A Backhoe Operator Looks At 80

If you have been reading this blog for a while then you know about my retired neighbor who operates a backhoe to contribute to his and his wife's retirement income. He has been quite an inspiration and role model for many reasons. As you may know he was a firefighter with me for quite a few years, he recruited me onto the department back in 2002 (2003 was my first fire season).

Earlier this week he turned 80 and I've long thought his 80th birthday would be a great time to interview him for a blog post. Like just about everyone up here he did not know about the writing I do and he certainly did not know how famous he has become-- in an anonymous sort of way. I visited with them both yesterday (they will remain anonymous) for a couple of hours and for however well I knew them I learned a lot.

They have been married since 1954 which is something right there to be impressed with. They got married when he got out of the Air Force. In their early days he was a student at Michigan State and worked at Sears at night. They had son number 1 in 1956. When he graduated he wanted to be a law enforcement officer but there was no hiring in Detroit in 1958 so they moved to Phoenix where her sister lived and the police department was hiring.

When they were first married her father gave them $1200 in a mutual fund with the instruction to never sell it. By 1958 it was worth less than what it was in 1954 so they sold it for a down payment on their first house. Shortly thereafter they started to buy houses that needed work, they did the work themselves and rented them out such that the rent covered the mortgage. Very quickly they had five rental houses. While I am not certain of the exact timeline they were quite young at this point.

This was one of the things I learned about both of them. I knew he was very much a get it done type guy but really far more so than I ever knew. The entire time I have known him he is either out somewhere on the backhoe, doing something that is FD related and if he is home he is in his shop/garage working on something. Doing nothing really bothers him. This ran in his family as his grandmother successfully ran a farm with employees after her husband passed away and his parents were just as hard working. My neighbor seemingly knows at least a little about everything and learned much of this from time spent with his father when he was a boy and those lessons stuck. He tried to instill the same work ethic in both sons and while this was not easy when they were little guys both sons are as busy and successful as my neighbors.

To give an idea of the work ethic, my neighbor was a law enforcement officer for 27 years until age 54. About a year before he retired he went to school to learn refrigeration repair. After retirement his plan was to do refrigeration repair (roof top AC units mostly), have the rental income from the five houses and his police pension. They way things worked out, they lived off the rentals and the refrigeration work and the pension check went into savings.

This lasted for about five years until he made contact (friend of a friend) with someone we've all heard of (this person needs to remain anonymous as well) who needed a caretaker/manager of a mansion in Florida along with some other interests. They moved to Florida and did this for about five years (at one point in Florida they switched employers but the situation was very similar). The nature of this work was that all they had to pay for was food so essentially all of this income went into savings as well.

They first bought in Walker in 1972 as a weekend place. They moved here full time in 1992 when they got back from Florida. The bought a different place along the way and didn't do much with it until they moved back but it did need work that they did themselves both in terms of the actual house and the property (this is what lead to the first backhoe). As he was working on their own place he got a lot of side jobs with the backhoe but more on that later.

At some point they sold out of the houses in Phoenix and bought houses in the Prescott area with the same idea for the rental income and while I am not certain the status of those houses in terms of being occupied or positive cash flow, the police pension check still goes into savings.

Other than the mutual fund they got as a wedding gift they have no use for stocks but have owned bonds a couple of times but really have done very little there. There are two reasons for this; they don't know what stocks to buy and they believe there are too many dishonest people in the profession so they've always gone with houses and savings accounts. Although they never thought of it this way before I said that the self awareness to know they were not stock pickers is unusual and commendable. Too many people don't know what they don't know but my neighbors do which is impressive.

Both of them are incredibly fit. He is 80 and she is a couple of years younger. They apparently have good genes and they do have a good diet which you might expect to hear a very healthy 80 year old to say but he made a point to talk about never shying away from physical labor. It keeps you moving, keeps you fit and requires thinking and problem solving (same with firefighting). There was no mention of any exercising at this point. But as I was practically on my way out the door she said "oh yeah he does his exercises every morning." He is so fit that a normal 50 year old would need to exercise regularly to be as fit as he is. As recently as 2007 he dug a fire line up a very steep hill.

To the backhoe; as mentioned he bough the first backhoe in 1992 for $4000. He had so much work on their property that he felt it made financial sense to buy the backhoe instead of renting frequently. He did the work he needed, got some side jobs and was able to sell it for the $4000 he bought it for. He then bought the second and current backhoe (pictured above) in 1996. It was a 1992 model than he bought with 3000 hours on it for $23,000 which is much less than I would have guessed. It now has 6000 hours on it. The hours are relevant as there is relatively little maintenance before 5000 hours and more so after 5000 hours and he does the maintenance himself.

The income from the backhoe work would not be a lot by itself, it is simply a piece of the puzzle for their retirement solution--I think the funnest part as he loves doing it. Although he did say that it is fun for three-four hours but eight hours and it becomes a job.

As far as why they stay so active, simply, if you don't use it you're going to lose it. Another important point is that they have always lived below their means, with all the real estate transactions they've never owned a fancy house. They are happy with adequate in terms of quality and having room for when kids or grand kids visit (I am aware of one great grandchild). I asked about volunteerism as in they time I have known them they've been very involved with the fire department (less so in the last year because of how fouled up the politics have become) but for many years they were generally too busy but just as he recruited me in, someone else recruited him into the department and she got very involved on the fund raising side of things.

In many posts I have talked about all of these things in one way or another. When you don't have equity exposure that is adequate for growth you need to figure a way to make up for the growth you are not getting which is exactly what my neighbors have done in a way that is right for them. I do not know if they are wealthy in the way most people think of it but they have a modest lifestyle and the various sources of income are such that the pension check usually goes into savings (as mentioned above). This is a scenario where success does not hinge on having some huge balance in the bank. They cover their bills, do what they want to do and I imagine could address just about any sort of financial one off event that might come along.

My neighbors have had a profound influence on how we live our lives. We've not had a credit card balance since 1991, we've always been savers, quite content to live in a modest house and drive cars for a relatively long time but meeting these neighbors in 1998 was a chance to see some similar, as it turned out, ideas working out for people further down the road which was a validation of what we were doing. In 1998 I was 32 and while we were saving money the notion of retirement was not yet tangible to me (I was a trader at this point not an RIA). As I moved into this phase of my career I realized it was something I would not want to retire from and a contributing factor was the fun my neighbor has on his backhoe.