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Hello World

October 14th, 2020 at 03:38 pm

Hello World,

Last year, when several months of blog entries were lost, I lost my blog. All my entries were within the time range of lost entries. I kept waiting for them to be re-instated, but it did not happen, so I am starting again.

I am 41, single, no kids, in the healthcare field, and am newly self-employed.

Here is the gist of my financial situation:

For all my twenties, I was a financial idiot. I saved nothing, spent more than I could afford, did not learn about managing money, and got myself into a giant mess of high-interest consumer debt.

In my early thirties, this started catching up with me, and I started to educate myself about money and how to dig myself out of the hole. Unfortunately, two things were working against me - the high interests made it harder to make a dent in the debt, and I was in an abusive relationship which also included financial abuse and a gambling habit. I divorced when I was 36, and spent the next four years pulling myself together financially. I started working for myself on the side, paid off all my debt (~$58,000), purchased a new-to-me car in cash, saved an emergency fund of $20K, saved 5% for down-payment and purchased my current home, and determined that I will never again carry consumer debt.

I have just started my forties. Earlier this year, I left my salaried job of ten years, and went into full time self-employment. I work 2/3rd as much and make twice as much, and was the best decision I could have made for myself. For the first time in my life, I am not living paycheck to paycheck. For the first time in my life I am not constantly thinking or worrying about money. So, for the first time in my life, both my money and my time actually belong to me. It is a tremendously freeing experience. I am truly happy for the first time in my life.

My current focus is trying to save and catch up on retirement planning and investing as much as I can. Never having had money to invest before, this is new to me and I am learning as I go. I hope to retire at the age of 55. However, it will require consistent and aggressive savings to do since I am starting so much later than I should have. I hope to save 75% of my post-tax income if I can. At my current income level, I think this is doable. Years of living frugally due to necessity also makes it easy to save - it has become habit by now. It also helps that I have no debt and am a single member household. I have a small amount of retirement from my previous job, but apart from that, everything else I have saved in just this year.

My financial strategy is as follows:
1. Save by maxing out tax-deferred retirement contributions. Since I am self-employed, I get to save more than the traditional IRA amounts.
2. Invest in taxed retirement accounts. (Can I have a Roth IRA in addition to the tax-deferred? Need to check up on this)
3. Invest the remainder of what I can save in a brokerage account
4. Pay off my house in 10 years. It is a 30-year mortgage, but I want to prioritize paying this off because I only have one income coming in and want to get this off my back as soon as I can. This provides psychological relief, but also if I don't carry a mortgage into retirement, I need to save less for retirement.
5. As I get closer to paying off my mortgage, purchase some rental property and pay that off by the time I am retired. This should provide passive income for me to live on in addition to savings/dividends until I can draw on retirement and social security income.

Here is where I currently stand. (** I am not going to do exact decimals. I will round debt up and assets down to the nearest hundred)

60,000 - House Equity
27,000 - SEP IRA
52,000 - 457 Account
20,000 - Brokerage
20,000 - Savings(EF)
3,900 - HSA
182,900 - NET WORTH

Edit: Thanks to a comment by Petunia100, my NW jumped $253,000 this morning. I guess I was incorrectly counting my mortgage twice. I have been in positive NW for a while now, but my brain has just caught up with this fact. WTH! How am I so lucky? Petunia - thank you so much!!

10 Responses to “Hello World”

  1. rachael resk Says:

    I am VERY impressed with your story. It is motivating... especially that part of switching to working for yourself. you need to take a big bow. May I ask what you do and how you gained the courage to make that switch? Kudos!

  2. Petunia 100 Says:

    You are counting your mortgage in your net worth twice. House equity is value-mortgage, for a net of 60k. Then you are listing your mortgage separately.

    Yes, you can have a Roth IRA. But, if you make too much to contribute directly you will have to contribute to a traditional first then convert. Part of the conversion will be taxable as you have a SEP IRA as well, and pro-rata rules say you can't convert only your nondeductible contributions and not your deductible contributions, you must convert a proportionate share of each.

    Welcome back! Smile

  3. late.start Says:

    Petunia - thanks so much. That is my mortgage balance. If I don't use my mortgage balance as debt, it will record me at positive NW. I can't wrap my mind around that. Really? Wow! Even when I owe 253K more? I need to read up on this. I can't fathom being in the positive NW. That will be a HUGE GIANT emotional boost for me.

    Rachael Resk - Thank you so much. I really appreciate your words. I am a psychologist. I think it was being fed up with working 8-5 more so than courage that made me switch. That being said, it wasn't quick. I spent 1.5 years slowly building up my practice on the side. I decided that I wasn't going to quit until I had paid off all my consumer debt, had a substantial (to me) EF, and a down-payment for a house. Once I got those things covered, it made it so much easier to quit my regular job.

  4. rachael777 Says:

    that little accounting mistake that Petunia caught up top gives you a MASSIVE reversal in networth. bask in it and keep growing!

  5. Wink (East Coast Saver) Says:

    Your journey to financial stability is really inspiring! All of your hard work is really paying off, and you have a really sound strategy going forward. I can really relate to #4 of your plan. I also made paying off my mortgage early a priority, and I don't regret it for a second. Welcome back!

  6. LivingAlmostLarge Says:

    Congratulations and good luck! You should do Home value under assets and mortgage under debt.

  7. CB in the City Says:

    Welcome back! You do indeed have an inspiring story!

  8. terri77 Says:

    We have similar background stats. Welcome & good luck! You have a very solid plan.

  9. late.start Says:

    Thank you everyone for your sweet comments and warm welcome.

  10. Thrifty Ray Says:

    Your story is inspiring! You have overcome a lot at your young age and are definitely on the right path for financial success!

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