Posts

Posted on

Home Again, Home Again (and Again, and Again)

Home is where the heart (and most of the expense) is.

Of our many mistakes with money, one that is particularly ironic has to do with housing. The irony is due to the fact that our mortgages have been, by far, our largest debts in our lifetime. Yet, by having had so many of them — each with a break in between — we’ve been temporarily debt free several times.

By the time we had been married for 20 years, we had purchased our fourth house with our fourth 30 year mortgage. It’s not like we’ve ever had to move due to some compelling outside reason like a job transfer or being closer to an ailing loved one. In fact, none of our homes has ever been outside a ten-mile radius from our first. Each time, we had different reasons that prompted us to leave. They were generally the wrong reasons and, being honest with ourselves, they generally shared a common theme.

Continue reading “Home Again, Home Again (and Again, and Again)”

Posted on

It Never Looks the Same Twice

When you look at an intricate painting, you tend to notice different things, depending upon your present perspective and what element currently holds your focus. I’ve learned that hindsight is very similar; events look very different as the lens through which you view them evolves. When I started sharing my experience leaving a pension behind, I ended with the question “would I do it again?”. In that post, I was focused on the long-term financial impact. I do realize even pensions aren’t guaranteed; in fact, the one I left had already ended as a benefit for new hires, though it is still in force to this day for those who were already covered. This knowledge made gauging the financial impact of leaving pretty straightforward. Even though financial ramifications are certainly of great import and, likely of great interest to those reading this blog, they are just one piece of the puzzle.

Continue reading “It Never Looks the Same Twice”

Posted on

Unintended Consequences

While cashing in the 401k was probably the most blatantly stupid financial decision, another decision Mr. Frugal Source made for the wrong reasons is in competition for the greatest negative impact on our ability to retire “early”, and possibly eclipses it.

When I was a relative youngster (mid 20s), I found a secure job writing software for a bank. This was the same job I left just before cashing out the 401k. The cash-out notwithstanding, the decision to leave that employer, in it’s own right, hugely impacted our retirement timeline. Why is that? One word. Pension.

Continue reading “Unintended Consequences”

Posted on

That thing you should never do? Yeah, we did it.

We have made TONS of financial mistakes over the years; so many, in fact, that when we reflect upon our past, it is a miracle that we are free from consumer debt and continue to pay additional principal on our mortgage every month.

Over the next several months we will be sharing our biggest mistakes. We aren’t doing this because we want to beat ourselves up and relive the decisions we wish we could take back, but because we sincerely hope we can help someone else from making the same mistakes.

Neither of us was raised in a family where financial matters were discussed, let alone healthy financial attitudes and strategies encouraged. This is not to lay blame, but to set the stage that we have, for the most part, been figuring this out on our own. In most cases, we failed to seek — and when we did seek, we often did not find — wise counsel. We find ourselves reflecting on our past and say, what if?  It is not helpful, but when we think about retirement, which is creeping up much faster than we would like to admit, it sometimes can’t be avoided.

If you’ve not already “been there and done that” allow us to present our own experiences as cautionary tales.

Continue reading “That thing you should never do? Yeah, we did it.”

Posted on

Low-cost Fall Activities

Autumn is my favorite time of year, and if you spend any time on social media, it seems many feel the same way. The sights, sounds, and smells of the season are a delight to the senses and the weather is perfection in my book.

This is the time of year when I feel at my best, and I appreciate being able to spend more time outside. I love having the windows open and being able to cook without worrying about running up the electric bill while the AC beats back the heat from the kitchen.

Without further ado, here are some of my favorite low cost fall activities:

Continue reading “Low-cost Fall Activities”
Posted on

Baby Step #7 – Build Wealth and Give

Give freely of your time; it is far more valuable than any amount of money.

We have finally reached the very last baby step. And if you personally have or will soon arrive at this step, congratulations! It takes an incredible amount of work and dedication to get here, and you deserve to sit back and enjoy this part of the ride.

Even if you’ve been investing 15% or more, have set aside enough to help your kids get through college debt free (we think they should pitch in; it’s good to have “skin in the game”), you still may not be in a position to give much more financially than you have been throughout the process, and that’s okay. While we think you should certainly give whatever you can, and hope that your ability to give financially continues to increase over time, there are so many other ways you can give that may have an even bigger impact on the lives of others.

Continue reading “Baby Step #7 – Build Wealth and Give”

Posted on

Baby Step #6 – Pay Off the House Early

In our last post, we discussed baby step #5 and mentioned how steps 4, 5 and 6 are to be worked on simultaneously. And, that it is our humble opinion, steps 4 (investing 15%) and 6 should take precedent over saving for your children’s college (step #5).

Now, on to the debate that every single personal finance blog has touched on at least once; do you pay off your home early or invest more money? Which one will be better, financially speaking, in the long run. There are a ridiculous number of variables to consider: Do you plan on staying in your home long term? What is the interest rate of your mortgage? How much is your home worth? How much principal do you have remaining to pay off? What return do you expect on your investments? How soon do you plan to retire? What do you anticipate the rate of inflation will be? It’s enough to make you dizzy.

Continue reading “Baby Step #6 – Pay Off the House Early”

Posted on

Commentary on Step 5 – Saving for College

Here we are at baby step #5, saving for your children’s college.  As you likely know, Mr. Ramsey’s guidance is to work on steps 4, 5, and 6 at the same time.  He does keep this step more vague then the others due to the differences in family circumstances, from those who do not have children to those who have a boat load, creating a much bigger challenge in saving for college for the entire brood.

Most of what we’ve read, heard, and watched from Dave himself about this part of the journey implies it’s a non-negotiable step if you have children.  This is concerning, as everyone’s situation is different.  To be fair, Chris Hogan, one of the “Ramsey Personalities”, has shared on more than one occasion that one size does not fit all and, furthermore, making sure you can afford to retire should take priority.  Amen to that!
Continue reading “Commentary on Step 5 – Saving for College”

Posted on

baby step # 4 – investing

Once you have reached this part of the Dave Ramsey plan you are now instructed to invest 15% of your household income into ROTH IRAs and pre-tax retirement. We will not get into the pros and cons of various types of investing in this post, but instead of focusing on the amount. So, this will be a short one.

Investing money is a very important step in winning with money. It is a necessity to save money for your future if you ever plan on retiring. On the flip side, none of us have any idea what life will throw at us and we may not be one of the lucky ones who actually get to choose when to stop working.

Continue reading “baby step # 4 – investing”

Posted on

How Much is Really Enough?

This week we continue our commentary with baby step 3, which is to save 3-6 months of expenses in a fully funded emergency fund. We absolutely agree that you should have a fully funded emergency fund. However, if you are already dealing with extenuating circumstances, or you are a one income family, we believe six months is really the minimum you should consider having in reserve before moving on to the next step; depending on your circumstances, a year may be more appropriate. Just think about how fast this summer has flown by; Memorial Day seems like it just happened, and yet we’re only a couple of weeks away from Labor Day… that span is just over 90 days, or three months. I can’t imagine how fast it would seem if we were in the midst of a financial crisis and were eating through our emergency reserves.

To reiterate, we’re not in disagreement as to the point of this step, or its order in the process. We just think that those of us who have more going on would be well advised to take a bit more time to build a bigger cushion before moving on to ensure we are able to weather our brand of storm.

Continue reading “How Much is Really Enough?”