Tuesday, February 9, 2016

It's All In The Planning - Part 2

As Hubby and I continued on our journey to financial independence, we made extra payments on the principle on our mortgage each month. That was the only debt we had and we didn't want to pay interest for 30 years. Hubby continued to go to college and I did whatever I could to save money on a daily basis that we could put into investments. After 6 years of marriage we had our first child. With the birth of our child, our priorities changed. We now had college to save for. So we opened an account to do that. Two years later we had another child so we had to plan for college for two. Hubby had always maxed out his 401K and we had always saved an additional 10% in taxable savings. As the years continued, our investments and savings grew. During those years, Hubby graduated with his B.S. in engineering and continued on and got his Masters going nights. He had switched jobs to make a better future for us. It paid less than engineers were making but the benefits were better. So it was a trade off. He had many promotions over the years and we were comfortable. He turned down a promotion to NYC and one to Buffalo because we wanted our children to grow up in a smaller area with family close by. That was more important to us than the extra money.

I went to work when the children were in junior high and high school. I continued to work until my youngest was in his last two years of college in a 5 year program. I saved through my 401K and took it with me when I left work. I was a stay at home wife for 4 years until Hubby retired. We spent those years firming up our retirement plans. We retired to another state and loved every minute of it. But when our grandchildren were born, we missed them so came back to our home state to be closer to them.

As we grew older and our children became independent after college, we saved more and more of a percentage of our income. It grew from 10% to 70% in later years. We finally were able to retire early. I was 53 and Hubby was 54. Our dream of financial independence had come true.

If we hadn't been saving all along, we would not have been able to pay off two homes before retirement and then pay cash for one in another state. Then turn around and buy another one back here a few years later with cash. The cross country moves were super expensive without even thinking about the housing. Those set us back about $25,000. Without life long planning, none of this would have been possible. We could have easily been stuck in another state without the money to get back and live near our grandchildren.

None of this was easy. We didn't win the lottery or get huge inheritances from our parents. We named every penny we spent. We knew where all of it went. Our children went without nothing but learned the value of a dollar. They had part time jobs during summers when they were old enough. They had paper routes from the time they were each 12. They knew money didn't grow on trees. It was one of the best lessons they ever learned.

None of this would have been possible if we just spent freely spending more than we earned. We always spent under what we earned. We still do because we still have dreams for us, our children and our grandchildren. 

The only way to get there is to plan it out year after year after year. Invest and save early because the earlier you do the more that money will grow. If you are older and haven't saved, the time is now to get moving on that.  

Without savings and investments, you will have to work beyond 65.  Most people won't be healthy enough to do that. Or do you think that Social Security will pay your way? Don't count on that. It won't be enough to carry you through a retirement. Inflation will eat away at it. Besides the Social Security system is broken and will  have to be reduced because our government promised to keep it safe for our retirement and didn't. They spent it on other things. 

If you have a pension, you earned it. But those are almost non- existent now since less than 19% of working people will have one. Plus they could be done away with at any time by your prior employer. We have seen companies cut them again and again. Many states are cutting them for their new hires and even those already retired. The federal government will have to reign them in because they are too costly. Schools and local governments will have to do the same because they are costing the tax payers a fortune in their school and property taxes. So even if you have a pension or will have a pension, save your own money as a back up plan because pensions are an uncertain future.

We all make our own choices in life. They don't just drop into our lives. We decide who to work for and what education is needed to get there, how to live and what we save. But we all eventually retire. So  plan well so that you have a happy, stress free one.

Start planning and saving now so that your future will be as bright as you want. Remember, it is all in the planning. I want all of you to have financial independence while you are still young and healthy enough to enjoy life.

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