Friday, September 9, 2016

Is There A Better Way? Part 2

From the day that Hubby and I got married we were always looking for a better way. We knew in order to reach our goals we had to maximize income and minimize expenses. Fortunately, Hubby had a good job as an engineer for a large company. I graduated from a community college with no loans(worked to pay my way through). Hubby had a year left on a small student loan he took which we paid off as quickly as income would let us. I looked for a job after we got married and started work 3 months later. We opened a savings account the day we got back from our honeymoon. Hubby had contributed to his 401K and continued to do so. 

We immediately minimized expenses by finding a clean attic apartment in a safe neighborhood. Our rent was $ 80. per month which included heat, electricity, water and garbage. We had free telephone service through Hubby's employer. We then paid off our car loan and his student loan(from 2 years at a community college) the first year. We spent $ 25. twice a month for groceries(that included cleaning and soaps too) and we ate well. I learned how to cook frugally. The only other bills we had were for tuition and books for Hubby to go to college nights for his B.S. in electrical engineering, automobile, life, medical and renter's insurance, personal care items, dental and annual medical check ups. Hubby did maintenance on the car for non-warranty items. We only bought clothes when we absolutely needed them. I packed Hubby's lunch every day and mine too when I started working. We rarely went out to eat. We entertained friends in our apartment by hosting dinners or providing snacks and drinks while playing cards. We went to a movie every couple of years.

When we opened our savings account, we were given a passbook to make deposits with. Every week we made a deposit whether it was $10., $20. or $50. Whatever we felt we could put in every week and still be able to pay the bills. When I started working, we banked my entire paycheck with the goal of buying a home within 2 years. Our rent was cheap but we wanted to buy a home and build some equity in it for ourselves. Twenty two months after we married, we moved into our newly constructed home. We didn't want to pay our property taxes through the bank where we got our mortgage because they didn't pay interest on that money to us at that time. So we convinced them that we had good credit and they could count on us to pay the school and property taxes every year ourselves. We have paid our taxes forever that way and earned the interest for ourselves not let the bank earn it. We loved seeing the interest added to our savings account every month. When we got a couple of thousands dollars built up again after we bought our home, we put it into CD's which paid more interest. We also paid extra money on the principle on our mortgage every month with the goal of being mortgage free as quickly as possible. 

We bought the bare necessities of a refrigerator, sofa and bed when we moved into our home. Relatives gave us some hand me down dressers and dining room furniture. Everything we purchased was paid for with cash. I went to the laundromat for a couple of years because we had no washer and dryer. I had planned on working for a few years but 5 months after we moved in our home, I left my job due to a miscarriage. Hubby and I decided that I would stay home and learn whatever I could to keep our expenses down. I started by washing our clothes in the sink and hanging them outside to dry. We finally found a great deal on a scratch and dent washer and dryer after a year but I still continued to hang the clothes to dry to save on our electric bill. I ironed them so that Hubby looked great going off to work.

I took every book on frugality, saving and investing, and D.I.Y out of the library that I could find. I learned how to D.I.Y on almost everything. I planted a garden of strawberries, green beans, tomatoes and peppers that spring.  My mission was to save us as much money as possible so that we could continue to save money after our bills were paid each month.

After we had a good cash cushion in savings and CD's, we decided it was time to buy our first mutual  stock and bond funds. I remember the excitement we felt doing this. We added whatever money we could to them every month. We watched them grow and over the years we have purchased many dividend funds which also provide us income via quarterly dividends. We pay low fees these days through Vanguard and they manage our money for us. Some people will tell you that they make money buying individual stocks and some probably do but it is riskier. I like having a knowledgeable fund manager do the picking of companies inside the mutual funds and I like paying low fees for this.  Have we ever made mistakes with funds and lost money? Of course but that is how you learn. You learn very quickly to sell, take your loss, and move on. When you find another fund you like, you invest the money you took out.

We always have kept a good amount of money in cash so that all of our money is not in one bucket. Right now we have 6 years worth of expenses in cash. Why so much? Because since the Obama administration has been manipulating the market all of these years by keeping interest rates low, we don't have a lot of faith that the bottom won't drop out quickly when they do start raising them. Hence we keep a lot more cash than we normally would at the ready.

When we had children a few years after I left work,
I pushed our frugality up a notch so that we could continue to invest. It became even more important if we were going to pay off mortgages early, build a nest egg for two college educations and retire early like we had planned. I breast fed the children, washed and dried cloth diapers rather than buy Pampers, and made most of our baby food. I purchased clothing for them on clearance usually a year in advance. When they went to school I packed healthy lunches for them until they were in high school. We saw to it that they had some nice  vacations renting camps on lakes, sending them to Disney World, Busch Gardens, and a tour of Washington, DC, and camping out in a cabin once or twice a year.  We put an inground pool(paid cash) in the yard in our 2nd home when they were 2 and 4 so that they would have years of entertainment. We had many a fun gathering around it for the boys and their friends and for we adults. We did all of this while still investing and saving every month. We have always considered that to be one of our expenses that has to be paid every month. Pay yourself first.

Over the years our nest egg has grown and grown not only because of the long time line but because we still invest money each and every month. We not only have our nest egg but we do get a small pension every month from Hubby's last employer, have had 401K's earned during our working years(I went back to work when my children were in private high school and junior high schools)and we both get Social Security every month since we became of age. We also own property in Texas that produces some income for us. And we have hefty dividend income that is paid to us quarterly on some of our mutual funds and interest on our cash accounts.

The other things that prepared us to retire so early was that we have owned our last three homes outright. We paid our second one off early and we paid cash for the last two we purchased. We buy our cars new with cash. We keep them for 10-15 years and maintain them well. We use credit cards but only to earn rewards from them. They are paid in full every month. Why were we able to do this? Because we have lived as frugally as possible without being stingy like Hetty Green and without our family going without necessities or the luxuries that we wanted them to have like private junior highs, high schools and then college educations. This was also possible because we saved money and invested every week of our marriage even when we only had $10. to spare.

So we maximized income and we minimized expenses all of these years and it is paying off. We have always tracked our income and expenses so that we know where each dollar is going. We buy whatever we need and we don't have the worry of running out of money unless there is a catastrophic event. And we continue to save and invest and minimize expenses because we like the game.

One thing that I wanted to mention to those of you looking to retire in the next few years. Property and school taxes are a hefty expense every year for those of you who own your own homes. Most towns and cities and school districts have an income based reduction that you can get on those taxes when you turn 65. This makes it possible for someone with lower income to stay in their home. So it is something to look into where you live. We don't qualify for any of those reductions because we have too much income. But you should look into and check cut off income amounts to see if you would qualify.

So as I wrap this post up,the best advice that I can give you is to always ask yourselves is there a better way to do something that will help you build your nest egg and pay off your loans? It's just a little question that helped Hubby and I get to where we are today. We are happy and love each other and love doing things together. We love our comfortable and beautiful home and the community that surrounds us. And we can live out our years knowing that we have enough money to do it. That is what I want for all of you! So hence I write for you.


  1. Thank you for writing for us! So amazing and inspiring! Wow, 6 years worth of living expenses in cash!
    I really need to ramp up our savings. I need to check into Vanguard. We started investing in T.Rowe Price spectrum funds 18 years ago with only $200/month. It was nice to be able to pay cash for cars and new roof etc, without taking on debt. But we are far from where we need to be.
    If you were starting out now, what would you invest in?

  2. Hi Kathy,

    If I was starting out now, I would save 2 years worth of cash in savings and CD,s. Then I would pick a total stock market index fund next. However if I was just starting to invest and had 5 years or less to retirement I would stay away from the market. You need a long time to invest in stock funds. Overtime they will grow but with the volatility today I would stay liquid if I had a short time frame until retirement.

  3. Hi AD this is Chris. Thank you for sharing your life story in these 2 posts. It was inspirational. :)