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Author: TourDeFarce Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5069  
Subject: On our way Date: 11/3/2006 2:45 AM
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Recently I began tallying up our finances to check and see just where we are with respect to FIRE. Here's our story....

My wife and I both married for the first time at age 45. She had some school debt (still in four figures) and a 403(b) from a prior employer. I had a 401K, Roth IRA, IRA, and home equity. After marrying, we paid off all her student debt (to relatives, mostly, a little to govt) right away so we'd be free and clear of all debt other than the house.

She spent about two years finishing up her dissertation and working as an adjunct before landing a full-time job teaching. We then cranked things up and maxed out IRAs (for both of us) as well as her 403(b) - for the new employer - and my 401(k). I also purchased stock at a discount through my employer.

Fast forward about 5 years. I began going to grad school at night to earn a certificate and was really enjoying school. Conditions at work were getting less and less enjoyable. For the first time I looked at what I was doing and didn't see it leading to enjoyable tasks and a promising future. GIven taht I could attend grad school tuition free (courtesy of my wife), we ran the numbers and figured I could just quit. Unlike some who step out of a job into the abyss, I felt like I stepped out of a cage into an opportunity. It's now been almost two years since I began grad school and just about a year and a half since I left work. Straight A's, with only one B so far and I'm on track to graduate in August.

During this interim period while I'm not working, we're cutting back and managing to live mostly on DW's salary and benefits. We dip into savings as needed, but that's not such a big deal. (Truth is, we were seeing so many cuts at my company that we decided to keep a very large e-fund just in case.) We still contribute to my wife's 403(b) as we get some free matching funds for it, but otherwise we're shuffling money from our liquid accounts to IRAs as time goes on. Once I get working again, we'll crank up her 403(b) contributions. (I will attempt to land adjunct teaching positions and those don't pay much.)

Our lives are much happier now. As the "stay at home" I handle the vast majority of the daily duties and such as I can pretty much do homework whenever I want, with my only "fixed" time committments being attending class in the evenings. DW loves her job, is advancing, and should get tenure in another couple of years. This'll give us the security of benefits as well as giving us a steady income.

The financial planner we work with says we should be millionaires by the time we reach 60, but he only sees part of our portfolio -- not the company stock I own or either of DW's 403(b) accounts. In fact, looking at the numbers I ran the other day we may make get to that million in another 3 years, although ~10% of it will be in the form of home equity. Our home is on a 7 year balloon at 4.5%, meaning that in 2009 we can choose to accept terms from the current mortgage company, finance elsewhere, or just pay it off (and - yes - we'll have the money to do that too!).

The shame of all this is that my wife earned a very meager salary most of her life and had virtually nothing saved until we married. I, on the other hand, was a good saver but knew nothing about investing. As a result, I missed out on some great markets over the past decades. I also guess that marrying late meant that we doubled up on some expenses which, if we had been married, could have resulted in even more savings.

If asked, "What's your secret?" I wouldn't have much to say. DW and I came from families with very modest means, me more so than her. But maybe it's not what we *did* that made the difference but what we *didn't* do in our lives. Neither of us had a passion for new, fancy cars and bought used. While others went on ski trips and travelled to far off places, we didn't but used our respective jobs to enjoy travel. The latest fads and such didn't appear in our closets, while some clothes lasted season after season. (The sweat pants I'm wearing right now are at least ten years old.)

I've heard people argue over what constitutes being "rich," and for a long time I agreed that definition was a difficult one to really nail down. The other night as I drove home from class I thought about all the things I just wrote. I may not travel to the ends of the earth, own the finest cars, or live in the most magnificent home. I may not be able to go into a luxury store and not look at price tags or walk into any high class restaraunt and order without looking at the menu. One thing I can do, though, is look into the eyes of the woman I love, know that we are both doing things we enjoy, and that our lives and futures are on an even keel. It was on that drive home that I realized I was "rich".

TDeF

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Author: malaoshi Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3877 of 5069
Subject: Re: On our way Date: 11/3/2006 2:56 PM
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Great inspiration to others, Tour de Farce, and yes, you are rich! In the best way possible.

(I'm a little jealous of your DW's accomplishment in finishing her Ph. D..I'll never manage that..).

I'm happy for you that you are both enjoying where you are at right now, as a result of your own hard work and forethought.She is happy with her job, you are happy with your future, and you are happy with each other.

We are also happy with each other, but I wish I had known more about finances when we married. I have recently retired with a laughable monthly pension ( not even food for a month) but fortunately my DH always patiently socked away money in IRA, etc etc. But his plans involve enjoying it while we can...travel is a huge item on his future retirement budget.

And because he and I didn't talk about the financial side of retirement when we were your age, too much of the effort , the saving and the planning was on his shoulders. Maybe, being of culturally "old European family style" he wanted that, but I wish we'd done what you are doing, by being on the same page from the beginning. If his numbers are right, we are quite comfortable, but if I had it to do over, I would do far more to help!

Just rambling, but in response to your excellent post.

Big MOmma

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Author: gastrolith Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3878 of 5069
Subject: Re: On our way Date: 11/3/2006 10:24 PM
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Yes, thanks for posting. It's nice to read something from someone happy who isn't emphasizing how many digits are in their bottom line. Congrats at finding the pot at the end of the rainbow.

I'm curious, what is your wife's Ph.D. in? What are you studying?

My B.A. and my wife's B.A./M.A. are in Anthropology. Not a wealth builder, but certainly gives lots of topics to bore people with.

g

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Author: TourDeFarce Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3879 of 5069
Subject: Re: On our way Date: 11/4/2006 12:22 AM
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Gastrolith,

DW's field of study is psychology; I hold undergrad degrees in physics and math, MS in physical science, and (by August) an MBA.

Yes, thanks for posting. It's nice to read something from someone happy who isn't emphasizing how many digits are in their bottom line.

Definitions of "being rich" will undoubtedly vary from person to person, but I think most folks would agree it involves at least two elements of "freedom" -- freedom from worrying about security and freedom to pursue interests. Fortunately for us, these freedoms are the direct output of savings (mostly mine, a little hers) and future work (mostly hers, a little mine).

TDeF

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Author: sailrmac Big red star, 1000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3881 of 5069
Subject: Re: On our way Date: 11/11/2006 6:14 PM
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TDeF,

You've got another sweet surprise in your future.

With a non-fuzzy undergrad degree and an MBA you are probably going to find your income, interest in the work, etc. all start to increase significantly. Not just with the first hire after the MBA but each year after that. All the time you are also going to know (not just think but know) that you can make it OK on her income just fine.

You will boht find it a very liberating experience; opening up all sorts of cool options.


Darren
Been there, done that, enjoying the fruits

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Author: walhersh One star, 50 posts Old School Fool CAPS All Star Global Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3929 of 5069
Subject: Re: On our way Date: 12/8/2006 3:23 PM
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sailrmac, TDF,

You both mentioned MBA's and I have considered entering an MBA program. I think I know the answer, but are the education and opportunities as great as I hear? It becomes evident in my investing that there are so many things I don't know about business. Is the MBA the place to learn what I know is out there?

Congrats to TDF. I admire anyone who has interupted their career to persue the degree full-time.

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Author: sailrmac Big red star, 1000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3930 of 5069
Subject: Re: On our way Date: 12/9/2006 1:56 AM
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You both mentioned MBA's and I have considered entering an MBA program. I think I know the answer, but are the education and opportunities as great as I hear? It becomes evident in my investing that there are so many things I don't know about business. Is the MBA the place to learn what I know is out there?

Actually I'm guessing my answer won't be what you expected. Yes, getting the MBA was definately worth it for me. Having that particular degree opened doors, quickly leading to more interesting work and a doubling of my income. If you get a top 20 program MBA (mine was not) this is even more true. A top 20 MBA opens a whole lot of doors, more important doors, doors that can lead to the executive suite.

But no I did not necessarily learn a whole lot about business which I didn't already know. The degree mostly gave me just that, a degree many others didn't have and thus an advantage in getting jobs and assignments, not business knowledge to actually accomplish tasks. It opens the door, the chance, but you still have to figure out how to step through and perform.

Unfortunately, many classes in an MBA program are taught by PhD's who have never worked in the real world and thus have limited practical experience. For example the professor who taught my MBA investing course taught and believed you couldn't beat the market (unless you had illegal insider knowledge) because the market already reflected all known knowledge. Thus you should invest in index funds. Lots of theory and mathmatical proofs of why this was so, very little useful information.

However, a few classes, too few, were useful and sometimes very useful. Also, sometimes I learned from fellow students. Generally the useful classes were taught by lecturers, people without PhD's but with lots of real world experience in their specialties. For the most part they didn't teach theory as much as practical skills and knowledge. For example the retired CFO who taught accounting 101, the retired VP who taught negotiation skills (he had to actually name the course something more politically correct but it was a negotiations course) and the guy who owned over 300 rental units who taught real estate finance (OK that particular guy did also happen to have a PhD). Those were the useful classes. The knowledge they imparted have made me literally hundreds of thousands of dollars. But you had to pay attention and be proactive. Sometimes the most important knowledge was given in no more than a couple minutes during a lecture or even after a lecture in response to a question from me.

So I guess you are going to get out of it what you want. I didn't give a shit about my grade, I wanted knowledge and skills and when I wasn't getting it from the PhD I got it from my classmates. I was dissapointed in many of the professors but squeezed every ounce out of the program that I could.

I do recommend getting an MBA.







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Author: walhersh One star, 50 posts Old School Fool CAPS All Star Global Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3931 of 5069
Subject: Re: On our way Date: 12/11/2006 11:04 AM
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Thanks for all the info sailrmac. I know I would like to get the degree, I just need the guts to leave my comfy day job and go to school full-time.

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Author: sailrmac Big red star, 1000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3932 of 5069
Subject: Re: On our way Date: 12/14/2006 2:23 PM
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I know I would like to get the degree, I just need the guts to leave my comfy day job and go to school full-time.

Here's how I did it:

1.) Start part-time doing one or at most two classes a semester at night.

2.) Realize, yes I really do want to do this.

3.) Realize life really sucks working and getting your MBA at the same time. You don't have the time to do justice to work, family or the MBA, all are left wanting, as are you.

4.) Talk to wife, eliminate all non-essential expenses, open HELOC and withdraw as needed to fund full time MBA and generally prepare the way.

5.) Take boss to lunch and tell him you really wouldn't mind being laid-off the next time there is a need (before spring semester starts would be ideal).

6.) Use severance and unemployment insurance to help pay survive during MBA.

Darren



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