It’s Never Too Late
- Written by Candice Elliott
If I knew then what I know now. I hate that saying. There is so much regret and blame in that sentence. But I hate it most of all for the futility of it.
Well yes, if you did than you would know not to marry that person, drop out of school, pass on buying Apple stock when it was cheap. If ifs and buts were candy and nuts, every day would be Christmas.
No lamentations for what could have been but isn’t. So rather than bemoaning what you didn’t know, you can be grateful that you know it now. Because as long as you use what you know now, it’s almost never too late for that knowledge to benefit you.
I beat myself up a lot about this. As I’ve mentioned in other writings, I came late to personal finance. I never really thought about money until about two years ago by which time I was already in my late thirties.
I think back to how much money I could have if I had known anything about how to manage or invest what money I did have. Even if had been nothing more complicated than opening a Betterment account fifteen years ago (Betterment is not that old, but you get the point) rather than this past summer. A moment of silence please for all my lost gains.
I think the money regret is worse than other regrets in some ways. If you knew then not to marry that person for example. Well, it couldn’t have been all bad. You married them after all. Maybe got some kids out of the deal or at least a honeymoon.
All you have if you didn’t start saving and investing until later is no fucking money. No fond memories, no good friends you would otherwise not have met. Just no money.
So if you are late to this whole thing like me, you need to play catch up.
Pay Off All Credit Card Debt ASAP
This has to be step one. You are not going to get any return on an investment that trumps the ridiculous interest rate you are paying on credit card debt. An average return on an investment is 7%. The average interest rate on a credit card is about 15% but some are much higher, well into the twenties.
Cut Closer To The Bone
The kind of money you need to start chucking into investments isn’t going to be found by ditching your daily Starbucks habit. You need to start investing a significant percentage of your income, not a few dollars here and there.
Consider taking a part time job. The second job doesn’t have to be forever. Just grit your teeth and do it for maybe six months. If at the end of the six months you find that it wasn’t really that bad, keep it up.
Consider finding a way to make some extra money on the side. We have done a few episodes on “side hustles.” Maybe what started as a side hustle becomes something more. Some big companies started out as side businesses, Yankee Candle and Gibson Guitars among them.
Downsizing is what will free up the kind of cash you are looking for. Do what you have to in order to become a one car family. Move to a cheaper house or apartment or rent out a room in your existing home. Move to a cheaper area in which to live. I know these things seem drastic but your situation requires drastic action.
Max Out 401K
This is true at any age but especially important if you are late to the party. If you invested $17,500 a year into a 401K, assuming 8% returns and no employer match, you would have a little over $1.3 million by age 65.
Strike The Right Balance
The younger you are the more your portfolio should be weighted towards stocks rather than bonds. But if you’re coming off the bench in the second half, you need to be a little more daring. I have mine balanced at 90/10. Conventional wisdom says this should be more like 80/20 but I don’t have that kind of time anymore.
You Might Have To Have “The Talk” With Your Kids
If you have children, you probably want to at least help them pay for college. If you’ve listened to some of our past episodes about student loan debt you know how crippling it can be. We all want the best for our kids but given the state of higher education, we may have to redefine what the best is.
People with college degrees earn about $830,000 more over a lifetime than those with only a high school diploma. So college remains a good investment but college doesn’t have to mean all four (or more) years at the best school that will take you.
It’s much cheaper to do part of your college education at a community college. Not only is the tuition cheaper, but it enables a student to live at home further cutting expenses.
Exhaust every avenue for scholarships and grants before you start filling out those loan applications. There are millions of dollars available for education if you know where to look.
The Most Lucrative Period of Your Life
Here’s a bit of good news. If you’re in your mid thirties to early fifties, you are making more money than you ever had or likely ever will. Of course there are some exceptions to this but in general, these are your prime earning years.
Remember when we talked about lifestyle creep? Put what I taught you to use here. Every time you get a raise or a bonus, pretend you didn’t. Invest the full amount (or close, you can treat yourself a bit as a reward for your hard work) and continue living as you currently are. Don’t run out and use that money to buy a new car or a bigger house.
Have “The Talk” With Your Parents Too
As we get into our 40’s and 50’s, some people will become part of the “sandwich generation.” Still taking care of children while also taking care of aging parents. Taking care of in the physical sense, the financial sense, sometimes both.
Have a frank discussion with your parents about their finances. Do they have enough to see them through retirement? Do they have the proper insurance in place should they get a chronic illness? Discuss with them what would happen if they were no longer able to live independently.
What measures do they want taken to prolong their lives? Some people want to be hooked up to machines even if all other signs of life are extinct. Some people loathe the thought of a very low quality of life that can result when extreme measures are taken to prolong life. Do you know which camp your parents fall into?
Who will make health and financial decisions if the parents are no longer able to do so? Is it you or is it your shady ass worthless brother your parents still seem to think can do no wrong?
Will they have the money to live in an assisted living facility or are they expecting to live with you? Have they made plans for their funeral expenses? Funerals cost on average between $7-10,000.
These are unpleasant things to talk about and having to become the parent to a parent is devastating, especially for those of us who were always daddy/mommy girls or boys. But if your parents don’t have these kinds of things already sorted out, the financial and emotional burden can fall on you. This discussion not only protects your parents’ financial future but your own as well.
I’m sorry for all of you out there who are in this same boat with me. That’s one of the biggest reasons I care so much about what LMM does. I don’t want other people to have that moment of panic I had when I realized how old I was and how little I had. But even for us, it’s not too late. It’s not getting any earlier either though so get it together!
PS Yesterday a terrible blow against freedom of expression and freedom of the press was struck in Paris. As a writer and a human being nothing is more sacred or important to me than the preservation of those two ideals. If you would like to do something to help protect press freedoms, The Committee To Protect Journalists has worked for thirty years to defend the rights of journalists to report the news without fear of reprisal. I made a donation in the memory of those Charlie Hebdo employees martyred to the cause.
“The moment you say that any idea system is sacred, whether it’s a religious belief system or a secular ideology, the moment you declare a set of ideas to be immune from criticism, satire, derision, or contempt, freedom of thought becomes impossible.”
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