Welcome to the Late Starter to FI series!
I am a Late Starter – I did not discover FIRE (Financial Independence Retire Early) concept until I was 47. This was way later, I thought than others who seem to have it all together in their 20s and 30s.
Since I started to write about my own journey, I have discovered there are many more Late Starters like me, yay! It is such a relief knowing I am not alone.
I want to share our stories, our unique perspectives and show that it is absolutely not too late for us.
So in this series, I particularly highlight those of us who start our FI journeys in our 40s, 50s and 60s. And explore questions such as ‘where do we start’, ‘can we still retire early(ish)’, ‘what are the specific challenges for us late starters’. We look at our past to see how we got here today.
Please join in the conversation in the comments below. I encourage you to share your story if you fit the profile of a late starter. You absolutely don’t have to be a blogger or podcaster to share your story. Please email me at firstname.lastname@example.org or connect with me on Twitter, Facebook or Instagram
Disclosure: Please note that I may benefit from purchases made through my affiliate links below, at no cost to you
Today, Deb shares her story from the US – she discovered FI at the age of 59. I first came across Deb while reading her blog post – Think you are too old to reach Financial Independence? Think again! and knew I’d found a kindred spirit. Deb writes about her journey to FI at FIafter50.com (Edit: Sadly, Deb has taken down her blog) and you can follow her as she tries 60 adventures before her 60th birthday at 60to60.com – it’s a great list!
Without further ado, here’s Deb …
A little about me
I’m a late starter. A really, really late starter.
At 60, I missed the boat on the ‘Retire Early ‘ part of FIRE. Instead, I’m working towards being able to retire by the time I’m 67. With some luck – and a lot of healthy living – I’ll still be able to enjoy many years of financial security.
I’m Deb, by the way. A single mom with one kid in college and another in high school. I own and operate a small preschool. I also blog at FIAfter50.com, where I strive to be a resource for other late starters to the financial independence movement. I live in the US, in the Boston area, with my daughter and our annoying but loveable dog.
Formative Money Mindset Issues
Throughout much of my adulthood, I paid scant attention to my finances. Two major influences in my formative years led to a mindset of “money doesn’t matter”.
The Cinderella Syndrome
First, the “Cinderella Syndrome” paralysed me financially.
Growing up in the 60s and 70s, I always expected Prince Charming to rescue me from all thoughts of money. Learning about investing, budgeting, or bringing in a high income? No need. I would get married, and my husband would take care of all of that.
Unfortunately, the men in my life didn’t prove to be Prince Charming material.
So I never married and just muddled through. For example, some years I put aside in an IRA, (invested in high fee mutual funds – who knew?), in order to get the tax deduction. Other years I didn’t invest anything. I had never heard about dollar cost averaging and never bothered to learn.
Counter Culture Ideas of Money vs Helping People
The second major influence on my financial mindset was the 60s and 70s counter culture.
I was too young for Woodstock, but like many idealists of my generation, I focused on making a difference in the world instead of accumulating wealth. I (wrongly) saw it as an “either-or” equation: either I helped others or I made money.
For example, at a turning point in my early 30s when I had the choice between a job in a non profit or another in a corporate cubicle (with much higher pay and better benefits), I chose the non profit, where I wrote grant proposals and helped immigrants and refugees prepare for life and work in the US.
I just couldn’t see myself spending my energy contributing to the bottom line of a large insurance company.
Use this FREE Checklist to start your journey to Financial Independence
Big Financial Decisions: Graduate School and Buying My House
I always managed to make just enough to do the things I really wanted to do. Besides long distance bicycle trips and other travel, this included going to graduate school for my Master’s degree in education and buying a house.
Paying for Grauate School
Almost as soon as I paid off my student loan for my undergraduate degree ($40 a month for 10 years, comically low compared to what many younger people face today), I took a leave of absence from the non profit to go to graduate school. Between financial aid (loan and grants) and savings, I was able to cover tuition and living costs while pursuing my degree.
Buying My House - Who Knew It Would Be Such A Great Financial Move?
As soon as I paid off the graduate school loan, I bought my two-family house, where I would live in one unit and rent out the other. I had managed to save a 5% down payment, and bought the house through a first-time home buyers program.
This was the smartest financial move I ever made – but I didn’t know that at the time. It was pure dumb luck that within a few years, housing values in my neighbourhood would double, then triple, then quadruple.
I remember lying awake the whole night before I closed on the house, terrified. “I’m spending SO much money, all by myself. What if this ruins me? Is this a mistake?” I bought the house for $229 500; it’s now worth over a million dollars.
At first, my tenants paid most of my mortgage, real estate taxes, and insurance. Within a few years, rentals in my area had increased so much that they covered all my costs (except maintenance and repairs), and for many years now I’ve made a profit. A small one but a profit nonetheless – which has all gone towards upkeep and repairs.
The Biggest Financial Impact Of All - Kids
The one thing I wanted most in the world, that would allow me to live my most meaningful life, was to have kids.
When I decided to adopt in my late 30s as a single mom by choice, I created a budget for the first time in my life. I accounted for every expense, from adoption fees to diapers. I knew exactly how much I needed to save not only for the adoption, but for living expenses during an unpaid, three month maternity leave.
But when I adopted my second daughter four years later, I didn’t do the same meticulous budgeting.
Between parenting my first kid and running my newly established preschool, my energy and mental capacity were maxed out. I knew in my heart that adopting again was something I wanted to do – something I had to do – but I just couldn’t face the financial planning it required. I went on faith that it would all work out in the end, and tapped both savings and my home equity line of credit (HELOC) to cover adoption costs.
I know, not smart. Financially, both adopting again – and not planning for adopting again – were poor decisions. Any financial planner would have warned me against it.
But boy, what a fantastic life desicion. My baby made our little family complete, and I can’t imagine life without either of my girls.
Starting a Business
During my oldest daughter’s toddler years, I yearned to spend more time with her. In addition, I had worked in an educational capacity with adults for many years, and was ready to work with children.
So I quit my job at the non profit and opened a daycare (now a preschool) in my home.
The first few years were HARD!
I naively thought it would be good for my daughter – I’d get to spend more time with her. However she didn’t find vying for my attention with a bunch of other kids – in her own house – to be a whole lot of fun. Ironically, I ended up sending her out to preschool the second year, which she loved.
Not only that, but I made next to nothing for the first year or two, as I was building up my reputation.
Two years in, just before I adopted my younger daughter, I refinanced my home. I took out $70000 to finish my basement, turning it into a preschool with kid sized sinks, a kitchen and bathroom, and separate spaces for art, dramatic play, books, and blocks and trains.
It was a good investment. My preschool has been going strong now for 18 years. At this point, I have three part time teachers to help me out and free up some of my time for blogging and other pursuits. I’ve also developed a reputation for providing high quality care and education, and I usually have waiting lists for spaces in my program.
Having the preschool in my house allowed me to be home when my kids got home from school. It gave me just what I wanted – work I enjoyed, the ability to spend more time with my children that I could have with a 9-5 job outside the home, and in the past few years, some time flexibility enabling me to pursue other interests.
What it didn’t give me was a high income. While I now gross between $132 000 – $135 000 per year (for many years it was considerably less than that), I end up with less than half that after paying my teachers and other school related expenses. Factoring in home repairs (new roof, having the house painted, etc), health insurance, my kids’ expenses (see below) and more, I have little left over at the end of the month.
In some ways, I’ve always lived a “FI” lifestyle – living intentionally, doing work I loved, and making time to spend with my family.
While my kids were growing up, we lived frugally. Their clothes all came from either hand-me-downs or Goodwill. They never felt privation, but didn’t have the mountains of toys that some of their friends had. We rarely took expensive vacations, instead visiting friends with beach or lake houses, or renting tiny cabins near the ocean.
As a single parent running a business, though, I simply ignored my finances.
“I’ll get to that later”, I always thought, when contemplating savings and investments – but I never did. I had many excuses – after all, I had to get dinner on the table and prepare the next day’s curriculum and do the laundry and drive the kids to Kung Fu or ballet. Excuse after excuse.
The years rolled by. I saved very little, invested less, and made some stupid mistakes. I tapped into my HELOC to pay for a new (used) car when my old one died (I paid $8000 in cash and financed $5000). I also used the HELOC to pay for taxes I had neglected to set aside, and for a home repair. Before I knew it, I owed over $30 000.
Then one day a year or so ago, a friend posted on Facebook about the House of FI podcast, and I decided to listen. My friend and I got together to talk about FI and steps we could take in our own lives to improve our financial situations.
I binge listened to the ChooseFI podcasts, and learned about index fund investing, tax advantaged savings, strategies for cutting expenses, and so much more. I was hooked – or perhaps I was just ready!
I also learned how to travel for free, or close to it. I started reading everything I could get my hands on, including, among others, Vicki Robins’ Your Money or Your Life to JL Collins’ The Simple Path to Wealth to Ramit Sethi’s I will Teach You to be Rich.
And I started to make small changes.
My Own Version Of FI
My journey towards FI is definitely a work in progress, and I’m at the beginning stages.
Yes, my tenants cover my housing costs, but my savings rate in 2019 was a pathetic 6%.
I have some big expenses, including one more year of tuition for my older daughter. She gets great aid at a small, private, liberal arts college – the perfect match for her – but I still pay approximately $16 000 per year, plus travel and other incidental costs.
My other daughter is a passionate and committed dancer, whose dream is to dance professionally. Dance costs a fortune, and now, feeling stymied by her current training, she’s decided to finish out high school at a dance academy or training program.
I currently pay thousands and thousands a year for training, summer intensives, pointe shoes and more, but the cost of a year-round dance academy, including room and board, can be as high as $30 000. Hopefully, we’ll be able to shave that way down with financial aid, possible scholarships, and help from family.
I regret not having started saving and investing in a serious way earlier in life, and reaping the benefits of compound interest over many years.
But I believe change is possible at any age, and while my kid-related expenses may put me back for a couple of years, I am working towards my own version of FI by the time I’m 67.
My FI Plan
Here’s the breakdown of my current assets:
– Emergency Fund: $10 000
– IRA (Individual Retirement Account): $63 500 – invested in Index Funds, with a small portion in bonds. I’m considering switching to a target fund, with the target in 15 years, even at my age. Barring unforeseen circumstances, I won’t have to tap this until the government requires me to make minimum withdrawals
Pretty pathetic for retirement savings, until you factor in my house, worth approximately $1 million dollars. I could sell it, invest the proceeds and live well on 4%. But I love my house and community, and it provides rental income.
My plan is to keep my preschool open for another 7 years, until I’m 67. At that point, my mortgage will be paid off, and the rent I receive from my tenants can go to living expenses (factoring in taxes and insurance).
Once I close the preschool, I will do some minor remodelling of the school space in my basement and rent that space out as well, providing additional income. I will also be eligible to receive Social Security at that point.
In addition, I’m working hard to increase my income. I’m committed to growing my blog and am contemplating other ways to both help people and bring in additional income.
I’m not too old, and you’re not, either!
As I work towards those goals, I plan to increase my savings rate and pay down the $30 000 I owe on my HELOC. I will do what I can while my kids are still in college or dance training, and will become much more aggressive once they’re done.
My back up plan? If a big health crisis or other emergency makes everything come crashing down, I’ll sell my house and possibly move to a lower cost of living area.
Small Steps Can Lead To Big Changes
When I was younger, 60 seemed so old!
Now that I’ve reached that milestone, though, I don’t feel old. I’m continuing to learn every day, and have faith that small steps, like looking at EVERY budget item and cutting wherever I can, and committing at least an hour a day to my blog and other side hustles, will help me on the path to FI.
At my age, I’m not willing to live a Mr Money Mustache-type life. As my children leave home, social connection becomes increasingly important, and I want to be able to go out to dinner occasionally with friends, to take a class once in a while, and to travel, which should be possible with lots of credit card points and careful planning.
I will continue to think carefully about every expenditure, and will focus on the “increasing income” side of the equation.
I truly believe that it’s never too late.
Back to Latestarterfire
Boy, what a story! Thank you very much, Deb for sharing so honestly about where you’re at, numbers and all.
Your courage is so inspiring! Deciding to be a single mom and adopting not one but two children leaves me in awe. Your daughters are very fortunate to have you as their mom and champion.
I work in healthcare and earning a lot of money is kind of frowned upon too – as if helping people and making money are diametrically opposed. So I understand exactly your thoughts in your younger days.
And Prince Charming? You didn’t need him, after all!
Many people in Australia (me included) are like you – asset rich and cash poor – a big proportion of our net worth is tied up in property. In your case, it brings in valuable rental income which is a huge bonus. My view has always been that owning property is a good back up plan when all else fails.
I look forward to reading more about your progress and the steps you are taking to make achieving FI a reality. Here’s to us late starters – it is indeed never too late!