Late Starter to FI series #7 – FI after 50

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 info@latestarterfire.com or connect with me on Twitter, Facebook or Instagram

 

A book house in front of Deb's house

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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.

Deb and Obi

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.

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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.

 

Finding FI

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.

She turned me on to two life-changing resources: ChooseFI and Travel Miles 101 

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!

At what age did you start pursuing FI? What were your circumstances that led you to pursue FI? What is your back up plan?

Late Starter to FI series #6 – Fire for One

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 how we arrived at this point in our lives and what the future holds for us.

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 info@latestarterfire.com 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, I welcome Fire For One from Queensland, Australia. She blogs about an “older single’s journey towards Financial Independence Retire Early”, a theme that resonates with me 🙂 She is interested to see how the journey will pan out for a single person pursuing FIRE as often it seems that almost everyone pursuing FIRE has a partner or family.

You may connect with Fire For One on Twitter too.

Photo by The Lucky Neko on Unsplash

A little about me

I’m a single, child-free woman in my early 50s, living in Brisbane, Queensland. I was born in New Zealand and lived for about 18 months in Papua New Guinea before my family moved to Australia in late 1980.

I’ve been a choral singer for approximately half my life, although this year I gave up the semi-professional choir that I’d been singing with for over 20 years. I can’t put my finger on why, but I’d reached a point where I no longer looked forward to each week’s rehearsal – that’s when you know you need to walk away.

Other than that, I’ve always loved to read, especially fantasy and speculative fiction, with a smattering of ‘chick lit’ thrown in for good measure (not Mills & Boon bodice-rippers, though!)

My other love is cats – big, small, I love them all. Their bright eyes, their intelligence, elegance and grace, and their playfulness are just a delight. Sadly, I recently lost my own beautiful girl. She had just turned 21 but had declining health due to age. I may get another cat at some point, but I have some travel coming up in the next 18 months, so I’m holding off.

If I win the Lotto though, I have plans to start a cat sanctuary for stray cats (if I can find an appropriate property and get council approval – Brisbane City Council are cat haters). 

My first real job was with Australia Post, where I worked my way up to being a Postal Manager before I quit to go to university and do my music/education dual degree. However, teaching didn’t work out for me, so a brief series of temp jobs led to my current employment. 

I now work for the State Government as a system administrator and trainer for one of my department’s corporate databases.

 

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Not one lightbulb moment

 

At the time I first discovered the Barefoot Investor in early 2017, my superannuation was not too bad after 10 or so years of State Government employment. But I had no savings and was feeling like I couldn’t get ahead financially, despite having spent a fair amount of this time doing higher duties.

Having a redraw facility on my home loan was probably the number one reason for this – I used to spend without much thought (on a credit card), and this habit ate up whatever savings I was accumulating through having my full pay put into the loan to save on interest.

I’d also managed to kill my car’s engine in 2007 so needed a new car. Plus I owed my Dad some money. And had refinanced my home loan at that time to include paying for these.

Don’t get me wrong – I was always able to pay the credit card bill. I wasn’t an over spender when it came to my regular expenses. But I did have a clothing habit that I had to break. Taking a ‘retail-free’ year in 2016 finally put paid to my shopping hobby. But the lack of financial security was weighing on my mind, and I was really fed up with having a home loan still, after so many years.

I think the thing that really got me thinking about my financial situation, though, was the three years that the Liberals were in power in Queensland, under Campbell Newman, which I wrote about here.

For those of us in the Queensland public service, those three years were frightening and horrific. Due to the massive job cuts, there was almost no opportunity for promotion. Or even to move to another department, as anyone who had a permanent position clung to it like a limpet to a rock.

Looking back now, those years felt like a war of attrition; people basically battened down the hatches and bunkered down to wait for the next election.

Being faced with the very real threat of losing my job for no reason other than “Can-Do” Campbell’s spite made me realise how precarious my lack of financial security was. The relief across the entire public service when the Liberals were routed in the 2015 election was palpable.

Discovering the FIRE community

I discovered the FIRE movement relatively recently through my Barefoot Investor membership. From memory, someone had posted a link in one of the forum discussions to an article by either Strong Money Australia or the Aussie Firebug, and that was the start of my tumble down this particular rabbit hole!

The comments section on the article provided links to other blogs, which led to yet other blogs. I’ve actually had to limit what I read because it becomes a bit overwhelming.  I’ve tried to stick with mostly Australian bloggers since they are more focused on local issues. 

FI appeals to me because, being single and having no children, I don’t have anyone to look after me when I reach a point where I can no longer look after myself. Well, I have a niece but she’s now a young single mum; she’ll have her own mum to look after, and I don’t want to be an added burden for her.

Taking the first steps on the FI path

My first step towards financial independence was to sit down and start documenting a financial plan. Taking a proper look at how much I needed to pay my regular bills and living costs over a year was instrumental in my getting my financial act together. Because it made me realise that I needed to pay a lot more attention to my spending.

Setting up the Barefoot Investor buckets* after reading the book was the next thing I did – I love a system that I can ‘set and periodically review’. 

The other aspect of the plan was to set some goals, so that I had something concrete to work towards.

*The Barefoot Investor’s money management system has 9 steps. Step 2 is to set up 3 buckets to divide your income into – 

(1) Blow bucket – for daily expenses, the occasional splurge and some extra cash to fight financial fires

(2) Mojo bucket – basically an emergency fund

(3) Grow bucket – to build long term wealth and total security

My relationship with money

My relationship with money hasn’t ever really been bad; I’m not a gambler (other than the occasional lotto or raffle ticket), nor have I ever been a party animal, so I’ve never spent huge amounts on going out. I’ve been lucky enough that I’ve always been in a position where I’ve been able to support myself, so I don’t actually know what it’s like to be poor/broke (touch wood).

The primary change for me in the past few years is that I’ve finally taken charge of my finances and I have specific goals that I’m working towards. If I could tell my 18 year old self a few things, though, I’d be in a much better position now! I would definitely have told her to pass on the multi level marketing schemes and let her know about FIRE! And to take a much stronger interest in IT. And to avoid the dotcom disaster. And to buy Bitcoin when it first started and wait until it hit $20,000 a coin to sell 🙂 

Where I am now and where I am heading

I’m a little over two and a half years into my FI journey now, if I count from when I started implementing the Barefoot Buckets system. It has made such a difference to my sense of security. Reaching my first short term Mojo goal – three months’ living expenses – gave me a real buzz. I have now saved over three months’ full pay, or a bit more than six months of living expenses. 

This has allowed me to increase the excess on my house and contents insurance to reduce the premium. And the feeling of just being able to pay an unexpected bill without having to worry about where the money will come from is, as the ad says, priceless.

The other thing I plan to do after the end of this financial year is boost my salary sacrificing into superannuation up to the $25,000 cap. Selling some shares this year has taken care of this year’s boost as well as offsetting the capital gains, but by the end of financial year 2019-20 I’ll be at the top pay rate for my rank, so no more pay rises unless I get a promotion. That makes it easier to work out how much extra I can put in without going over the cap. 

Smashing the mortgage over the next few years is the other primary goal.

It’s still relatively early days for me, FI-wise. I don’t think I’ll be retiring early, per se, but I do hope to avoid working beyond retirement age. Although at the moment, the Federal Government apparently gives you a rather healthy bonus payment if you do – I guess it’s less costly than giving you a pension for those years. 

I guess, though, in a way I will be retiring early, because it’ll be earlier than I anticipated.

Reflections on starting late

The main challenge for late starters like me is the lack of time.

The lack of time to accumulate funds for investing, paying off outstanding debt, for boosting superannuation and simply for learning about the world of finance.

Superannuation funds tend to push us into more conservative investment mixes (another thing I intend to delve into sooner rather than later), further hindering the opportunity to grow wealth. 

The only way to compensate for this is to find ways to increase your income (not that I’ve done this yet other than through being promoted a couple of years ago), decrease expenses (I’m working on it), and learn enough about investing to make good choices – ones that aren’t so risky that you’d lose your dough, but not so conservative that they won’t provide the income and growth we need.

The advantage of starting late, though, is that I think we have more patience and are less likely to get sucked into BS money making schemes (multi level marketing, anyone? – and yes, I’ve been there too, when I was young and stupid)

Our knowledge of the ups and downs of the past provides us with the understanding that, should things go pear shaped, they will eventually return to normal, making it (hopefully) easier to resist the pull of the herd.

What's next?

So where to from here? As previously mentioned, getting rid of the mortgage is my short to medium term goal. And then after that, I want to start investing outside of superannuation. 

I also need to start thinking about where I want to live when I do retire.

And I really need to take a few holidays! 

Latestarterfire comments

Thank you, Fire For One for sharing your story. As a single woman myself, I totally resonate with your wanting to be financially secure because there is no one to look after us in our old age.

Working in the public service sector was always a sought after job in my days. It goes to show that the most secure of jobs may not be that secure after all. I do remember Campbell Newman’s time in office – he made the news in Victoria too.

But the good thing that came out of that period was to motivate you to seek financial security. And now you are on the FIRE path!

I love your cat sanctuary idea – wouldn’t it be great if your dream came to fruition! And it would be an awesome project for retirement … just saying! 

 

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