DH = Dear Husband
Our financial situation then
In June of 2012, DH and I woke up to our lousy financial situation. I was 49 years old, and he was 53. We were ostensibly entering our last decade in the work force, but no trajectory towards financial freedom was happening in our numbers.
- At a time when the national debt-to-income ratio (total debt ÷ total take-home pay) was a record-breaking 163%, ours was over 220%.
- We were in a pattern of yo-yo debting. We would pay off one debt only to free up room to take on another.
- We had consumer debt, business debt, and a mortgage.
- We would not be debt-free within a decade at the rate we were going.
- We had no emergency fund.
We could count on the pension plan from my work as a teacher, but we had stopped investing anything from DH’s income after the high-tech bust in the early 2000s. My pension and his portfolio would not be enough to finance the debts and expenses we had.
Our financial situation 4½ years later
Tuesday evening of this week, we had a meeting with a financial specialist from Educators Financial Group (and they aren’t sponsoring this post – I just mention it because it’s true). I did not know until this fall that through my work, I have always had access to free financial advice. The financial specialists are paid a salary by the teachers’ union, so they earn the same amount no matter what their clients decide to do.
When Darryl asked for our numbers, here is what we were able to tell him:
- Our debt-to-income ratio was less than half the national average.
- We never purchased anything – even big expense items – on credit.
- We had no consumer debt, no business debt, and our mortgage was down to $95,300.
- We were on track to be completely debt-free by June of 2019.
- We had an emergency fund saved (enough to pay our expenses for 3-6 months in the case of loss of income).
Our main question was whether or not we would be in a financial position to allow me to retire in June of 2019 – the date when my age plus my years of work will add up to 85, making me eligible to start receiving my pension. The answer? Yes.
What financial freedom looks like to me
When I explained that I wanted to be free to retire as soon as I became eligible, Darryl assumed I meant that I had had enough of my job. I corrected him. I am actually so grateful for my job.
I work in a wonderful high school. I love my colleagues, and I love the students. Ours is a very international school, and every day, I get a peek into the lifestyles of different cultures – with no travel costs. I get to do things that I find meaningful. For instance, just today, I was able to help with an initiative to send books to Inuit communities in the north. And I get to make great connections with people through my work. Again, just today, a graduate who had been in my Jane Austen Book Club came back to visit, and she offered to sew an Austen style dress for me. How nice is that? (Any other Austen fans out there?)
So why do I want to retire as soon as I can? I want to pursue a second career – in writing. It’s been a dream of mine since childhood, and I want to give it an honest shot. I’m not a Superwoman type, and I find it tough to fit in writing after (and sometimes before) a day of work. This past July and August, I didn’t teach summer school or take a course, and I was able to live 2 months of writing, financially free. It was wonderful! A test drive that convinces me it’s the direction I want to take.
3 types of clients
Darryl said that he had 3 types of clients:
- People in a poor financial position who needed a lot of detailed advice.
- People in a great financial position who had already achieved what they needed for financial freedom.
- People who were on track and headed in the right direction.
If he had visited us 4½ years ago, we would have been clients in the “poor financial position” category. For me, it felt terrific to be considered “on track.” And though I have some regret that we didn’t get our financial act together earlier in life – so that we could be in the “great” category now – I’m more amazed at the difference we have been able to make despite our late start. “The key is to pay off all debt before you retire,” Darryl said to us.
Where to start?
If you are middle-aged and in too much debt, it’s not too late for you to turn things around. But you’ve got to be the one who does the turning. “Where do I even start?” you might ask. I invite you to tune in here at Fruclassity. Read about other people’s experiences in reducing personal debt – and all of the challenges, obstacles, discouragements, and victories that are a part of that effort. Read the 10 Commandments of Fruclassity and decide where change is most needed in your own situation. And then, begin your journey out of debt in the way all journeys start: with one step in the right direction.
Have you ever felt it’s too late to turn your financial situation around? What does financial freedom look like for you? What do you see as your first step in a journey out of debt? Your comments are welcome.
Image courtesy of Pixabay