I was driving to work this morning, listening to a podcast, as I always do. This particular one was Choose FI: Alan Donegan. A lot of what he was talking about wasn’t really applicable to my situation, but I liked his zest for life (and I’m always a sucker for a British accent) so I kept it on as I drove. Then, towards the end of the podcast they started talking about people who may feel as if they’ve missed the boat with financial independence because they only stumbled across the idea in their 40’s, 50’s or 60’s. Alan Donegan declared, “Start where you are!” and that resonated with me.
Because 6 years ago, I was that person.
Just after I turned 50, I finally paid off my house. I’ve written about accomplishing that HUGE goal here. For about three weeks, I felt terrific. I’d done it! The boys and I were finally secure! No-one could ever take that place away from us and the boys would always have a place to come back to if they ever needed it. I lashed out and bought a brand new pair of sandals (Poppy the puppy chewed them up a week later), and I ordered $300 worth of knitting yarn to celebrate – yes. I bought ALL the colours.
Then, after the euphoria started to fade, I realised that I’d only achieved the base-line level of security. Ok, so we always have a safe place to lay our heads. But what about when I get old? How was Old Lady Frogdancer going to pay for her retirement?
I had no idea where to turn. Sure, my parents had self-funded their retirements, but they did it with property. I was living in the midst of one of the biggest property bubbles on Earth. That was wasn’t open to me – after all, it took me 17 years to pay off my house. I was running out of time – I definitely wasn’t getting any younger…
I knew I had a couple of things in my favour to put against the fact that I was elderly and tottering towards the grave.
- I’m a saver. Right at that stage of my life, I was literally starting with $0 in savings because I’d poured them all into getting rid of the mortgage, but I knew that I’d build my savings up again. After all, I’d done it before.
- The boys were coming to the end of their total financial dependence on me. Two of them were already ay University and the other two were in upper secondary. They were still a huge expense – have you ever seen how much adult men can EAT??? – but I could see light at the end of the tunnel.
- I’m frugal. Sure, I can spend when I want to, but my living expenses and hobbies are cheap to run.
- I was on the top tier of the teaching pay scale, so I was on a decent wage. Given all of the above, once I learned about investing, I’d have something to play with.
However, it wasn’t all beer and skittles:
- I had no idea where to start. This is seriously what stops most people from even beginning. The investing world is seriously intimidating.
- I have a real fear of numbers. I joke about hating numerals, but when I see a whole heap of them on the one page, my brain seizes up. Give me pages of text and I’m happy, but change it to numbers and it’s horrifying.
- I didn’t know much about the investing world, but I was pretty sure that numbers have a good bit to do with it.
I don’t mind telling you, I was scared. Very scared. I was on my own, with no partner’s income and knowledge to smooth the ride. Any decision, or lack of decision, that I made could possibly have huge ramifications for Future Frogdancer down the track. It was paralysing, to tell the truth.
The risk of inertia putting people’s retirements at risk is a very real thing. Often, doing nothing is riskier than taking action. Inflation eats away at savings and you can find you’re like a hamster on a wheel, forever racing and getting nowhere.
In my case, a thread on the Simple Savings forum, which mentioned that the Barefoot Investor was starting an investing group, was what saved me from that trap. They mentioned that the first thing he was planning to do was ‘Rescue Your Retirement’. It was a workbook and video that promised to lay out a gameplan for people like me who had no idea what to do.
I signed up immediately. When the ‘RYR’ was released a week later, I watched the video and looked through the workbook and at the end, I cried real tears of relief. I’d been so scared that my situation was hopeless. I was in my 50’s and, apart from the paid-off house, I had not a penny to my name. But here was a guideline to follow that meant that by the time I reached retirement age (which is 67 in Australia) I’d be able to be a self-funded retiree and not rely on the Age Pension.
It was shortly after this that I read Go Curry Cracker’s and Mr Money Moustache’s explanations about the 4% Rule, which I summarised in the post called “The 4% Rule for people who are scared of Maths.” (The original links are in that post.) I’d found the FIRE community.
Hooray!! I had a figure to aim for! It was daunting, sure, but as the saying says, “Shoot for the stars. If you miss, you’ll at least hit the moon.” This meant that if I couldn’t reach my 4% FI number, at the very least I’d reach retirement age at 67 with a healthy portfolio behind me and (hopefully, all going well) a vastly decreased risk of having to eat dog food in my old age.
I was excited. I rolled up my sleeves and got started. I figured that I might not make it to the best result, but it stands to reason that Future Frogdancer would be better off than if I did nothing and continued to freeze in fear.
I read as many FI blogs and books as I could lay my hands on. I learned to invest, firstly from Barefoot, then, as his advice became too simplistic, from others. Bit by bit, ever so slowly but steadily, my knowledge and confidence continued to grow.
As people who’ve read this blog before would know, sometimes things change. With all the reading and talking I was doing, I picked up a smattering of knowledge about lots of financial things. This came in useful when I decided to completely up-end my life and move down to The Best House in Melbourne 3 years ago.
If I hadn’t decided to put the “start from where you are” philosophy in motion, things would be very different.
If I hadn’t tweaked geoarbitrage to free up the equity in my little weatherboard house in the best school zone in Melbourne, I know what my next 11 years would look like.
I’d be working full-time until I was 67. By then, all things going well, I’d have close to a million dollars in investments. I’d still be living in my tiny 1950’s weatherboard with the food forest and the chickens. I’d be happy enough, but locked in to the job and the lifestyle.
Instead, I have choices. Choices I would never have been able to have access to if I didn’t elect to start where I was.
I’m not saying everyone can do what I did with the geoarbitrage. I got lucky with that one. But everyone can start to make moves towards financial independence, no matter how old you are.
I was 50 years old, with no savings behind me. I had my house paid off, my car was paid for and I had no credit card debt. I was essentially starting from nothing.
But the important word in that previous sentence is “starting.” It was scary and intimidating, but honestly, if I can do it you can too.
Don’t get to the end of your life and look back with regret. Start from where you are.