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Friday, November 14, 2014

Which financial path did you choose?

Choices. We each get to choose our financial path. We can choose living life way beyond our means, or we can choose to live within our means.

I'm close to someone who chose a very different financial path than my husband and I. They live a life that looks affluent to me. They travel a lot, eat out frequently, have not just one extraordinarily lovely home, but a second home, as well. They drive very nice cars, have gorgeous clothing and furnishings, and would shudder at the thought of "having" to live the life that I chose.

My family shops discount stores, thrift stores, clearance racks, gladly accepts hand-me-downs, makes do with what we have, and drive our cars until they just won't move any more. We rarely eat out, our travels are limited and so feel very special, and our home is almost entirely furnished with second-hand furniture, most of which was given to us by relatives who were down-sizing.

Looking at the surface, it would appear that this other couple is doing much better than my husband and I, financially. Their career paths have been far more lucrative than ours. My husband and I have always managed on about 1/3 to 1/4 of the other couple's income.

However, looks don't always tell the whole story. My husband and I don't have 1 stitch of debt, not one tiny bit. Our house is paid in full. We paid cash for our cars. We have enough comfort in our lives that life is indeed enjoyable. And we have a significant savings to ward off any unforeseen financial disaster. This other couple is in the retirement zone, but unable to retire for several more years, due to debt. They try to be upbeat, but I can hear between words that they wish that they could be enjoying retirement right now, as are all of their friends.

Over the years, I've felt envy for all they seemed to have. But now, I feel sorry for them and their financial choices. If my husband and I had to retire right here and now, we'd do okay, and find happiness regardless of our finances. If something were to happen and this other couple were to be forced into retirement, they'd be miserable with the style of life that they'd "have" to live with.

Often times, these choices are gradual. You find yourself in the fast lane and boxed in, unable to move over to a slower lane. In no time, the spending-lifestyle has escalated, and debt builds. Or in my family's case, our income was quite small, and we needed to trim costs a little bit, all those years ago. And before we new it, 27 years had passed and we had developed many frugal habits, and managed to snag a bit of financial freedom for ourselves in the process.

Either way, it takes just one step in the direction of choice to set a new path for yourself. Just one step. I'm grateful that my husband and I took that one step in a frugal direction.



Kris said...

Very well stated. You're right, it's sad for the other couple. We have a similar situation in my family. My parents raised 4 kids primarily on my dad's factory work income (he had other odd jobs through the years to supplement his income, and when I was in school, mom worked in the school cafeteria for a little extra money--I was the youngest child so she was free to do that). His sister and B-I-L live in the same town and raised 3 children. Both my aunt and uncle had factory jobs, so, essentially, their income was close to double that of my parent's. Interestingly ... my parent's home was paid off decades ago ... they helped put 4 kids through college ... they've been debt-free for decades. My aunt and uncle still haven't paid off their home (they are 80-ish in age), and put one child through college, and if I recall correctly, she was class valedictorian so most, if not all, of her college costs were covered by scholarships. Part of the reason my aunt and uncle struggle is that their kids have had financial crises through the years and have had to be bailed out ... they didn't learn good money management techniques at home ... and while my aunt and uncle don't have a fancy home, they have always had expensive cars and have eaten out frequently at pricey restaurants through the years. It's sad, really. It can be hard to know when to save and when to splurge, and I wish my parents had splurged a few more times in their lives, but overall, I prefer their lifestyle of frugality. The thing is, there comes a point in our lives when our incomes will slow or stop, and it can be easy to forget that during the busy years of raising a family/establishing a career. It can seem like "Oh, I have years before I have to worry about getting old and retiring" but age has a way of sneaking up on you. While I don't advocate a lifestyle of total deprivation, saving for future needs that you know will come up (retirement, college ... ) is just ... smart.

Lili said...

Hi Kris,
thank you for sharing this story of your aunt and uncle. I know that in many families, the parents continue to "help" out their grown children, long past the age of the parental responsibility. I'm guessing that this was not the only factor contributing to your aunt and uncle's current financial state, but a large part.

I do feel badly for your aunt and uncle's situation. If they are 80-something, haven't paid off their home due to having to bail their kids out financially over the years, then it's not likely that they could rely on their kids for financial assistance should something financially huge come their own way. Even so, on a fixed income, it is still possible to change financial habits and begin moving in a better direction. It's much more difficult, but it is possible.

Cathy said...

We married and had children at a young age, with both of us still in school. Thank goodness those were the days when getting credit was difficult, because we were forced to pay cash for everything. We quickly learned how to budget, do things ourselves and make do. Neither of us had an affluent background, so that helped. I read whatever I could get my hands on regarding homemaking, budgeting, and it was a lightning bolt moment when I realized that I was acting like this was my job, and a valuable one at that. Our kids are all university educated (although I did go back to work to help finance some of that), and we retired early. We have enjoyed ourselves along the way, and are enjoying retirement immensely.

Judy said...

I think that we are like you, Cathy and Kris. My husband can retire but he just happens to LOVE his job. But when he is ready, the time is right. We'll be fine. Our home and other properties adjoining are paid. We love privacy and of course, it comes at a price. That price is paid. I'd rather look out into the woods than to shop for stuff we don't need. My hobbies are things that enhance our home and being frugal has always been first priority. We never had a lot of money yet always enough for us. My husband said in the past, I provide it, you divide it.

We know people, some very close to us, that complain about finances. Some who really don't have much and a few snobs who have plenty and keep looking for more. Many have sneered at suggestions (that they asked for) and just generally don't get it.

Oops! Got carried away. This is a really big deal to me. Loved your post.

Lili said...

Hi Cathy,
Not having easy access to credit may have, indeed affected your financial course. Those first few years of our marriage, credit cards weren't accepted at grocery stores, so I either brought actual cash, or wrote checks, which made me very aware of how much I was spending each week. What a great realization you had, about taking your finances seriously, as your job. It wasn't just *like* your job, it was/is your job. That is how I have taken my financial role in the household.
Good to hear your story, Cathy!

Lili said...

Hi Judy,
That sounds like you and your husband have found the ideal situation for yourselves, and all paid for! Congrats!
Isn't that frustrating, when you offer advice (that was asked for), but then others just don't want to hear it? This other couple, that I posted about -- I could probably look at their finances, and at least shave a year or two off of their projected working-past-retirement-age years (another 5 years). But, unfortunately, they wouldn't want the advice I would give. It would mean making changes to their lifestyle.
It's a big deal to me, too. That's why its important enough for me to take my free time to blog about it.

ruthie said...

Great post! Just this week my husband was talking with our son who got married six months ago. He wanted to let husband know that his life beneficiary is my husband - not his wife! She has always been a spendthrift and isn't willing to even talk about a budget. Her mother has always given her any and every thing she wanted. (Her mom rents an apartment and can barely meet her bills - even though she has a very good income). My son knows that his wife would spend the whole life insurance money in a few days so he wants us to dispense a bit of it yearly to her - should the need ever arise.
I love the peace of mind that living frugally brings me. And I enjoy the challenge of finding joy in more simple things.

Live and Learn said...

I think most people who read here are of a frugal mindset or they wouldn't be attracted to your blog. Sadly, however, most of us also know of people who are in dire financial straights because of poor money management.

We too are debt free and have always lived below our means. However, I think Kris brings up an important point--sometimes it's okay to spend money (if you have it). I struggle with this sometimes even when it is well within our means. My kids are also very frugal and budget their money well, although I'd like them to know that's okay to spend money for fun sometimes. I'm not sure that I taught them a good balance--but I'd much rather have them to be frugal than to spend beyond their means.

EcoCatLady said...

I, like you, feel sooo fortunate not to be saddled with any debt. I made my "break" from the world of consumerism early - mostly because of an intolerance for "playing the game" as it were. I remember various times throughout my journey feeling twinges of jealousy at the lives my friends were living - fancy cars, vacations, big houses and the like.

But the older I got and the more I watched people suffer with the consequences of their spending decisions (not to mention the consequences of the stress induced by the jobs required to earn the money to support those spending decisions) I can honestly say that I wouldn't trade places for anything in the world. I'm gonna go kiss my avocado green shag carpeting now... you know, like Jimmy Stewart in "It's a Wonderful Life" kissing that round thing that always falls off the top of his stair banister after he gets to have his life back! :-)

Cat said...

I wish we'd started on the wiser path earlier in life, but we are working on it now, well before retirement age (we are early 40's). Sometimes, it feels challenging, but it's good to know that we plan such that we can always pull food out of the freezer or pantry and have a good meal (maybe not always exactly what we'd choose, but nutritious). We have a great library for new reading material, beautiful mountains close by that we can hike or fish in for only the cost of gas to get there, bicycles, and so on. All we need and some of what we want when you think about it.

Anne in the kitchen said...

We have chosen a path somewhere in between the 2. We married when we were still in school so our finances were tight. Fortunately we were at a large school so there were lots of free things to do. Then we had our children when we were very young and continued our commando finances. About the time our kids were leaving for college we accidentally decided to do the kid thing over again (enter son3) So now we had tuition and a new baby. At that time we amassed a bit of debt which we paid off rapidly. Though we do have a mortgage and outrageous tuition for son3 we have no other debt and we feed all of our other accounts monthly. ( 401K, mutual funds, portfolio, and general savings) We do not exactly do without, but our purchases are thoughtful and planned. And now we are at a point in life that we don't want much. In fact we are getting rid of stuff right and left.

Lili said...

Hi Ruthie,
Well, at least your son understands his situation and can act accordingly. I do think the value of peace of mind is greatly underrated. Isn't it a thrill when you find a way to do something for less $$, even when it's just a small savings? Meeting the challenge is the fun part!

Lili said...

Hi live and learn,
I think there's a general principle, here, that it's not just okay to have pleasure in life, but necessary. Sometimes life's pleasures take money, sometimes they're free. When our family has more disposable income, we do the things that cost a little bit of money. When our income has been lower, we find the free pleasurable activities. Either way, being mindful of income, future financial goals and spending makes the difference between a life of debt, and a comfortable retirement.

Lili said...

Hi Cat,
playing the game when I was first married in the 80s, meant dual incomes were necessary if you ever wanted to get a leg up in life. Well, turns out that's just not so!

Avocado green, one of my fav colors! Our kitchen appliances were avocado until just a couple of years ago. And our family room carpeting was rust-colored shag (with matching drapes!).

Lili said...

Hi Cat,
the good news is that you are on the path to financial freedom, now! You will get there, and you still have many years ahead of you.
Isn't that the right balance, as you said -- all of what you need and some of what you want?!

Lili said...

Hi Anne,
How exciting, though, to add a new member to your family, when you thought that era was behind you. Tuition for son3 will be a challenge (goodness, I can hardly believe how much more expensive tuition is from the time my son went to the Univ, graduating in 2010, to now). But with your frugal skills, you will manage quite well. And as you pointed out, you are still saving towards retirement and other goals. That puts you clearly ahead of the game. Good luck going forward, Anne!

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