There I was at the top of my game. But exhausted and frustrated and burned out…and suddenly, FIRED! And at the spry age of 54, I wasn’t exactly ready to retire or jump to any old job. The disbelief gave way to relief and then to grief and … well, I’m still working on the next phase. But you know what, I’m in terrific shape financially, socially, and psychologically. Consequently, I have the luxury of time to plan and carry out my next move. So why am I not panicking or checking job openings at Walmart? As they say, hindsight is 20/20, so let me tell you the best and worst moves I made financially that put me in this sweet spot.
I had converted a 30-year mortgage into a 15-year mortgage at 4.25%. According to many financial experts, it would have been “smart” to keep the mortgage for the tax deduction. Plus, I could make a lot more than 4.25% interest if I invested “extra” money into the stock market. Then 2008 and the recession hit hard, and suddenly, getting a guaranteed return of 4.25% didn’t look too shabby. So I really became obsessed, paying off my remaining $64,000 mortgage in 15 months. And for me, owning my home outright is a huge psychological lift as it gives me a sense of security. I’d be really sweating bullets if I still had those mortgage payments!
I didn’t always max out my retirement contributions – especially when I was prioritizing my mortgage payments. But my salary increases typically went right into retirement contributions and when the house was paid off, I maxed out my contributions. Plus, I invested a fair amount into my Roth 403b option at work, which gives me tax-free distributions and more options in terms of timing my withdrawals. Now I certainly don’t have enough in my retirement funds to begin taking withdrawals at this young age, but I don’t need to make additional contributions either. I should be fine even if I average 5% annual interest – as long as I let the funds sit for a decade.
From the very beginning of my career, I’ve always tried to max out my leave. On my last gig, I accumulated the maximum 420 hours of leave, the equivalent of 11.2 weeks. Not a bad deal! And once I was fired, that accumulation of leave turned into a generous payout – enough to cover at least seven months of typical living expenses. That accumulated leave turned into a nice emergency savings fund!
In 2009, I set aside about $25,000 to invest in individual stocks. Well, I was great at buying low. But I discovered I was even better at selling lower! Darn you, Chinese solar power stock! I did my research, but I was new to the game. Worse, I later realized that I don’t have the “killer instinct” to know when to sell. I rode a stock to the penthouse suite, and then took it all the way to the basement! Uggghhhh! The takeaway from that experience? Stick to low-cost index funds and don’t try to time the market.
I failed to set a long-term goal for the assets outside of my retirement account. Truthfully, I had goals designated for home remodeling and vacation funds, but I just sort of stored remaining funds in multiple accounts. Ironically, I had just set things in motion to create a $100,000 early retirement fund a month before I was fired. That didn’t go so well, did it? While I am in a good place with my taxable accounts, I’d like a do-over on this one.
Even though I was saving and investing a lot, I got complacent. My monthly budget was a figment of my imagination. Now I can see that high levels of stress from the job and frequent business travel wrecked havoc on my spending patterns. My bar tab has certainly gone way down since I lost my job! Regardless of the cause, I got complacent and careless, and I’m finding it’s not quite so easy to return to a more disciplined budget.
I’ll be the first to admit, there’s a lot of luck involved in reaching a state of financial security. I was lucky to have excellent health insurance and work for a compassionate boss when I fell terribly ill. And I bought my current house before the housing market imploded. I’d like to take full credit for my state of affairs, but I can’t. My parents taught us to be frugal and to save money for a rainy day. I am a lucky duck! My final advice: Make sure your best moves outweigh the costs of your worst moves.
Dr. Brenda is a financial coach, educator, researcher, and sociologist. In addition to blogging at The Five Journeys, she is the founder of the Gutsy Women Club. Her passion is guiding people on their journey to financial freedom through coaching at DrBrendaMoneyCoach and online courses at DreamBigMoneyAcademy.com.
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