In my flurry of sorting and organizing that always accompanies the turn of a new year, I discovered a legal pad that I had taken on last year's vacation to visit my in-laws and promptly tucked away in a drawer upon my return.
Along with a list of items I planned to order from Penny's and several delicious recipes copied from Southern Living magazines there are several pages of notes from an interview with my mother-in-law.
When I first met my husband's parents I thought they must be quite well off. They retired early to a nice home with lake access in a resort community, drive an expensive car, have no debt and take winters off to live in a condo on the gulf coast and most importantly they have no financial worries. They are so happy and at ease, they are living the retirement life they always dreamed of. In my limited life experience I thought they must be rich to have this idyllic of a life.
Over time I've learned my in-laws are not rich. What they are is excellent planners, budgeters, savers and wise spenders. Yep, you heard me right. They've been able to live this lifestyle for the past 20+ years and really enjoy themselves because of good old fashioned financial wisdom.
Nobody cares about Old Fashioned Financial Wisdom
Old fashioned financial wisdom is a funny thing. Nobody wants to hear about it. It's old school, simple and besides, everybody already knows that. Nowadays people want to discuss market timing, mutual fund rates and exotic investments. But,time has proven over and over the time tested methods of planning, saving and spending wisely build financial success.
Sure, I'll agree with you, old fashioned financial wisdom isn't as exciting as winning the lottery or making a killing on a risky investment. It's easy to get discouraged when all it feels like you are doing is saving a little bit of money every month and everyone else is out spending money and having fun. But, the point is that careful planning, budgeting and saving works in the long haul and that's what I'm in for.
So, just how did my in-laws do it?
During our interview, my mother-in-law sites 4 secrets to their financial health. They've done these 4 things for their entire marriage, and continue to do them today.
1. Spend less than you make
2. Save up to buy things; use credit sparingly
3. Invest wisely
4. Plan for the future
A Little History:
My mother-in-law, Pat met her future husband, Jack while in nursing school. As soon as she graduated, she and Jack married in a simple, but beautiful ceremony. Once married, they moved into the upstairs apartment in the same house that my father-in-law's parents lived. The place was very small, but so was the rent and they were happy about that as their goal was to save up for a down payment on a house as quickly as possible. And that's what they did for nine months -- foregoing everything was wasn't an absolute necessity they scrimped and saved every spare penny until they had almost enough for a down payment. Remember, back then, you needed 20% down.) They borrowed an additional $300 from a family friend that acted as sort of a bank to newlyweds in this type of a situation to make the down payment and pay closing costs. Pat recalls at that time she made $1.25 an hour. She and Jack were very nervous about borrowing that much money; they made a pact to pay back the $300 loan to the family friend early so as not to tarnish their reputation or the friendship.
You know what kind of a house they bought? I've give you a hint: it's something that most of us wouldn't consider livable today. They wanted a house in a decent family neighborhood (notice I didn't say one of the cool suburbs) that was modest, but had good potential 5, 10, 20 years down the road. In order to afford a house in this area, they had to skimp on some of the extras like appliances, a finished upstairs, and furniture. A bedroom set was a gift from Jack's parents (they still use it in the guest bedroom today), lamps were wedding gifts. Other furniture was purchased second hand, as were the stove, refrigerator and washer. They never had a dryer until my husband was in high school.
First Comes Love, Then Comes Marriage, Then Comes The Baby Carriage
Over the years, as they were building their life together, they acquired a few more things (and three children:) and finished the house into something quite livable. Soon after they moved in, the first of the 3 children came along (my George) and Pat started her long career as a homemaker. When the boys were in high school she started back to work part time. They didn't let being a one income family stop them from planning and saving for their future. Whatever their income was, they made sure to spend less so they would have enough to save, invest and purchase life insurance. When I asked Pat about her thoughts on how hard it is for modest one income families to save and invest today, compared to back then she stated that when she and Jack were doing it they just somehow made sure they "needed less necessities" and that allowed them the extra money to save.
"Needing less necessities" doesn't sound very fun does it? Pat assured me they had lots of fun times, they even took a nice two week vacation to the lake every year. Fun times don't always have to cost much money!
After decades of this kind of frugal lifestyle, they were able to retire at ages 56 and 52. The main reason they retired so early was because early in their marriage, Jack and Pat began to notice people that worked hard all of their lives and when they finally retired, they promptly died. They didn't want that to be them; they wanted at least some time to enjoy the fruits of their labors.
Here are a few additional financial tips Pat shared with me.
1. When buying a home, buy as nice a home as you can in a decent area, but don't spend more than you can afford to. Also; it is very important, if you and your husband are both working to only by it on one income and put down as large of a down payment as you possibly can.
2. Try to save up and pay cash, for things you want for the house. Same thing for house improvements like adding on or finishing a room. If you have to use credit, don't borrow so much your payments crush you.
(Pat told me how after they had been married for a few years, they saved enough to buy a console tv with a record player -- they took very good care of it and made it last for over 20 years. It took them years and years to save enough to build a breezeway between the house and garage (they built the garage too). As she was telling me about finally putting the breezeway in, you could see her smiling as if she went back in time to that wonderful day.
3. Make what you can.
(Pat made all of the curtains for their home as she could afford the material.)
4. When you come across a particularly lean time with reduced/no income cut ALL but the essentials and eat very cheaply.
(Pat told me of a several times when this happened. She explained that it was heartbreaking to use up their savings they worked so hard to build, but it is much better to go into a lean time with savings than none, so they were thankful the money was there)
5. There is no instant gratification.
6. Insurance -- get some. (Get some wasn't exactly Pat's wording, but you know what I mean. She thinks insurance is very important. She said many times their life insurance payment was due and they didn't have the money to pay it. During those times Jack would pick up any overtime he could or work odd jobs to get the money).
7. Be determined.
8. Do not take fancy vacations.
(Pat told me of the their vacations to the lake, they drove a couple of hours to a nice lake and rented a little cottage for cheap and made fish, sandwiches, chips, hot dogs and hamburgers for most of the meals. )
9. Don't eat out very often. (She means when you are at home and not on vacation)
10. Hint on building your savings account: Whenever Jack got a raise, they tried to put all or most of it directly into savings and continue to live on just the money they had pre-raise.
11. Have all debts paid when you retire.
12. Encourage children to work and to begin paying some of their expenses when they are teenagers. (Pat said all of her boys mowed lawns, raked leaves, helped on farms, and did extra chores as teenagers to earn money for fun (movies, hamburgers, dates, concerts, etc), some clothing, cars, gas and insurance.
*We also got into a lengthy soapbox discussion on raising children to be grown up when they are adults -- that's a whole 'nother post! All I'll say right now is that I greatly appreciate both of my in-laws for the pains they took to raise my husband to be an adult. He has a great work ethic and sense of responsibility about life, primarily because of what she and Jack believed about raising their kids to be grown ups.
13. Take advantage of whatever retirement/insurance options your work provides.
(Jack's employer had a plan and later on, when Pat went back to work, her employer offered a retirement plan and insurance. They took advantage of both and Pat feels it was a big part of their ability to retire early. She did say when the children were young, it was very hard to set aside that part of their salary for retirement, but they did it because they knew at some point it was likely neither of them would be able to work, even if they wanted to.)
My Thoughts
That about sums up all of our discussion notes on finances. It was such a treat to learn a little of my in-laws' story and the important things that have shaped their lives. Today, when you visit them, you can see they live quite frugally on even less then their retirement income. While everything they have is nice and well cared for, it's usually not new. When they purchase a new item for the house, like a chair, bedroom linen set or even new bathroom towels, you can tell how excited they are (well, maybe just Pat -- Jack doesn't get chills at the thought of new towels, he saves that for a new lawn tractor). They don't have to constantly be buying something new, bigger or better to be happy. That's how George and I are living now and want to live the rest of our lives -- even if we have a million dollars in the bank. Another thing George's parents do is to actively volunteer. They've really enjoyed the opportunity that early retirement has afforded them in that area. It was difficult when they were working and trying to take care of a family to find as much volunteer time as they would've liked.
Handling our finances the old fashioned way takes a lot of
diligence and hard work, pressing through when we get discouraged but I can tell from my discussion with Pat that it is worth every effort. She said to me over and over how glad she was that they did all the hard work and lived frugally and creatively even when they didn't feel like it. Not only does that build your nest egg for the years when you are unable to work, it builds character.
