Thursday, January 7, 2010
I Will Never Be Able to Live Like You Do!
I received the following excerpt in an e-mail from a reader yesterday:
I will never be able to live like you do. We are a family of four. My husband is 33 and I am 31 and we have two young children. Both my husband and I work fulltime and make a six figure income. There is no way we could ever own our home outright or pay cash for one like you are. We will always have a mortgage. We use credit cards to purchase the things we need so we will probably always owe those also.
You must have made a huge income to be able to be debt free, pay cash for a home and cash for all your other purchases. So fess up, how much did you make a year? $200,000, 400,000. or $500,000. a year?
I didn't print all of the e-mail because some of it was quite nasty. This e-mail at first, as Glenn Beck would say: "Made blood shoot out of my eyes!" But then I realized that perhaps the writer was really looking for an answer to their own problems. So I will make an attempt to respond to her question.
Let's clear up the income issue right away. When we first got married way back in the 60's, we made $5,000. a year. It took DH many years of working and going to school nights to get an advanced degree to get us up to a middle 5 figure income. The last couple years before DH retired, we made a high 5 figure income. I will also tell you that DH chose for most of those years to be a public servant which paid a whole lot less than he could have made in the private sector with his Engineering Batchelors Degree and his Masters Degree. We chose for me to be a stay at home mom for most of DH's career. I could have easily worked and we could have easily made a six figure income. But that is not the path we chose for ourselves and one that we have never regretted. I did go back to work for 6 years when the boys were 1/2 way through attending a very prestigious private military junior high and high school and to help with college expenses. I guess my small income did put us over the $100,000. mark for a couple of years but every penny of the money I made went to pay thousands of dollars in tuition and associated costs for the boys. We never used one penny of that money to live on or to save for anything. As soon as I had covered those costs, I quit working. I am a homebody and I loved taking care of my family and home. I HATED working with a passion because it took away from our home life.
We never made as much as you do now at your young ages and believe me we live on a whole lot less than you do now.
All of that being said, I see no reason why you can't be mortgageless in a number of years. If you choose to pay your mortage off early, you have the income to do it. We have paid for three homes in the years that we have been married. We are about to pay cash for a $300,000. one. It is all about choices which I have written about extensively here on my blog over the past couple of years. You are still young enough to be able to make the choices that you need to, to be totally debt free when you retire. You have to remember that what DH and I can do today is because of a lifetime of choices that we made that were best for us. When you don't pay for your needs on credit cards, especially when you make a six figure income like you do, you don't pay interest. When you aren't handing over interest to credit card companies, you are able to use that money for yourself. You need to reassess what you believe are needs. I would bet you that most of your needs are wants. When you pay off your mortgages early, you get to keep all of that interest that you would have paid. Oh yes, I have heard that ridiculous argument that you should not pay off your mortgage because of the tax write offs and the fact that your money would make more in the bank and the stock market. First, as I have said before, you only get a small portion of that interest back taxwise depending on your tax bracket. Secondly, the stock market is risky as we have seen only so well over the past few decades. The banks pay hardly any interest, especially now. So paying interest is a huge waste of money.
I have seen so many retired people who chose wants over needs over their 30-40 year careers. They can't even remember what they spent their money on and now are living at poverty level thinking poor me. They have nothing of any real value that they could even sell to make their lives better. They owe mortgages on their homes because they used them like piggybanks to pay off credit card bills or other debt every couple of years. There is only one reason in my mind as to why someone who purchased a home with a mortgage 30-40 years ago SHOULD still owe a mortgage. That reason would be because they needed that money to pay medical for a very sick child or relative. But the majority of people just made poor choices. They own a car or two but owe car payments on at least one. They wonder how they will pay their property and school taxes every year because they have not planned for them. Do you want to be that person? I know you are thinking that retirement is years away. Believe me when I say that life is short. It flies right by. So make good use of all of your choices while you are young and your money will snowball. You will be able to do what we can do, if that is what you want.
I sensed a bit of jealousy in your e-mail. There is no reason to be jealous of us. We made the choices that we knew would be best for us in retirement and we worked toward that goal for years. We lived a beautiful life while we were getting there without spending thousands of dollars frivolously. We have not missed out on a thing. We lived our life exactly the way we wanted to. We made our choices and we are now enjoying the fruits of our choices in our retirement. Anyone can do what we did! But you have to do what is best for your family. If you believe that having a mortgage, owing money on credit cards and having other loans for cars, etc., is the way to live and retire, go for it! But you will have no one to BLAME but yourself!
You have told told me you are new to my blog. If you really don't believe having a mortgage, owing credit cards and having other outstanding loans is the way to retire then go back and read my other posts. Start with these:
You are young and have at least 25-30 years before retirement. You can change your attitude and be where we are when you retire. Even if you are older and reading this, it is never too late to make your situation better. It can always get better if YOU make the right choices! As I have said before, I would like to see all of you be debt free and have a wonderful life.