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- My mother is a smart economist – she knows her financial priorities and focuses on them.
- Following his example, I never deprive myself but also don’t waste money on big-ticket items.
- Dad taught me about investing. His example helped build a $530,000 retirement portfolio.
The year I turned 12, my mother drove me in our Chevy station wagon to a bank in Bethesda, Maryland, where the teller helped me open my first one. savings account. Mother insisted I deposit $ 6, half earnings babysitting and newspaper delivery.
He is a smart economist. Although our family goes to the beach every summer, we never go on luxury vacations, because Mom thinks college tuition is more important. He even bought canned vegetables at half price.
My husband and I have followed my mother’s example
His example has served me well throughout my life. Because my husband Barry and I have managed our money carefully, in our 70s we now divide our lives between Eureka, the “port of Victoria” on the North Coast of California, and Guanajuato, a UNESCO World Heritage center in the Central Highlands of Mexico.
Throughout our marriage, we rarely bought a new car or new furniture. Today we have a 1990 Mazda Miata, which we drive about once a week, and a 2003 EuroVan, which we use to explore the beauty of Northern California and southern Oregon. In Guanajuato, we do not have a car – a great advantage, because in center, where we live, the house does not have a garage or toll road, and parking is expensive. We walk everywhere in the vibrant, colorful streets of our city.
We also don’t have a dishwasher or clothes dryer in the house. In Guanajuato, clothes dry quickly on our patio in the sunny, warm weather, but even in Eureka, it doesn’t take very long. You just have to be patient.
I admit, we are not complete minimalists. We can’t – we have six kayaks, two paddle boards, and eight bikes! The bikes are divided between our two houses. As for kayaks, each has its own story. Another article!
We visit Europe about once a year, but rarely pay for international tickets. By applying for a credit card with 50,000 or 60,000 bonus air miles every few years, we build up our miles. We apply for a new card only if we know we can reduce a lot of expenses in a short period of time, because you have to spend $3,000 to $4,000 in the first few months, which is more than we normally spend.
A friend recently described us as “frugal,” but I disagree, because we don’t deprive ourselves. I don’t believe self-deprivation works in the long term: it’s like dieting – too much deprivation can lead to excess.
My dad taught me how to invest long term
Meanwhile, my father was not only a saver, but also an investor. During my childhood I would overhear him discussing stocks with my mother.
In my early 30s, when Barry and I lived in Bellingham, Washington, a cheap hippie town, Daddy encouraged me to open an IRA, since I am the only child who works for himself and has no pension. I didn’t earn much at the time, but I took his advice and opened an IRA with $50. Barry did the same, and a year later we each opened a SEP IRA. Our accountant advised us to put the maximum in two accounts each year to reduce our annual taxes, so we did, and now, 40 years later, my two IRAs combined are over $530,000.
I made some stupid decisions, of course, like impulsively following Barry’s idea in the ’80s to buy futures. Not again! I lost $1,500 that way.
But the other decision was smart. When we moved from Bellingham to cushy Palo Alto in 1987, I was terrified, because our rent went from $265 to $1,200 a month, and to $1,400 a year later. But I was forced to make serious money for the first time in my life, and it was good for the future. After networking for six months, I got a gig with Apple, which led to other contracts, leading training for companies like Hewlett-Packard and AT&T.
Seven years later, during a short dip in the market, we managed to scrape together enough money to buy a house from a friend of a friend, avoiding real estate fees. We work hard to pay off the house.
In 2004, we left Palo Alto and sold the house. After giving the money to our daughters, we invested about a third of our profits in bonds, which have earned us about $1,000 to $1,200 a month consistently ever since. At our peak, before the 2008 crash, we were making $2,000 a month. It comes out to about 5 to 7% return on average.
And instead of paying someone to manage our stock, we did invested in index funds. We know that no one has a “market in the market,” so to speak.
Between stocks, bonds, our IRA, Social Security, and our part-time earnings, we are financially comfortable. Thanks to my parents’ example – investing carefully and not spending money on expensive things like a trip to Hawaii or a new car – we were able to afford the rich, diverse, bicultural life we now enjoy.