I’m an anonymous blogger and I choose to be for many reasons. It gives me the freedom to share ALL of my finances with you, which is a great learning tool. Additionally, I can be very open with my observations. And I can write openly about things going on around me, which is great because they are probably going on around you too.
It also means that I can introduce you to my neighbors and use them as a learning experience. Now please, I’m as cooky as they get and I’m not trying to put anybody down or be all judgy. But it’s so interesting to learn from others and that means their challenges and successes.
And like I said, I’m far from perfect and I’ve already admitted some of my own mistakes (more will come too) but I’d like to share some observations I’ve made of my neighbors. They are good lessons we can learn from or at least consider.
Neighbor 1: The Recent “Retiree”
A couple next door, nice enough people, moved in a few years ago to downsize their home and prepare for retirement. She’s is an elementary school teacher that “retired” last year after 30+ years in the classroom. Sounds simple enough, right?
The Issue – Two months before “retiring,” she bought a brand new $40,000 car with debt.
The Lesson – Have a plan. Seriously, don’t take on debt just before you retire unless you have sufficient monthly income to offset the debt. Even then, consider paying with cash. If she really felt the need for another car (which her husband didn’t believe) then she could have:
- Continued working, save for a new car, and paid for it with cash
- Gotten a less expensive car (new or used)
- Reduced the term on her loan to end when she could retire
This new debt means she wasn’t able to retire so she had to become a substitute teacher. She’s embarrassed by her decision because it was so easy to avoid. And her husband just shakes his head and keeps saying “I told you so.” Ouch!
Neighbor 2: The Dentist
The other couple next door bought their house at the absolute peak of the housing market and I always felt bad about that. The dentist is about 67 years old and he continues to work 50+ hours each week. They travel a lot, rotate cars on a regular basis (three are in their garage now), and eat out all the time.
The Issue (is it really an issue?) – Slow down the spending so you can retire already and find a new way to stay busy.
The Lesson – Don’t use your strong work ethic as a reason to keep working 50+ hours a week until the day you drop dead. There has to be another way to satisfy your need to stay busy. If he wants to keep his hand in dentistry, he could periodically do some charity dentistry work for the homeless or low-income people.
With his work ethic, he probably makes at least $175,000 yearly (the 2017 national average for dentists). So I don’t know if he needs to slow down the spending or if he needs to think of some other way to stay busy.
This is where I’m probably come across as a little judgy or preaching some of my values (or situation) onto someone else. None of us knows what makes someone else tick or decide what they decide. We are all wired differently and I’ve got to remember that.
I must admit that I struggled to describe The Dentist’s situation. I read somewhere that work is what we love and jobs drain our lifeblood from our souls.
Maybe The Dentist has it right after all. If so, good for him!
Neighbor 3: The Entrepreneur
This story is truly a cautionary tale. This couple (about 62 years old) across the street has the largest house on the block, a very nice backyard, and have done multiple upgrades on the inside (kitchen, bathrooms, etc…). They’ve been in the house for almost 20 years and you would get the impression that they are at least house rich.
The Issue – The husband has been an entrepreneur his whole life. He told me once he’s never made over $100,000 and he has no retirement plans. He’s invested any of his little savings into his dying business and his house has been used as collateral for more than one business loan. He has no home equity, no retirement plans, and just recently closed the doors of his business (no income).
The Lesson – On a regular basis, we see statistics about how bad the retirement picture really is in this country and my entrepreneur neighbor is a great example. They are the poster children for these sad statistics.
At 62 years old, the entrepreneur got his first job working for someone else. It’s a steady paycheck but he should have done this long ago when he realized his business wasn’t going to make it. By the way, he bought a brand new $45,000 car just after he closed his business. I’m not sure I want to know how he got that loan.
The lesson … where do I start? Have a plan or vision and then course correct along the way. Though he constantly told me how bad business was, he should have made adjustments along the way. He always talked about downsizing the home but they never did. He shouldn’t have bought a brand new car either. And no retirement savings?
They are nice people but now they are broke and being forced out of their home by the bank. Unfortunately, they are part of the statistics that we read about every day.
Summary
I’m guessing my immediate neighbors aren’t too different from yours. Again, I’ve made plenty of stupid mistakes and will likely make some more. There’s plenty to learn here so I’ll add a few of my takeaways:
- Don’t take on debt right before retirement unless you can handle it with retiree cashflow.
- Working until you drop dead doesn’t sound like a good plan or a lot of fun. Life is too short.
- First, have a retirement plan. Second, course correct that plan on a continual basis.
- Taking on new debt while you are unemployed is stupid (yes, stupid).
- Having too much house, especially with no equity and no retirement savings, is apparently a real thing.
- This one should be a no-brainer … save for retirement. If you have no retirement plans available at work then open an IRA or even a taxable account.
Some of you might say the real lesson is that I should mind my own business and not worry about what’s going on with my neighbors. But I think the lesson is to always learn from those around you. That includes challenges and successes.
Thanks for reading!
Mr. TLR