Pick Your Path and Don’t Stray

I read an amazing post by Kitty at BitchesGetRiches last night.  She walked through her reasoning behind buying $25 wedding rings.  She compared them to the $1,900 rings she and her partner really wanted and explained why they decided on the $25 rings.

They decided on the $25 rings because she and her partner had, years earlier, talked about their dreams.  She wanted the pony her parents never got her and she wanted to live in a house with secret passages.

Buying $1,900 rings didn’t help her get the pony. . . or the house.

She gives us permission to get the fancy rings if “you’ve dreamed your whole life of having a great big diamond on your finger”.  That wasn’t her dream or her path so she didn’t do it.

Before I read Kitty’s post, I was trying to come up with a way to use this amazing picture of a slot canyon I hiked last weekend.  I wanted to talk about how we each have to decide what is important to us and spend our limited resources–our time and money–to pursue our own path.

But she expressed it better than I could.

If you want the pony, then do everything you need to do to get the pony.

If you want the rings, then do everything you need to do to get the rings.  But please, please, please don’t settle on the partner portion of this scenario–you can buy your own damn rings.

If you want to get out of debt, then do everything you need to do to get out of debt.

If you want some flexibility or freedom, then do everything you need to do save some money.

But don’t jump on someone else’s path, figure out what matters to you and stay on your own path.

Do you know what your pony/hidden passage house is?  Figure out your path to get you there.

If you don’t know what your pony/hidden passage house is, read this and take an hour to do J.D. Roth’s exercise to figure it out.

Sometimes other people’s paths look like more fun–whether it’s fancy rings, huge ass houses or amazing trips.

But here’s the thing.  You don’t know their whole story.  You only know your own whole story.  Don’t compare your real story to their Facebook/Instagram/Twitter story.

Figure out your path and stay on it.  Your path is the only path that is right for you.

I’d hate to get to the end of this one beautiful life and realize I’d been walking on the wrong path . . . for me.

Save To Retire Early Even If You Won’t

I listened to a good bit of the James Comey hearing last week.  I don’t follow politics closely but Mr. Ms. Liz does so it was on the TV while I was working.

I kept wondering–does he have F U money?

We haven’t talked about F U money before because I find it to be a bit vulgar and I know some of my readers are sensitive to such things.  But I haven’t found a better way to express this concept.

Jim Collins, one of my personal finance heroes, coined the term.  If you haven’t read his stock series yet, do it right after you finish this insightful post :).

Does James Comey have enough money to move on to something else without worrying about how he will keep his family afloat during the interim?  He’s 56, could he retire?

Fortunately, few people see their jobs implode like James did.  But layoffs are common, companies sell, bosses move on, economies falter etc.

In my last job, we had two major downturns that affected people’s ability to pay an obscene amount of money for ski vacations.  A few of my colleagues lost their jobs–at a time when good jobs were not plentiful.

Most were not prepared.

My approach was to save as if I would retire early, even if I didn’t. 

I wanted to have F U money before I even knew what F U money was.

I’m a worrier, a planner and a control freak.

There are many worries that I have little control over–car accidents, health crises etc.

I have a lot of control over my dependence on a job. 

I reduced my need to worry by reducing my spending and increasing my savings . 

About 15 years ago, my boss’s boss asked me how I could get by with one less accountant.  I think I had a team of seven at the time so the loss of one would have been significant. I immediately replied, “well it better be me because I couldn’t do it”.

I wonder what my response would have been if I didn’t have F U money–maybe I would have worked 80 hours a week rather than the 60 I was already working.  I’ll never know.  Fortunately, I never heard another word about this suggestion.

The value of having F U money isn’t just that you have the ability to leave.

F U money allows you to shape your job throughout your career.

It allows you to ask for more flexibility because there’s less risk if they say no.  It allows you to stand your ground if you’re asked to do something unethical or not aligned with your values.  It gives you more control–now we’re talking my language!

I was a world class saver–saving over half of my take home pay for the last decade I worked.

When I turned 30, my net worth was about 1 times my gross earnings; at 40, it was 7 times; at 50 it was 13 times.

More importantly, when I turned 30, my net worth was 2 times my annual spending; at 40, it was 22 times; at 50, it was 53 times.

I saved this money even though I didn’t have a burning desire to retire. 

I loved my job 95% of the time.  I didn’t have a lot of hobbies and I didn’t have anything to retire to . . . until I found something to retire to.

Once we bought our retirement home in the desert, I wanted to spend my winters there.  BAM – I suddenly had something to retire to.

Fortunately my husband and I were on the same page though he still isn’t fully retired.

We researched what we needed financially, did a bunch of long-term projections and decided we had enough.

I mentored my staff so my work transition could be as smooth as possible.

Then I took the leap–on leap day no less!

Don’t put off saving until you have something to retire to.  It may sneak up on you like it did me or, like James Comey, it may not be your choice.  Start preparing yourself–gather your F U money, invest it, and watch it grow. And, in the meantime, shape your career into something that works well for you–you’re in control.

Reflections On My First Year of Retirement

I’ve been retired a year–it’s crazy how fast it has gone!  It makes me better understand a line Gretchen Rubin often quotes “The days are long but the years are short”.

I hope you’re not disappointed but I’m not issuing a report card like I did for my first four months of retirement.

Mainly because my grade would go down and I’m a gold star junkie.

Not because I’m not loving this retirement thing but because retirement has turned into more of a vacation than something I can grade myself on.

I feel like this first year has been a detox.

I’ve allowed myself to be far less productive than I expected I would.

I got my first job when I was 12–yes, 8th grade.  I bussed tables at a Mexican restaurant for five weeks–just enough time for the owner to realize the head bus girl was hiring 12 year olds.

Not sure what my parents were thinking but I learned a lot about how to handle come ons from gross kitchen workers in just five weeks.

I got my first legitimate job at 13 making models of teeth for an orthodontist.  I kept that job all through high school and typically had one or two jobs on top of it.

I wasn’t allowed to work my freshman year of college and couldn’t have worked my first year of law school.  But other than those years, I always had at least one job.

So retiring at 51 may seem early but I had worked almost 40 years.

I thought my job was my life.  I think that tends to happen when you don’t have kids.

I learned my job was not my life.

It’s a long story more appropriately discussed on a therapist’s couch than on this blog but suffice it to say some loyalties were stretched or broken.  I was able to rebuild the relationships but I better understood the difference between colleagues and friends.  I do have a few treasured friends who have bridged this gap but not many.

So it feels like I’ve been on vacation for a year.  Yippee!

I retired for a lot of reasons but the overarching reason was so I could spend the winter in the desert.  21 winters in ski country is enough.  And I’ll tell you, the saving and the sacrifice was worth it.

Sorry mountain friends, but it was especially fun when I received weather and road alerts from our home county.  This winter was a doozie–early season snowfall was record setting.  We enjoyed watching much of this snowfall on our driveway cam, from the desert.  The gal who replaced me at work texted that I picked a great year to retire because my old 25 mile commute sucked.

People who are working often ask me what a typical day is like.  There’s rarely anything super exciting in my days but here goes.

I wake up when my body tells me it’s time to wake up.  I stretch while my latte brews.  I then spend a bit of time working on this blog and reading posts from my favorite bloggers.  After breakfast, we play pickleball, hike, mountain bike or take our cruisers out for a ride.  We get cleaned up, do household chores or shopping.  Then on the best days we get together with friends for cocktails or dinner and cards.  On the other days, Mr. Ms. Liz and I play cards and watch TV or a movie.

I  spend a bit of time on homeowner association matters.  I’m on the Board of my mountain association and help with financial matters for my desert association.  Association management is the business I retired from and this is a way I can give back to the communities I love.

I’ve worked a bit – about a weeks worth in total.  It’s been fun and hasn’t interfered with my important leisure activities too much.  I also received my first gold star in a year . . . literally:  “and a gold star to Liz for” blaah blaah blaah. . .

I’ve informally coached a few people and hopefully helped them make better financial decisions.

I also read and listen a lot–books and podcasts about money and life that teach me and give me ideas for this blog and shit-lit that entertains me.

We’ve done a bit of local traveling–but stay pretty close to home because of our geriatric cat (who knew a cat could live 21 years?!).  Once he’s gone, I suspect we’ll buy a sprinter van RV and travel more extensively.

It may sound like a snore, but I’m doing what I want to be doing.  The mix of physical, social and sedentary activities suits me.

This coming year, I need to work on the technical side of this blog so I can reach more readers.  I really (read: really, really, really) hate messing with the technical side–I tend to screw it up and can’t figure out how to unscrew it.  But, fortunately, I have a friend who is expert in this area and has offered to help.  It sounds like a good winter project to me.  I’m also working on formalizing my coaching process and even have a friend who is willing to work with me while I develop the program.

But this is a blog about money so let’s talk about money.

I thought it would be really hard to spend money when I’m not making any.  I’m shocked, but it isn’t hard at all.  Each month, I get a transfer from my investment account–it feels like I’m getting a paycheck even though it’s just my own money.  If I had to think about where my money was coming from each month, it would be unnerving–automated transfers reduce my stress.

I’m spending more money in retirement because I have more time to fill.  It’s mainly groceries and dining out that have gone up.  But we saved on utilities by avoiding winter and save on vehicle expenses by driving less.  I’m still staying well within my budget–I should probably be spending more but I have and do everything I want.

And I’m making a bit of money too which was not in my plan!  I’ll use the money to maintain my CPA license and fund an IRA.  It’s been fun to contribute to these projects and I’ve kept in touch with my former colleagues.

I thought it would be hard to see my net worth go down.  But it hasn’t gone down, it’s up over $100,000 since I retired thanks to the 16% run up in the S&P 500.  And I’m not even including increases in our real estate values–our mountain community’s real estate market is making a comeback (finally!).

My investments increased more in the first two months of this year than I will spend all year.  I’m incredibly grateful for this–if the market had tanked as I retired, retirement would be way scarier.

So speaking of scary.  What scares me?  Healthcare.

If there is anything that could make one of us go back to work, it is the cost of healthcare.

We are on an HSA eligible Obamacare plan.  We pay $171 a month for coverage for both of us.  It’s absurd but it’s the law.  Because we are (voluntarily) low income, we receive a subsidy for most of our insurance premium.  You don’t want to hear me rant about how foolish this is–the government paying insurance premiums for high net worth individuals–so I won’t start.

If the subsidies go away and premiums stay at the current levels, we’ll feel it.  Fortunately, Mr. Ms. Liz has only five years until he’s eligible for Medicare (one time when it’s good to be old!) but I’m 13 years out and a lot can happen in 13 years.  If you’re in a similar situation, and wanting to read a great write up on the current situation (aka scare yourself!) check out ournextlife.com.

It’s a worry, but it won’t keep me from enjoying this early retirement I worked (and saved!) hard for.