursue your income generating dreams. If you can get some done, sold, earn some money on the side with these activities and see a real income stream that needs more of you time, then you could "retire" and pursue them with a realistic idea of how they can replace an income. Don't mean to be harsh, but if you really wanted to build hot rods, or write, design games, you would already be doing it. Don't think the job is stopping you. You could spend an hour or two a night working on these things if you really wanted it. If you really do, then do it while you still have a job and can pay your bills too without pissing away your inheritance.

$100K is not a lot of money, especially if you have liabilities of $70K over the next 10 years. I would, certainly work until Medicare, because health insurance will suck up all your money, and it is money you don't get back, and hopefully you don't get sick enough to make it worthwhile.

Yea, working for someone else can feel like you don't have control. But if you own your own business, you are just a slave to it instead. And I actually inherited a bunch of money and quit working, although my wife was working. Being a homebody was terrible, I rather would be working. I went back to work with a fresh perspective that I will be doing something with my time, and sitting in traffic and solving computer issues is better than doing dishes and laundry. And there is also a bit of pride in working you lose when you are not.

[TravelGal]

To further what Hard Driver said, and what G. said, be sure to contact your attorney first. Child Support is for the child. If you give it to the mother, it's not for the child. As far as I know, it has to be clothes, shoes, books, food, education, toys, eye glasses, whatever. It can't be to pay off someone else's (even the mother's) credit cards. Further, if it's all paid off now, what's to stop her coming back in 5 years and asking for an increase? Sounds like she'd spend it all and want more.

I also agree that you can start doing what you want now. It's not like you could be making a lot of money at the beginning anyway. You wouldn't be good enough at it at the beginning. Give yourself a time to perfect what you want to do. The best part is that you have options. If you spend all your money on anything, you limit them. Not to be too morbid but look at poor dando. You might not even be alive 10 years from now. Why pay that far ahead? Which reminds me, if your will is not in good order, use some of your inheritance for that. Have trusts written in for the children so the spendthrift ex or a greedy attorney don't get more than they should. Be proactive but prudent. Then you can reevaluate. As my dear mom used to say, "You don't have live your whole life at one time." Good luck. Let us know how things are going forward.

[cameraman]

Do not start a restaurant, just don't. There's an excellent little restaurant just around the corner from me. It is absolutely fantastic. The guy running it is a truly excellent chef but works about 90 hours a week and while the restaurant is in the black he personally is just barely staying above water. It's an unholy grind.

[chop456]

As my dear mom used to say, "You don't have live your whole life at one time."

Howard Jones ripped your Mom off.

[Dvdb]

I think you answered your own question in the second paragraph. Sixty is the age to really start putting money away, not giving it away.

And I agree with the no restaurant sentiment. One of my best friends, who managed bars/restaurants while in college, decided at 55 that he wanted to start his own. Mind you, had been out of the industry for 30 years. Long story short, he moved to Fort Meyer's Beach, lasted two years, and about $100,000 in debt. He is now an over the road trucker, trying to pay off that debt.

[nrc]

I agree with the general sentiment here. 60 is where you should be lining up your final approach for retirement. You should make sure that you have your retirement finances lined up so you have security for your future. That's what will allow you to enjoy those golden years with your children and do those things that make you feel happy and productive.