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April 07, 2011

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"Our income has increased quite a bit since grad school, so we have been saving and investing about half of it for the last several years." Beautiful. Completely explains how you currently have an income 'issue' instead of 'crisis' as most 30 year olds with a family would have in this situation.

Your wife seems to be well suited to be able to make a good part-time income from home (software engineer working toward freelancing). As a family that seems to be able to keep expenses low, if she could find just a few hours of work here and there she could simultaneously start building her next career and slow down your savings draw quite a bit. Nothing to worry about now given your great savings, but if this leave does start to stretch out into something longterm there seems no reason to wait until your move to get started making an income on this next venture (I know how overwhelming dealing with family health issues can be, makes work seem like a vacation).

Best of luck with the health issue. This is the biggest reasob for financial devastation. Sounds like you have done quite well in planning. I hope you are ok. Cheers on you getting priorities in order. And I echo strick above. Even a tiny bit of freelance work from home may seem like a vacation.

love your concluding advice. know the value!! if only more understood this. also loved what you said about using money "strategically" and "timely" to get what you want out of life. all the best with your health, it was very good reading about you LB.

Excellent example of how doing the right thing (planning ahead, living within your means) can really pay off and help you get through difficult times. It sounds like you've struck a good balance between priorities in the present and the future.

Thanks for the post! I like this series!

I fully agree with Lothar's statement that "Money is Power". The US history class that my wife and I have attended for many years had an interesting class discussion yesterday about the 2nd. Amendment. Out of about 16 members, there was one that echoed Charlton Heston's famous statement when he was leader of the NRA, that "The only way they will ever get my gun is to pry it out of my cold, dead hands." There were two members that were strong Libertarians and resent all government imposed regulations that force them to do anything they don't want to do. The majority feeling was that handguns and automatic weapons have no place in a civilized society, other than for the military and law enforcement, and that citizens should be willing to give up certain right for the common good. Rights falling into this category involve driving an automobile, air travel, entering certain public buildings, and ownership of certain classes of firearms. A common feeling was that gun fanatics have the opinion that "Guns give them Power" whereas the majority, myself included, believe that "Money gives you Power".

Money gives you the power to protect yourself from a lot of unpleasant things that can happen to you and your family members.

LotharBot, I hope your ill family member has a speedy recovery. Illness can be a big financial drain, so it's great that you have lived frugally and have a good emergency fund and financial plan to help you get through it. Good luck!

Thanks for the kind words, everyone!

> "there seems no reason to wait until your move to get started making an income on this next venture"

Totally agreed. We're expecting to be able to cover expenses through freelancing by the end of this month, but she probably won't be healthy enough to move until summer.

> gun fanatics have the opinion that "Guns give them Power" whereas the majority, myself included, believe that "Money gives you Power"

They give you different types of power that apply in different circumstances. Guns don't give you the power to take time off to get your health in order; money doesn't help you deal with the guy breaking into your home and threatening your kids. As with anything, evaluate your options and find the right balance.

LotharBot:
Any gun that is kept in a home for the purpose of defending oneself would need to be kept in a hidden, locked, and very secure cabinet or gun safe and the ammunition would also need to be similiarly secured, especially when there are children in the home. Thus there would be quite a delay before it could be used. One would also need to have both husband & wife trained in gun operation and safety. The book we use in our class on the US constitution quoted government statistics that showed that more people were killed from accidental discharge of weapons in homes than were saved by using them to drive off intruders. I don't have my own copy of the book or I would have quoted the statistics. Another "Power of Money" is that it can be used to buy a home security system if needed.

Old Limey: a biometric finger print gun safe will alleviate your concerns for security and safety and quick access. A simple swipe of my fingerprint (or my wife's) will open the gun safe in seconds. This prevents any unathorized access (kids), while allowing me to quick access to my weapon without delay.

One of the main intents of the framers when drafing the 2nd amendment was to ensure that the goverment was kept in check by enabling the citizens to hold the govement accountable and over throw it if necessary.

Outlawing guns would certainly ensure that only criminals have them. I for one choose to keep a firearm in a safe and responsible way within my propery so as to defend myself in the unlikely (hopefully) case that a criminal comes onto my property to hurt my family.

If you choose not to have a firearm - that is your choice as we live in a free country. I hope no one ever comes into your home to threaten you or your family's safety and you never wish you had a gun safely available to you to use in self defense. I could never live with myself in that situation where I didn't have the tool available to protect myself or my family from an intruder.

Unless I am missing something, I see a guy who lives off his wife's labor. Instead of finding work, even during this difficult time, the choice is to reduce expenses further, and wait for the wife to get another job after she has acquired some additional job skills to improve her income. Lots of talk about "our investments" and "our income". Sorry I am not jumping on the bandwagon here. This fellow, who apparently has a graduate degree, should be working to help out his family, especially now.

Limey, yes, training and security are both important, and no, a "home security" system doesn't provide the same benefits that a firearm does. I'm not going to get further into this as it's rather off topic, and I would appreciate if you (and others) would refrain from derailing this discussion any further in this direction.

Lowdown, yes, you missed some things.

1) We are financially very secure. We have about a decade of living expenses saved up, not counting retirement accounts. This is not a time of "crisis" or "difficulty" financially; it is a time of difficulty medically. We've made some financially wise decisions, but the overriding factor is getting healthy.

2) it is important that our child is well cared for. We agreed long ago that I would make that my career; day care is not an acceptable substitute except in cases of dire need. My wife's condition made her unable to care for our child, and she will recover more effectively if she doesn't have to take on that extra responsibility.

3) my wife is very career-oriented and has been wanting to make this transition and develop these new skills for some time. Her recovery happens to be a rather convenient time to do so. My continuing to care for our child gives her the freedom to do exactly that.

JMoneyATL,

When you talk about the biometric finger scanner to open the safe, all I can think about is a thief cutting off your finger to open the safe. Ugh.

I'd rather live in a society with no guns and have neighbors and connections so that we all look out for each other. Oh yeah, I'm already doing that.

-Mike

Just wanted to chime and say great job! It's really wonderful that even though life has thrown you some curve balls, you and your wife have the resources to keep doing the things that are most important to you - have you home with your son, etc. It's great to see an example of how your prior decisions to save, live frugally, and develop marketable skills (software engineering) made what could be a crisis situation a "not-crisis" opportunity for your wife to develop new skills.
I also think it's neat how you and your wife found a way to really make your family work, factoring in her health issues. My boyfriend's health issues have a significant influence on our decision to have (or not, or sadly break up over the issue) children, and it's neat to see a couple that found a way to work things out so well. I enjoyed reading this.

I think the guy should worry about how to help his family!
Is the wife having health issues? it makes it worse!!!!!!! GET A JOB, make money be a provider.
Even w/ a decade of savings, when you stop making an income, it won't last you forever!
I totally agree w/ Lowdown.
I am a SAHM and if tomorrow, my husband gets sick, I'll get a J.O.B. ASAP and put my daughter in daycare.....are you serious???????

Cecilia, you're right, it won't last forever, only 10+ years. My wife is on track to be fully recovered by summer. So the drawdown we're looking at is a tiny portion of our assets, not enough to be worrisome. Our net worth has actually increased in the 3 months since she stopped working, due to market gains.

I told my wife about lowdown's comment. Her response: "tell the guy you already have a job. You take care of Michael." Exactly -- this is the arrangement we agreed to and we're happy with. I'm helping my family by taking care of my son, and by taking care of my wife, and by creating the lowest stress environment possible for her recovery. Replacing that with a paying job would be a net negative for the family -- the money I'd bring in would be worth less than the help I provide here. Being outside the home would make it worse, not better.

This might not be the right decision for you, because your circumstances are different. But it's the right decision for us.

This is LotharBot's wife -- I wanted to chime in and say something.

He's right that he shouldn't be working, for the reasons he states. Humility is keeping him coy about our actual assets, a policy I won't compromise. But I want to reinforce that money is not the dominant concern here. We have years of income in savings. We have decades (with an s!) of expenses in investments. If we put together another $500 a month in income or savings, we could retire right NOW.

That's not to say we spend the money lightly; neither of us likes to spend savings. To this day, I remember being a grad student, and how hard it was to put together $200, sometimes $500 in a month, to save. That money is still in the account. When I withdraw something from savings, I mentally compose a letter to myself of ten years ago -- "You know that money you worked so hard to save? I pulled it out today; here's how I spent it." I'm not really comfortable with it if I don't think she would approve.

That's not really what I came here to say, though.

In the frugal, financial blogosphere world, we could probably all agree that most people spend too much and save too little. It's foolish to waste money on consumption today, when you could save it and have it tomorrow. We much prefer freedom, peace of mind, and wealth over high living, narrow margins, and sudden falls into crisis.

That's wise. I'm not going to say it isn't.

But I am a Christian. I come from a tradition that sees and agrees with that, but says there's another side to the coin: some people may save too little, but other people save too much. I see a life that consists entirely of hard, productive work -- living cheap, earning much, saving it all, dying rich -- as a life wasted. You need to eat to live, but if you are living to eat, you're wasting your life.

People around the financial blog world seem to struggle with how much they're allowed to spend on themselves, how much they need to save. And what you decide on that front is really a very personal call, and comes down to what you think life is about. But the view of myself and my husband is this:

Money is not to be wasted. And money is not to be hoarded. Money is to be USED, and used wisely. LotharBot's last paragraph -- about our philosophy of money -- describes this well. Know what a dollar is worth; know what you can get for it today and tomorrow, and spend it to achieve what you think is important.

A few years back, we had a conversation about that. There is a financial progression from subsistence to prosperity to "what the heck are we going to do with all this money, anyway?" As we were making the final transition, we decided that our goal would be to use our money to purchase freedom -- the ability to live flexibly, to work minimally, to absorb risks and to help people. (That's paying off at the moment; taking a long time off work is a heck of a freedom to be able to afford.)

Hence, our top financial priority is early retirement -- but not in the sense that most people intend it. We're not looking for a secure life; the right opportunity could result in us giving our entire fortune away and going back to work. We're looking for freedom -- the ability to focus less on working for subsistence and more on working for God and perhaps humanity.

One of the things we discussed was that if we were to take a true retirement, the end of life might not be the right time for it. The middle of life -- while our children are young and our spirits are high -- might be the right time in life to live and work most freely.

That was years ago. I won't say we've pulled the trigger on that decision--what we're doing now is transitional, not vocational. But financially it adds up to much the same thing.

On the spectrum between working for subsistence and being independently wealthy, we're much closer to the latter than the former. And our financial outlook in life is not to make ourselves wealthy and secure, but to USE our financial status to our best advantage. Sure, Lotharbot could be out making a side income. Heck, I could be out draining myself while making a BIG income. But compared to the money we already have, that would be noise. And the cost to our family -- my health without my husband's support, my son's life, without his dad at home -- well, it'd be huge.

Some people would think the money would be worth it. Some people are all about money, and other people need it bad enough that it's reasonable to go after it (though I don't think it's ever reasonable to be out making an extra buck when your family needs you around). But for us, taking a season of rest is an easy call.

A whole lot of judging going on here.

Having been part of this audience for a long time now, to say I'm surprised would be an understatement.

They have obviously put a lot of thought and calculations into their situation and it's obvious that it's working out well.

Who are you all to judge? I see no lack of personal responsibility here, in fact I see the opposite.

It's fine to ask questions about how/why they came to their decisions, but to openly criticize is just plain rude.

Dove and Lotharbot - thanks for sharing with us! I loved getting a second (eloquent) perspective from Dove as well. I admire where you are and how you have chosen to make your family work for you. Your perspective on using money is interesting and one we need to consider as well. I hadn't really thought about taking a break while younger (if the financial picture allows it) and then planning to work more later.

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