Man, I’ve fallen behind on blog posts due to the holidays…. Well, back tracking a bit, lets first go to my last week in Seattle with Penny ( Dec. 12th – 19th)…
This week has been a week full of exciting opportunities, connections, and learnings.
First, Penny got me in the door of one of the largest architecture firms in Seattle; Callison. Although the work that this firm does is, in many ways, on the opposite end of the spectrum from the kind of work I see myself doing I am always interested in learning about the other side and hearing other perspectives. And I was pleasantly surprised to find that at least some of the people in this firm were equally interested in hearing about my side of the building spectrum and what I am interested in doing. John, a wonderful Principal in the firm, was incredibly unassuming and talked with me with great interest for almost three hours! I showed him a bit of some videos about earthship building in Haiti as part of disaster relief efforts, some of my own drawings of houses I hope to build one day, and just shared my knowledge about the natural and alternative building world. It was quite an empowering experience to realize that I could reach across the lines of the building world and find a receptive audience.
After my visit to Callison Penny and I took a break from our architecture/building focused tour of the Seattle area and took a trip to Fidelity where I learned a bit about investing and money managing. Money is something that makes many people, including myself uncomfortable. Often I wish I just didn’t have to deal with it. But Penny has been really helpful in talking very frankly with me about money and walking me through things like why it might be important to start building a credit history or investing, and how one can make the system work for you. One thing Penny does, which I think is quite brilliant, is she uses a zero APR credit card to get miles for almost all her purchases and bill paying which has allowed her to travel on many of her trips practically free. And since she is good about managing her money she has never paid a cent in interest or other fees to the credit card company.
When Penny found out that I also knew nothing about investing she decided to invite me to come with her to Fidelity and learn a bit. I was a bit hesitant at first, and still have my questions and doubts about the world of investing, but I must say that the whole investing process seems much less scary and intimidating now. Here is how I understand it (beware, I am NOT and expert, so don’t take my word on any of this money stuff); there are four “pots” that people generally put their money into: 401k’s, IRA’s, Taxable accounts, and emergency money.
A 401k is always attached to an employer. It is money that you ask your employer to take directly out of your paycheck, before taxes, and put aside to invest in a pool of mutual funds that they have already chosen. Often employers will match what you put in your 401k up to a certain percentage of your total paycheck. This match is basically free money that you can now use to invest, so I can’t see a reason to not at least put as much money as they will match into your 401k. But, this money cannot be touched until you are 59, at least with current laws.
Then there is an IRA: an Independent Retirement Account. There re two main kinds of IRA’s: Traditional and ROTH IRA’s. Traditional IRA’s are money you set aside to invest that is not yet taxed. So when you reach retirement age (59) and take that money out you will have to then pay taxes on however much you now have. A ROTH IRA, on the other hand, is an account in which you put money to invest after taxes. So, lets say you put $5000 in that account. Then you would pay taxes on that original $5000 but when you go to take the money out at age 59, even if that money has now grown to 1 million through investing, you do not have to pay any additional taxes. That is kind of incredible, if you ask me. Any money put in an IRA cannot be touched until you are 59, but one could at a certain point decide that you have made enough money and do not want to risk a market crash and pull the money out of all stocks, bonds, etc. and just let it sit in your IRA. Or, you could put the money in lower risks investments, such as only bonds and CD’s. There is also something called a SEP IRA which is for people that are self employed. These work like a traditional IRA, so they are before taxes, but one thing I am not clear on is why a self employed person cannot have a ROTH IRA since as far as I can tell IRA’s in general are independent retirement accounts and not attached to an employer.
Then there are your taxable accounts, which are just things like your savings and checkings account from which you can invest money at will and take money whenever you want (You don’t have to wait until you are 59 to touch this money).
The last pool is your emergency money, which is money you will not invest and is basically always available. Remember, money invested is not really available for your to spend until you sell the stock or bond. So your emergency pot is the money you keep under your mattress for hard times, if you know what I mean. And it seems that it would always be smart, if possible, to have at least 1 year’s worth of saving in this pot in case you lose your job and/or the market crashes, or both happen at once….
So those are the four pots of money. And then you have the different kinds of investments you can make with money from each of these pots (except the last, emergency pot. That stays out of the volatile hands of the market).
First there are mutual funds, which are a portfolio of companies or stocks that change in order to maintain the goal of the mutual fund, which, for instance, could be at least 5% returns annually. These are generally pretty low risk but also somewhat lower returns.
Then there are Index funds. These have a predetermined set of companies rather then a predetermined goal of a certain amount of returns. So, for example, an index fund might consist of 5 of the largest companies in the world, or it could be focused on socially responsible, small businesses, or businesses related to the computers software…. My understanding is Index funds can be higher risk then mutual funds but they can also have much higher returns if chosen carefully.
Then there are Bonds. A bond is basically an amount of money you “loan” to a company that they then pay back to you over a set amount of time with a set amount of interest. So you generally know exactly how much you will make if you keep your bond for the life of the bond. These are low risk for exactly this reason. But you could still be screwed if the company from which you bought the bond were to tank.
Lastly there are CD’s, or certificates of deposit. These are like bonds but you buy them from the bank, so they are even more secure. They are actually government insured so even if the bank were to fail, for some reason, to pay you back the government would pay you. But the interest rates are also generally much lower so the gains are much smaller.
Overall, it seems that most people recommend maintaining diversity with all these different kinds of investments; having some in lower risks investments and some in higher, and also diversifying in the kinds of companies and stocks you invest in; large, medium, or small, and once focused more on value, growth, or a blend of the two. And, on a site like fidelity.com you can look at all these different kinds of investments and buy and sell them on your own right from the site if you hold an account with fidelity.
Ok, enough talk about money. Back to architecture, building, and design….
A few days later Penny and I met with Martha Rose, a woman who is doing her part to make an impact on the building world. Martha comes from a construction background but now designs and builds extremely tight homes in the Seattle area. She strives to build homes that are highly efficient, comfortable, and use as little chemically treated materials as possible. Her homes are in many ways catering to those who experience chemical sensitivities. For me, the most inspiring part was to see a woman builder who does not have an architectural background but is designing the homes she builds and is succeeding in making a living building these homes and marketing them to the mainstream.
After receiving a tour of Martha Rose’s latest project, City Cabins, we went to meet with Terry Phalen, who is the founder of living Shelter Design, a small architectural firm. Terry is a licensed architect but she got her license not by going through an architectural program but by apprenticing with architects and then taking the licensing exam. This is something that can only been done in some states, Washington being one of them, and an architectural license obtained in this way is also only recognized in certain states. As I learned about Terry’s alternative path to becoming an architect I also found out that another possible way to become an architect is to do a 2 to 3 year master’s program rather than go through the usual five year programs. These were all interesting alternatives that I will keep in mind for myself if I find that a license or degree in architecture is something that I want. But it was also interesting sitting at a table with Terry and Penny and hearing from both of them that hands on building experience is not something that most architects have and both of them seemed to agree that an architectural degree or license may not be necessary for the kind of work that I want to do. They also pointed out that with an architect’s license comes increased liability and responsibility, so in some ways less freedom to be creative or take small risks. Its like being a doctor; once you have an MD you are also liable for malpractice and expected to deliver a certain quality of care.
The finale of our day was meeting Sam, a friend of Penny’s that I knew from way back in Boston and getting a tour of Sam’s kung fu teacher’s place. Johann, Sam’s kung fu teacher, has a sweet set up on a piece of land that he has been working on for years. He has created a maize through an edible forest garden that he has been growing for over 15 years! In this maize he has many different species of bamboo, fruiting trees, and little boardwalks, to name just a few things. His land also had lots of out buildings that demonstrated creative ways to build alternatively but still to code, including a yurt, a beautiful little “god house,” which is basically a little temple, and and kung fu training room with a rope ladder up to a second floor!
For now, I think continuing to gain hands on building skills through apprentice like programs is what interests me most. Two “schools” that I have bookmarked in my mind as possibilities for my future are Yestermorrow, and the Earthship Biotecture Academy.
Yestermorrow especially intrigues me. It is a design and build school in Vermont that offers over 15o different hands on courses and a range of options for how one can enroll, from taking individual courses that range from a day to 2 or more weeks long when one has time and money to do so, or doing a certificate or semester program, or interning and obtaining a certain amount of class hours for free in exchange for “work,” which really sounds in itself like a hugely educational experience.
So there are my highlights from my last week in Seattle with Penny. It’s amazing how much you can learn without actually being in school when you have a little bit of time on your hands and the freedom to follow your own interests.