By Amy, from Women Who Money
My 20’s were very different from my business partner, Vicki’s. While she was making smart money moves right out of college, I was juggling responsibilities as a working single mom living paycheck-to-paycheck.
Married to my high-school sweetheart, I had my first child at 20. At the time I was the breadwinner in the family.
Through hard work, I’d been promoted a few times at the company I’d started with right out of high school and I was fortunate to be earning a decent salary with benefits – even a 401k!.
Unfortunately, my marriage dissolved and I became a single-mom just shy of my daughter’s 1st birthday. The next couple of years my goal was to survive and not take on too much debt.
I married again and had child number two by the age of 25. As our household income rose so did our lifestyle. My then-husband started working at a Jaguar Dealership. Game on! We fell into the “keeping up with the Jones” trap.
While we weren’t totally irresponsible with our money, our 30’s were very much like Vicki’s – a lot of money moves I’d change if I could.
- We didn’t increase our 401k contributions as our incomes rose
- We sold our starter house for a larger one, and then an even bigger one
- Didn’t track our expenses carefully, or have a budget or financial plan
- Leased a new car every two years
- Used HELOC’s to put a new kitchen addition on the 1st house, and then to remodel kitchens in house #2 and #3!
- Sent our kids to private schools but didn’t start saving for their college expenses
Hitting the 40’s and Making Changes
Ah, mid-life. I’d love to tell you once I hit my 40’s everything fell into place. But it’s a bit more complicated than that.
My early 40’s were similar to prior years. Save a little, spend a lot. Family vacations, college and high school tuition for the kids. New vehicles every couple of years, gadgets, and more stuff to fill a 4,000 square foot house.
Then, my 20-year marriage crumbled.
Then, I rebuilt my life following a different path, I:
- Bought a sensible house (less than 2000 sq. ft.) that was a foreclosure property
- Finally finished my bachelor’s degree, graduating just after turning 45
- Began maxing out my 401k contributions
- Opened and funded a Roth IRA
- Married again (yes, that’s number 3)
- Found the financial independence retire early (FIRE) movement and consumed article after article to increase my knowledge of personal finance. As a result, we then made a number of lifestyle changes including:
- Making job changes to increase income
- Selling expensive vehicles and buying older used cars
- Eliminating all debt but our mortgage, refinancing it from a 30-year mortgage to a 15-year loan
- Established an emergency fund equal to 6+ months of expenses
- Diversified investments including the purchase of a rental property
At 45, my husband and I believed we’d need to work until we were 65 or more. But after learning about FIRE, our pursuit of financial independence took much less time.
I left the cubicle shortly after my 50th birthday. And he’ll join me before he’s 55.
Better Late than Never
The earlier you begin on your path to financial independence the better of course. But it’s never too late to start on the journey.
The rewards are too great to miss, and failing to get your financial house together can keep you chained to a job when you want to be enjoying your last phase of life.
Whether your path to FI is long and winding, or short and bumpy, the important thing is to start. Make those first steps and keep your focus on the end goal.
Owning your time. Having the funds to care for yourself and your family. Feeling free and secure.
It will require patience, tenacity, humility, and faith.
The bigger the lifestyle changes you can make, the better – downsizing your home, driving older vehicles, eating in, staycationing, eliminating unnecessary expenses, trimming the rest. Paying off your debts, saving and investing.
Start now. You’ll thank yourself later.