Working for a top-tier consulting firm.

In my previous blog entry, I suggested the global firms might not be a good as the middle-market firms. In terms of quality people, this I believe to be true. There are, however, some advantages to using a global, or top-tier, firm. The most significant advantage is the support structure behind each consultant. The big-boys go to great lengths to make sure each consultant receives continued training and is connected to their massive internal support networks. When you get one consultant from one of these firms, you also get a collective knowledge from the entire firm. In a way, they are much like the Borg.

I did mention perks in my previous posting and I will go into some details about them. If you played your cards right, working for one of these larger firms could help one retire by the age of 45, give or take 5 years. Even if you did not play all of the cards correctly, there are many other advantages – but there are also some costs. Let me explain.

Working for one of these consulting firms will require a fair degree of travel. If you have any reservations about travel, then you should not even consider joining their ranks. If, on the other hand, you can travel, then a whole world of opportunities is handed to you on a plastic plate (your expense card). I'll present the formula for early retirement and let you take away the good and the bad. Ready? (I should be paid to let you read this formula).

Prerequisite #1: You are not married.
Prerequisite #2: You do not have any children.
Prerequisite #3: You do not own a home.
Prerequisite #4: You have, at least, a 4-year degree from a reputable university.
Prerequisite #5: You have self-control.

These firms want you to travel because they can get a larger billing rate from the client, so travel is the primary catalyst for early retirement. When traveling for these firms, they pay for everything. This includes the air fare, hotel, meals, and any other associated expenses related to your work. Many times, this will include a rental car (you have to be able to drive back and forth between your hotel and the client’s work site).

When you travel, you will earn reward points. It is a good idea to pick one provider for each aspect of your travel. For example, always stay at a Marriot. Always fly American Airlines. Always rent a car from Avis. You get the point; or, should I say, you’ll earn the points. Here is a run-down of point rewards.

Credit Card (American Express): Earn points for every dollar charged on the card.
Air Fare: Earn frequent flyer miles.
Hotel: Earn points towards free stays.
Rental Car: Earn points towards free rentals.

As you start to accumulate points, the providers will start to reward you with bonus points. For instance, your air fare points will start to double and provide nice perks, like free upgrades to first-class. Your rental car points will allow you free upgrades (go from a Ford Taurus to a convertible Mustang). If you are using American Express, your reward points will start to accumulate to allow larger “Gifts” from the catalog (I knew someone who was real close to having enough points for a Harley Davidson).

How does all of this enable one to retire early? As a traveling consultant, you will be gone for weeks at a time. It would be a very typical week for me to leave home on Monday morning and then return late Friday evening. During the week, my out-of-pocket expenses were zero; remember the firm pays for your hotel, meals, etc. etc. Since you do not have the typical day-to-day expenses one would normally have with a “Regular” job, you now have more money to save. Not too shabby, but it gets better.

For most projects, you are given a per diem, which accounts for three meals and incidentals. They do this to help reduce the number of receipts needed for reconciliation. Quite often, you can get by for less than the per diem; which means you pocket the extra. Over time, this becomes a nice tax-free source of revenue (consult your tax advisor on this). So, if the firm gives you $40.00 to spend on dinner, but you spend $5.00 on Mac-And-Cheese, you just pocketed $35.00.

On my next installment, I will put this all together to explain how to enable early retirement.

Stay Tuned.