We all suffer from some level of financial insecurity because society can be cruel. The future is always unknown, as the global pandemic has shown us!
Financial insecurity is the reason why we tend to stay in cash long after the signs of a recession are over. Financial insecurity is the reason why we work long after we need to because we fear some financial disaster might wipe out all our wealth.
During the height of the global pandemic, financial insecurity caused me to wake up at 3 am sometimes! If I had properly forecasted my passive income and wealth, I wouldn't have had to worry so much.
Financial insecurity is why we buy insurance! I hope everybody with kids or debt has gotten at least a basic term-life insurance policy. Tomorrow is not guaranteed.
In a positive light, being financially insecure helps us become more financially secure because we take action to get rid of such an uncomfortable feeling. But after a certain point, financial insecurity may become debilitating – ruining relationships, limiting potential, and creating a sea of regret.
Here are some signs you might be overly insecure about your finances:
* You constantly tell others how much you make for the purpose of making yourself feel better.
* You crave constant adoration or at least reaffirmation that you aren't one of your insecurities e.g. weight, education, product.
* You enjoy constantly checking yourself out in the mirror, taking selfies, and posting pics of yourself for all to see. There's a correlation between physical fitness and financial health.
* You sometimes lie awake at night, unable to sleep because you're worrying about your liabilities or potential liabilities.
* You buy nice cars, fancy clothes, expensive jewelry, and nice watches to show off your wealth or make up for shortcomings.
* You have multiple-years of living expenses saved away, but still work at a job you hate in order to save more money you don't need.
* You feel your friends are all more successful than you, despite having an income or net worth well within in the top 25% for your age.
Let's see if we can provide some help to a reader who writes in about his financial insecurity!
Overcoming Financial Insecurity
A reader writes in,
I'm going through a rut. Actually, I think both my wife and I both suffer from financial insecurity. We're both 30 years old, and make roughly $200,000 combined. Around $170,000 of that comes from my wife, and $30,000 comes from me.
You see, I'm basically unemployed after moving to a new state. There are some odd jobs here and there that I can do, but nothing steady. I never wanted to leave my job, but my wife's business started taking off so she told me not to worry about money. Good thing her business is my business too, by default!
I love my wife to death, but she's driving me nuts. She has constant insecurity issues because she was a little out of shape growing up. She always asks me whether her outfits make her look fat. Every time I tell her she looks beautiful, but she doesn't believe me and can't get enough praise. She was never the cool girl in school, nor was I, so she especially has this “I'll show them” type mentality that has helped her become successful.
Unfortunately, her success is getting to her head! She's constantly telling her friends how much money she makes in the exact opposite way you recommend in your Stealth Wealth post. Her friends, our friends, are teachers or have regular jobs making $30,000 – $65,000 a year. But she goes and tells them she's going to easily make over $200,000 a year if our business momentum continues! I'm so embarrassed!
Meanwhile, all my friends are digging at me because I have a sugar mama. They say stuff like, “How's the good life there?” and “Are you ever going to get a job again?” and “How does it feel to be a kept man?” It's getting me depressed and it doesn't help that we moved to a new town in the middle of nowhere where I have no other friends. Jobs in my old industry are few and far between.
Sorry for the long e-mail. I'm hoping you can share your thoughts. Maybe the FS community can provide some ideas as well!
Discussing The Financial Issues
1) One spouse makes way more than the other spouse.
No matter how much you love someone, it's hard to feel equal if your incomes are so different as DINKS (dual income no kids). Unfortunately, money is an easy barometer to measure. Most men I know have this inherent need to make enough to provide for a family. Men can get very insecure if women make more because society has brought us up to provide.
Solution: A good idea is to simply join the business as a partner. One can be the CEO, and the other can be the CFO. In business, there is an endless amount of things to do if her business is making $200,000+ a year. Just doing the bookkeeping alone is a full-time job!
2) 30 years old. Moved to a random new town. Not sure what to do with their lives. It sounds like they are going through an early mid-life crisis.
The year before turning 30, I felt depressed because I started thinking about all the people who died before 60. But, I snapped out of it a week after I turned 30 and decided to look forward to the future. 30 is an important age for most ambitious guys because that's the year where we decide whether we will have made it, or know we will have made it. Time will heal this disconcerting feeling of turning a new decade.
Solution To Financial Insecurity
Will and his wife need to realize that they will probably have at least 45 years of life ahead of them. Less than 10% of American households have an income over $200,000 a year. They are way ahead of the game and should be appreciative of their good fortune. Use the excess money to donate to charities. Will can spend more time volunteering at local organizations. There's nothing more rewarding than giving back if you're feeling unsettled.
3) Will's wife feels insecure due to her upbringing, and is now trying to make up for her insufficiency by making as much money as possible and telling everyone. Will's wife is embarrassing Will with her constant bragging. Will doesn't like the new version of the wife he first married.
We know there is an inverse correlation between how much people brag about their wealth (income, assets, cars, housing, clothes, etc) and their self-esteem. Everybody knows someone like this, and it's annoying. But, it's important for all of us not to fall into this trap of trying to keep up with the Joneses.
Solution: Will needs to have an open conversation with his wife to tell her how her income transparency with friends who are poorer is making him feel. Will should remind her wife why he married her in the first place, and explain how he doesn't want money to come between them. Once you reveal how someone's actions make you feel, it's much easier to come to a compromise.
Any suggestions for Will and his wife?
Steps To Solve Financial Insecurity
Having more money doesn't necessarily solve financial insecurity. You may become even more insecure as a rich person because you'll start wondering whether other people like you for your money or yourself. You may even start stressing about whether you might one day lose it all. If you've got no money, there's only upside!
I've found that by doing the following things, I've felt much more financially secure:
1) Make financial goals and take action towards reaching those goals. Share your goals with friends or loved ones to help build a support network. No matter how little the progress, you will feel happier with each step.
2) Create multiple passive income streams. If one engine goes down, you've got another engine propelling you along. You can develop financial buffers by completely harnessing all your abilities.
3) Get the best insurance for your car, house, and overall assets through an umbrella policy so you won't get wiped out if something terrible happens.
4) Track your net worth and create a budget. A simple analogy is writing out a list of things to buy at the grocery store, instead of trying to memorize everything. You'll feel much more secure and much more relaxed knowing that you'll get everything with a list. The more you know where your money is going, the better.
5) Accumulate real assets. The people who often feel the most insecure are those who make a lot of money and have nothing to show for their income. They wonder, “where did it all go?” Buying real assets allows you to actually see where your hard work is going.
6) Get professional help. The people who are the most financially insecure tend to have the most to gain by talking to a financial advisor. Here are some questions to ask a financial advisor before taking him or her on. You can also reach out to personal finance bloggers, participate in financial discussions online, and read plenty of finance literature to give you more confidence.
7) Get life insurance. If you have a mortgage and/or kids, you must get term life insurance. Term life insurance will cover your debt and other expenses in case of an early death. The goal is to get enough term life insurance to cover all liabilities and until your kids become adults. The best place to get life insurance is through PolicyGenius. PolicyGenius makes comparing custom quotes a breeze. And, it's free.
You Can Overcome Financial Insecurity
After writing about how to achieve financial independence on Financial Samurai since 2009, I strongly believe you will eventually overcome financial insecurity. The more financial knowledge you have, the more financially secure you will also feel.
Please continue to build more passive income to cover your desired living expenses. Once you can, you will have the most financial security in the world.
How Much Should My Net Worth Or Savings Be By Income?
51 thoughts on “Solving Financial Insecurity To Live More Freely”
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My financial insecurities mainly came from my husband. I don’t spend much, whereas, my husband and his brother competes with each other on earning powers, who have the most fancy tools and toys. Yet, he wants to retire in 10 years. I told him with his current lifestyle, he needs at least $100k per year, that is 20 years before he reach his full retirement age. In order for me to feel financial secure and let him retire, we need $6m and up….which we are far from it.
Thoughts of figuring out a way to make more money on your end to help achieve the $100K a year in retirement? I know it will allay your financial insecurities if you do start making more and creating this financial buffer.
While I agree that there are financial strategies that can help with financial insecurity, I think the larger issue that needs to be addressed is insecurity simpliciter. Women (yes this is a rough generalization) in our society often face appearance insecurity due to an irrational set of appearance norms for women that are enforced in cruel ways. (it’s not just about being perceived as “beautiful”; it’s about being perceived as “acceptable”). Anyway, I think similar ridiculous norms are culturally enforced against men when it comes to “providing” or being “successful” rather than a “loser.” (While I don’t think our culture as a whole pushes these norms nearly as severely on women, plenty of individual families do, and shame researcher Brene Brown has found that your own family’s shame constructs are extremely formative when it comes to your own personal insecurities). I think it’s important for all of us to remind ourselves that our worth–and our spouce’s worth–does not come from an income or a bank account. Internalized lessons from childhood, culture, and family can be hard to unlearn.
Definitely insecure though well above the median for my age. My peers all seem to have luxuries like nicer residences, ~pets~ (this is a luxury I want more than anything), no stress about dropping mad cash on a night out, though I’m sure I make more. -shrug- Makes me think, damn what if I threw caution to the wind and did whatever I want?
Oh well, my student loans will be paid off long before their’s, so small miracles.
I have a boss who is insecure. He is constantly throwing out the big numbers and his title (he constantly points out he’s the President of the company. And yes, he constantly capitalizes his title even though it is grammatically correct to leave it lower case.) He freaks out over small issues if they think that they make him look anything less than godlike. And (being in accounting) I know he has little to no credit worthiness. It’s horrible working for someone like that. The only reason I stay is because of loyalty to the company and I feel like putting up with things is good practice in dealing with hard people. Some days it is still hard to not just say, “You know what Mr. President, I don’t know why you think you’re so great because I see the truth. The way you treat others is hurting your business and I’m no longer going to be a peon you can step on so you can feel better about yourself.”
I cannot begin to imagine what it would be like to be married to someone like that. I don’t think this wife is as bad as my boss (excuse me, my ‘President’) but I’d say this guy is learning lessons big time in being supportive yet not an enabler. It’s a hard, fine line and I tip my hat to him for looking for the tools to do it better, for caring about his relationship with his wife, and for being honest about the situation. That is a big part of the battle, good sir.
Have you read: How To Deal With A MicroManager Without Killing Yourself First?
For Will, my one recommendation is to ask his wife if one of her friends told her she was on track to making half a million and kept putting that out there how would she view that friend? Then suggest from his POV she is slapping her friends in the face with how much she earns and lording it over them even if that isn’t what she means to do. Maybe it makes her friends feel a little bad about themselves versus making them feel good for her, it’s a matter of perspective and delivery. It’s one thing to bring it up when asked, another to brag about it. She may never learn but may give it a bit of a rest.
As far as the guys asking about how he feels being a kept man, I can think of a number of possible responses:
– Just shrug and say it’s good.
– I dunno, hey (name of asker’s wife), (asker) wants to know how we feel about being lazy ass kept spouses?
– F#$*ing great! I get to do a job I enjoy on my terms and don’t have to worry about money as much.
– More power to her, after all, this is a community property state and worse comes to worse, I get half.
– With a smile say “life is good”, or even better “life is good, and getting better”
– “You know, when she comes home and the house is clean, dinner is on the table, and she doesn’t have to lift a finger after a tough day at work, all I have to do is drop a hint and next thing I know we’re going at it like rabbits overdosed on viagra.”
You get the point. Stop being embarrassed by your wife’s success, there are always those who are jealous, who would tear you down for not “earning” it, etc. Be happy you married someone who you can be happy with.
What a great article Sam! I know a ton of people who are in similar situations. Lucky for me and my girlfriend we don’t have any financial imbalance and we very openly discuss finances however I don’t think it would bother me one bit if she was earning the majority of the money. I might actually like that! ;)
I would NEVER go touting how much I make to my friends. Eeek. However, I do always feel ‘the more money in my life, the better’ even though my spending habits are so low I don’t really need it. I guess I just want to be prepared in case something bad happens – or a kid. lol
When I read this article yesterday, I thought it was pretty solid, but didn’t really apply to me. I usually come back to check the comments and realized that it will apply to me.
My 5 year high school reunion is coming up this weekend (who does 5 year reunions?) and I am going (I figure, you only have a 5 year reunion once, so might as well go!). It should be very, very interesting to see how other people I knew spend and have spent their money. Since it is at a bar, I’m sure that it will be eye opening. I’m I will be able to fill a whole post on the experience!
Stealth wealth might be tough in this situation. Considering I just bought a house in a great location, people will for sure figure out that I have things under control. What is your experience with this?
Have a good one,
If we’re supposedly the average of the 5 people we spend the most time with (or however that saying goes), this guy is surrounded by people that aren’t making him better. His wife sounds immature by talking about how much money she makes, and his friends shouldn’t be hassling him like that when he isn’t exactly doing anything wrong or odd. In 2015, with more undergrad and grad degrees going to females than males, I can’t see why he should be hassled
They need open communication, with him not being afraid to speak up.
Separately, I think that while this financial insecurity discussed above is not good, some can be okay. For example, if people save money for their future due to their own financial insecurity, the mindset is actually driving a positive outcome. So perhaps insecurity might not always be bad, it just depends on how it manifests itself.
So many wise thoughts. In our family, it depends on a month as my boyfriend works in sales and I run my business. So sometimes he makes more and sometimes it is the opposite. However, it is all about communication. You really need to be on the same page as a couple, otherwise money problems just get worse regardless of income.
For sure. Communication is so important, and team work makes things so much easier!
Nice balanced article,I wanted to give the recent example: Robin Williams who died of depression leaving behind millions of wealth, estate and No one really to take care of at that age. I think Money upto certain level is Important for day-to-day necessities, luxuries & after that Its good, reliable, Family, Friends,relatives. So back to basic principles: grow your wealth on good values & always be mindful of giving back, sharing so that you will have support from society & community.
It’s sad about Robin. He lived here in San Francisco. He’s got this amazing $20million+ estate in Napa he’s trying to sell too.
At least his kids will be taken care of.
This post hit home for me in my FI journey. The last two items on your list are what I am struggling with:
* You have multiple-years of living expenses saved away, but still work at a job you hate in order to save more money you don’t need.
* You feel your friends are all more successful than you, despite having an income or net worth well within in the top 25% for your age.
I think the root of my issues are from growing up in a poor family and having a bit of a “poverty mentality”. I still have the desire to have the fancy and expensive things, however I try to keep that gremlin in check. For me, it comes down to knowing how much is enough and being ok with that so I leave my paid employment for good.
Bryan, how many more years do you have to go in your FI journey?
Maybe continuously search for new jobs on the side while you have this current job?
We are less than a year away to be at a fairly secure spot with our finances. Of course I have about a 100% contingence on our passive income built in as well.
I am in an employment situation now that has had several recent layoffs with severance packages. For that main reason, I keep hanging on. Needless to say I am looking forward to your newest book release in August!
Recently read an interesting book on the topic of financial insecurity, and how folks at various economic strata identify it and deal with it:
It was particularly interesting because the author did her research here in Silicon Valley, where the growing wealth gap is becoming increasingly obvious on almost a daily basis. The bottom line is that NO ONE, whether rich or poor, seems to feel financially secure! The folks who have $5m claim they wouldn’t feel secure until/unless they have $10m.
One thing about the book made me uncomfortable, however: there was an implied assertion that the reason there is so much financial insecurity is because of the shift of financial responsibility from employers and government to the individual. Certainly some of that has happened, but the implication that this is an injustice perpetrated upon the general population doesn’t sit well.
It failed to address any sort of personal responsibility that individuals must assume for the choices they make. Yes, there are many circumstances beyond an individual’s control that can result in financial insecurity, but there are also quite a few that are *within* individual control. A lot of one’s circumstance has to do with one’s individual choices. Not that those choices are always easy, but I think it’s everyone’s responsibility to take stock of the economic times and situations in which one lives and make choices accordingly. Remember, the “easy living” of the mid-late 20th century was likely just a blip on history’s radar. No one should assume that anyone is going to “take care of you”.
(Full Disclosure: Yes, I’m a financial insecurity head case myself!)
I definitely believe it. Friends who are worth eight figures and nine figures are still insecure. They could always use more. It’s nuts.
I like the sharing economy in that if you want to make more money, you can via TaskRabbit, Uber, whatever. There’s less and less of an excuse to blame others for being unable to make money. You won’t make a lot, but at least you can literally make thousands and thousands extra if you want to.
I could turn on my Uber app tonight from 8pm – 2am and probably make an extra $180. Do that 30 days in a row and that’s $5,400! So now it’s becoming, who is willing to kill themselves the most to earn the most amount of money! WHOO HOO!
I feel both secure and unsecure if that makes any sense.
Secure that I will be able to go out and earn good money and make wise financial decisions. Secure because compared to most I am doing very well and have assets to show for it. Secure because I have adequate insurance in place to protect me and family.
Unsecure because I know it isn’t enough. Compared to true peer group, others are way ahead. Unsecure because I know nothing is certain.
So some days I feel secure and some days unsecured.
So you voted 3 or 4? Makes a lot of sense to me.
How much is enough though? Have you calculated a number you are reaching towards?
I voted 3, but 4 is really a better statement about where I stand. I voted too hastily.
Today I am feeling insecure. Something about this market and the uncertainty in the air that has me feeling pessimistic.
I guess I’m financially insecure on the inside (but have enough self awareness to refrain from the outward symptoms like rubbing it in to friends who are truly struggling). I think I get it from my dad – he’s set for life, but he still works, shoes his own horses (which is crazy hard work that you can very cheaply outsource), and brings instant coffee with ham and cheese in a plastic bag skiing everyday, so he can make his coffee with free water and sandwich for the price of a .50 roll! Oh, and I pay for dinner when we go out. It cracks me up, but then I recognize some of the same patterns in myself. I don’t know if enough is ever really enough to stop worrying that it all could disappear someday!
He got horses?! Dayum! How did you make his money and where is his ranch?
This entire post really hit home for me. For quite a long time, I have been the major breadwinner and have done pretty well. My wife spent many years working part time (really flex time), while our 2 daughters were very young. The situation has worked for us.
2 things have happened over the last couple of years that will change the dynamic. My wife started her own business and it is going very well. In contrast, while I am still making good money, I am completely burned out and miserable at my place of work. The environment is toxic and every day it has become a chore for me to go in. I do travel some for business but now am being micro managed despite setting a sales record last year and having a completely clean record.
It is what it is. I want to last 8 more months because when I turn 50 I will qualify for a health insurance retiree benefit that should last for 6 years. I have been with the firm almost 19 years but i think these last 8 months may seem like 19 years. Here are my concerns:
1. I don’t really know what is next. I keep racking my brain but I feel very insecure on this.
2. Yep – I totally get the “kept man” thing. I don’t want to hear that. Part of my insecurity? Sure.
3. College education for my daughters. Despite having six figures saved for each daughter, it is not enough to keep up with the Jones in our zip code. In some aspects, I feel like a failure because I won’t be able to write a check for 60K a year for each kid. My oldest is 15 and we will have to have an honest conversation with her soon. I have been thinking I should grind this out for several more years to help pay for the expensive college but I know my health, mental and physical, won’t hold. I won’t raid retirement or any other funds I have put aside. Just not happening.
4. I got caught up in the nice car thing. It is my only vice. I don’t wear expensive clothes or jewelry. Neither does my wife. My wife does like to travel for vacation more than I would like. I will keep my current car for at least 7 more years and won’t buy an expensive one again thanks to this blog!
In the end, I am trying to balance the feelings of uncertainty and insecurity of an unknown future against my physical health and sanity.
Any tips would be greatly appreciated! I want to develop the right mindset.
I’m not sure I have any answers for you except to say this. You sound like a great husband and great dad. Imagine how much better our country would be in if these were the primary issues we were dealing with.
As to the insecurity, I would offer that you should take some comfort and security in knowing that you and your wife can provide the necessities for your family. You have done it before, you sound like a good salesman. You can find a new opportunity – perhaps after recharging your battery for some time.
You have saved up for your children’s education. I think the kids that will do best in the long run are going to be the ones who have to put some skin in the game. I did not, but I think I would make my kids. Perhaps that is unfair to them. I suspect your children would rather have a happy, healthy dad rather than a stressed one. And who knows you may find something better and be able to provide them with full boat anyway.
From what I can tell, whatever decision you make will be the right one because you sound like someone who has always put his family first.
Kudos to you (and your wife).
I agree with Sam….what good is savings when their father is miserable and he drops dead from a heart attack- which is happening a lot in our upper middle class neighborhood.
I agree with S, too. I think giving a college kid a reasonable budget and helping them to plan their own financial future, starting with that very big ticket item, is a great learning tool and a great way to launch them into adulthood. I got family help going to college, but it was in the range of what you’ve saved for each kid. I sat down with my mom, looked at my finances, made a budget, went to a good state school, worked part time on my way through, and graduated with money to spare. I used the spare money to help me get through law school, again by working part time, and by earning some big academic scholarships.
If my mom hadn’t done the sit-down-and-be-realistic conversation with me, I might have blown the money on private school for undergrad and graduated with unnecessary debt, and no law degree. By making me part of the discussion process, I feel like I received a gift much bigger than just the money to attend undergrad. I spent the money much more wisely feeling like I had some ownership over the process.
Try to look past the “kept man” thing, particularly since you put in so many working hours/years to get to where you are now. If anyone gave you flak for being a “kept man” you could easily correct them by saying “I planned ahead and saved wisely.” It’s the truth. Then maybe they’ll feel like they should have planned better, like you did.
Thank you so much for the replies. I feel better!
While both my wife and I are lucky to be financially literate and have been savers for a long time (not as much as I would like but some say I am obsessive), I had a huge blind spot when it came to the subject of passive income streams. This blog has cured me of that.
I still believe in low cost index funds for the core of my portfolio but has always had an opportunistic streak as well. I am a rookie at building passive income. I don’t have the risk tolerance or the knowledge to do direct real estate myself. I have begun to invest in a real estate crowd funding site called Fundrise. Given my nature, I studied it for a year before finally beginning to make some investments. Does anyone have experience with this firm? I collected my first set of dividends and, I have to admit, it felt great. My goal is for my wife’s business and the passive income we generate to cover all of our spending needs and still allow for some investments into college, joint index funds and to fully fund her SEP.
With any luck, I will start to feel more comfortable with other asset classes that can help me meet this goal.
8 more months! Awesome! It will go by faster than you think.
Big tip: DON’T use your vacation days to take vacation. Take your sick days you probably underused your entire 19 years there as sick days are paid out as daily income when you leave.
For college, do they insist on going to private school? If so, show them how much they’ll have to work to pay for it. Don’t let them assume Bank of M&D will pay for it all! Education is fast becoming FREE thanks to the internet and various free education programs. It makes NO SENSE to pay record high tuition for free education.
You can always join your wife’s company as an employee and help grow revenue. There IS definitely a correlation with effort for businesses in general. That was my biggest fear starting my own… that my efforts will result in nothing, but I was wrong.
Stick it out until 8 months, and brainstorm with the wife during this time what you should do!
When it comes to college, I think it’s best to know what the end goal is. If you’re kids are planning on going to professionals schools (law, medicine), then the prestige of their undergraduate education is far less important than their grades. Which means, you can have them go to a much cheaper state school (possibly even going to a community college the first two years), kick ass, and get into the best law/medical/dental school possible.
The only reason to go to a expensive/prestigious undergrad is if you want a job in consulting/banking firms right away.
MD, a good business coach can help you identify what your problems with a job are and give you real strategies to deal with them. They can also do some personality tests and explain to you why you have problems with certain things. If the job isn’t well suited for you, a coach can help you get a couple more years out of a high paying gig
Ok. I’ve thought about this topic for a long time because I’m contemplating leaving the corporate world and living solely off the income my investments provide. I’m having trouble cutting the corporate cord because I always think I’m on the cusp of being ready but just $1-2K/month more would “be enough”. I’d like some advice on whether I’m suffering from financial insecurity or if I really should stick it out a while longer (there are other options as well, but I’m just considering staying or cutting the cord at the moment).
Here are some details: Age, late 40s. Passive income ~$5100/month. Tax-Deferred retirement portfolio ~$750K (not touching for at least 15 years). Pre-cord cutting expenses ~$3500/month, post cord-cuting expenses estimated at ~$5K (adding in taxes and medical insurance). Debt, ~$60K mortgage @2.75% (have the cash to pay it off quickly if needed). Passive income is based solely on dividend returns, capital gains are reinvested to potentially keep up with inflation.
So, it seems I have the ability to cut the cord right now and go off and do something more meaningful and enjoyable (yes, I do have post-work plans figured out, and I’m more than ready to not work for a corporation any longer). But my instincts are telling me that I should stick it out 3-5 more years to develop more after-tax savings to generate $7K-$8K in monthly income before cutting the cord to have a better cushion for unexpected expenses and for potential occasional splurges. (and in 15 years, I’m hoping my pre-tax retirement portfolio will substantially increase my monthly income, if needed)
Is this a case of financial insecurity and anxiety, or am I applying the right amount of caution by sticking it out for a while longer?
Good on you for analyzing the pre- and post-cord-cutting expenses. Most people wouldn’t think to add back the cost of health insurance and other things that you receive as a perk at your current job.
If I were in your situation, I would hang in there for another 2-3 years to give yourself more of a cushion. If you can get to a situation where you’re pocketing a surplus of $2k a month or more, that’s a lot safer than pulling the plug with a surplus of only about $100 a month. There may be years when your passive income stream is drier than you’d like, or when your expenses might be larger than you expect. For my part, my biggest concern is the potential cost of in-home health care when I get to be in the last 10 years or so of my life. So even if I think I can live within my retirement budget as a healthy adult, I’m planning to have a decent margin of income/savings to cover me in case I ever become house-bound.
If you’re not as concerned about that, or if the cost of your post-cord-cutting expenses includes a long term care insurance policy, then maybe you would be okay cutting the cord now. You could always work part time to develop another small stream of income to help insulate you against any rainy days coming in the future.
Good job adding another $1.5K in expenses for health care. I’m paying a whopping $1,500 a month for health care for two, which is $850 more than we use to pay.
After going through my own early retirement for two years, here is my feedback:
* You will easily adjust to your income level. Given your dividends cover your expenses, and you can always touch your principal if you absolutely have to, you’re fine.
* Late 40s is slightly past mid age. An client of mine just died yesterday at 69. You will NOT regret going on your own.
* You already have what’s next figured out. As a result, you are ahead of the game. You can work a min wage job at your favorite ice cream store or drive for Uber if you are desperate for money.
* You will miss the money less than you think.
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What Does It Feel Like To Retire Early?
The Dark Side Of Early Retirement
All are must reads before you pull the rip chord!
I think it takes time to acclimate to the higher income for some people. If you are not naturally a numbers oriented person, it may take a while to be comfortable. Some people just need the affirmation that they have made it, it may go away or may not.
I know when I was 30, I was more of a bragger, but have realized how to be more sensitive to others viewpoints on money and finances. I try to help people with their finances now, but I am always sure to use an example of where I screwed up in the past so to make them realize I have been there, too.
I don’t think we can help but brag about some of our successes in our 20s and early 30s. But over time, we get over ourselves and just do our own thing.
I think Will and his wife are in a phase where this too shall pass. She’s experiencing financial success, and that’s great. They just need to have a heart-to-heart conversation.
I knew a couple that was similar but opposite at the same time. In their case the husband was making the bacon – my guess is around 200k – and the wife, didn’t work. She used to work as a nanny I think but stopped once they got together. He was a pretty humble guy, not flashy, nice, laid back. The wife on the other hand was super flashy, always wanted to be the center of attention, and constantly bragged about her husband’s money. She’d always say things to me and our friends like, “oh hubbie will pay for that” and “I only want the best.” She just seemed really reckless with his money and expected to be treated like a princess. I just wonder if there will come a day when he will snap.
I think it’s just inappropriate etiquette to brag to anyone about how much money one has, including family members. I’m not a flashy person in the least, so it’s hard for me to understand why some people love to brag about money and having material things. Financial insecurity seems like the clear explanation!
Yeah, knowing how men think, I doubt that relationship will last if she doesn’t start being more considerate about their finances and doing something to help bring in some income.
Men like when women offer, or have a passion where they can make some side income. They don’t have to make a lot. They just have to have something they call their baby.
“You have multiple-years of living expenses saved away, but still work at a job you hate in order to save more money you don’t need.”
My dad has a net worth of 5-6 million USD (3 million in cash), but he is still working at the age of 60. I would rather him invest his cash into passive income streams and transition into retirement. However, I’m not even sure how to express my views or even if I should.
Is he happy doing what he’s doing? If so, I think 60 is still quite young!
Does him having 5-6 million do anything for your wealth accumulation motivation?
Yeah – he seems happy at work as he has a pretty senior position.
I’m doing well for myself career wise as we became “stealth wealthy” in the past ten years only.
I probably won’t say anything to him based on your thoughts.
I have found that having multiple streams of income is the best solution for me. When I earn money from work, and then also have money coming in from 50 – 60 dividend paying companies that work for me around the clock, life is easier.
I have also found it easier to save a lot, which helps in knowing where my money went – quietly working for me in the background.
Unfortunately, I am not skilled enough to find a sugar mamma ;-)
Finding a sugar mamma might be one of the greatest underrated skills of all! I have a friend who found one whose father left the family over one billion. Nuts!
That story deserves a post Sam! :)
Yikes, I feel bad for this guy. They need to go to counseling. His wife is being a fool and she’s driving her husband bonkers.
Last year Goldman wanted my brothers girlfriend to move to Frankfurt. She said he should just quit his job and live in his apartment and figure something out. I was like, dude, do it! He said “I am more of a man that that”. I thought, you’re a dumbass.
What did the gf end up doing? And are they still together?
I got stuck in Frankfurt a couple years ago on my way back from Mallorca. I was not a fan!
Wise words, Sam! I love the step-by-step guidance you provided.
Remembering that they are in the top 10% of all households is key, as well as saving as much as they can (think of highly compensated entertainers or sports stars– they are paid millions, but if their star is descending, and they don’t manage their finances, they can have nothing to show for it).
Most importantly, the two of them talking is vital. Things happen. Life happens. Having strong relationships (IMO) are the most important thing you can have, and money can’t buy those.
Active communication. Good relationships take a lot of work, understanding, and empathy.
It’s so interesting how our insecurities BEFORE we have money manifest itself in different ways once we do have money.