Valerie is a relatively new SavvyReader that was introduced to this blog by one of her co-workers, my wife. In addition to being a reader of this blog, she is currently reading my book, RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit. I certainly look forward to getting her feedback. She readily agreed to this interview when I approached her and it is clear that she is enthusiastic about learning more about becoming a SavvyInvestor and securing her financial future.
What was the catalyst that started you on the road to fiscal fitness? How old were you at the time?
My fiscal fitness journey started last year in October when the federal government was shut down – I was 45 years old. I handled the furlough with ease – just looked at it as an extra day off. I didn’t really feel much of a financial impact like others did. However, the shutdown scared the crap out of me. I guess it was the fear of the unknown – how long am I going without a paycheck? When I do get paid, am I going to get paid for the days I was out? I really felt panicked because I didn’t have enough money that I could get my hands on to sustain a lengthy period without a paycheck. To add to my panic, I have a 27 year-old daughter that works for the government and owns her own home. I was worried about her finances and being able to make her house payment as well as my own. It was then and there that I decided that my number one priority was getting my finances in order and building an emergency fund.
What do you believe are some of the essential behaviors individuals should adopt in order to become, or remain, fiscally fit?
The most important thing in my opinion is to save for an emergency. You never know when you are going to have to go without a paycheck and having some money in the bank to live off of will be one less thing you have to worry about. When I was in the U.S. Air Force, I always told my troops to put $50 a paycheck into a savings account. One of the girls that used to work for me told me that she took that advice and when it came time to buy a house, she had a substantial down payment. Unfortunately, I did not take my own advice. Also, the standard answers of making a budget and tracking your expenses are really good. You should also look to see where you can cut expenses. I took a good look at all my bills and discovered that I was paying $16 a month for a DVR that I never used. I also started checking the grocery sale flyers and clipping coupons.
I would recommend getting an Entertainment book for the town you live in or near. The Entertainment book has some really good deals on just about everything (buy one get one free at restaurants, discounts on museums, etc). Just because you are trying to become fiscally fit doesn’t mean you aren’t going to do anything – you just have to find cheaper ways of doing it. I take my lunch to work pretty much every day and really only eat out on the weekends. I also don’t frequent the places where I know I will overspend. Shopping malls are my weakness. I once spent $300 on makeup and thought nothing of dropping $500 on a purse. I am happy to report that slowly but surely I am changing my way of thinking. I still spend probably more than I should on makeup and I will still buy a nice purse, but I now plan my purchases and no longer buy on impulse.
What is your definition of wealth?
I would define wealth as having enough money so you never have to worry about paying for the necessities of life as well as having a little extra to do what you want to do. Also, wealth to me is the ability to give back, whether it be helping my daughter buy her first house or giving to charities that are important to me.
With regards to planning and managing your portfolio, is that something you do on your own, through a financial advisor, or a combination of the two?
I manage my own. I have a TSP account and took the advice of a trusted friend on what funds to put my money towards and his advice is working well so far. For every raise I get, I increase my contributions. I do a dollar amount instead of percentage as that is easier for me. I also have my military retiree pension and hope one day to get to the point where that check will go into savings without me having to touch it. I plan to look into a Roth IRA account but haven’t done that yet.
What do you believe is the most difficult obstacle for individuals to overcome in their pursuit of financial freedom?
Two things. First, for the younger generation especially, I think it is an obstacle to make a salary that is enough to provide for you and your family, especially if you are saddled with student loans. One of my daughters’ friends has student loans totaling over $100k for a four-year degree. That is ridiculous and was not a well thought out plan. People need to understand the ramifications of their decisions. For this particular individual, it wasn’t cool to do the first two years of college at the local junior college. I’m not sure how cool she thinks it is now to have a loan payment of $1k per month and a job as a waitress.
The second most difficult obstacle to me is life. Life happens and it can be expensive. Starting a family, buying a house, getting a divorce, healthcare expenses, car trouble. All of that happens to each and every one of us on a daily basis. It can be very difficult to have enough money set aside for each event that life throws at you. I think you have to do the best you can do with what you have to work with. Don’t spend frivolously and don’t try to keep up with the Joneses.
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